ITEM 1.
BUSINESS.
Background
On October 28, 2011, DiMi Telematics International, Inc. (“DTII”) entered into a Share Exchange Agreement (the “Share Exchange”) with DiMi Telematics, Inc. (“DTI”) and its stockholders. Pursuant to the agreement, DTII issued 29,150,000 shares of its common stock in exchange for all outstanding shares and warrants to purchase common shares of DTI. As a result of the Share Exchange Agreement, DTI became a subsidiary of DTII. DTII assumed operation of DTI and entered the Telematics, or Machine to Machine/M2M industry. On November 10, 2011, the closing of the Share Exchange occurred. In connection with the Share Exchange, 5,000,000 of DTII’s issued and outstanding shares of common stock were surrendered for cancellation.
The following discussion includes information about the business operations, management and financial condition of DTII and DTI. Unless specifically set forth to the contrary, when used in this report the terms “we,” “us,” “our,” the “Company” and similar terms refer to DTII, a Nevada corporation, and its wholly owned subsidiary DTI, also a Nevada corporation.
General
The Company designs, develops and distributes Machine-to-Machine (“M2M”) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. Through our proprietary software and hosted service offerings, the Company endeavors to capitalize on the pervasiveness and data transport capabilities of wireless networks in order to facilitate communications and process efficiencies between commercial and industrial business owners/managers and their respective networked control systems, sensors and devices.
Strategically, the Company is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise.
Our mission is to earn global distinction as the leading supplier of world class M2M communications solutions that empower our customers to optimize efficiencies and productivity through remote tracking, monitoring, management and protection of their most valuable assets.
The DiMi Solution Platform
Our flagship M2M solution is “DiMi,” a proprietary, patent-pending, business intelligence and two-way communications platform that captures and seamlessly integrates real-time data from networked tracking, monitoring, alarm and alert systems, sensors and devices; and, in turn, centralizes this data onto an online command and control dashboard that is accessible 24/7 by a designated user or community of designated users through the secure DiMi Internet portal, found at www.dimispeaks.com.
To date, we have not yet commenced commercial marketing of DiMi and have not yet generated revenues from operations. DiMi is to begin beta tested in anticipation of the initial commercial roll-out of version 4.0, which is anticipated will take place in the third quarter of 2017. We have also instructed our outsource software developer to begin work on smartphone apps to work in conjunction with version 4.0. For more information on our agreements with our outsource software developer for the development of version 4.0 and corresponding smartphone apps to work in conjunction with version 4.0, see “MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.”
With adoption of the DiMi M2M communications platform, users can remotely control, monitor, manage and acquire data from their operational assets, providing the interface for lighting, temperature, humidity, keycard access, fleet management and many other vital systems that impact the enterprise. DiMi uses established secure technology standards (i.e. LONet, MODbus, BACnet and ELK) combined with a unique, proprietary software interface that keeps users connected to their asset management and control systems through any web-enabled computer or mobile device.
By providing dynamic, real-time access to critical information from a wide array of new or legacy sensors, GPS tracking tools and/or diagnostic devices - irrespective of their make, model or manufacturer, DiMi alerts or reports back to its users via familiar communication tools, like instant messaging, email, HTML and text messaging. Users can even issue global commands to its asset management and control systems through the DiMi software interface. Moreover, DiMi leverages the collected knowledge of a particular asset or assets and compares it to historical performance metrics and other critical benchmarks through an integrated data management module, giving users insight that allows them to rapidly identify and implement proper preventive maintenance measures, efficiency improvements and other key operational activities.
Our proprietary M2M solutions utilize a cloud-based, two-way communications delivery platform, marketed as “DiMi.” Leveraging the power, scalability and flexible turnkey advantages of DiMi’s patent-pending software and hosting platform, users are able to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device while located anywhere in the world. DiMi features a robust, customized interface that gives its users secure command and control functionality of multiple remote, connected sensors, alarms and diagnostic devices. Moreover, the intuitive DiMi framework readily adapts to and integrates both new and legacy monitoring/sensing equipment - irrespective of make, model or manufacturer - providing for simplified, economical M2M deployments.
Our DiMi solution is currently being used to actively monitor property management systems in several high-rise commercial and residential buildings in New York City - all beta sites which have served to demonstrate the efficacy of the DiMi technology and M2M communications platform. Moving forward, the Company intends to concentrate its DiMicommercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
We expect to deliver DiMi as a monthly, hosted service that puts critical information into the palm of its user’s hands with no major hardware investments. Our hosting platform can be tailored for each customer to create secure and reliable end-to-end connectivity between their specific remote connected equipment and DiMi’s proprietary web interface. Once a new client’s core M2M business needs have been confirmed, the Company will closely collaborate with the client to design the organizational and process modifications required to ensure a successful DiMi launch, offering full service project definition, management, user interface customization, implementation services and ongoing quality assurance and testing.
Uses and Benefits of the DiMi Solution
Based upon the knowledge and experience of our executive management in real estate operations and management, we have initially targeted the real estate management industry for initial commercialization of the DiMi Platform solution. Among the uses and benefits of DiMi in the real estate industry are the following:
“Smart” Facility Management
Today’s buildings - whether residential, commercial, medical or otherwise - are sustained through operation of various utility systems. Through these systems, electricity, heat, HVAC, water, lighting, security and other necessities, are provided to the buildings.
Some conventional systems are controlled by human operators and, thus, require maintenance staff on-site or on-call to control, maintain and otherwise operate such systems. Other systems may be controlled electronically or through a combination of electronic and human control. These systems force building owners to extend additional resources and incur burdensome costs in order to maintain proper operation of the systems, as well as account for human errors that may result from improper system operation or management. Moreover, many conventional systems are not capable of remotely controlling multiple buildings having multiple building functionalities using a single monitor and control device nor can they adapt to various control interfaces that are used by the buildings and facility managers.
Our DiMi solution works as a centralizing component of a facility or multiple facilities’ management system, acquiring and interpreting data from thousands of networked devices monitoring systems operating in multiple locations.
Whether a facility manager is looking to save oil and gas, monitor carbon emissions, avert a flood or monitor and control temperatures, lighting or remote keycard access, DiMi provides a fully integrated, affordable solution. Moreover, DiMi allows our clients to evaluate their building management practices for strengths, weaknesses and opportunities to be greener, more productive and more efficient. DiMi’s virtual grid can track and sort building data to enable cost savings, reduce the carbon footprint and set new global standards of performance for the facility management industry.
Energy Savings
For boilers to run at peak efficiency, operators must attend to boiler staging, water chemistry, pumping and boiler controls, boiler fuel-air mixtures, burn-to-load ratios and stack temperatures. DiMi can consolidate all the above efficiency-enhancing metrics and provide monitoring of water chemistry and temperature to improve equipment efficiency and reduce energy expenditures. DiMi provides these features on a cost effective platform which empowers users to realize significant cost savings.
