UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




Form 10-Q




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




For the quarterly period ended: November 30, 2010


or
 o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from ____________________ to _______________________
  Commission File Number: 000-53711
 AMICO GAMES CORP.
 (Exact name of registrant as specified in its charter)
  Nevada

98-0579264(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)
  2nd Floor, Zhonhshan Avenue No. 238, Tianhe District, Guangzhou, Canton Province, China 510630
 (Address of principal executive offices) (Zip Code)
 (86) 20 8556 2666
 (Registrant’s telephone number, including area code)
 
 N/A
 (Former name, former address and former fiscal year, if changed since last report)
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  xYES  o NO
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  oYES  oNO
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer o           Non-accelerated filer o          Accelerated filer o          Smaller reporting company x
 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act  oYES  xNO
 
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 
 Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court  oYES  oNO
 
 APPLICABLE ONLY TO CORPORATE ISSUERS
 Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
 219,000,000 common shares issued and outstanding as of January 13, 2011







Table of Contents




PART I – FINANCIAL INFORMATION
2Item 1.  Financial Statements
2Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
3Item 3.  Quantitative and Qualitative Disclosures About Market Risk
8Item 4.  Controls and Procedures
8PART II – OTHER INFORMATION
9Item 1.  Legal Proceedings
9Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
9Item 3.  Defaults Upon Senior Securities
9Item 4.  [Removed and Reserved]
9Item 5.  Other Information
9Item 6.  Exhibits
10SIGNATURES
11


1




PART I – FINANCIAL INFORMATION




Item 1.  Financial Statements




Our unaudited consolidated interim financial statements for the three month period ended November 30, 2010 form part of this quarterly report.  They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.





2





AMICO GAMES CORP
 Consolidated Balance Sheets




Nov. 30,


Aug. 31,2010


2010(Unaudited)Current AssetsCash and cash equivalents

$
350,934


$
444,706Accounts receivable, net


267,225



271,651Prepaid expenses and other receivables


65,253



71,703Total Current Assets


683,412



788,060Property, plant and equipment, net


120,777



73,181Intangible assets


474



488Leasehold improvements, net


40,473



-Security deposits


28,798



-Total Assets

$
873,934


$
861,729Current LiabilitiesPayables and accrued liabilities

$
35,171


$
45,282Due to related parties (short term)


13,493



13,145Other taxes payable


13,402



11,124Wages payable


71,139



64,329Loan facility


30,197



30,158Total Current Liabilities


163,402



164,038Total Liabilities

$
163,402


$
164,038Stockholders' EquityPreferred stock, 100,000,000 shares authorized, $0.00001 par value; none issued and outstanding

$
-


$
-Common stock, 600,000,000 shares authorized, $0.00001 par value; 219,000,000 shares issued and outstanding


2,190



2,190Additional paid in capital


280,158



280,158Accumulated other comprehensive income


31,111



10,477Retained earnings


397,073



404,866Total Stockholders' Equity


710,532



697,691Total Liabilities and Stockholders' Equity

$
873,934


$
861,729
  The accompanying notes are an integral part of these financial statements.




F-1


AMICO GAMES CORP


Consolidated Statements of Operations


(Unaudited)




For the Three Months EndedNov. 30,2010


2009Revenue

$
463,250


$
467,526Operating Costs and Expenses:Selling expenses


181,311



141,924A&G expenses


284,089



172,963Depreciation of property, plant and equipment


4,994



4,361Total operating costs and expenses


470,394



319,248Income (Loss) From Operations


(7,144
)


148,278Interest income


(317
)


(156
)Interest expenses


966



181Income (Loss) Before Income Taxes


(7,793
)


148,253Income Tax Expense(benefit)Current


-



21,031Deferred tax expense(benefit)


-



-Net Income (Loss)

$
(7,793
)

$
127,222Other Comprehensive IncomeForeign currency translation adjustment


20,634



(234
)Comprehensive Income

$
12,841


$
126,988Earnings Per Share, Basic and Diluted

$
0.00


$
0.00Weighted Average Shares Outstanding


219,000,000



163,500,000





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




F-2




AMICO GAMES CORP


Consolidated Statements of Cash Flows
 (Unaudited)


For the Three Months EndedNov. 30,2010


2009Operating activitiesNet Income (Loss)

$
(7,793
)

$
127,222Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Depreciation expense


4,994



4,361Amortization of intangible assets


27



-Amortization of leasehold improvements


3,668



-Changes in operating assets and liabilities:Accounts receivable, net


4,426



(77,524
)Prepaid expenses and other receivables


6,450



(1,542
)Accounts payable and other accrued liabilities


(1,023
)


111,635Security deposits


(28,798
)


