ITEM
1. FINANCIAL STATEMENTS
ECOMAX, INC.
BALANCE SHEETS
Balance Sheets as of March 31, 2023 and June 30, 2022
ECOMAX,
INC.
STATEMENTS
OF OPERATIONS
ECOMAX, INC.
STATEMENTS OF CASH FLOWS
ECOMAX, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
Ecomax,
Inc.
Notes
to Financial Statements
March
31, 2023
(Unaudited)
Note
1. Organization and Nature of Business
Ecomax,
Inc., formerly Ecomat, Inc. (the “Company”), was incorporated on December 14, 1995 pursuant to the laws of the State of Delaware.
On February 9, 2007, the Company completed its change in domicile to Nevada. The Company used to operate a wet-cleaning process which
was an early alternative to conventional dry-cleaning methods. Currently, the Company is actively engaging in the
distribution of personal healthcare products and nutrition supplements.
On
April 13, 2021 the Board of Directors (the “Board”) of the Company’s Board and a majority of its shareholders approved the following:
| ● | A
reverse stock split of common stock of one share for every ten (1-for-10) shares outstanding; |
| ● | A
change in name from Ecomat, Inc. to Ecomax, Inc.; and |
| ● | An
increase in the authorized number of shares of capital stock from 75,000,000
shares of capital stock, par value $0.0001, consisting of 74,000,000 shares of common stock, par value $0.0001 per share, and
1,000,000 shares of preferred stock, par value $0.0001 per share to 500,000,000
shares of capital stock, par value $0.0001, consisting of 450,000,000
shares of common stock, par value $0.0001 per share, and 50,000,000
shares of preferred stock, par value $0.0001 per share. |
All
share and per share information, including earnings per share, in this Form 10-Q have been retroactively adjusted to reflect this
reverse stock split and certain items in prior period financial statements have been revised to conform to the current presentation.
Note
2. Summary of Significant Accounting Policies
Basis
of Presentation:
The
accompanying unaudited Financial Statements of Ecomax, Inc. (“Ecomax,” “we,” “us,” “our,”
or the “Company, have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial
information and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and disclosure required by accounting principles generally accepted in the United States of
America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion
of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and
cash flows for the interim periods have been included. These financial statements should be read in conjunction with the audited financial
statements as of and for the year ended June 30, 2022, as not all disclosures required by generally accepted accounting principles for
annual financial statements are presented. The interim financial statements follow the same accounting policies and methods of computations
as the audited financial statements as of and for the year ended June 30, 2022.
Significant
Accounting Policies:
Use
of Estimates:
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from the estimates.
Cash
and Cash Equivalents:
For
financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities
of three months or less to be cash or cash equivalents. There were no cash equivalents at March 31, 2023 or June 30, 2022.
Accounts Receivable, Net of Allowance for Doubtful
Accounts
The Company extends unsecured credit to customers
in the ordinary course of business but mitigates risk by performing credit checks and by actively pursuing past due accounts. The allowance
for doubtful accounts is based on customer historical experience and the aging of the related accounts receivable. At March 31, 2023 and
June 30, 2022, the allowance for doubtful accounts was $0 and $0, respectively.
Property
and Equipment:
New
property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs
and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating
results in the period the event takes place.
Inventories
Inventories
at March 31, 2023 consist of bottles of Rocitin NMN purchased from our Hong Kong suppliers. Inventories are stated at the lower of cost
(first-in, first-out method) or market. The valuation of inventory requires the Company to estimate obsolescence, excess, and slowing-moving
inventories. The Company evaluates the recoverability of the inventory based on expected demand and market conditions No inventory write
downs were recorded in the periods presented.
Valuation
of Long-Lived Assets:
We
review the recoverability of our long-lived assets, including equipment, goodwill and other intangible assets, when events or changes
in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment
is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without
interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is
recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted
cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as
well as other fair value determinations.
Stock
Based Compensation:
Stock-based
awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type of share-based
compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation
analysis of the options include the market value of the Company’s common stock, the estimated volatility of the Company’s
common stock, the exercise price of the warrants and the risk-free interest rate.
