NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 31, 2020 and DECEMBER
31, 2019
Note 1 – Organization and basis of accounting
Basis of Presentation and Organization
Shentang International,
Inc. (“we” or the “Company”) was incorporated in the State of Nevada on June 29, 2007. We were an exploration-stage
company engaged in the exploration of mineral resource properties.
On July 22, 2009, Shentang
International conducted a 1-to-10 stock split (the “Stock Split”) of the issued and outstanding common stock, so the
Company’s issued and outstanding shares increased from 1,670,000 to 16,700,000 with par value of $0.001. Immediately after
the Stock Split on July 22, 2009, Shentang International entered into a Share Exchange Agreement (the “Exchange Agreement”)
with Boom Spring, the shareholders of Boom Spring, and Shengtang. Pursuant to the terms of the Exchange Agreement, the shareholders of
Boom Spring transferred to Shentang International all of the equity interest of Boom Spring in exchange for 12,000,000 outstanding shares
of Shentang International and 33,300,000 newly issued shares of Shentang International (the “Share Exchange”). As
a result of the Share Exchange, Boom Spring became a wholly owned subsidiary of Shentang International and Shentang International became
a holding company with issued and outstanding common stock of 50,000,000 with par value of $0.001.
Pursuant
to a board resolution dated October 21, 2009, the Company increased its authorized number of common stock from 50,000,000 to 190,000,000,
and conducted a 2-for-5 reverse stock split (the “Reverse Stock Split”) of the issued and outstanding common stock. After
the Reverse Stock Split, the Company’s issued and outstanding shares changed from 50,000,000 to 20,000,000 with par value of $0.001
effective on October 21, 2009. This reverse stock split also give retroactive effect in the balance sheet as of
December 31, 2008 and the computation of basic and diluted EPS is adjusted retroactively for all period presented accordingly.
Hereinafter, Shentang
International, Boom Spring and Shengtang are collectively referred to as the “Company”.
The Company had exclusive use of the core
technologies, including hollow/solid glass processing technology, pure manual glass rod processing technology, wire processing technology
and painting processing technology. It developed “Yi Fan Feng Shun” liquor vessel with the brand of Wu Liang Ye. The
Company was engaged in expanding in the international market. The Company also planned to build or acquire its own production capacity
to meet the demand in the domestic Chinese market by purchasing or acquiring new equipment of machine-made glass producing. The
objective of the Company was to become a large-scaled glass craftwork supplier and further develop its innovational technology.
On May 11, 2018, the eight judicial District Court
of Nevada appointed Custodian Ventures, LLC as custodian for Shentang International Inc., proper notice having been given to the officers
and directors of Shentang International, Inc. There was no opposition.
On May 16, 2018, the Company filed a certificate
of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.
On July 2, 2018, the Company terminated its registration
with the Securities and Exchange Commission.
On August 2, 2018, the Company filed a Form 10-12G, which went effective
on October 1, 2018.
On November 19, 2019, the Company board of directors
determined that it is their best interest to redeem the 27,000,000 shares of common stock, held by David Lazar in exchange for services
valued at $1,400,000. In addition, the company elected to cancel and return to the shareholder the promissory note dated May 31, 2018
in the amount of $7,500 including interest. The company shall also pay the additional amount of $19,168.97 by issuance of a promissory
note.
On April 29, 2020, Shentang International, Inc.
(the “Company”) entered into and closed the transaction contemplated by a stock purchase agreement (the “Stock Purchase
Agreement”) between the Company, Plentiful Limited, a Samoan company (the “Purchaser”), and Custodian Ventures, LLC,
a Wyoming limited liability company (the “Principal”) controlled by David Lazar, an individual (together with the Principal,
the “Seller”), the controlling shareholder of the Company. Pursuant to the Stock Purchase Agreement, Purchaser purchased 10,000,000
shares of preferred stock (the “Shares”) of the Company from the Principal. The full purchase price set forth in the Stock
Purchase Agreement is $240,000, or $0.024, per share. Upon the closing, $225,000 of the purchase price was paid to Principal, and the
balance of $15,000 will be paid once the Company’s common stock has received full DTC eligibility approval, subject to the condition
that such approval must be obtained by June 5, 2020, or a later date as agreed by Purchaser. The Company’s common stock and preferred
stock have different voting rights whereby one share of common stock is entitled to one (1) vote and one share of preferred stock is entitled
to one hundred (100) votes. The Shares represent approximately 98% of the Company’s outstanding voting power as of the closing.
Accordingly, as a result of the transaction, Purchaser became the controlling shareholder of the Company.