-Net cash provided by (used in) operating activities

$
(18,049
)

$
164,152Investing activitiesProperty, plant and equipment additions


(52,590
)


(4,033
)Leasehold improvement additions


(44,153
)


-Net cash used in investing activities

$
(96,743
)

$
(4,033
)Financing activitiesProceeds from related parties


-



7Net cash provided by financing activities

$
-


$
7Effect of exchange rate changes on cash and cash equivalents


21,020



(234
)Increase (decrease) in cash and cash equivalents


(93,772
)


159,892Cash and cash equivalents, beginning of period


444,706



191,470Cash and cash equivalents, end of period

$
350,934


$
351,362Supplemental DisclosuresInterest paid

$
966


$
236Income taxes paid

$
-


$
11,433




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




F-3




AMICO GAMES CORP


Consolidated Statements of Stockholders' Equity
 For the Three Months Ended November 30, 2010 (Unaudited) and the Year Ended August 31, 2010


Common Stock


Additional


Accumulated OtherShares


Par ($0.00001)


Paid-In

Capital


Comprehensive

Income


Retained

Earnings


TotalBalance as of August 31, 2009


163,500,000


$
1,635


$
106,713


$
12,344


$
80,516


$
201,208Effect of reverse merger


54,600,000



546



(546
)










-Common shares issued for services


900,000



9



173,991











174,000Net income for the year ending


















324,350



324,350Foreign currency translation adjustment














(1,867
)






(1,867
)Balance as of August 31, 2010


219,000,000


$
2,190


$
280,158


$
10,477


$
404,866


$
697,691Net loss for the three months ending


















(7,793
)


(7,793
)Foreign currency translation adjustment














20,634







20,634Balance as of November 30, 2010 (Unaudited)


219,000,000


$
2,190


$
280,158


$
31,111


$
397,073


$
710,532


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





F-4





AMICO GAMES CORP.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




November 30, 2010




NOTE 1 – ORGANIZATION, NATURE OF BUSINESS, and BASIS OF PRESENTATION




Organization and Nature of Business




The Company was incorporated under the name of Destiny Minerals Inc. on February 12, 2008 under the laws of the State of Nevada.  On September 23, 2009, the Company filed an amendment to its articles of incorporation to change the name to Amico Games Corp. (“Amico Games” or “the Company”).




On December 31, 2009, the Company closed a reverse merger with Vodafun Limited (“Vodafun”). Vodafun has no other material operations except a series of contractual arrangements with Galaxy Software (Guangzhou) Limited (“Galaxy”), a private-owned company incorporated under the laws of the People’s Republic of China on November 15, 2001 with a registered capital of RMB 3,000,000 that was fully paid up.




On December 31, 2009, the Company closed the transactions contemplated by the Share Exchange Agreement and acquired Vodafun Limited (“Vodafun”), a company incorporated under the laws of British Virgin Islands on January 8, 2009, as its wholly owned subsidiary.  Vodafun has entered into a series of contractual obligations with Galaxy Software (Guangzhou) Limited (“Galaxy”), a company incorporated under the laws of the People’s Republic of China (“China”) that is engaged in the business of developing and operating cellphone multiplayer games for the Chinese market, as well as the holders of 100% of the voting shares of Galaxy.




The Company’s relationship with Galaxy and its shareholders is governed by a series of contractual arrangements among Vodafun, Galaxy and the 100% holders of the share capital of Galaxy (the “Galaxy Shareholders”) entered on April 15, 2009.  The contractual arrangements include Consulting Services Agreement, Business Operating Agreement, Equity Pledge Agreement, Exclusive Option Agreement, and Voting Right Proxy Agreement. Under the laws of China, the contractual arrangements constitute valid and binding obligations of the parties of such agreements.  Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of China.




Galaxy is an information technology company primarily specialized in developing and operating cell phone multiplayer games in mainland China. Galaxy is a leading developer of cell phone games that are networked to serve a population of multiplayer users and delivered across JAVATM and WAP platforms over 3G and 2.5G mobile telecommunication network in China.  Currently, Galaxy mainly distributes its mobile games on the QQ Game Platform in China and is developing its own game platform with as well as a separate platform with 3G compatibility.




Basis of Presentation




The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).   The Company’s consolidated financial statements include the financial statements of Vodafun Limited and Galaxy Software (Guangzhou) Limited.  All significant intercompany accounts and transactions have been eliminated in consolidation.




These interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been included. These consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended August 31, 2010 and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on November 29, 2010. Interim results are not necessarily indicative of the results for the full year.