Fair
Value of Financial Instruments:
FASB
ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets and
liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines
fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing
parties. At March 31, 2023 and June 30, 2022, the carrying value of certain financial instruments (cash and cash equivalents, accounts
payable and accrued expenses) approximates fair value, due to the short-term nature of the instruments or interest rates, which are comparable
with current rates.
Revenue
Recognition
It
is the Company’s policy that revenues from product sales are recognized in accordance with Accounting Standards Codification (“ASC
606”) “Revenue Recognition.” Five basic steps must be followed to recognize revenue: (1) Identify contract(s) with
a customer that creates enforceable rights and obligations; (2) Identify performance obligations in the contract, such as promises to
transfer goods or services to a customer; (3) Determine the transaction price (i.e. the amount of consideration in a contract to which
an entity believes it is entitled in exchange for transferring promised goods or services to a customer); (4) Allocate the transaction
price to the performance obligations in the contract, which requires the Company to allocate the transaction price to each performance
obligation on the basis of the relative stand-alone selling price of each distinct good or service promised in the contract; and (5)
Recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer.
The amount of revenue recognized is the amount allocated to the satisfied performance obligation. Adoption of ASC 606 has not changed
the timing and nature of the Company’s revenue recognition and there has been no material effect on the Company’s consolidated
financial statements.
Our
revenue (referred to in our financial statements as “Sales”) consists primarily of the sale of Rocitin NMN products for cash
or otherwise agreed-upon credit terms. Our customers consist primarily of wholesalers. Our revenue generating activities have a single
performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is
when the related goods are shipped or delivered to the customer, depending upon the method of distribution, and shipping terms. We have
elected to treat shipping as a fulfillment activity. Revenue is measured as the amount of consideration we expect to receive in exchange
for the sale of our product. The Company has no obligation to accept the return of products sold other than for replacement of damaged
products. Other than quantity price discounts negotiated with customers prior to billing and delivery (which are reflected as a reduction
in sales), the Company does not offer any sales incentives or other rebate arrangements to customers.
Earnings
per Common Share:
We
compute net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted
earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect
to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock
using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive.
Income
Taxes:
We
have adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for net operating
losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because
the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
We
must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments
occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue
and expense for tax and financial statement purposes.
Deferred
tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities
using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition of deferred
tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon
our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary
differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences
will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset.
Management
will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred
tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period
in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign
tax jurisdictions in which we operate.
In
addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We
recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and
to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will
reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary.
We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is
less than we expect the ultimate assessment to be.
ASC
740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the
estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on
enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not
expected to be realized.
Uncertain
Tax Positions:
The
provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for
financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This ASC also provides
guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities,
accounting for interest and penalties associated with tax positions, and related disclosures.
Our
federal and state income tax returns are open for fiscal years ending on or after June 30, 2007. We are not under examination by any
jurisdiction for any tax year. At June 30, 2022, we had no material unrecognized tax benefits and no adjustments to liabilities or operations
were required under ASC 740.
Recently
Issued Accounting Pronouncements:
In
December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides
an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated
loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income
as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate
when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized
for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of
an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment
date. The Company adopted this ASU on July 1, 2021. Upon adoption, there was no effect to the Company.
The
Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material
impact on results of operations, financial condition, or cash flows, based on current information.
Note
3. Going Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. At March 31, 2023, the Company
had no cash and negative working capital of $287,805, and had an accumulated net operating loss of $574,567, with only limited
revenue source. For the nine months ended March 31, 2023 and March 31, 2022, the Company had losses
of $80,114 and $74,527, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern for a reasonable period of time. The future of the Company is dependent upon Management’s success in its efforts and limited resources
to conduct current business. These financial statements do not include any adjustments related to the recoverability and classification
of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern.
Currently,
the Company obtains capital from a significant shareholder to meet its minimal operating expenses. If the current single business
model is not successful, we do not believe that we could succeed in raising additional capital from unrelated parties or sustain
our operations without some strategic transaction, such as a business combination or merger. If we are unable to generate enough
revenues to cover the costs of operation, we expect that we would need to either continue to borrow funds from a related party, or
cease all operations and wind down. Although we are currently evaluating our strategic alternatives with respect to all aspects of
our business, we cannot assure you that any actions that we take would raise or generate sufficient capital to fully address the
uncertainties of our financial position.
