Item
7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
.
You
should read the following discussion together with our financial statements and the related notes included elsewhere in this annual
report on Form 10-K. This discussion contains forward-looking statements that are based on our current expectations, estimates
and projections about our business and operations. Our actual results may differ materially from those currently anticipated and
expressed in such forward-looking statements.
Business
Overview
We
are a bakery based company in California, specializing in freshly-made cakes and cupcakes and also offering other baked goods,
as well as hot and cold beverages. The Company has entered the touchscreen industry through its Hong Kong subsidiary, incorporated
on August 18, 2016, specializing in the design and trading of touchscreen products and services. On July 18, 2014, we completed
a share exchange whereby we acquired all of the issued and outstanding shares of common stock of Sweets & Treats CA. Sweets
& Treats CA became our wholly-owned subsidiary and we have operated our business through Sweets & Treats CA since the
Share Exchange.
We
currently market our baking products primarily through our website, social media and personal referrals, and the touchscreen products
primarily through personal referrals. Our plan for the next twelve months calls for reviewing the company’s bakery business
and development of the touchscreen business. We anticipate that the cost for developing our touchscreen business will be approximately
$250,000. Despite our plan, we currently have no commitments for any financing and cannot provide assurance that we will realize
this goal.
Plan
of Operations
Our
goal is to maintain the quality of our products and to build a sufficient customer base for the design and selling of touchscreen
products. We anticipate the cost for developing our touchscreen business will be approximately $500,000 within the next 12 months.
We have not commitments for any financing and cannot provide assurance that we will realize this goal.
If
we are unable to build a sustainable customer base, we will cease our development and/or marketing operations until we raise money.
Attempting to raise capital after failing in any phase of our development plan could be difficult. As such, if we cannot secure
additional proceeds we will have to cease operations and investors would lose their entire investment. We intend to raise additional
capital through private placements, but there is no assurance that we will be able to achieve any capital-raising. If we need
additional cash but are unable to raise it, we will either suspend marketing operations until we do raise the cash, or cease operations
entirely. Other than as described in this paragraph, we have no other financing plans.
Critical
Accounting Policies and Estimates
While
our significant accounting policies are more fully described in Note 2 to our financial statements, we believe that the following
accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
Use
of Estimates
The
preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting periods. Estimates may include those pertaining
to accruals and going concern assumption assessment. Actual results could materially differ from those estimates.
Fair
value measurements and Fair value of Financial Instruments
We
follow paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial
instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to
measure the fair value of its financial instruments. Paragraph 820-10-35- 37 establishes a framework for measuring fair value
in generally accepted accounting principles (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency
and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy
which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described
below:
Level
1
|
|
Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
Level 2
|
|
Pricing inputs other
than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting
date.
|
|
|
|
Level 3
|
|
Pricing inputs that
are generally observable inputs and not corroborated by market data.
|
Financial
assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or
similar techniques and at least one significant model assumption or input is unobservable.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within
more than one level described above, the categorization is based on the lowest level input that is significant to the fair value
measurement of the instrument.
The
carrying amounts of our financial assets and liabilities, such as cash, prepaid professional fees, and accrued expenses, approximate
their fair values because of the short maturity of these instruments.
Transactions
involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive,
free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the
related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
Recent
Accounting Pronouncements
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting
bodies that are adopted by our company as of the specified effective date. Unless otherwise discussed, we believe that recently
issued accounting pronouncements adopted do not have a material impact on its financial position or results of operations.
In
May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic
606)” (“ASU 2014-09”).
This
guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer.
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods
or services.
To
achieve that core principle, an entity should apply the following steps:
1.
|
|
Identify
the contract(s) with the customer
|
2.
|
|
Identify
the performance obligations in the contract
|
3.
|
|
Determine
the transaction price
|
4.
|
|
Allocate
the transaction price to the performance obligations in the contract
|
5.
|
|
Recognize
revenue when (or as) the entity satisfies performance obligations.
|
The
ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature,
amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative
information is required about the following:
|
1.
|
Contracts
with customers – including revenue and impairments recognized, disaggregation of
revenue, and information about contract balances and performance obligations (including
the transaction price allocated to the remaining performance obligations)
|
|
2.
|
Significant
judgments and changes in judgments – determining the timing of satisfaction of
performance obligations (over time or at a point in time), and determining the transaction
price and amounts allocated to performance obligations
|
|
3.
|
Assets
recognized from the costs to obtain or fulfill a contract.
|
ASU
2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting
period for all public entities. Early application is not permitted.