F-5





Galaxy is considered a variable interest entity (“VIE”), and Vodafun, the Company’s wholly owned subsidiary, is the primary beneficiary. The Company’s relationships with Galaxy and its shareholders are governed by a series of contractual arrangements between the Company and Galaxy, which is an operating company in the PRC. The contractual arrangements constitute valid and binding obligations of the parties of such agreements. Each of the contractual arrangements and the rights and obligations of the parties thereto are enforceable and valid in accordance with the laws of the PRC.  On April 15, 2009, Vodafun entered into the following contractual arrangements with Galaxy:




(1)
Consulting Services Agreement. Pursuant to the consulting services agreement between Vodafun and Galaxy, dated April 15, 2009, Vodafun has the exclusive right to provide Galaxy with consulting services and daily operations, including general business operations in relation to the cell phone game development, human resources, research and development, and business growth, and support the daily operation costs and daily expenses. Galaxy pays an annual consulting service fee to Vodafun that is equal to 100% of Galaxy’s net revenue for such year, based on the annual financial statements. This agreement shall remain in force unless otherwise terminated. Vodafun is entitled to assign to a wholly-owned subsidiary, if one were set up in the future, all the rights to the Company as stipulated in this agreement.  All intercompany transactions, including this service fee, have been eliminated in the consolidated financial statements presented.




(2)
Business Operating Agreement. Pursuant to the business operating agreement among Vodafun and Galaxy, dated April 15, 2009, Vodafun provides Galaxy guidance and instruction on Galaxy’s daily operations, financial management and employment issues. Vodafun has the right to appoint or remove Galaxy’s directors and executive officers. In addition, Vodafun agrees to guarantee Galaxy’s performance under any agreements or arrangements relating to its business arrangement with any third party. Upon the request of Galaxy, Vodafun agrees to provide loans to support its operation’s capital requirements and to provide guarantee if the Company needs to apply for loans from a third party. In return, Galaxy agrees to pledge its accounts receivable and all of its assets to Vodafun. The term of this agreement is ten years; and may be extended or terminated only by 30-day prior written notice served by Vodafun (or its designated party). Vodafun is entitled to assign to a wholly-owned subsidiary, if one were set up in the future, all the rights to the Company as stipulated in this agreement.




(3)
Equity Pledge Agreement. Under the equity pledge agreement between Vodafun and Galaxy, dated April 15, 2009, Galaxy’s 100% shareholders pledged all of their equity interests in Galaxy to Vodafun to guarantee its performance of its obligations under the Business Operating Agreement. If Galaxy or its shareholders breaches their respective contractual obligations, Vodafun, as Pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The 100% shareholders of Galaxy also agreed that upon occurrence of any event of default, Vodafun shall be granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the 100% shareholders of Galaxy to carry out the security provisions of the equity pledge agreement and take any action and execute any instrument that Vodafun may deem necessary or advisable to accomplish the purposes of the equity pledge agreement. The 100% shareholders of Galaxy agreed not to dispose of the pledged equity interests or take any actions that would prejudice Vodafun’s interest. This equity pledge agreement shall expire two years after Galaxy’s obligations under the Consulting Services Agreement have been fulfilled. Vodafun is entitled to assign to a wholly-owned subsidiary, if one were set up in the future, all the rights to the Company as stipulated in this agreement.




(4)
Exclusive Option Agreement. Under the exclusive option agreement between Vodafun and Galaxy, dated on April 15, 2009, all the shareholders of Galaxy irrevocably granted to Vodafun (or its designated person) an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Galaxy for the minimum amount of consideration permitted by applicable PRC law. Vodafun (or its designated person) has sole discretion to decide when to exercise the option, whether in part or in full. The term of this agreement is ten (10) years from April 15, 2009 and may be extended prior to its expiration by written agreement of the parties.




(5)
Voting Right Proxy Agreement. Under the voting right proxy agreement between Vodafun and Galaxy, dated on April 15, 2009, all shareholders of Galaxy agreed to irrevocably grant Vodafun with the right to exercise the 100% shareholders of Galaxy’s voting rights and their other rights, including the attendance at and the voting of the all the shares held by 100% shareholders of Galaxy at shareholders’ meetings (or by written consent in lieu of such meetings) in accordance with applicable laws and its Articles of Association, including but not limited to the rights to sell or transfer all or any of his equity interests of the Galaxy, and appoint and vote for the directors and Chairman as the authorized representative of the shareholders of the Galaxy. The proxy agreement may be terminated by joint consent of the parties or upon 30-day written notice from Vodafun.