DiMi can help maintain consistent temperature throughout buildings and provide the ability for managers to monitor and control irregularities. Users benefit from being able to: prevent system wear and tear from operating under stress, increase the life of the systems through proper timing of maintenance and determine peak efficiencies and set pre-defined conditions and alerts. DiMi’s service can also measure water consumption by unit to ascertain usage by tenant and carbon emissions to track changes.
Enhanced Security
DiMi can provide remote monitoring, control and access to restricted areas. Our technology provides an audit trail that enables users to see who accessed a room and when. The ability to track entries to individual rooms via the audit trail eliminates the cost of replacing locks and lost keys. DiMi readily interfaces with most alarm panels on the market as well as most existing keycard access systems.
Disaster Management
Water leaks and flooding may be costly for property managers and owners. DiMi can assist with disaster management by providing the ability to monitor strategically placed water sensors in bathrooms, elevator shafts, rooftop drains or any other problematic area. Users will be alerted if there are any irregularities within a defined scope to avert catastrophes. In addition, hurricane shields can be activated from a remote location to avoid disaster and minimize costs in protecting assets.
Routine Maintenance
All forms of routine maintenance that can be automated can be controlled directly using the DiMi M2M communications solution. From pre-defined schedules, on a demand basis when equipped with the proper sensors to a user’s instant messaging (“IM”) account anywhere the Internet is accessible, maintenance can be performed at will. For example, automated service calls can be enabled when a boiler is operating outside of predetermined optimal ranges or, storage tank levels can be preset to enable DiMi to trigger automatic scheduling of oil deliveries
Building Value
We believe that a building that incorporates DiMi will have a documented pedigree of asset performance. Energy management and efficiency gains, along with maintenance and repair history, are mapped through our Master Data Management module. DiMi’s information management capabilities increase property return on investment and overall property value.
The Marketplace
Although widely heralded as a “transformative” technology, M2M is not new. The concept was first used during World War II for identifying “friend” or “foe” to prevent pilots from hitting the wrong targets. Satellites use M2M to fire engines based on guidance and navigation sensors. Garage door openers respond to the clicker in a car. The difference now is that you can network the sensors in devices and objects, and use the data for extended purposes, such as recognizing that the garage door was left open and notifying the homeowner or security company to close it by way of remote command.
M2M - also commonly called “ubiquitous” or “pervasive” computing - refers to digital microprocessors and sensors embedded in everyday objects and connected to networks. M2M most often refers to “machine-to-machine,” although mobile-to-machine or man-to-machine is also used to describe this fast evolving family of technologies. Because M2M communications can exist in practically any machine, environment and market, it holds the potential to reshuffle entire industry structures, creating an anticipated windfall for technology enablers in the M2M arena and enabling an array of solutions that deliver new levels of “smart services” and commerce.
Secondary Target Markets
Distilling customer needs to discrete services allows us to target and expand high value opportunities and generate critical need niches in vertical market sectors. Combining these niches into a consolidated service, offering a single point customer interface, is expected to give the Company key competitive differentiation in the marketplace.
Restaurant and Retail Chains - DiMi can provide owners and managers of restaurants and retail businesses the ability to monitor and control multiple locations remotely from any web-enabled computer or mobile device. We can provide the interface that gives users real-time insight and control of critical systems within their establishments that enable them to reduce costs, manage more efficiently and increase their return on investment. As long as there is Internet access, users can monitor and manage all of their properties - whether at home, walking down the street or traveling out of the country.
With respect to restaurants, DiMi provides the ability to monitor the humidity and temperature of walk-in environments, such as freezers, wine cellars and refrigeration units, helping to ensure that meats age properly, cellaring of wines is maintained and cheese or other perishables are well stored. When a power failure or surge occurs, immediate alerts are sent to a manager or owner’s handheld device, enabling quicker response times and reducing the loss of inventory from food spoilage or wine cellar temperature fluctuation.
Weather extremes may also trigger instability in a restaurant environment. DiMi helps by providing the ability to remotely monitor temperatures in one or more restaurants and signal any deviation from normal.
Schools, Colleges and Universities - With DiMi, educational facilities can experience the peace of mind that comes with being able to monitor points of entry as well as restricted areas on-site or remotely from any web-enabled computer or mobile device.
Our solution helps to protect sensitive documents, dormitories and classrooms housing expensive assets, such as computer centers, biotech labs, movie production and digital publishing facilities. Moreover, through use of DiMi’s auditing capabilities, school building managers can mitigate losses due to theft and receive immediate, real-time feedback in emergency situations, including security breaches, fire, smoke, gas leaks, and carbon monoxide and carbon dioxide alerts, among other potential crises.
Healthcare Facilities - In addition to benefiting from the same remote monitor and control capabilities afforded all sectors involving the management of building systems, healthcare facilities can leverage DiMi M2M communications solutions in highly innovative ways to enhance resident patient care.
For instance, DiMi can provide care facilities with an ability to prevent scalding due to inconsistencies in tap water temperature. The risk is greater where the resident population may be elderly, prone to sensory loss or when nerve reaction times are reduced; thus, the intuitive reaction to pull away from the scalding hot water is not sufficient to avoid potentially severe skin burns.
Another potential application is home monitoring of patients suffering from chronic diseases and conditions, such as congestive heart failure, hypertension, diabetes, asthma and obesity. Hospitals, clinics and physician practices can utilize DiMi to establish an additional communication channel with their patients, removing geographic barriers and enhancing the quality of care.
Connecting with Telehealth devices used in the home and accessed via any web-enabled computer or wireless device, DiMi’s powerful interface can give medical staff the ability to monitor and quickly assess - in real-time - an at-home patient’s oxygen levels, pulse, blood pressure and other vital statistics, potentially reducing hospitalization rates, improving treatment plans and decreasing emergency room visits. Moreover, DiMi’s data management module captures important patient data for medical records, which can help reduce costs related to paperwork and prevent costly mistakes that could lead to malpractice claims.
Industrial Complexes - DiMi’s cloud-based M2M communications platform supports a vast array of possibilities to employ innovative tracking, sensing, monitoring, alerting and reporting equipment to remotely monitor and manipulate industrial control systems. Integrating with existing or new backend systems, DiMi can serve as the command and control interface for a vast number of industrial M2M applications in sectors that range from oil and gas, water treatment and waste management to manufacturing, green power generation and utilities.
One possible DiMi application is managing an industrial complex’s consumption of energy by reducing or shifting electricity use to improve electric grid reliability, manage electricity costs, and encourage load shifting or load shedding during times when the electric grid is near capacity. Another would be real-time remote monitoring and control of automated irrigation systems for a commercial farming enterprise or monitoring and detecting tank leaks at oil refineries.
Because DiMi is hardware-agnostic and readily customized to address the demands of any industrial sector, we believe that the DiMi interface can be leveraged and applied to protect a vast array of fixed and mobile assets deemed valuable and mission-critical.