In
August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going
Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU
2014-15”).
In
connection with preparing financial statements for each annual and interim reporting period, an entity’s management should
evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s
ability to continue as a going concern within one year after the date that the financial statements are issued (or within one
year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should
be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are
issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s
ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that
it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the
financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450,
Contingencies.
When
management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going
concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate
the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is
probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions
or events that raise substantial doubt about the entity’s ability to continue as a going concern.
If
conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial
doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables
users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the
footnotes):
a. Principal
conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration
of management’s
plans)
b.
Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability
to meet its obligations
c. Management’s
plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.
If
conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt
is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating
that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date
that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that
enables users of the financial statements to understand all of the following:
a. Principal
conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern
b. Management’s
evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations
c. Management’s
plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to
continue as a going concern.
The
amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim
periods thereafter. Early application is permitted.
In
August 2015, the FASB issued the FASB Accounting Standards Update No. 2015-14 “Revenue from Contracts with Customers (Topic
606): Deferral of the Effective Date” (“ASU 2015-14”).
The
amendments in this Update defer the effective date of Update 2014-09 for all entities by one year. Public business entities, certain
not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods
beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted
only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting
period.
Management
does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material
effect on the accompanying financial statements.
Results
of Operations
Eleven
Months Ended June 30, 2016 Compared to Twelve Months Ended July 31, 2015
We
generated revenue of $0 and $0 for the eleven months ended June 30, 2016 and twelve months ended July 31, 2015, respectively.
We incurred operating expenses of $26,404 and $63,845 for the eleven months ended June 30, 2016 and twelve months July 31, 2015,
respectively. The decrease of operating expenses is mainly attributable to the decrease in professional fees, which decreased
from $61,538 for the twelve months ended July 31, 2015 to $15,633 for the eleven months ended June 30, 2016, in addition to the
decrease of salary and wages to our officer. We had a net loss of, $26,404 for the eleven months ended June 30, 2016 compared
to net income of $63,845 for the twelve months ended July 31, 2015.
Our
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability
and classification of recorded amounts of assets and liabilities that might be necessary should our company be unable to continue
as a going concern.
Liquidity
and Capital Resources
As
of June 30, 2016, the Company had cash, of $228. The Company’s liabilities as of June 30, 2016 were $63,854, which comprised
of $8,610 in accounts payable, $444 in accrued liabilities, and $54,800 as advances from a shareholder and a related party. As
of June 30, 2016, the Company had a working capital deficit of $33,848.
As
of July 31, 2015, the Company had cash, of $531. The Company’s liabilities as of July 31, 2015 were $33,048, which comprised
of $22,525 in accounts payable,$371 in accrued liabilities, and $10,152 as advances from a shareholder and a related party. As
of July 31, 2015, the Company had a working capital deficit of $32,444.
The
following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the
eleven months ended June 30, 2016:
|
|
For the eleven months ended June 30, 2016
|
|
For the twelve months ended July 31, 2015
|
Net Cash (Used in) Operating Activities
|
|
$
|
(44,951
|
)
|
|
$
|
(30,627
|
)
|
Net Cash used in Investing Activities
|
|
|
—
|
|
|
|
—
|
|
Net Cash Provided by Financing Activities
|
|
|
44,648
|
|
|
|
30,202
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
$
|
(303
|
)
|
|
$
|
(425
|
)
|
For
the eleven months ended June 30, 2016, the net cash used for operating activities was $44,951. The Company participated in no
investing activities for the eleven months ended June 30, 2016. The net cash provided by financing activities was $44,648 for
the eleven months ended June 30, 2016. The Company had a net decrease in cash and cash equivalents of $303 for the eleven months
ended June 30, 2016.