The accounts of Galaxy are consolidated in the accompanying financial statements pursuant to generally accepted accounting standards pertaining to variable interest entities (“VIE”).  As a VIE, Galaxy’s sales are included in the Company’s total sales, its income from operations is consolidated with the Company’s, and the Company’s net income includes all of Galaxy’s net income. The Company does not have any non-controlling interest and accordingly, did not subtract any net income in calculating the net income attributable to the Company. Because of the contractual arrangements, the Company had a pecuniary interest in Galaxy that requires consolidation of the Company’s and Galaxy’s financial statements.




F-6





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Use of Estimates




The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as well as the reported amounts of revenues and expenses. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.




Reclassifications




Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.




Cash and Cash Equivalents




Cash and cash equivalents include cash on hand, cash on deposit with various financial institutions in the PRC, and all highly-liquid investments with original maturities of three months or less at the time of purchase.  The Company did not have any cash equivalents as of November 30 and August 31, 2010.




Accounts Receivable




Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management judgment and estimates are made in connection with establishing the allowance for doubtful accounts. Specifically, the Company analyzes the aging of accounts receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms. Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness or weakening in economic trends could have a significant impact on the collectability of receivables and the Company’s operating results.  The company’s allowance for doubtful accounts is $0 at November 30 and August 31, 2010.




Property and Equipment




Property and equipment are recorded at cost and depreciated using the straight-line method, with an estimated 0% salvage value of original cost, over the estimated useful lives of the assets as follows:




Office equipment
5 yearsElectronic equipment
5 yearsFurniture
5 yearsAutomobiles
5 years




Expenditures for repairs and maintenance, which do not improve or extend the expected useful lives of the assets, are expensed as incurred while major replacements and improvements are capitalized.




When property or equipment is retired or disposed of, the cost and accumulated depreciation are removed from the accounts, with any resulting gains or losses being included in net income or loss in the year of disposition.




F-7





Intangible Assets and Long-Lived Assets




The Company has one category of intangible assets, application fee for the copyright of cell phone games, which is amortized using the straight-line method over approximately 10 years, which is the estimated economic life of the asset. The company evaluates long-lived assets for impairment annually.




Leasehold Improvements




Leasehold improvements are recorded at cost and amortized over the length of the lease which is a three year period beginning in September 2010.




Revenue Recognition




The Company generally recognizes revenue when its products are sold and splits the revenue earned with its partners that provide the platform for its software applications, the largest of which is Shenzhen Tencent Computer System Co., Ltd (“Tencent”). As of November 30, 2010, there were five cell phone games of the Company in operation, which are Miracle Journey to the West, Journey to the West Online, Fantasy Wulin, Miracle Jiutian, and Journey to the West: déjà vu. These games are downloadable to the mobile hand set of the end users for free. Revenue is recognized when the end users purchase virtual in-game goods to enhance the competence of their game characters or send text messages to other game players.    At the time of purchase of these virtual goods or the use of text messages,  the following criteria of SAB 104 are met: 1) an arrangement exists, 2) the sales prices is fixed and determinable, 3) goods and services have been delivered, and 4) collectability is reasonably assured.  At this point, the revenue earnings process is complete and revenue is recognized.  There are no dual revenue components and their revenue process is complete and therefore no revenue deferral is necessary.




Comprehensive Income




The Company has adopted the standard issued by the FASB, “Reporting Comprehensive Income,” codified with ASC 220, which establishes standards for reporting and displaying comprehensive income, its components, and accumulated balances in a full-set of general-purpose financial statements. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.




Foreign Currency Translation




The functional currency of the Company is the Renminbi (“RMB”), the PRC’s currency. The Company maintains its financial statements using the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.




For financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the Company’s reporting currency, United States Dollars. Balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholder’s equity.




The exchange rates for the balance sheets in effect at November 30 and August 31, 2010 were RMB 1 for $0.149925 and $0.146051, respectively. The average rates used to convert income and expense for the three months ended November 30, 2010 and 2009 were RMB 1 for $0.149477 and $0.146465, respectively.





Stock Options and Similar Equity Instruments




The Company is required to recognize expense of options or similar equity instruments issued to employees using the fair-value-based method of accounting for stock-based payments in compliance with the standard issued by the FASB "Share-Based Payment," codified with ASC 220. The standard covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.  Application of this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award. The Company does not have any instruments subject to compliance with this standard.




F-8





Income Taxes




The Company accounts for income taxes in accordance with the standard issued by the FASB, “Accounting for Income Taxes,” codified with ASC 740, and related FASB interpretation. In accordance with this standard, deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities and net operating loss and credit carry forwards using enacted tax rates in effect for the year in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized.