Logistics/Fleet Management - Powered by DiMi, DiMi Telematics provides the commercial transport industry with a cost effective method of monitoring in real-time all aspects of fleet operations, including driver and vehicle performance, geo-tracking, safety, compliance and efficiency. The resulting benefits range from the successful streamlining of routes and schedules to save money in fuel consumption and personnel costs, to mitigating risk and lowering insurance costs.
Certain U.S. legislation (e.g., Food Safety Act 1990, Quick Frozen Foodstuffs Regs 1995 and the Temperature Control Regs 1995) mandates that mobile transporters of chilled food products closely monitor the temperature of goods in transit to protect them from spoilage. Working in concert with automated, wireless temperature monitoring devices, DiMi is able to transmit alerts directly to fleet managers and/or refrigerated truck drivers when load temperatures approach predefined levels requiring immediate attention.
Competition
Given the positive outlook for the M2M industry and our targeted market segments, we will sell our solutions in intensely competitive markets. Some of our competitors have significantly greater financial, technical, sales and marketing resources than we do. As the markets for our software products and hosting services continue to develop, additional companies, including those with significant market presence in the wireless industry, could enter the markets in which we compete and further intensify competition. In addition, we believe price competition may become a more significant competitive factor in the future.
Several businesses that share the M2M space can be viewed as competitors, such as M2M application service providers, Mobile Virtual Network Operators, system integrators and wireless operators/carriers that offer a variety of the components and services required for the delivery of complete M2M solutions.
We believe we have a competitive advantage and are uniquely positioned as an M2M solution-centric business because our M2M communications platform is hardware-agnostic, and our hosting environment is in the cloud which gives us the ability to help businesses lower their IT infrastructure costs and management requirements while improving performance, scalability and flexibility.
We have also taken, and will continue to take, the necessary steps to secure the proprietary aspects of our applications through patent filings in the U.S. and in key international markets. Moreover, we intend to remain focused on proactively developing best-of-breed Internet-enabled M2M solutions that are designed to effectively meet the evolving needs of our primary target market, namely web-based remote asset tracking, management and control with applications in the commercial, industrial, educational, government and military sectors.
The markets for our M2M communications solutions will remain characterized by rapid technological change and evolving industry standards. Nonetheless, the principal competitive factors in these markets will continue to be product performance, ease of use, reliability, price, breadth of solution offerings, sales and distribution capability, technical support and service, customer relations, and general industry and economic conditions.
We believe that our consultative approach to enabling hosted M2M technologies for our clients, as well as the attention we give to their specific needs, requirements and circumstances, are critical competitive differentiators that we are dedicated to preserving and nurturing as we grow. Moreover, prudent and timely integration of new and emerging digital and web technologies into our M2M communications platform will remain an underpinning mission for us if we are to earn and maintain distinction as a recognized industry leader.
Among the public companies with which we may compete are: Digi International, Inc. (Nasdaq:DGII), EnerNOC, Inc. (Nasdaq:ENOC), Evolving Systems, Inc. (Nasdaq:EVOL), Gemalto, NV (OTCQB:GTOFF), Numerex Corp. (Nasdaq:NMRX), RF Monolithics, Inc. (Nasdaq: RFMI), Telular Corporation (Nasdaq:WRLS) and Trimble Navigation Ltd. (Nasdaq:TRMB). Many of these competitors have greater name recognition as well as financial and other resources than we have. We may never become a competitive influence in the marketplace.
Plan of Operations
DiMi Telematics, Inc. is headquartered in New York City and incorporated under the laws of the State of Nevada. Aside from the oversight and administration of our corporate, financial and legal affairs by the executive management team, once commercial roll-out of DiMi takes place, our Company’s operating activities will be centralized in three core areas:
● Sales and Marketing will employ both direct and indirect sales models utilizing an in-house business development team, partners and resellers and self-service through a service on-demand web interface.
Our initial sales and marketing team will be comprised of our current management staff, and supplemented by the hiring of dedicated sales professionals as the Company matures. However, we intend to immediately begin building out our global distribution network through reseller and strategic marketing agreements with qualified third party sources. To support and nurture strong relationships with our future sales and marketing partners, we expect to provide co-marketing, trade show support, product training and DiMi demo units, while also actively engaging in industry awareness and leading generation programs.
Once a new client’s core M2M business needs have been confirmed, our solutions team will closely collaborate with the client to design the organizational and process modifications required to ensure a successful DiMi launch, offering full service project definition, management, user interface customization, implementation services and ongoing quality assurance and testing.
In order to achieve accelerated market penetration and sustainable, recurring revenue from a global customer base, the Company expects to ultimately adopt a hybrid sales and marketing model involving the following: direct sales (solutions team), channel sales (via leading Value-Added Resellers (“VARs”) and distributors dedicated to niche market applications that DiMiis capable of addressing in target domestic and international markets) and strategic marketing and integration collaborations with industry leading system integrators, Original Equipment Manufacturers (“OEMs”) and large cellular carriers and dealers.
● Operations will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations, 24/7 client service/help desk, professional services and installation support and quality assurance and testing of our DiMi software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications platforms.
Our DiMi solution is currently being used to actively monitor property management systems in numerous high-rise commercial and residential buildings in New York City. All beta sites are owned and managed by the FATA Organization. These sites have served to successfully prove the DiMi software technology and hosting platform and will provide the Company’s sales and marketing team with the capability to provide live demonstrations of the DiMi platform.
After our solutions team works in close collaboration with our customers throughout their respective DiMi implementation projects, our account service representatives will assume responsibility for ongoing technical and administrative support following DiMi’s deployment. In addition, our customers will have access to a dedicated team of customer service and technical specialists who can be reached after hours and on weekends through a telephone helpdesk and an online technical support center.
● Product Development will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis. We anticipate that the creative formulation of enhancements and new product conceptualization will be performed in-house by our officers and directors. Thereafter, we intend to outsource software enhancement and product development to third parties.
Currently, the Company, in collaboration with its outsource software development team, is engaged in developing the next generation of its M2M communications platform, DiMi 4.0,which is being designed to provide for a number of technological enhancements and new user benefits being built into the system, including Voice Over Internet Protocol. Based on current development timelines, DiMi 4.0 should be finalized and ready for commercial launch on or before the end of the third quarter of 2017.
At that time the Company intends to concentrate its DiMi commercialization efforts on marketing the solution to property management companies, commercial property developers, government/military installations, industrial facilities, retail and restaurant chains, colleges and universities, fleet managers, and any business or institutional concern with valuable fixed and mobile assets requiring remote surveillance, regular maintenance or general oversight.
Intellectual Property
Our M2M communications solutions rely on and benefit from our portfolio of intellectual property, including pending patents, trademarks, trade secrets and domain names.