Note
4. Related Party Transactions
Advances
from related party:
On
March 31, 2021, we entered into a Loan Agreement with New York Listing Management Inc, a significant shareholder of the Company,
under which we receive funding for general operating expenses from time-to-time as needed by the Company. The Loan Agreement bears
interest of 8%
per annum and shall be due and payable on a date 366 days from the date of the loan. On April 1, 2022, the Loan Agreement was
extended to March 31, 2023. On April 1, 2023, the Loan Agreement was re-signed. Under the new term, the loan has no expiration date,
but shall be due on demand. As of March 31, 2023 and June 30, 2022 the outstanding
balance on this loan was $392,336
and $191,091,
with accrued interest of $17,704
and $3,329,
respectively. During the three-month period ended March 31, 2023 and March 31, 2022, the Company borrowed $149,377
and $20,397,
respectively, under this Loan Agreement. During the three-month period ended March 31, 2023 and March 31, 2022, the Company expensed
interest of $5,761
and $2,385,
respectively, related to this Loan Agreement. During the nine-month period ended March 31, 2023 and March 31, 2022, the Company
borrowed $201,245
and $75,172,
respectively, under this Loan Agreement. During the nine-month period ended March 31, 2023 and March 31, 2022, the Company expensed
interest of $14,375
and $5,829,
respectively, related to this Loan Agreement.
Note
5. Inventories
Our
inventories consisted of $55,798 of Rocitin NMN at March 31, 2023 and nil at June 30, 2022.
Note
6. Capital Stock
On
March 18, 2021, the board of directors of the Company, with the written consent of a majority of the holders of the shares of the Company’s
common Stock issued and outstanding, authorized the Company to (i) increase the number of authorized shares of common Stock from 74,000,000
to 450,000,000 and the number of authorized shares of preferred stock from 1,000,000 to 50,000,000 (the “Authorized Stock Increase”),
and (ii) filed a Certificate of Amendment with the Secretary of State of the State of Nevada to effect the Authorized Stock Increase.
On
April 13, 2021, the Company filed a Certificate of Amendment with the Secretary of State of the State of Nevada to affect the Authorized
Stock Increase, which became effective on May 3, 2021.
At
March 31, 2023 and June 30, 2022, the Company’s outstanding shares of common stock were 2,380,958 and 2,380,958 shares, with par value of
$0.0001 per share, respectively. At March 31, 2023 and June 30, 2022, the Company had no outstanding shares of preferred stock, respectively.
Note
7. Subsequent Events
The
Company’s management has performed subsequent events procedures through the date the financial statements were available to be
issued. There were no subsequent events requiring adjustment to or disclosure in the financial statements.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Some
of the statements contained in this quarterly report of Ecomax, Inc. (hereinafter the “Company” or “we”) discuss
future expectations, contain projections of our plan of operation or financial condition or state other forward-looking information.
Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact
that they do not relate strictly to historical or current facts. They use of words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” and other words and terms
of similar meaning in connection with any discussion of future operating or financial performance. From time to time, we also may provide
forward-looking statements in other materials we release to the public.
General
Background of the Company
Ecomax,
Inc. (formerly known as Ecomat Inc.) was incorporated on December 14, 1995 pursuant to the laws of the State of Delaware and was formed
to develop the Ecomat concept - an environmentally sound solution to the current standard dry-cleaning method that utilizes perchloroethylene,
which has been shown to have various toxic effects.
On
March 26, 1999, the Company filed a petition under Chapter 7 for liquidation of the Company’s business. As a result, all of the
Company’s properties were transferred to a United States trustee and the Company terminated all of its business operations. The
bankruptcy trustee has disposed of all of the assets.
On
June 14, 2006, the bankruptcy court granted an order approving the contract and finding that Park Avenue Group was a good faith purchaser
within the meaning of 11 USC Section 363(m) of the Bankruptcy Code.