For
the twelve months ended July 31, 2015, the net cash used for operating activities was $30,627. The Company participated in no
investing activities for the eleven months ended July 31, 2015. The net cash provided by financing activities was $30,202 for
the twelve months ended July 31, 2015. The Company had a net decrease in cash and cash equivalents of $425 for the twelve months
ended July 31, 2015.
We
have nominal assets and have generated little revenues since inception. We currently have no material commitments for capital
expenditures. We may be required to raise additional funds, particularly if we are unable to continue generating positive cash
flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will not
be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to
12 months. In addition, our company may, from time to time, receive continued funding and capital resources from related parties.
However, as of the date of this Annual Report, such related parties do not have any existing obligation to advance funds or working
capital to support our business, nor can our company rely on any advance funds from such related parties. Other than working capital,
we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion
of our operations and to provide working capital necessary for our ongoing operations and obligations. We may need to raise significant
additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate we will be
profitable in 2017. Therefore our future operations may be dependent on our ability to secure additional financing. Financing
transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.
However, a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance
of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs
and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative
financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the
new equity securities may have rights, preferences or privileges senior to those of existing holders of our Common Stock. The
inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business
operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development
plans and possibly cease our operations.
We
anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future.
Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
Our
liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs
associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002
and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations
to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.
Going
Concern
Our
financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of business.
As
reflected in the financial statements, we had an accumulated deficit at June 30, 2016, a net loss and net cash used in operating
activities for the reporting period then ended. These factors raise substantial doubt from our auditor about our ability to continue
as a going concern.
We
are attempting to commence operations and generate sufficient revenue; however, our cash position may not be sufficient to support
its daily operations. While we believe in the viability of its strategy to commence operations and generate sufficient revenue
and in its ability to raise additional funds, there can be no assurances to that effect. The ability of our company to continue
as a going concern is dependent upon our ability to further implement our business plan and generate sufficient revenue and in
our ability to raise additional funds.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements.
Contractual
Obligations
We
do not have any contractual obligations at this time.
Item
8.
Financial Statements and Supplementary Data
Atlas
Technology International, Inc.
(fka
Sweets & Treats, Inc.)
June
30, 2016
Index
to the Consolidated Financial Statements
Contents
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
Consolidated Balance Sheets at June 30, 2016 and July 31, 2015
|
|
|
|
Consolidated Statements of Operations for the Eleven and Twelve Months Ended June 30, 2016 and July 31, 2015
|
|
|
|
Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Reporting Period Ended June
30, 2016 and July 31, 2015
|
|
|
|
Consolidated Statements of Cash Flows for the Eleven and Twelve Months Ended June 30, 2016 and July 31, 2015
|
|
|
|
Notes to the Consolidated Financial Statements
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders of
Atlas
Technology International, Inc.
Sylmar,
CA
We
have audited the accompanying consolidated balance sheets of Atlas Technology International, Inc. and its subsidiaries (formerly
Sweets & Treats, Inc.) (collectively the “Company”) as of June 30, 2016 and July 31, 2015, and the related consolidated
statements of operations, stockholders’ equity and cash flows for the 11month period ended June 30, 2016 and for the year
ended July 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Atlas Technology International, Inc. and its subsidiaries as of June 30, 2016 and July 31, 2015 and the results of their operations
and their cash flows for 11month period ended June 30, 2016 and for the year ended July 31, 2015, in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, the Company has accumulated losses from operations since inception and has a working capital
deficit as of June 30, 2016. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
Management's plans in this regard are described in Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/
MaloneBailey, LLP
MALONEBAILEY,
LLP
www.malonebailey.com
Houston,
Texas
September
27, 2016
Atlas Technology International, Inc.
|
(fka Sweets & Treats, Inc.)