Patent Applications:
U.S. Trademark Applications
1. Greenfreak Serial No.: 77724645
2. Domain Names
http://www.dimispeaks.com
http://www.greenfreak.com
http://www.controlfreak.org
http://www.theicontrol.us
http://www.icontrol.mobi
http://www.icontrolmultiple.com
http://www.icontrolnow.com
http://www.icontrolonline.com
http://www.greened.biz
http://www.greenfreak.biz
http://www.green-freak.com
http://www.green-freak.info
http://www.green-freak.me
http://www.green-freak.mobi
http://www.green-freak.org
http://www.greened.ws
http://www.greenfreak.info
http://www.greenfreak.me
http://www.greenfreak.mobi
http://www.greenfreak.ws
http://www.greened.net
http://www.askdimi.net
http://www.askdimi.org
http://www.askdimi.info
http://www.askdimi.biz
http://www.askdimi.us
http://www.cntrlfreaks.biz
http://www.cntrlfreaks.us
http://www.cntrlfreaks.com
http://www.cntrlfreaks.info
http://www.cntrlfreaks.net
http://www.cntrlfreaks.org
http://www.greenfreak.us
http://www.greenfreak.com
http://www.Precisionloc8.com
http://www.Precisionloc8.net
http://www.Precisionlok8.com
http://www.Precisionlok8.net
http://www.Precisionlocate.com
http://www.Precisionlocate.net
http://www.DiMiTelematics.com
http://www.DiMiTelematics.net
http://www.DiMiTM.com
http://www.DiMiTM.net
http://www.DiMi-tm.com
http://www.DiMi-tm.net
http://www.DiMi-m2m.com
http://www. DiMi-m2m.net
http://www. DiMim2m.com
http://www. DiMim2m.net
History of DTI
DTI was formed as a Nevada corporation on January 28, 2011 under the name Medepet, Inc. On June 30, 2011, Medepet, Inc. changed its name to Precision Loc8, Inc., on July 28, 2011, Precision Loc8, Inc. changed its name Precision Telematics, Inc. and on August 10, 2011, Precision Telematics changed its name to DiMi Telematics, Inc.
On or about July 31, 2011, DTI entered into an Asset Purchase Agreement with Roberto Fata pursuant to which Mr. Fata sold and DTI purchased the technology encompassing DiMi, including certain specified assets used in the remote monitoring and control of building management systems through unique software interface.
History of DTII
DTII was originally formed as Cine-Source Entertainment, Inc. (“Old Corporation”), a Colorado corporation, on July 29, 1988. Pursuant to a Plan of Merger dated February 24, 2004, the Old Corporation filed Articles and Certificate of Merger with the Secretary of State of the State of Colorado merging the Old Corporation into Cine-Source Entertainment, Inc. (the “Surviving Corporation”), a Colorado corporation Thereafter, on April 27, 2004, the name of the Surviving Corporation was changed to First Quantum Ventures, Inc. On April 13, 2006, the Surviving Corporation formed a wholly owned subsidiary, a Nevada corporation, under the name First Quantum Ventures, Inc., and on May 5, 2006 merged the Surviving Corporation into First Quantum Ventures, Inc. On November 10, 2011, DTII acquired DTI in a “reverse merger” as discussed elsewhere in this Annual Report on Form 10-K.
Fiscal Year End
Following the closing of the Share Exchange pursuant to which DTII acquired DTI, DTII changed its fiscal year end to August 31, so as to correspond to the fiscal year end of DTI.
Employees
As of November 30, 2016, other than our officers and directors, we had no full time or part time employees other than our Chief Executive Officer.
ITEM 1A.
ITEM 1A.
RISK FACTORS.
An investment in our common stock involves significant risks. You should carefully consider the following risks and all other information set forth in this Annual Report before deciding to invest in our common stock. Our business, financial condition and results of operations may suffer as a result of these risks.. In that case, the value of our common stock may decline and you could lose all or part of your investment.
Risks Associated with the Company’s Prospective Business and Operations
The Company lacks meaningful operating history and will require substantial capital if it is to be successful. We will require additional funds for our operations.
At August 31, 2016, we had net negative working capital of approximately $115,104. We will require significant cash during fiscal 2016-17, in order to grow our business, including implementing any acquisitions. No assurances can be given that the Company will be able to obtain the necessary funding during this time to make any acquisitions or for any other purpose. The inability to raise additional funds will have a material adverse effect on the Company’s business, plan of operation and prospects. Acquisitions may be made with cash or our securities or a combination of cash and securities. To the extent that we require cash, we may have to borrow the funds or sell equity securities. The issuance of equity, if available, would result in dilution to our stockholders. We have no commitments from any financing source and we may not be able to raise any cash necessary to complete an acquisition. If we fail to make any acquisitions, our future growth may be limited. If we make any acquisitions, they may disrupt or have a negative impact on our business.
The terms on which we may raise additional capital may result in significant dilution and may impair our stock price. Because of our cash position, our stock price and our immediate cash requirements, it is difficult for us to raise capital for any acquisition. We cannot assure you that we will be able to get financing on any terms, and, if we are able to raise funds, it may be necessary for us to sell our securities at a price that is at a significant discount from the market price and on other terms which may be disadvantageous to us. In connection with any such financing, we may be required to provide registration rights to the investors and pay damages to the investor in the event that the registration statement is not filed or declared effective by specified dates. The price and terms of any financing which would be available to us could result in both the issuance of a significant number of shares and significant downward pressure on our stock price.
There is substantial doubt about our ability to continue as a going concern.
Our independent public accounting firm in their report dated December 16, 2016 included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. Our ability to continue as a going concern ultimately is dependent on our ability to generate a profit which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. As a result, our financial statements do not reflect any adjustment which would result from our failure to continue to operate as a going concern. Any such adjustment, if necessary, would materially affect the value of our assets.
The Company’s officers and directors may have conflicts of interest and do not devote their full time to the Company’s operations.
The Company’s officers and directors may have conflicts of interest in that they are and may become affiliated with other companies. In addition, the Company’s officers do not devote their full time to the Company’s operations. Until such time that the Company can afford executive compensation commensurate with that being paid in the marketplace, its officers will not devote their full time and attention to the operations of the Company. No assurances can be given as to when, if ever, the Company will be financially able to engage its officers on a full time basis.
We have not voluntarily implemented various corporate governance measures in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.
Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors' independence, audit committee oversight, and the adoption of a code of ethics. While our board of directors intends to adopt a Code of Ethics, we have not yet done so nor have we adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
Provisions of our Articles of Incorporation and Bylaws may delay or prevent take-over which may not be in the best interest of our stockholders.
Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Nevada Revised Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders. In addition, our articles of incorporation authorize the issuance of up to 50,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors, of which no shares of preferred stock are issued and outstanding as of August 31, 2016. Our board of directors may, without stockholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock. As a result, our board of directors can issue such stock to investors who support our management and give effective control of our business to our management.
We may be exposed to potential risks relating to our internal control over financial reporting.
As directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the SEC has adopted rules requiring public companies to include a report of management in the Company's internal control over financial reporting in its annual reports.
While we expect to expend significant resources in developing the necessary documentation and testing procedures required by SOX 404, there is a risk that we will not comply with all of the requirements imposed thereby. At present, there is no precedent available with which to adequately measure compliance. In the event we identify significant deficiencies or material weaknesses in our internal control over financial reporting that we cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.