Earnings Per Share




The Company has adopted the provisions of standard issued by the FASB, “Earnings Per Share,” codified with ASC 260, which provides for the calculation of basic and diluted earnings or loss per share. Basic loss per share includes no dilution and is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings or losses of the entity.  The Company does not have any potentially issuable shares.  For the three months ended November 30, 2010 and 2009, basic and diluted earnings (loss) per share are $0.00 and $0.00, respectively.




Fair Value of Financial Instruments




The Company adopted the standard issued by the FASB, “Fair Value Measurements,” codified with ASC 820, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:




Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.




Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.




Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.




The carrying amounts reported in the balance sheets for cash, accounts receivable, loans payable, and accounts payable and accrued expenses, approximate their fair market value based on the short-term maturity of these instruments.




The standard issued by the FASB, “The Fair Value Option for Financial Assets and Financial Liabilities,” codified with ASC 825, concerning the fair value option for financial assets and liabilities, became effective for the Company on January 1, 2008. The standard establishes a fair value option that permits entities to choose to measure eligible financial instruments and certain other items at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date. For the periods ended November 30 and August 31, 2010, there were no applicable items on which the fair value option was elected.




Concentrations of Credit Risk




The Company's operations are carried out in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.




Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the People’s Republic of China of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company's sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.  Approximately all of the accounts receivable at November 30 and August 31, 2010 consisted of amounts due from one customer-Shenzhen Tencent Computer System Co., Ltd.  These amounts were $267,225 and $271, 651, respectively.




F-9





Recent Accounting Pronouncements




In January 2010, the FASB issued ASU No. 2010-6, “Improving Disclosures About Fair Value Measurements”, that amends existing disclosure requirements under ASC 820 by adding required disclosures about items transferring into and out of Levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchases, sales, issuances, and settlements relative to Level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. For the Company, this ASU is effective beginning September 1, 2010, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective beginning September 1, 2011. Since this standard impacts disclosure requirements only, its adoption will not have a material impact on the Company’s consolidated results of operations or financial condition.




In April 2010, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-13, Compensation – Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010 and is not expected to have a significant impact on the Company’s financial statements.




NOTE 3 – PREPAID EXPENSES AND OTHER RECEIVABLES




Prepaid expenses and other receivables totaled $65,253 and $71,703 as of November 30 and August 31, 2010, respectively, as follows:




Nov. 30


Aug. 312010


2010Prepaid Expenses

$
43,005



49,536Home Loans to Employees


13,499



13,670Other Receivables


8,749



8,497Total Prepaids and Other Receivables

$
65,253



71,703





The prepaid expenses were prepayments for networking and consulting services provided the following fiscal year.




The loans made to employees were done as additional incentive for performance.  The employee was allowed to use the loan for a down payment on a home.  The loans are to be repaid in one year from the date of issuance and non-interest bearing.




F-10





NOTE 4 – PROPERTY, PLANT AND EQUIPMENT




Property, plant and equipment consist of the following:




Nov. 30


Aug. 312010


2010Office equipment - Cost

$
95,256


$
54,105Office equipment - Accumulated Depr


(46,120
)


(44,358
)Office equipment - Net


49,136



9,747Electronic equipment - Cost


103,467



90,127Electronic equipment - Accumulated Depr


(33,422
)


(28,541
)Electronic equipment - Net


70,045



61,586Automobiles - Cost


38,629



37,631Automobiles - Accumulated Depr


(38,629
)


(37,631
)Automobiles - Net


0



0Furniture equipment - Cost


6,012



5,857Furniture equipment - Accumulated Depr


(4,416
)


(4,009
)Furniture equipment - Net


1,596



1,848Total Fixed Assets - Net

$
120,777


$
73,181


F-11




NOTE 5 – LEASEHOLD IMPROVEMENTS




Leasehold Improvements include the following:




Nov. 30


Aug. 312010


2010Cost

$
44,153



-Accumulated Amortization


(3,680
)


-Leasehold Improvement, Net

$
40,473



-
 The amortization expense for the three months ended November 30, 2010 and 2009 were $3,668 and $0, respectively.




NOTE 6– PAYABLES AND ACCRUED LIABILITIES




Payables and accrued liabilities totaled $35,171 and $45,282 as of November 30 and August 31, 2010, respectively.  These accounts consist primarily of payables for auditing fee and consulting expenses incurred by the Company.




NOTE 7 – DUE TO RELATED PARTIES




Due to related parties consists of the following:




Nov. 30


Aug. 312010


2010Ling Liu (a)

$
13,493


$
13,145




(a)  Company’s shareholder.




The amount due to related parties represents loans payable that are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. The loans from related parties are to meet the Company’s operational needs.  The Company has not recorded any imputed interest on the balances, as any amounts would be immaterial to the consolidated financial statements as of November 30 and August 31, 2010.