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
|
|
July 31,
2015
|
ASSETS
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
228
|
|
|
$
|
531
|
|
Accounts receivable
|
|
|
25
|
|
|
|
73
|
|
Prepaid expenses
|
|
|
29,753
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
30,006
|
|
|
|
604
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
30,006
|
|
|
$
|
604
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
8,610
|
|
|
$
|
22,525
|
|
Accrued expenses
|
|
|
444
|
|
|
|
371
|
|
Advances from stockholder
|
|
|
54,800
|
|
|
|
10,152
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
63,854
|
|
|
|
33,048
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
63,854
|
|
|
|
33,048
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT:
|
|
|
|
|
|
|
|
|
Preferred stock par value $0.00001: 1,000,000 shares authorized; none issued
or outstanding
|
|
|
—
|
|
|
|
—
|
|
Common stock par value $0.00001: 100,000,000 shares authorized; 20,900,000
and 244,800,000 shares issued or outstanding
|
|
|
209
|
|
|
|
2,448
|
|
Additional paid-in capital
|
|
|
55,883
|
|
|
|
28,644
|
|
Accumulated deficit
|
|
|
(89,940
|
)
|
|
|
(63,536
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Deficit
|
|
|
(33,848
|
)
|
|
|
(32,444
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Deficit
|
|
$
|
30,006
|
|
|
$
|
604
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated
financial statements.
|
Atlas Technology International, Inc.
|
(fka Sweets & Treats, Inc.)
|
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Eleven Months
|
|
For the Year
|
|
|
Ended
|
|
Ended
|
|
|
June 30, 2016
|
|
July 31, 2015
|
Operating Expenses
|
|
|
|
|
|
|
|
|
Professional fees
|
|
|
15,633
|
|
|
|
61,538
|
|
Salary and wages - officer
|
|
|
700
|
|
|
|
868
|
|
General and administrative expenses
|
|
|
10,071
|
|
|
|
1,439
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
26,404
|
|
|
|
63,845
|
|
|
|
|
|
|
|
|
|
|
Loss before Income Tax Provision
|
|
|
(26,404
|
)
|
|
|
(63,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(26,404
|
)
|
|
$
|
(63,845
|
)
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and diluted
|
|
|
(0.00
|
)
|
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
169,912,239
|
|
|
|
243,830,795
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated
financial statements.
|
Atlas
Technology International, Inc
(fka
Sweets & Treats, Inc)
Consolidated
Statement of Changes in Stockholders’ Equity (Deficit)
For
the reporting period ending June 30, 2016 and July 31, 2015
|
|
Common Stock, $0.00001 Par Value
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Retained Earnings (Accumulated
Deficit)
|
|
Total Stockholders’
Equity (Deficit)
|
Balance, July 31, 2014
|
|
|
240,000,000
|
|
|
|
2,400
|
|
|
|
(1,358
|
)
|
|
|
309
|
|
|
|
1,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital contribution
|
|
|
|
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issue for cash
|
|
|
4,800,000
|
|
|
|
48
|
|
|
|
29,952
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(63,845
|
)
|
|
|
(63,845
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2015
|
|
|
244,800,000
|
|
|
|
2,448
|
|
|
|
28,644
|
|
|
|
(63,536
|
)
|
|
|
(32,444
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of Shares
|
|
|
(224,000,000
|
)
|
|
|
(2,240
|
)
|
|
|
2,240
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issue for services
|
|
|
100,000
|
|
|
|
1
|
|
|
|
24,999
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(26,404
|
)
|
|
|
(26,404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2016
|
|
|
20,900,000
|
|
|
$
|
209
|
|
|
$
|
55,883
|
|
|
$
|
(89,940
|
)
|
|
$
|
(33,848
|
)
|
See
accompanying notes to the consolidated financial statements.
