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AMERICAN GENE ENGINEER CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) Forward Looking Statements This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States generally accepted accounting principles. In this quarterly report, unless otherwise specified, all references to "common shares" refer to the common shares of our capital stock. As used in this quarterly report, the terms "we", "us", "our", "American Gene Engineer Corp.", "the Company" means American Gene Engineer Corp., unless otherwise indicated. Corporate Overview American Gene Engineer Corp. ("Company") was incorporated in the State of Delaware on November 15, 2010. The Company has been in the developmental stage since inception and has conducted virtually no business operations. The Company has no full-time employees and owns no real estate or personal property. The Company was formed as a vehicle to pursue a business combination and has made no efforts to identify a possible business combination. As a result, the Company has not conducted negotiations or entered into a letter of intent concerning any target business. The business purpose of the Company is to seek the acquisition of, or merger with, an existing company which provides genetic testing and diagnostic services. We have a minimal amount of cash. The Independent Auditor's Report to our financial statements for the fiscal year ended October 31, 2013, included in this prospectus, indicates that there are a number of factors that raise substantial doubt about our ability to continue as a going concern. Such doubts identified in the report include the fact (i) that we have not established any source of revenue to cover our operating costs; (ii) that we will engage in very limited activities without incurring any liabilities that must be satisfied in cash until a source of funding is secured; and (iii) that if we are unable to obtain revenue producing contracts or financing or if the revenue or financing we do obtain is insufficient to cover any operating losses we may incur, we may substantially curtail or terminate our operations. The Company, based on our proposed business activities, is a "blank check" company. The U.S. Securities and Exchange Commission ("SEC") defines those companies as "any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange Act of 1934, as amended ("Exchange Act") and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies". Under Rule 12b-2 promulgated under the Exchange Act, the Company will be deemed to be a "shell company," because it has no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as we are subject to those requirements. 1-------------------------------------------------------------------------------- Table of Contents Results of Operation Three months ended July 31, 2014 as Compared to Three months ended July 31, 2013 We have not generated any revenue since inception and therefore do not have any cost associated with revenue. For the three months ended July 31, 2014, we incurred $11,361 in operating expenses as compared to $0 for the same period in 2013. Our operating expenses for the three months ended July 31, 2014 mainly included fees paid to our third-party professionals, including lawyers, accountants and auditors for the preparation of going public and audit and other miscellaneous fees. For the three months July 31, 2014 and 2013 we had net losses of $11,361 and $0, respectively, due to the payment of expenses as described above. Nine Months Ended July 31, 2014 as Compared to Nine Months Ended July 31, 2013 We have not generated any revenue since inception and therefore do not have any cost associated with revenue. For the nine months ended July 31, 2014, we incurred $126,158 in operating expenses as compared to $1,900 for the same period in 2013. Our operating expenses for the nine months ended July 31, 2014 mainly included fees paid to our third-party professionals, including lawyers, accountants and auditors for the preparation of going public and audit and other miscellaneous fees. Our operating expenses for the nine months ended July 31, 2013 mainly included accounting fees. For the nine months July 31, 2014 and 2013 we had net losses of $126,158 and $1,900, respectively, due to the increase of expenses as described above. Liquidity and Capital Resources As of July 31, 2014, we did not have any sources of income and had cash and cash equivalents of $8,121. There is a substantial doubt regarding the Company's ability to continue as a going concern. Our expenses have been paid for with cash provided by our CEO and majority shareholder, Mr. Ming Lin, as well as proceeds of $100,000 received from issuance of common shares in January 2014. As of the date of this report, we have not yet generated any revenues from our business operations and have no cash. Although we have minimal liabilities, our inability to generate revenue raises a substantial doubt regarding the Company's ability to continue as a going concern. We anticipate that in order to fund our ongoing working capital requirements, we will need to use all of the remaining cash funds as well as seeking other sources of funding. We may need to raise additional capital through loans or additional investments from our initial shareholders, officers, directors, or third parties. None of the initial shareholders, officers or directors is under any obligation to advance funds or invest in, us. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of our business plan, and controlling overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These factors raise substantial doubt about our ability to continue as a going concern. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements, financings or other relationships with entities or other persons, also known as "special purpose entities." Critical Accounting Estimates The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management's initial estimates as reported. A summary of our significant accounting policies are detailed in the notes to the financial statements, which are an integral component of this analysis. 2-------------------------------------------------------------------------------- Table of Contents Significant Accounting Policies The Company has defined a significant accounting policy as one that is both important to the portrayal of the Company's financial condition and results of operations and requires management of the Company to make difficult, subjective or complex judgments. Estimates and assumptions about future events and their effects cannot be predicted with certainty. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments. These estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. We have identified the policies set forth in Note 2 to our financial statements as significant to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Results of Operations and Financial Condition, where such policies affect our reported and expected financial results. In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe that the discussion set forth in Note 2 to our financial statements addresses our most significant accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. |