Our business relies heavily on outsource software developers, which could harm our business by adversely affecting the availability, delivery, reliability, and development cost of our platform.
We have limited staffing and are relying on our outsource software developer to create our DiMi 4.0 platform. If the outsource software developer delays or curtails progress on our platform, we may not be able to roll out the related platform in desired configurations, or in a timely manner. In addition, we may not be able to replace the functionality provided by the third-party software that we currently offer if that software becomes obsolete, defective, or incompatible with future versions of our software (especially if we use different outsource software developers for different versions of our platform) or if the software is not adequately maintained or updated. Even though other software developers are available, qualification of the alternative developer and establishment of reliable software code could result in delays and a possible loss of sales as well as a significant increase in development costs, which could harm our operating results. In addition, defective or delayed roll out of our platform could harm our reputation and brand recognition.
Risks Related to the Company’s Common Stock
The Company does not expect to pay dividends in the foreseeable future.
The Company has never paid cash dividends on its common stock and has no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business.
“Penny stock” rules may make buying or selling the common stock difficult and severely limit their market and liquidity.
Trading in the Company’s common stock is subject to certain regulations adopted by the SEC commonly known as the “Penny Stock” rules. The Company’s common stock qualifies as penny stock and is covered by Section 15(g) of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), which imposes additional sales practice requirements on broker/dealers who trade in the Company’s common stock in the market. The “Penny Stock” rules govern how broker/dealers can deal with their clients and “penny stock.” For sales of the Company’s common stock, the broker/dealer must make a special suitability determination and receive from clients a written agreement prior to making a trade. The additional burdens imposed upon broker/dealers by the “penny stock” rules may discourage broker/dealers from effecting transactions in the Company’s common stock, which could severely limit our stock’s market price and liquidity. This could prevent investors from reselling the Company’s common stock and may cause the price of our common stock to decline.
Although publicly traded, the Company’s common stock has substantially less liquidity than the average trading market for a stock listed on a national securities exchange, and its market price may fluctuate dramatically in the future.
Although the Company’s common stock is eligible for quotation on the OTC Pink, the trading market in the common stock has substantially less liquidity than shares of companies listed on national securities exchanges. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Due to, among other reasons, limited trading volume, the market price of the Company’s common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company’s performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company’s common stock, and the current market price may not be indicative of future market prices.
ITEM 1B.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2.
ITEM 2.
PROPERTIES.
The Company’s current executive offices are located at 290 Lenox Avenue, New York City, New York, 10027. The property consists of 500 square feet of finished office space. We currently have a five year lease through August 31, 2019. We believe that the current office space is adequate to meet our current needs.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS.
None.
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 PURCHASERS OF EQUITY SECURITIES.
Market Information
Our shares of common stock are quoted on the OTC Pink under the symbol “DIMI”. However, our shares do not trade other than on an extremely limited and sporadic basis. The following table sets forth for the periods indicated the range of high and low bid quotations per share as reported on the OTC Pink since the first period for which figures are available. These quotations represent inter-dealer prices, without retail markups, markdowns or commissions and may not necessarily represent actual transactions
Holders. As of December 14, 2016, there were approximately 339 holders of record of our common stock, which excludes those stockholders holding stock in street name.
Dividend Policy. We have not declared or paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings, if any, to finance our operations.
Equity Compensation Plans. We have not authorized any compensation plans (including individual compensation arrangements) under which our equity securities have been authorized for issuance as of the end of the most recently completed fiscal year ended August 31, 2016. We have not authorized any such plan for the fiscal year ended August 31, 2016.
Recent Sales of Unregistered Securities
None.
ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA.
Not required for smaller reporting companies.
ITEM 7.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended August 31, 2016, found in this Annual Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as “anticipate,” “believe,” “intends,” or similar expressions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of this Annual Report.
Forward-looking Statements
We and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this annual report and other filings with the SEC, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this Annual Report to conform forward-looking statements to actual results, except as may be required under applicable law. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:
● Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
● Our failure to earn revenues or profits;
● Inadequate capital to continue business;
● Volatility or decline of our stock price;
● Potential fluctuation in quarterly results;
● Rapid and significant changes in markets;
● Litigation with or legal claims and allegations by outside parties; and
● Insufficient revenues to cover operating costs.
The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this annual report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED AUGUST 31, 2016 AND 2015
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the year ended August 31, 2016 totaled $34,520 an increase of $3,899 compared to selling, general and administrative expenses of $30,621 for the year ended August 31, 2015. Stock based compensation expense in the amount of $0 and $105,000 during the year ended August 31, 2016 and 2015, respectively. Payroll expense amounted to $101,173 and $93,645 for the year ended August 31, 2016 and 2015, respectively. Consulting expense amounted to $124,584 and $47,280 for the year ended August 31, 2016 and 2015, respectively. Professional fees amount to $104,192 and $116,138 for the year ended August 31, 2016 and 2015 respectively.
Amortization Expense
Amortization expense for the years ended August 31, 2016 and 2015 totaled $131 and $3,798, respectively. Amortization expense is the expensing of intellectual property and the iPhone application.
Interest Expense
Interest expense for the years ended August 31, 2016 and 2015, totaled $365 and $0 respectively. The Company had no notes during 2015.
Impairment of Asset
Impairment of asset for the year ended August 31, 2016 and 2015, totaled $0 and $334,685, respectively. The impairment was due to the Dimi platform and the complications with finding suitable properties for beta testing.
Net Loss
For the reasons stated above, our net loss for the year ended August 31, 2016 totaled $364,965 or $0.13 per share, a decrease of $366,202 or approximately 50.1% compared to a net loss for the year ended August 31, 2015 that was $731,167. The majority of the additional loss is due to the recognition of impairment on the Dimi platform.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 2016, we had cash and cash equivalents of $431. Net cash used in operating activities for the year ended August 31, 2016 was approximately $216,938. Our current liabilities as of August 31, 2016 totaled $115,535 consisted of: accounts payable and accrued liabilities of $84,035 and note payable -related party of $31,500. We have net negative working capital of $115,104 as of August 31, 2016.
The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company has reported a net loss of $364,965 for the year ended August 31, 2016 and had an accumulated deficit of $2,427,589 as of August 31, 2016.
We have not generated positive cash flows from operating activities. The primary source of capital has been from the sale of equity securities. Our primary use of capital has been for professional fees, and general and administrative costs. Our working capital requirements are expected to increase in line with the growth of our business.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 7A.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 8.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Dimi Telematics International, Inc.
We have audited the accompanying consolidated balance sheet of Dimi Telematics International, Inc. and its subsidiary (collectively, the “Company”) as of August 31, 2016, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 statements referred to above present fairly, in all material respects, the consolidated financial position of Dimi Telematics International, Inc. and its subsidiary as of August 31, 2016 and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1, the Company has incurred losses from operations and has a working capital deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this mater are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
December 16, 2016
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Dimi Telematics International, Inc.