In connection with the closing of the stock purchase
transaction, on April 29, 2020, David Lazar, the sole director of the Company, submitted his resignation letter, pursuant to which he
resigned from all offices of the Company that he held effective as of the closing of the stock purchase transaction and from the board
of directors effective ten (10) days following the filing of Schedule 14f-1 with the SEC. The resignation of Mr. Lazar was not in connection
with any known disagreement with the Company on any matter. Upon the closing of the stock purchase transaction, on April 29, 2020, Lei
Xu was appointed as a director of the Company and for the offices previously held by Mr. Lazar, effective as of the closing of the stock
purchase transaction.
The accompanying financial statements are prepared
on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company is a development
stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital, and research into products
which may become part of the Company’s product portfolio. The Company has not realized significant sales through since inception.
A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and, even
if planned principal operations have commenced, revenues are insignificant.
The accompanying financial statements have been
prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues
sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company
is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While
management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be
no assurance that the Company will be able to raise additional equity capital, or be successful in the development and commercialization
of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
Note 2 – Summary of significant accounting
policies
Cash and Cash Equivalents
For purposes of reporting within the statements
of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly
liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Property and equipment
Property
and equipment are stated at historical cost less accumulated depreciation and impairment. The historical cost of acquiring an item
of property and equipment includes the costs necessarily incurred to bring it to the condition and location necessary for its intended
use.
Income Taxes
The Company accounts for income taxes pursuant
to FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based on temporary
differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets
and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.
The Company maintains a valuation allowance with
respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred
tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the
Federal tax laws.
Changes in circumstances, such as the Company
generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change in the
valuation allowance will be included in income in the year of the change in estimate.
Fair Value Measurement
The Company values its convertible notes and amounts
due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements.
Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).
The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions
about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated,
or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes
a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs
(level 3 measurement).
The three levels of the fair value hierarchy are
as follows:
Level 1 – Quoted prices are available in
active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset
or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of
financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 - Valuations for assets and liabilities
that can be obtained from readily available pricing sources via independent providers for market transactions involving similar assets
or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and valuations are
based on observable market data in those markets.
Level 3 – Pricing inputs include significant
inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that
result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
Employee Stock-Based Compensation
The Company accounts for stock-based compensation
in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment
(“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards
result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected
to vest and will result in a charge to operations.
Estimates
The financial statements are prepared on the basis
of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities as of December 31, 2018 and 2017, and expenses for the years ended December 31, 2017 and 2016, and cumulative from inception.
Actual results could differ from those estimates made by management.
Subsequent Event
The Company evaluated subsequent events through
the date when financial statements are issued for disclosure consideration.
Adoption of Recent Accounting Pronouncements
The Company has implemented all new accounting
pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting
pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Recent Accounting Pronouncements
In February 2016, the
FASB issued an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet.
The new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance as
well as the FASB’s new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining lease classification
as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific quantitative disclosures
to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The pronouncement
is effective for annual reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after
December 15, 2020, for nonpublic entities using a modified retrospective approach. Early adoption is permitted. The Company is still
evaluating the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures and
has not yet determined the method by which it will adopt the standard.
Note 3
– Going Concern
The accompanying financial statements have been
prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source of revenues
sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management of the Company
is making efforts to raise additional funding until a registration statement relating to an equity funding facility is in effect. While
management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be
no assurance that the Company will be able to raise additional equity capital or be successful in the development and commercialization
of the products it develops or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
Note 4 – Discontinued Operations
The Company has fully impaired all assets since
the shutdown of its operations in 2009 and has recorded the effects of this impairment as part of its discontinued operations. With the
absence of a substantial amount of the old records and the passage of the statute of limitations the company has recorded a discontinued
operations expense in 2017 the most current year since operations shutdown based on the accumulated records obtained to date through the
year ended 2020.
Note 5 – Related Party Transactions
On May 31, 2018, the Company obtained a promissory
note in amount of $7,500 from its custodian, Custodian Ventures, LLC, the managing member being David Lazar. The note bears an interest
of 3% and all unpaid interest and principal is due within 180 days following written demand.
On May 31, 2018, the Company issued 27,000,000
shares of common stock to Custodian Ventures, LLC at par for shares valued at $27,000 in exchange for settlement of a portion of a related
party loan for amounts advanced to the Company in the amount of $19,500, and the promissory note issued to the Company in the amount $7,500.
On November 19, 2019, the Company board of directors
determined that it is their best interest to redeem the 27,000,000 shares of common stock, held by David Lazar. In addition, the company
elected to cancel and return to the shareholder the promissory note dated May 31, 2018 in the amount of $7,500 including interest. The
company shall also pay the additional amount of $19,168.97 by issuance of a promissory note and cancel all interest due on the May 31,
2018 note. The promissory note dated November 19 , 2019, in the amount of $19, 168.97 is due and payable in full within one hundred eight
(180) days following written demand by the holder and bears an interest rate of 3% per annum. As of December 31, 2019, a total of 19,168.97
remained outstanding. In addition there was $66 in accrued interest expense.