On
June 15, 2006, and as a result of the Bankruptcy court’s order, Park Avenue Group appointed Ivo Heiden to the board of directors
of the Company and to serve as its Chief Executive Officer, Chief Financial Officer, sole director, and Chairman of the board of directors.
On
February 5, 2007, the Company issued 13,230,000 shares of common stock to Ivo Heiden, for services provided valued at $2,500. Since then,
Ivo Heiden controlled 78.58% of the issued and outstanding shares of common stock.
On
February 9, 2007, the Company completed its change in domicile to Nevada.
On
January 5, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) with Clark Orient (BVI) Limited, (“Clark
Orient”), Mr. Heiden, and WWYD, Inc. (WWYD, Inc. was a 5% or more shareholder of the Company. Mr. Heiden and WWYD, Inc. are collectively
referred to as the “Sellers”), pursuant to which Clark Orient acquired 20,205,000 shares of common stock of the Company (the
“Shares”) from Sellers for an aggregate purchase price of $320,000. The transaction contemplated in the SPA closed on January
7, 2021. The Shares represented approximately 85% of the issued and outstanding common stock of the Company. The transaction resulted
in a change in control of the Company.
In
connection with the change in control, Mr. Heiden, the then Chief Executive Officer, Chief Financial Officer, sole director, and Chairman
of the board of directors of the Company, resigned from all of his positions with the Company and the resignations became effective on
January 6, 2021. Ms. Yang Gui was appointed as the Chief Executive Officer, Chief Financial Officer, sole director, and Chairwoman of
the board of directors of the Company, effective on January 6, 2021.
On
March 11, 2021, upon the departure of Ms. Yang Gui, Mr. Yu Yam Anthony Chau was appointed as the Chief Executive Officer, Chief Financial
Officer, sole director, and Chairman of the board of directors of the Company, effective on March 11, 2021.
On
March 18, 2021, by unanimous written consent of the board of directors of the Company, the board of directors adopted resolutions approving
1) a reverse split of the Company’s common stock at a ratio of 1-for-10, whereby every 10 shares of the issued and outstanding
common stock shall be combined into one share of issued and outstanding common stock (the “Reverse Stock Split”); 2) an increase
in the number of the authorized capital stock from 75,000,000 to 500,000,000, with the par value remaining at $0.0001 per share, consisting
of 450,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 shares of preferred stock, par value $0.0001 per share
(the “Increase of Authorized Stock”); 3) a change of the Company’s name and ticker from “Ecomat, Inc.”
and “ECMT,” to “Ecomax, Inc.” and “ECMX” (the “Change of Name,” together with the Reverse
Stock Split and the Increase of Authorized Stock, collectively, the “Corporate Actions”); 4) amendments to its articles of
incorporation to reflect the Corporate Actions (the “Amendments of Articles of Incorporation”); and 5) a proposal that such
resolutions be submitted for a vote of the stockholders of the Company.
On
March 18, 2021, the stockholder holding in the aggregate 20,205,000 shares of common stock, or approximately 85% of the common stock
outstanding on such date, approved the Corporate Actions.
On
April 1, 2021, the Company filed a preliminary information statement on Schedule 14C with the Unites States Securities and Exchange Commission
(the “SEC”).
On
April 13, 2021, the Company filed a definitive information statement on Schedule 14C with the SEC.
On
April 20 and 21, 2021, the Company filed a certificate of change and a certificate of amendment with the Secretary of State of the State
of Nevada with respect to the Corporate Actions.
On
April 28, 2021, the Company filed an Issuer Notification Form with the Financial Industry Regulatory Authority (“FINRA”)
requesting confirmation of the Change of Name.
The
Corporate Actions, as of the date of this report, have all come into effect. As of the date of this report, our ticker symbol on OTC
Markets has been changed to EMAX and our name has been changed to Ecomax, Inc.
On
September 30, 2022, upon the departure of Mr. Yu Yam Anthony Chau, Mr. Raymond
Chen was appointed as the Chief Executive Officer, Chief Financial Officer, sole director, and Chairman of the board of directors
of the Company, effective on September 30, 2022.