We have audited the accompanying consolidated balance sheets of Dimi Telematics International, Inc. (the Company) as of August 31, 2015 and 2014, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two year period ended August 31, 2015 and 2014. Dimi Telematics International, Inc’s management is responsible for these financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the 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. 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 effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dimi Telematics International, Inc. as of August 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the two year period ended August 31, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
RBSM, LLP
December 23, 2015.
Henderson, Nevada
Dimi Telematics International, Inc.
Consolidated Balance Sheets
The accompanying notes are an integral part of these consolidated financial statements.
Dimi Telematics International, Inc.
Consolidated Statements of Operations
The accompanying notes are an integral part of these consolidated financial statements.
Dimi Telematics International, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
The accompanying notes are an integral part of these consolidated financial statements.
Dimi Telematics International, Inc.
Consolidated Statements of Cash Flows
The accompanying notes are an integral part of these consolidated financial statements.
DiMi Telematics International, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in USD)
1. SIGNIFICANT ACCOUNTING POLICIES AND NATURE OF BUSINESS OPERATIONS
Basis of Presentation
The accompanying financial statements present on a consolidated basis the accounts of DiMi Telematics International, Inc. (formerly First Quantum Ventures, Inc.), a Nevada corporation (the “Company”), and its wholly owned subsidiary, DiMi Telematics, Inc. (“DTI”). All significant intercompany accounts and transactions have been eliminated in consolidation.
On October 28, 2011, the Company entered into a Share Exchange Agreement (the “Share Exchange”) with DTI and its stockholders. Pursuant to the agreement, the Company issued 291,500 shares of its common stock in exchange for all outstanding shares and warrants to purchase common shares of DTI. As a result of the Share Exchange Agreement, DTI became a subsidiary of the Company. The Company assumed operation of DTI and entered the Telematics/M2M industry. On November 10, 2011, the closing of the Share Exchange occurred. In connection with the Share Exchange, (a) 50,000 of the Company’s issued and outstanding shares of common stock were surrendered for cancellation and (b) the Company’s officers and directors resigned and the following individuals assumed their duties as officers and directors:
The Company has accounted for the acquisition under the purchase method of accounting for business combinations. Under the purchase method of accounting in a business combination effected through an exchange of equity interest, the entity that issues the equity interest is generally the acquiring entity. In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interest. Accounting for business combinations requires consideration of the facts and circumstances surrounding a business combination that generally involves the relative ownership and control of the entity by each of the parties subsequent to the acquisition. Based on a review of these factors, the Share Exchange was accounted for as a reverse acquisition, i.e., the Company was considered the acquired company and DTI was considered the acquiring company. As a result, the Company’s assets and liabilities were incorporated into DTI’s balance sheet based on the fair value of the net assets acquired. Further, the Company’s operating results will not include the Company’s results prior to the date of closing. Accordingly the accompanying financial statements are the financial statements of DTI. In addition, the Company’s fiscal year end changed to DTI’s fiscal year end of August 31 following the closing.
The Company has retroactively reflected the acquisition of DTI’s common stock in a ratio consistent with the Share Exchange.
On March 15, 2012, First Quantum Ventures, Inc., changed its name to DiMi Telematics International, Inc.
Nature of Business Operations
DTI is a development stage company formed on January 28, 2011 as Medepet Inc., a Nevada corporation. During the first year of operations DTI redefined its business purpose and operation. On June 20, 2011, DTI changed its name from Medepet Inc. to Precision Loc8. On July 28, 2011, DTI changed its name from Precision Loc8 to Precision Telematics Inc. On August 9, 2011, DTI changed its name to DiMi Telematics Inc.
On July 28, 2011, DTI entered into an asset purchase agreement for the purchase of intellectual property.
DTI designs, develops and distributes Machine-to-Machine (M2M) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. Through our proprietary software and hosted service offerings, DTI is endeavoring to capitalize on the pervasiveness and data transport capabilities of wireless networks in order to facilitate communications and process efficiencies between commercial and industrial business owners/managers and their respective networked control systems, sensors and devices.
DTI is focused on the M2M market segments in which we can provide highly differentiated and value-driven solutions capable of unleashing tangible productivity gains, material cost reductions and quantifiable risk mitigation across an enterprise. Aside from the oversight and administration of our corporate, financial and legal affairs by the executive management team, our operating activities are centralized in three core areas:
● Sales and Marketing, which will employ both direct and indirect sales models utilizing an in-house business development team, partners and resellers and self-service through a service on-demand web interface.
● Operations, which will be responsible for managing daily activities related to monitoring and administering our cloud-based server operations; 24/7 client service/help desk; professional services and installation support; and quality assurance and testing of our DiMi software and hosting platform, as well as the implementation and ongoing administration of our hosted clients’ M2M communications platforms.
● Product Development, which will be charged with enhancing our existing M2M software applications and services and introducing new and complementary hosted products and applications on a timely basis.
Going Concern
The accompanying financial statements have been prepared contemplating the realization of assets and the satisfaction of liabilities in the normal course of business. However, the Company has reported a net loss of $364,965 for the year ended August 31, 2016 and had an accumulated deficit of $2,427,589 as of August 31, 2016. The Company had net negative working capital of $115,104 as of August 31, 2016.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The conditions described above raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to obtain additional financing depends on the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.
We will need additional investments in order to continue operations. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
However, the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, we may incur unexpected costs and expenses, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.
The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of the aforementioned uncertainties.
Cash and Cash Equivalents
For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.
Concentrations of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.
The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
iPhone Application
The iPhone application is stated at cost. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years. As of August 31 2015, the iPhone application has been fully amortized.
DiMi Platform
When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 5 years. The impairment was due to the Dimi platform and the complications with finding suitable properties for beta testing. As of August 31, 2015, the company recognized full impairment of the Dimi Platform and expensed $334,685 as a loss from impairment.
Intellectual Property
Our M2M communications solutions rely on and benefit from our portfolio of intellectual property, including pending patents, trademarks, trade secrets and domain names.
Intellectual property is stated at cost. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 15 years.
Revenue Recognition
The Company will recognize revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.
Stock Based Compensation
The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.
Recent Accounting Pronouncements
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern. The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Company’s financial statements.
On June 10, 2014, the Financial Accounting Standards Board (FASB) issued a new accounting statement that reduces some of disclosures and reporting requirements for development stage companies. The change will be in effect for the interim and annual reporting periods beginning after December 15, 2014. As of such date, among other things development stage entities will no longer be required to report inception-to-date information. The Company has elected early adoption of this pronouncement and will no longer being reporting inception-to-date information.
Net Loss per Share
Basic loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. There were no outstanding common stock equivalents as of August 31, 2016 or 2015. Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the “if converted” method.
Management Estimates
The presentation 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 revenues and expenses during the reported period. Actual results could differ from those estimates.