On April 29, 2020, Shentang International, Inc.
(the “Company”) entered into and closed the transaction contemplated by a stock purchase agreement (the “Stock Purchase
Agreement”) between the Company, Plentiful Limited, a Samoan company (the “Purchaser”), and Custodian Ventures, LLC,
a Wyoming limited liability company (the “Principal”) controlled by David Lazar, an individual (together with the Principal,
the “Seller”), the controlling shareholder of the Company. Pursuant to the Stock Purchase Agreement, Purchaser purchased 10,000,000
shares of preferred stock (the “Shares”) of the Company from the Principal. The full purchase price set forth in the Stock
Purchase Agreement is $240,000, or $0.024, per share. Upon the closing, $225,000 of the purchase price was paid to Principal, and the
balance of $15,000 will be paid once the Company’s common stock has received full DTC eligibility approval, subject to the condition
that such approval must be obtained by June 5, 2020, or a later date as agreed by Purchaser. Accordingly, as a result of the transaction,
Purchaser became the controlling shareholder of the Company.
On April 29, 2020, the Custodian Ventures LLC
agreed to forgive all amounts owed on the November 19, 2019 promissory note of $19,168.97, including accrued interest for a total of $19,522
and the unsecured non interest bearing note in the amount of $72,284.
During the period January 01, 2020 thru April
29, 2020, Custodian Ventures, LLC advanced a total of $14,130 to the Company for payment of registration, legal and accounting fees. During
the period April 30, 2020 thru December 31, 2020, Plentiful Limited paid a total of $38,496 consisting of legal fees, transfer agent fees,
registration fees, and audit and accounting fees on behalf of the Company. As of December 31, 2020, the company had a loan payable remaining
of $0 to Custodian Ventures, LLC. and $20,772 due to Plentiful Limited. This loan is unsecured, non-interest bearing, and has no specific
terms for repayment
Note 6 – Common Stock
On May 31, 2018, the Company issued 27,000,000
shares of common stock, with par value $0.001 for par value for services valued at $27,000 to the Company’s Chief Executive Officer,
David Lazar in exchange for settlement of a portion of the related party loan in the amount of $19,500 and a promissory note issued to
the Company in the amount $7,500.
On November 19, 2019, the Company board of directors
determined that it is their best interest to redeem the 27,000,000 shares of common stock, held by David Lazar. As of December 31, 2020
20,000,000 shares of common stock with par value of $0.001 remains outstanding.
Note 7 – Preferred stock
On November 07, 2019 the board of directors approved
the issuance of 10,000,000 shares of Series A preferred stock to David Lazar, with a par value of $0.001 per share for a total of $1,400,000
for consulting services to the company. As of December 30, 2020 and 2019, 10,000,000 shares of preferred stock valued at $1,400,000 remains
outstanding.
Note 8 – Income Taxes
The Company provides for income taxes under FASB
ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes.
Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and
liabilities and the tax rates in effect currently.
FASB ASC 740 requires the reduction of deferred
tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has
been recorded. The total deferred tax asset is $7,700 which is calculated by multiplying a 21% estimated tax rate by the cumulative net
operating loss (NOL) adjusted for the following items:
For the period ended December 31,
|
|
2020
|
|
Book loss for the year
|
|
$
|
(44,893
|
)
|
Adjustments:
|
|
|
|
|
Accrued expenses
|
|
|
8,224
|
|
|
|
|
|
|
Tax loss for the year
|
|
|
(36,669
|
)
|
|
|
|
|
|
Estimated effective tax rate
|
|
|
21
|
%
|
Deferred tax asset
|
|
$
|
(7,700
|
)
|
Details for the
last period are as follows:
For the period ended December 31,
|
|
2020
|
|
Deferred tax asset
|
|
$
|
7,700
|
|
Valuation allowance
|
|
|
(7,700
|
)
|
Current taxes payable
|
|
|
-
|
|
Income tax expense
|
|
$
|
-
|
|
Below is a chart showing the estimated
corporate federal net operating loss (NOL) and the year in which it will expire. The total NOL carry forward as of December 31, 2020 was
$7,700 as itemized below:
Year
|
|
Amount
|
|
|
Expiration
|
|
2020
|
|
$
|
7,700
|
|
|
|
2039
|
|
2019
|
|
|
5,894
|
|
|
|
2038
|
|
Note 9 – Subsequent Events
The Company evaluates events that occur after the year-end date through
the date the financial statements are available to be issued. Accordingly, management has evaluated subsequent events through August 25,
2021, and has determined that there were no subsequent events, requiring adjustment to, or disclosure in, the financial statements.