F-12





NOTE 8 – LOAN FACILITY




On October 7, 2009, the Company entered into an agreement whereby it has access to a $150,000 loan facility.  Under the terms of the loan facility, any amounts borrowed would be due within 6 months of the original date of the agreement.  The due date is April 7, 2010.  The loan facility is non-interest bearing, except in the event of default, in which an interest rate of 9% per annum will be charged until the loan is repaid.  The loan is currently past due, and the Company imputed $688 interest for the three months ended November 30, 2010.  The balance due under the loan facility as of November 30 and August 31, 2010 is $30,197 and $30,158, respectively.




NOTE 9 – LEGAL PROCEEDINGS




There are no material legal proceedings pending against the Company.




NOTE 10 – CUSTOMER CONCENTRATIONS




The Company’s accounts receivable by customer are as follows:




Nov. 30


Aug. 31Customer

2010


2010Shenzhen Tencent Computer System Co., Ltd


100%



100%




The Company’s revenue by customer is as follows:




For Three Months EndedNov. 30


Aug. 31Customer

2010


2010Shenzhen Tencent Computer System Co., Ltd


100%



100%




F-13




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




Forward Looking Statements




This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.




While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.




In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references "common shares" refer to the common shares in our capital stock.




As used in this quarterly report, the terms "we", "us", "our company", mean Amico Games Corp. a Nevada corporation and our wholly owned subsidiary Vodafun Limited, a British Virgin Islands corporation, unless otherwise indicated.




Overview




We were incorporated under the name Destiny Minerals Inc. on February 12, 2008 under the laws of the State of Nevada.  On September 23, 2009 we filed an amendment to our articles of incorporation to change our name to Amico Games Corp., and on November 27, 2009 we entered into a share exchange agreement with Vodafun Limited, now our wholly owned subsidiary.  The closing of the transactions contemplated by the share exchange agreement occurred on December 31, 2009, at which time we adopted the business of Vodafun.  We are now engaged in the development and distribution of mobile phone games for the Chinese market.




The following are the names and details of the mobile phone games developed by us and which are currently available on the mobile internet of China through various mobile service providers:





Miracle Journey to the West
Miracle Jiutian
Fantasy Wulin
Journey to the West

OL
Journey to the West: déjà vuDevelopment Platform
WAP
WAP
WAP
Java TM
Java TMMobile Network
2.5G and 3G
2.5G and 3G
2.5G and 3G
2.5G and 3G
2.5G and 3GFinal Test Date
May 2006
September 2007
October 2008
May 2009
September 2010




We anticipate developing, or licensing, further games and technologies for distribution in our market over the next 12 months.  Our current areas of focus are:




1.
Develop software to allow users to generate maps and game play scenarios for Journey to the West OL.




2.
Develop software that would allow users to operate our games on a larger number of platforms such as the iPhone and personal computers.




3.
Develop WAP 2.0 support for our WAP games to take advantage of the benefits offered by this newer standard.




3




4.
Develop additional JavaTM games as the Chinese telecommunication network moves towards 3G compatibility.  We hope our aggressive strategy in this area will establish us as a leader in this newly developing market.




5.
Create in-game ‘goods’ which may be purchased by the players to increase their game experience or enhance their status in the game.  We anticipate this to provide us with additional revenue.




6.
Develop our own online mobile game platform and become not just a content provider, but a service provider by allowing players to access our games directly from our own websites.




7.
Investigate the possibility of licensing foreign developed games for use on the Chinese network in order to rapidly increase our game offerings and strengthen our position in the market.




8.
Develop games for Nokia's Symbian and Google's Android mobile operating systems.




Our principal offices are located at 2nd Floor, Zhonhshan Avenue No. 238, Tianhe District, Guangzhou, Canton Province, China 510630.  Our telephone number is (8620) 85562666.




Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.




Results of Operations




Our results of operations are summarized below:




Results of Operations for the three months ended November 30, 2010 and 2009





Three Months Ended November 30, 2010

($)


Three Months Ended November 30, 2009

($)Revenue


463,250



467,526Expenses


470,394



319,248Income (Loss) from Operations


(7,144
)


148,278




During the three months ended November 30, 2010, we earned revenue of $463,250 compared to $467,526 during the same period in 2009. The revenues were generated through sales of our mobile phone games; a decrease of less than 1%, which is primarily attributed to a decrease in sales. For the three months ended November 30, 2010 we incurred loss from operations of $7,144. During the same period in 2009 we realized income from operations of $148,278. The primary reason for the loss during the period ended November 30, 2010 was due to the increase in operating expenses.