2. INTELLECTUAL PROPERTY
Intellectual property of the following:
DTI executed an Asset Purchase Agreement on August 28, 2011 which included various types of intellectual property. Amortization expense for the years ended August 31, 2016 and 2015 amounted to $131 and $131, respectively.
3. I PHONE APPLICATION
The Company’s purchase of an iPhone application was completed in September 2012. The total cost of the application is $11,000 and will be amortized over a three year period.
Amortization expense for the iPhone application for the year ended August 31, 2016 and 2015 amounted to $0 and $3,667, respectively.
4. DiMi PLATFORM
The company has contracted for the development of software to develop and distributes Machine-to-Machine (M2M) communications solutions used to remotely track, monitor, manage and protect multiple mobile and fixed assets in real-time from virtually any web-enabled desktop computer or mobile device. The Company has recognized a loss on impairment in the amount of $334,685 as of August 31, 2015. The impairment was due to the Dimi platform and the complications with finding suitable properties for beta testing.
5. NOTE PAYABLE - RELATED PARTY
On April 27, 2016, the Company issued our CEO a 7% unsecured promissory note in the amount of $2,500 which matures six months from the date of issuance. On July 5, 2016, the company issued our CEO a second 7% unsecured note in the amount of $3,000 which matures six months from date of issuance.
The changes in notes payable to related party consisted of the following during the year ending August 31, 2016:
On May 17, 2016, the Company issued to Lyle Hauser, the Company’s largest shareholder, a 7% unsecured promissory note in the amount of $10,000 which matures six months from the date of issuance. On August 15, 2016, the Company issued a significant shareholder a second 7% unsecured promissory note in the amount of $26,000 which matures six months from the date of issuance
The changes in notes payable to related party consisted of the following during the year ended August 31, 2016:
6. EQUITY
Common Stock
The Company was formed in the state of Nevada on April 13, 2006. The Company has authorized capital of 800,000,000 shares of common stock with a par value of $0.001, and 50,000,000 shares of preferred stock with a par value of $0.001.
On December 1, 2015 the Company effected a 1 for 3 reverse stock split of the Company’s outstanding stock. All share and per share amounts herein have been retroactively restated to reflect the split.
On, July 8, 2015, the Company authorized to issue 250,000 shares of common stock for consulting fees in the amount of $105,000. These shares were not issued as of August 31, 2015 and the balance is reflected as common stock payable in the consolidated balance sheet.
On, July 8, 2015, the Company authorized to issue 250,000 shares of common stock for stock based compensation in the amount of $105,000. These shares were not issued as of August 31, 2015 and the balance is reflected as common stock payable in the consolidated balance sheet.
On October 30, 2015, the Company issued the 500,000 common shares granted on July 8, 2015 to settle the common stock payable of $210,000.
7. RELATED PARTY TRANSACTIONS
We currently lease approximately 500 square feet of general office space at 290 Lenox Avenue, New York, NY 10027 from our Vice President - Operations.
On April 27, 2016, the Company issued our CEO two 7% unsecured promissory note totaling $5,500 which mature six months from the date of issuance.
The Company issued a significant shareholder two 7% unsecured promissory notes totaling $26,000 which mature six months from the date of issuance.
As of August 31, 2016, the Company had an outstanding payable of $14,609 to the CEO. The payable is unsecured, due on demand and bears no interest.
8. INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
The Company is subject to US taxes. Historically, the Company has had no net taxable income, and therefore has paid no income tax.
As of August 31, 2016 and 2015, the Company had a net operating loss (NOL) carryforward of approximately $1,738,968, and $1,374,003. The NOL carryforward begins to expire in various years through 2030. Because management is unable to determine that it is more likely than not that the Company will realize the tax benefit related to the NOL carryforward, by having future taxable income, a full valuation allowance has been established at August 31, 2016 to reduce the tax benefit asset value to zero.
Components of net deferred tax assets, including a valuation allowance, are as follows at August 31st:
The valuation allowance for deferred tax assets as of August 31, 2016 and 2015 was $608,989 and 480,901, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of August 31, 2015 and 2014, and recorded a full valuation allowance.
9. SUBSEQUENT EVENTS.
On October 27, 2016 the Company issued a significant shareholder a 7% unsecured promissory notes totaling $10,000 which matures six months from the date of issuance.
On November 14, 2016 the Company issued a significant shareholder a 7% unsecured promissory note totaling $80,000 which matures six months from the date of issuance.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A.
CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Management of the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the 1934 Act) pursuant to Rule 13a-15 under the 1934 Act as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based on this evaluation, management concluded that the design and operation of our disclosure controls and procedures are not effective due to the following material weaknesses:
● Since inception our chief executive officer also functions as our chief financial officer. As a result, our officers may not be able to identify errors and irregularities in the financial statements and reports.
● We were unable to maintain full segregation of duties within our financial operations due to our reliance on limited personnel in the finance function. While this control deficiency did not result in any audit adjustments to our financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties.
● Documentation of all proper accounting procedures is not yet complete.
To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, the following:
● Increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) 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
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of August 31, 2016 based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013).
A material weakness is defined within the Public Company Accounting Oversight Board’s Auditing Standard No. 5 as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
In conducting his evaluation, our officer noted the following material weaknesses in our internal controls over financial reporting:
● While certain accounting procedures have been adopted, compliance with such procedures has been inconsistent.
● The Board of Directors has not established an Audit Committee. Accordingly, the entire Board, rather than an independent body, has reviewed our financial statements.
● Segregation procedures could be improved by strengthening cross approval of various functions, including cash disbursements and internal audit procedures where appropriate.
As a result of these deficiencies in our internal controls, our officer concluded that our internal control over financial reporting was not effective.
This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. The Company’s internal control over financial reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.
(c) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter of fiscal year ended August 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
We have appointed the following individuals to serve as our executive officers and directors:
Barry Tenzer, served as President, Chief Executive Officer, Chief Financial Officer, Secretary and Director of DiMi Telematics prior to the Share Exchange, and assumed those duties with the Company following the Share Exchange. Mr. Tenzer founded, managed and served as a board member of numerous private and public companies operating in a broad range of industries, including real estate, property management, construction, legal services, commercial packaging, cemetery, auto sales and chartered aviation services. From 1968 to 1981, he was General Partner of 527 Madison Avenue Company NY, LP, and No. 34th St. Company, L.P., and Limited Partner in approximately 20 real estate investments. From 1976 to 2003, Mr. Tenzer was the CEO of HIG Corporation, which owned and operated six cemeteries in Maryland, Virginia and Florida. From 1997 to 2003, Mr. Tenzer also founded and served as President and CEO of Motorcars Auto Group, Inc., a company engaged in the ownership and operation of exotic, high performance car dealerships and auto accessory businesses. Mr. Tenzer currently serves as General Partner of Northerly Company, a real estate partnership. Mr. Tenzer graduated from Cornell University, where he was awarded his BA degree, in 1953, and from NYU Law School, where he earned his LLB, in 1956. Mr. Tenzer was admitted to the New York Bar in 1957 and practiced law in private practice until 1961.
