Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified
by the words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions.
We
intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor
provisions.
Forward-looking statements are based on current expectations and assumptions that are subject to risks and
uncertainties which may cause actual results to differ materially from the forward-looking statements.
Our
ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have
a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes
in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted
accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements.
We undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Further information
concerning our business, including additional factors that could materially affect our financial results, is included herein and
in our other filings with the SEC.
Company
Overview
We
are engaged in the business of designing, developing, manufacturing, and selling a fully automated frying wok, which will be used
as an automatic fried rice cooker (the “Product”) specifically for commercial applications. We are currently testing
and refining the prototype Product, which we have built in our facility in Shanghai, China. When we are satisfied that our Product
provides the highest-quality of fried rice possible for the consumer, we will begin the manufacture and distribution of the Product
to restaurants, dining halls, and grocery stores throughout mainland China.
Because
fried rice is such a staple of the Chinese diet, significant amounts of manpower are used in the preparation of this dish for
millions of factory workers, as well as other urban dwellers, each day. We believe our Product will significantly reduce the amount
of labor required to feed those in China and other countries that utilize fried rice to a substantial degree.
The
most immediate application is in the feeding of China’s factory employees. For most, going home or eating out for lunch
is impractical. Thus, most factories have cafeteria-style dining halls where they feed hundreds or thousands of employees, cooking
hundreds of pounds of fried rice each day.
Restaurants
and grocery stores similarly make enormous amounts of fried rice each day to feed those who work in the city in a factory or office
that does not have a dining hall. Fried rice made in these bulk quantities is generally cooked in an extra-large (larger than
one meter in diameter), iron wok, heated by charcoal or heating oil. Because these materials don’t burn 100%, some of the
by-products of combustion float into the air and then drop on the food. Also, it is difficult to control the temperature of the
wok, and cooks generally use their hands to stir the food, so the food is often not cooked evenly and issues of hygiene abound.
Our Product, the Automatic Wok or Automated Fried Rice Cooker, addresses all of these concerns associated with cooking large quantities
of fried rice in traditional woks.
Our
Product consists of a large (2 meter diameter) stainless steel pot on a thermal transfer surface sitting atop electric heating
unit coils. A control panel allows the user to control the temperature of the surface, adjust the speed of the stirrer, and time
the entire process. The motor atop the unit rotates the drive shaft and ultimately the stirrer, which is uniquely shaped to ensure
that the rice is cooked evenly and completely, even with the large batch sizes for which our Product was designed. The framework
of the Product supports the top of the unit, along with the control panel and motor. This leaves 360 degree access to the unit
and the rice, which is being cooked inside. The entire unit is set atop four wheels, which allow cooks to pull the Product out
for use and move it easily to a corner for storage when not in use.
To
use our Product, a cook would heat the steel pot to cooking temperature and add approximately 500 ml of peanut oil - enough to
coat the bottom of the pot. He would add up to 100 lbs of cooked rice and a commensurate amount of other ingredients (green onions,
carrots, eggs, shrimp, beef, chicken, peas, bean sprouts, celery, tofu, etc.), depending upon the cook’s recipe. Then he
need only wait until the unit’s timer sounds, notifying him that the dish is ready and that the heat has been automatically
reduced from a frying temperature to a maintenance temperature. Servers can then portion out servings for up to 250 diners before
repeating the process.
Concerns
of hygiene are addressed as the unit’s stirrer mixes the dish, rather than the cook’s hand. The design of the stirrer
ensures that ingredients are mixed properly and all come into contact with the heated, oil-covered surface equally. The powerful
electric coils keep the surface of the pot at a high, constant temperature, eliminating the problem of hot and cold spots on the
surface and in the rice. Finally, because the pot is heated by electric coils, there are no by-products of combustion floating
above and into the final product, which could affect the taste and safety of the final fried rice dish.
Results
of Operations for the Three Months Ended July 31, 2013 and 2012 and Period from March 27, 2007 (Date of Inception) until July
31, 2013
We
generated no revenue for the period from March 27, 2007 (Date of Inception) until July 31, 2013. We are a development stage company
and do not anticipate earnings revenues until we are able to manufacture, distribute and sell our Product.
Our
operating expenses during the three months ended July 31, 2013 were $2,000, compared with $1,500 for the same period ended July
31, 2012. Our operating expenses from March 27, 2007 (Date of Inception) to July 31, 2013 were $146,816. For all periods mentioned,
our operating expenses consisted of professional fees.
We,
therefore, recorded a net loss of $2,000 for the three months ended July 31, 2013, compared with a net loss of $1,500 for the
three months ended July 31, 2012.. We recorded a net loss of $146,816 for the period from March 27, 2007 (Date of Inception) until
July 31, 2013.
We
anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to the
continued development of our Product and the professional fees associated with our becoming a reporting company under the Securities
Exchange Act of 1934.
Liquidity
and Capital Resources
As
of July 31, 2013, we had total current assets of $0. We had 103,816 in current liabilities as of July 31, 2013. Thus, we had a
working capital deficit of $103,816 as of July 31, 2013.
Operating
activities used $141,716 in cash for the period from March 27, 2007 (Date of Inception) until July 31, 2013. Our net loss of $146,816,
offset by $5,100 in accrued expenses accounted for our negative operating cash flow. Financing Activities during the period from
March 27, 2007 (Date of Inception) until July 31, 2013 generated $141,716 in cash during the period, represented by $43,000 received
from the sale of common stock and $98,716 received from officer loans.
As
of July 31, 2013, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient
cash to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon us obtaining
additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient
to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements
for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing
will be available to us on acceptable terms, or at all.
Off
Balance Sheet Arrangements
As
of July 31, 2013, there were no off balance sheet arrangements.
Going
Concern
We
have incurred losses since inception, have negative working capital, and have not yet received revenues from sales of products
or services. These factors create substantial doubt about our ability to continue as a going concern. The financial statements
do not include any adjustment that might be necessary if we are unable to continue as a going concern.
Our
ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt
financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining
debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful
in these efforts.
Item
4. Controls and Procedures
Disclosure
Controls and Procedures
We carried
out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2013. This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer and our Chief Financial Officer, Melissa Lopez. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that, as of July 31, 2013, our disclosure controls and procedures were not effective
due to the presence of material weaknesses in internal control over financial reporting.
A material
weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be
prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management
to conclude that, as of July 31, 2013, our disclosure controls and procedures were not effective: (i) inadequate segregation of
duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting
with respect to the requirements and application of both US GAAP and SEC guidelines.
Remediation
Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
Our company
plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered
by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate
such weaknesses, we plan to implement the following changes during our fiscal year ending April 30, 2014: (i) appoint additional
qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written
policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our
securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such
funds, remediation efforts may be adversely affected in a material manner.
Changes
in Internal Control over Financial Reporting
There were
no changes in our internal control over financial reporting during the three months ended July 31, 2013 that have materially affected,
or are reasonable likely to materially affect, our internal control over financial reporting.