On
February 16, 2023 and March 1, 2023, the Company entered into a sale of goods agreement (the “Sale Agreement”) and a distributor
agreement (the “Distributor Agreement”), respectively, with Rocitin Company Limited, a Hong Kong company (“Rocitin”),
and commenced substantial business operations, and thus ceased being a shell company.
Business
Objectives of the Company
The
Distribution Business
On
February 16, 2023, the Company entered into the Sale Agreement with Rocitin. Under the terms of the Sale Agreement, the Company has agreed
to purchase 10,000 bottles of Rocitin NMN, a nutritional supplement manufactured by Pharmazeutische Fabrik Evers GmbH & Co. KG, a
German company, in which each bottle contains 60 capsules, 10080 mg of Rocitin NMN, at HK $500 (approximately $64.01) per bottle (the
“Goods”), with the initial shipment of 2,000 bottles from Rocitin. Except for the payment of the initial shipment of 2,000
bottles of the Goods made on March 1, 2023, the payment of the residual 8,000 bottles of the Goods shall be made within 45 days from
the date of each invoice from Rocitin to the Company. Pursuant to the Sale Agreement, Rocitin will deliver the Goods to the location
specified by the Company within 15 days of the payment being made.
On
March 1, 2023, the Company entered the Distributor Agreement with Rocitin. Under the terms of the Distributor Agreement, Rocitin shall
store the Goods purchased by the Company from it pursuant to the Sale Agreement in an appropriate warehouse leased by it in Hong Kong
and non-exclusively distribute and use its best efforts to promote and maximize the sale of the Goods within Hong Kong, Macau, Taiwan
and China (collectively, the “Territory”) on behalf of the Company, as well as provide reasonable after-sale support to the
purchasers of the Goods. In addition, Rocitin shall provide monthly reports to the Company due by the 15th of each month concerning the
Goods’ sales and the marketing activities of the previous month.
Pursuant
to the Distributor Agreement, the Company and Rocitin shall share any gross profit generated by the distribution of the Goods on a 50/50
basis; that is, revenue generated from sales of the Goods to third parties minus the original purchase price of the Goods paid by the
Company to Rocitin, will be shared between the Company and Rocitin on a 50/50 ratio (the “Sharing Ratio”).
As
of March 31, 2023, Rocitin has delivered 2,000 bottles of the Goods that the Company has purchased to the warehouse leased by it in Hong
Kong and distributed and sold approximately 1,124 bottles of the Goods in the Territory, in accordance with the Distributor Agreement,
which has generated gross revenue of around HK $755,328 (approximately $96,221). The Company was allocated HK $96,664, (approximately
$12,314) from the gross profit, which amount represents the Sharing Ratio, as stipulated in the Distributor Agreement.
As
the Company intends to further develop the preceding business operation, its management also continues to seek other prospective new
business opportunities.
The
Company’s common stock is subject to quotation on the OTC Pink Sheets under the symbol EMAX. There is currently only a limited
trading market in the Company’s shares and the Company believes that no active trading market has existed for the last 3 years.
In the event that an active trading market commences, there can be no assurance as to the market price of our shares of common stock,
whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.
The
Company’s management has substantial flexibility in identifying and selecting prospective new business opportunities. The Company
is dependent on the judgment of its management in connection with this process. In evaluating a prospective business opportunity, we
would consider, among other factors, the following:
| ● |
costs
associated with pursuing a new business opportunity; |
| ● |
growth
potential of the new business opportunity; |
| ● |
experiences,
skills and availability of additional personnel necessary to pursue a potential new business opportunity; |
| ● |
necessary
capital requirements; |
| ● |
the
competitive position of the new business opportunity; |
| ● |
stage
of business development; |
| ● |
the
market acceptance of the potential products and services; |
| ● |
proprietary
features and degree of intellectual property; and |
| ● |
the
regulatory environment that may be applicable to any prospective business opportunity. |
The
foregoing criteria are not intended to be exhaustive and there may be other criteria that management may deem relevant. In connection
with an evaluation of a prospective or potential business opportunity, management may be expected to conduct a due diligence review.