The Board of Directors has concluded that Mr. Tenzer is qualified to serve as a director of the Company because of his extensive involvement in real estate ventures and managerial experience in operating and advising a wide range of public and private companies.
Roberto Fata served as Executive Vice President - Business Development and Director of DiMi Telematics prior to the Share Exchange, and assumed those duties with the Company following the Share Exchange. Since 1991, Mr. Fata has been employed by the FATA Organization (“FATA”), a New York City-based real estate company that has owned and managed commercial and residential properties in Manhattan, New York for over 70 years. As FATA’s President and Managing Director, he has played a leadership role in the revitalization of Harlem, one of Manhattan’s most famous neighborhoods. He currently serves on the Board of Directors for both the Greater Harlem Board of Realtors and the 125th Street Business Improvement District. In 2006, Mr. Fata founded DiMi PA, Inc. to commercialize DiMiSpeaks, a facility management software and hosting solution that he developed to better manage the many building operating systems that support all of FATA’s real estate properties. In 2010, Mr. Fata sold the assets of DiMi PA to DiMi Telematics, and he now serves as Executive Vice President of Business Development and a Director of the Company.
The Board of Directors has concluded that Mr. Fata is qualified to serve as a director of the Company because his employment of approximately 20 years with the FATA Organization. Mr. Fata’s experience in the real estate business and his role in the development of the Company’s proprietary software makes him a critical resource in our quest to commercialize our DiMi Solution.
Terms of Office
Our directors are appointed for one year terms in accordance with our charter documents and hold office until the earlier of (i) the next annual meeting of our stockholders, (ii) until they are removed from the board or (iii) until they resign.
Committees of our Board of Directors
We have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, or any committees performing similar functions. The functions of those committees are currently undertaken by Board of Directors as a whole. Because we have only two directors, neither of which is independent, we believe that the creation of these committees, at this time, would be cumbersome and constitute more form over substance, particularly under circumstances where a substantial majority of our outstanding shares are controlled by one individual (who has approved the appointment of our directors) and at a time when our resources do not permit us to obtain officers’ and directors’ liability insurance.
Stockholder Nominees for Directors
We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered nor has it adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size, early stage of development and lack of officers’ and directors’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how such candidate might bring a different viewpoint or experience to our Board.
Audit Committee Financial Expert
Barry Tenzer, our President, Chief Executive Officer, Chief Operating Officer and a Director, is an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K.
Code of Ethics
We have not yet adopted a Code of Ethics but expect to consider and approve a Code of Ethics in the near term.
Family Relationships
There are no family relationships among our executive officers and directors.
Involvement in Certain Legal Proceedings
During the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:
● the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
● convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
● subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any Federal or State authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
● found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law;
● the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation; (b) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
● the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and directors, and certain persons who own more than 10% of a registered class of the Company's equity securities (collectively, "Reporting Persons"), to file reports of ownership and changes in ownership ("Section 16 Reports") with the Securities and Exchange Commission (the "SEC"). Reporting Persons are required by the SEC to furnish the Company with copies of all Section 16 Reports they file. Based solely on its review of the copies of such Section 16 Reports received by the Company, or written representations received from certain Reporting Persons, all Section 16(a) filing requirements applicable to the Company's Reporting Persons during and with respect to the fiscal year ended August 31, 2016 have been complied with on a timely basis.
Changes in Nominating Procedures
None.
Board Leadership Structure and Role in Risk Oversight
Mr. Tenzer serves as Chairman and Chief Executive Officer. Due to the small size and early stage of the Company, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions combined.
Our Board of Directors is primarily responsible for overseeing our risk management processes. The Board of Directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding the Company’s assessment of risks. The Board of Directors focuses on the most significant risks facing the Company and the Company’s general risk management strategy, and also ensures that risks undertaken by the Company are consistent with the board’s appetite for risk. While the Board of Directors oversees the Company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing the Company and that our board leadership structure supports this approach.
ITEM 11.
ITEM 11.
EXECUTIVE COMPENSATION.
Summary Compensation Table
The following table summarizes all compensation recorded by using 2016 and 2015 for our then principal executive officer, each other executive officer serving as such whose annual compensation exceeded $100,000, and up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at August 31, 2016. The value attributable to any option awards is computed in accordance with FASB ASC Topic 718.
Outstanding Equity Awards at Fiscal Year-End
None
Compensation of Directors
We have not established standard compensation arrangements for our directors and do not have any agreements or understandings to compensate directors for their services as such.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As o November 30, 2016, and following our acquisition of DTI, we had 2,923,907 shares of common stock issued and outstanding. The following table sets forth information known to us relating to the beneficial ownership of such shares as of such date by:
● each person who is known by us to be the beneficial owner of more than 5% of our outstanding voting stock;
● each director;
● each named executive officer; and
● all named officers and directors as a group.
Unless otherwise indicated, the business address of each person listed is care of DTII at 290 Lenox Avenue, New York, NY 10027. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of November 30, 2016. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
(1) Mr. Hauser’s address is 1000 Quayside Terrace, Suite 1810, Miami, FL 33138.
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
We do not have any independent directors.
We currently lease approximately 500 square feet of general office space at 290 Lenox Avenue, New York, NY 10027 from our Vice President - Operations.
On April 27, 2016, the Company issued our CEO two 7% unsecured promissory note totaling $5,500 which mature six months from the date of issuance.
The Company issued a significant shareholder two 7% unsecured promissory notes totaling $26,000 which mature six months from the date of issuance.
As of August 31, 2016, the Company had an outstanding payable of $14,609 to the CEO. The payable is unsecured, due on demand and bears no interest.
ITEM 14.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
We have no formal audit committee. However, our entire Board of Directors is our de facto audit committee. In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and us that might bear on the auditors' independence as required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees.” The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors' independence. The Board also discussed with management, the internal auditors and the independent auditors the quality and adequacy of its internal controls. The Board reviewed with the independent auditors their management letter on internal controls.
PART IV
ITEM 15.
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(B) Exhibits.
* Filed herewith
(1) Incorporated by reference to Form 10-SB12B filed August 10, 2007.
(2) Incorporated by reference to Form 8-K filed March 15, 2012.
(3) Incorporated by reference to Form 8-K filed March 5, 2014.
(4) Incorporated by reference to Form 8-K filed December 3, 2015.
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.
DIMI TELEMATICS INTERNATIONAL, INC.
December 16, By: /s/ Barry Tenzer
Name: Barry Tenzer
Title: Chief Executive Officer (Principal Executive Officer), Chief Financial Officer
(Principal Accounting and Financial Officer)
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.
By: /s/ Barry Tenzer December 16,
Name: Barry Tenzer
Title: Chief Executive Officer
(Principal Executive Officer), Chief Financial Officer (Principal Accounting and Financial Officer) and Director
By: /s/ Roberto Fata December 16,
Name: Roberto Fata
Title: Executive Vice President - Business Development and Director