4





Expenses




Our operating expenses for the three month periods ended November 30, 2010 and 2009 are outlined in the table below:





For the Three Months Ended

November 30,2010


2009


Difference($)


($)


($)Selling expenses


181,311



141,924



39,387Administrative and general expenses


284,089



172,963



111,126Depreciation of property, plant and equipment


4,994



4,361



633Total Expenses


470,394



319,248



151,146




Our expenses during the three month period ended November 30, 2010 consisted of $181,311 selling expenses, $284,089 in general and administrative expenses and $4,994 in depreciation.  Comparatively, our expenses during the three month period ended November 30, 2009 consisted of $141,924 selling expenses, $172,963 in general and administrative expenses and $4,361 in depreciation. The increase in expenses was primarily due to the increase in payroll and office expenses.




Our general and administrative expenses consist of professional fees, management fees, transfer agent fees, consulting fees, investor relations expenses and general office expenses, legal, accounting and auditing fees, and our general office expenses include bank charges, office maintenance, communication expenses, courier, postage, office supplies and rent.




Liquidity and Capital Resources




As of November 30, 2010 we had cash and cash equivalents of $350,934 and a working capital surplus of $520,010.




For the three months ended November 30, 2010, we used net cash of $18,049 in operating activities, compared to net cash provided by operating activities of $164,152 during the same period in 2009. The decrease of cash provided by operating activities for the three months ended November 30, 2010 was primarily due to our net loss and increase in security deposits.




During the three months ended November 30, 2010, we spent $96,743 on investing activities compared to $4,033 spent during the same period in 2009.  These amounts were spent on purchases of equipment and leasehold improved additions.




During the three months ended November 30, 2010, we did used net cash of $Nil on financing activities, compared to $7 used during the same period in fiscal 2009.




Our cash level decreased by $93,772 during the three months ended November 30, 2010.




We anticipate that we will meet our ongoing cash requirements by retaining income as well as through equity or debt financing.  We plan to cooperate with various individuals and institutions to acquire the financing required to produce and distribute our products and anticipate this will continue until we accrue sufficient capital reserves to finance all of our productions independently.




5





We estimate that our expenses over the next 12 months will be approximately $2,150,000 as described in the table below.  These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.





Description
Estimated Completion Date
Estimated Expenses

($)Legal and accounting fees
12 months
150,000Selling expenses
12 months
500,000Investor relations and capital raising
12 months
100,000Salaries and consulting fees
12 months
200,000Fixed asset purchases
12 months
300,000General and administrative expenses
12 months
900,000Total

2,150,000




We intend to meet our cash requirements for the next 12 months through a combination of retained earnings, debt financing and equity financing by way of private placements.  We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any private placement financings.  If we are not able to successfully complete any private placement financings, we plan to cooperate with film and television producers or obtain shareholder loans to meet our cash requirements. However, there is no assurance that any such financing will be available or if available, on terms that will be acceptable to us.




Off-Balance Sheet Arrangements




We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.




Inflation




The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.




Audit Committee




The functions of the audit committee are currently carried out by our Board of Directors, who has determined that we do not have an audit committee financial expert on our Board of Directors to carry out the duties of the audit committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert on the audit committee.




6





Critical Accounting Policies




Use of Estimates




The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as well as the reported amounts of revenues and expenses. Actual results could differ from these estimates.




Revenue Recognition




Our company generally recognizes revenue when its products are sold and splits the revenue earned with its partners that provide the platform for its software applications, the largest of which is Shenzhen Tencent Computer System Co., Ltd (“Tencent”). As of November 30, 2010, there were five cell phone games of our company in operation, which are Miracle Journey to the West, Journey to the West Online, Fantasy Wulin, Miracle Jiutian, and Journey to the West: déjà vu. These games are downloadable to the mobile hand set of the end users for free. Revenue is recognized when the end users purchase virtual in-game goods to enhance the competence of their game characters or send text messages to other game players.    At the time of purchase of these virtual goods or the use of text messages,  the following criteria of SAB 104 are met: 1) an arrangement exists, 2) the sales prices is fixed and determinable, 3) goods and services have been delivered, and 4) collectability is reasonably assured.  At this point, the revenue earnings process is complete and revenue is recognized.  There are no dual revenue components and their revenue process is complete and therefore no revenue deferral is necessary.




Foreign Currency Translation




The functional currency of our company is the Renminbi (“RMB”), the PRC’s currency. We maintain our financial statements using the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.




For financial reporting purposes, the financial statements of our company, which are prepared using the RMB, are translated into our company’s reporting currency, United States Dollars. Balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in stockholder’s equity.




The exchange rates for the balance sheets in effect at November 30 and August 31, 2010 were RMB 1 for $0.149925 and $0.146051, respectively. The average rates used to convert income and expense for the three months ended November 30, 2010 and 2009 were RMB 1 for $0.149477 and $0.146465, respectively.