The
time and costs required to pursue new business opportunities, which includes negotiating and documenting relevant agreements and preparing
requisite documents for filing pursuant to applicable securities laws, cannot be ascertained with any degree of certainty. In addition,
the global COVID-19 pandemic has created significant challenges for us to research for a target and any target business with which we
ultimately consummate a business combination, may be materially adversely affected by the COVID-19 pandemic.
Management
intends to devote such time as it deems necessary to carry out the Company’s affairs. The exact length of time required for the
pursuit of any new potential business opportunities is uncertain. No assurance can be made that we will be successful in our efforts.
We cannot project the amount of time that our management will actually devote to the Company’s plan of operation.
The
Company’s intends to conduct its activities so as to avoid being classified as an “Investment Company” under the Investment
Company Act of 1940, and therefore avoid application of the costly and restrictive registration and other provisions of the Investment
Company Act of 1940 and the regulations promulgated thereunder.
The
Company’s common stock is “penny stock”
The
Company’s common stock is a “penny stock,” as defined in Rule 3a51-1 promulgated by the SEC under the Securities Exchange
Act of 1934 (the “Exchange Act”). The penny stock rules require a broker-dealer, prior to a transaction in penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and
the nature and level of risks in the penny stock market (the “Penny Stock Rules”). The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the
transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition,
the Penny Stock Rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination
that the penny stock is suitable for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure
rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the Penny
Stock Rules. So long as the common stock of the Company is subject to the Penny Stock Rules, it may be more difficult to sell the Company’s
common stock.
Results
of Operations during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022
We
have generated $96,221 during the three months ended March 31, 2023, and did not generate any revenues during the three months ended
March 31, 2022. We had total operating expenses of $39,154, including general and administrative expenses of $26,840, and sales
expenses of $12,314 during the three months ended March 31, 2023, compared to $22,290, including $22,290 general and administrative
expenses during the same period in the prior year. We incurred interest expenses of $5,761 during three months ended March 31, 2023
compared to interest expenses of $2,385 during the three months ended March 31, 2022. During the three months ended March 31, 2023
and 2022, we had a net loss of $20,292 and $24,675, respectively. The decrease in our net loss was due to the combination of the
increase in revenues, the increase in operating expenses, the increase in the service fees charged by vendors and the increase in
interest expenses generated from the increased loan amount from the lender.
Results
of Operations during the nine months ended March 31, 2023 as compared to the nine months ended March 31, 2022
We
have generated $96,221 during the nine months ended March 31, 2023, and did not generate any revenues during the nine months ended
March 31, 2022. We had total operating expenses of $90,362, including general and administrative expenses of $78,048, and sales
expenses of $12,314 during the nine months ended March 31, 2023 compared to $68,698, including $68,698 general and administrative
expenses during the same period in the prior year. We incurred interest expenses of $14,375 during nine months ended March 31, 2023
compared to interest expenses of $5,829 during the nine months ended March 31, 2022. During the nine months ended March 31, 2023 and
2022, we had a net loss of $80,114 and $74,527, respectively. The increase in our net loss was due to the combination of the
increase in revenues, the increase in operating expenses, the increase in the service fees charged by vendors and the increase in
interest expenses generated from the increased loan amount from the lender.
Liquidity
and Capital Resources
The
Company has currently commenced its business operation and has limited cash resources generated from its business operation other than
advances provided by our majority shareholder or an affiliated party. We are dependent upon interim funding provided by our majority
shareholder or an affiliated party to pay operating expenses and professional fees and expenses. Our majority shareholder and an affiliated
party have agreed to provide funding as may be required to pay for accounting fees and other administrative expenses of the Company until
such time the Company generates sufficient profits to pay these fees. The Company would be unable to continue as a going concern without
interim financing provided by our majority shareholder and our affiliated party.
If
we require additional financing, we cannot predict whether equity or debt financing will become available at terms acceptable to us,
if at all. The Company depends upon services provided by management and funding provided by our majority shareholder or our affiliated
party to fulfill its filing obligations under the Exchange Act. At present, the Company has limited financial resources to pay for such
services.
The
following table shows a summary of our cash flows for the periods presented:
| | |
Nine Months Ended March 31, | | |
| |
| | |
2023 | | |
2022 | | |
Change ‘23 vs. ‘22 | |
| Net cash (used in) provided by | |
| | | |
| | | |
| | |
| Operating activities | |
$ | (201,245 | ) | |
$ | (75,172 | ) | |
$ | (126,073 | ) |
| Financing activities | |
| 201,245 | | |
| 75,172 | | |
| 126,073 | |
| Increase (decrease) in cash | |
$ | 0 | | |
$ | 0 | | |
$ | | |
Net
cash used in our operating activities were $201,245 and $75,172 for the nine months ended March 31, 2023 and 2022, respectively. The
increase of $126,073 was due mainly to a $83,907 increase in operating assets.
Our
financing activities generated a cash inflow of $201,245 and $75,172 for the nine months ended March 31, 2023 and 2022, respectively,
due to the funds borrowed from our majority shareholder and an affiliated party and loan from the lender.
During
the next 12 months we anticipate incurring costs related to:
| |
● |
filing
of Exchange Act reports, |
| |
● |
the
Distribution Business, |
| |
● |
registered
agent fees and accounting fees, and |
| |
● |
investigating,
analyzing and consummating an acquisition or business combination. |
On
March 31, 2023, we had current assets of $139,705, and on June 30, 2022, we had no current assets. As of March 31, 2023, we had $427,510
in liabilities, consisting of accounts payable of $3,890, an advance from a related party of $392,336, accrued interest due to related
parties of $17,704 in one loan agreement, and accrued expenses of $13,580. As of June 30, 2022, we had $207,690 in liabilities consisting
of accounts payable of $3,250, an advance from a related party of $191,091, accrued interest due to related parties of $3,329 in one
loan agreement, and accrued expenses of $10,020.
During
the nine months ended March 31, 2023, we had negative cash flow from operating activities of $201,245, due to a net loss of $80,114,
and a change in operating assets. We financed our negative cash flow from operations and $201,245 in advances from New York Listing Management,
Inc, an affiliated party. During the nine months ended March 31, 2022, we had negative cash flow from operating activities of $75,172,
due to a net loss of $74,527. We financed our negative cash flow from operations through $75,172 in advances from New York Listing Management,
Inc, an affiliated party.
The
Company currently plans to satisfy its cash requirements for the next 12 months through borrowings from New York Listing Management,
Inc, as well as from the revenue generated from operations, and believes it can satisfy its cash requirements so long as it is able to
obtain such financing from New York Listing Management, Inc and the Distribution Business continues successfully. The Company expects
that money borrowed and generated from such sources will be used during the next 12 months to satisfy the Company’s operating costs,
professional fees and general corporate purposes.
On
March 31, 2021, we entered into a loan agreement with New York Listing Management, Inc, a related party, under which we are able to receive
funding of up to $200,000 for general operating expenses from time-to-time as needed by the Company (the “NYLM Loan Agreement”).
The NYLM Loan Agreement bears an interest rate of 8% per annum and is due and payable on the date that is three hundred sixty-six (366)
days from the date of such loan agreement. On March 31, 2022, we extended the NYLM Loan Agreement with New York Listing Management, Inc
and such loan agreement was to mature on March 31, 2023. On April 1, 2023, we re-signed the NYLM Loan Agreement with New York
Listing Management, Inc, and the loan agreement has no expiration date but shall be due on demand, and the borrowing limit has been increased to $800,000.
As of March 31, 2023 and 2022, the outstanding balance on this loan was $392,336 and $191,091, respectively, with accrued interest of
$17,704 and $3,329, respectively. As of March 31, 2023, we expensed interest of $14,375, related to this NYLM Loan Agreement.
The
Company intends to repay the loan from New York Listing Management, Inc at a time when it has the cash resources to do so.
The
Company has only limited capital. Additional financing is necessary for the Company to continue as a going concern. Our independent auditors
issued an unqualified audit opinion for the years ended June 30, 2022 and 2021 with an explanatory paragraph on going concern.
Off-Balance
Sheet Arrangements
As
of March 31, 2023, and 2022, we did not have any off-balance sheet arrangements, as defined
in Instruction 8 to Item 303(b) promulgated under the Securities Act of 1934.