Earnings Per Share




Our company has adopted the provisions of standard issued by the FASB, “Earnings Per Share,” codified with ASC 260, which provides for the calculation of basic and diluted earnings or loss per share. Basic loss per share includes no dilution and is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of securities that could share in the earnings or losses of the entity.  Our company does not have any potentially issuable shares.  For the three months ended November 30, 2010 and 2009, basic and diluted earnings (loss) per share are $0.00 and $0.00, respectively.




7


Item 3.  Quantitative and Qualitative Disclosures About Market Risk




As a "smaller reporting company", we are not required to provide the information required by this Item.




Item 4.  Controls and Procedures




Disclosure Controls




We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer (also our principal accounting officer), of the effectiveness of our disclosure controls and procedures.  Based upon that evaluation, our principal executive officer and principal financial officer (also our principal accounting officer) concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective at ensuring that information required to be disclosed in reports filed under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer (also our principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.  This determination was a result of our external auditor needing to post adjustments to our financial statements.




Our management, including our principal executive officer and principal financial officer (also our principal accounting officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.  We performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this quarterly report have been prepared in accordance with generally accepted accounting principles.  Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.




Changes in Internal Control




There were no changes in our internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




8


PART II – OTHER INFORMATION




Item 1.  Legal Proceedings




We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.




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




None.




Item 3.  Defaults Upon Senior Securities




None.




Item 4.  [Removed and Reserved]




Item 5.  Other Information




None.




9




Item 6.  Exhibits




Exhibit Number
Description(2)
Plan of acquisition, reorganization, arrangement, liquidation or succession2.1
Share Exchange Agreement with Tian Yuan and Vodafun Limited, dated November 27, 2009 (1)(3)
(i) Articles of Incorporation; and (ii) Bylaws3.1
Articles of Incorporation of Amico Games Corp. (formerly Destiny Mining Inc.)(2)3.2
Articles of Merger filed with the Nevada Secretary of State on September 23, 2009(3)3.3
Certificate of Change filed with the Nevada Secretary of State on September 22, 2009(3)3.4
Bylaws of Amico Games Corp. (formerly Destiny Mining Inc.)(2)(10)
Material Contracts10.1
Consulting Services Agreement between Vodafun Limited and Galaxy Software (Guangzhou) Limited dated April 15, 2009.(4)10.2
Business Operating Agreement between Vodafun Limited, Galaxy Software (Guangzhou) Limited and the Shareholders of 100% of Galaxy Software (Guangzhou) Limited’s stock dated April 15, 2009.(4)10.3
Equity Pledge Agreement between Vodafun Limited, Galaxy Software (Guangzhou) Limited and the Shareholders of 100% of Galaxy Software (Guangzhou) Limited’s stock dated April 15, 2009.(4)10.4
Exclusive Option Agreement between Vodafun Limited, Galaxy Software (Guangzhou) Limited and the Shareholders of 100% of Galaxy Software (Guangzhou) Limited’s stock dated April 15, 2009.(4)10.5
Voting Right Proxy Agreement between Vodafun Limited, Galaxy Software (Guangzhou) Limited and the Shareholders of 100% of Galaxy Software (Guangzhou) Limited’s stock dated April 15, 2009.(4)10.6
Share Cancellation and Debt Assumption Agreement with Emad Petro dated December 31, 2009.(4)(14)
Code of Ethics14.1
Code of Ethics(5)21
List of Subsidiaries21.1
Vodafun Limited, a British Virgin Islands corporation(31)
Rule 12a-14(a)/15d-14(a) Certification31.1*
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2*
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(32)
Section 1350 Certification32.1*
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2*
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





*filed herewith




(1)
Included as an exhibit to our Current Report on Form 8-K filed on November 30, 2009.




(2)
Included as an exhibit to our Registration Statement on Form S-1 filed on June 16, 2008.




(3)
Included as an exhibit to our Current Report on Form 8-K filed on September 30, 2009.




(4)
Included as an exhibit to our Current Report on Form 8-K filed on January 1, 2010.




(5)
Included as an exhibit to our Annual Report on Form 10-K filed on June 26, 2009.




10




SIGNATURES





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





AMICO GAMES CORP.(Registrant)Date: January13, 2011
/s/ Peter LiuPeter LiuPresident and Chief Executive Officer(Principal Executive Officer)Date: January 13, 2011
/s/ Wing Kuen HaWing Kuen HaChief Financial Officer, Secretary, Treasurer and Director(Principal Financial Officer and Principal Accounting Officer)


11