Atlas Technology International, Inc
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
For
the Eleven Months ended
June 30, 2016
|
|
For
the Twelve Months ended
July 31, 2015
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(26,404
|
)
|
|
$
|
(63,845
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Stock base compensation
|
|
|
414
|
|
|
|
—
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
48
|
|
|
|
(73
|
)
|
Prepaid expenses
|
|
|
(5,167
|
)
|
|
|
10,450
|
|
Accounts payable
|
|
|
(13,915
|
)
|
|
|
22,525
|
|
Accrued expenses
|
|
|
73
|
|
|
|
316
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(44,951
|
)
|
|
|
(30,627
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Advances from stockholder
|
|
|
44,739
|
|
|
|
1,811
|
|
Repayments to stockholder
|
|
|
(91
|
)
|
|
|
(1,659
|
)
|
Proceeds from sale of common shares
|
|
|
—
|
|
|
|
30,000
|
|
Capital contribution
|
|
|
—
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
44,648
|
|
|
|
30,202
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
(303
|
)
|
|
|
(425
|
)
|
|
|
|
|
|
|
|
|
|
Cash at beginning of the reporting period
|
|
|
531
|
|
|
|
956
|
|
|
|
|
|
|
|
|
|
|
Cash at end of the reporting period
|
|
$
|
228
|
|
|
$
|
531
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Income tax paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
NON CASH FINANCING AND INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Shares issued to consulting services not provided yet
|
|
$
|
25,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated
financial statements.
|
Atlas
Technology International, Inc
(fka
Sweets & Treats, Inc.)
June
30, 2016
Notes
to the Consolidated Financial Statements
Note
1 - Organization and Operations
Sweets
& Treats, Inc. (“CA Corp”)
Sweets
& Treats, Inc. (“Predecessor”) was incorporated on April 13, 2011 under the laws of the State of California.
The
Predecessor is a bakery shop specializing in freshly-made cakes, cupcakes, desserts and special events catering.
Atlas
Technology International, Inc. (fka Sweets & Treats, Inc.) (“DE Corp”)
Atlas
Technology International, Inc. (fka Sweets & Treats, Inc.) (the “Company”) was incorporated on July 7, 2014 under
the laws of the State of Delaware for the sole purpose of acquiring all of the issued and outstanding capital stock of the Predecessor.
Upon formation, the Company issued 10,000,000 shares of its common stock to the President of the Company as founder’s shares
valued at par value of $0.00001 and recorded as compensation of $100.
On
July 18, 2014, the Company issued 5,000,000 shares of the newly formed corporation’s common stock to the President of the
Predecessor for all of the Predecessor’s issued and outstanding capital stock. No value was given to the common stock issued
by the newly formed corporation. Therefore, the shares were recorded to reflect the $0.00001 par value and paid in capital
was recorded as a negative amount of ($50). The acquisition process utilizes the capital structure of the Company and the assets
and liabilities of Predecessor, which are recorded at historical cost.
The
Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting
Bulletins (“SAB”) (“SAB Topic 4B”) issued by the United States Securities and Exchange Commission (the
“SEC”), by reclassifying the Predecessor’s undistributed retained earnings of $942 at July 17, 2014 to additional
paid-in capital.
The
accompanying consolidated financial statements have been prepared as if the Company had its corporate capital structure as of
the date of the incorporation of the Predecessor.
On
March 11, 2016, the Company entered into certain Spin-Off Agreement with Tiffany Aguayo, the majority shareholder, pursuant to
which the Shareholder agreed to cancel 14,000,000 pre-split shares of Company's Common stock in exchange for the consummation
and execution of the Spin Off agreement and sale of Sweets & Treats, Inc., a CA Corporation and a wholly-owned subsidiary
of the Company to Ms. Aguayo. The transaction has not been consummated as of the date hereof but Ms. Aguayo still agreed to the
cancellation of her shares.
On
July 19, 2016, the Company filed with the Secretary of State of Delaware, amending its Articles of Incorporation by changing the
name of the Company to “Atlas Technology International, Inc.”
On
August 23, 2016, the Company filed with the Secretary of State of Delaware an Amended and Restated Certificate of Incorporation
in which the Company confirmed its name change to Atlas Technology International, Inc. and set forth therein the designations
for the Series A, B and C Preferred Stock.
Note
2 - Significant and Critical Accounting Policies and Practices
The
Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness
of accounting policies and their application. Critical accounting policies and practices are those that are both most important
to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective,
or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted
accounting principles.
Fiscal
Year End
The
Company elected to amend its fiscal year ending date July 31
st
to June 30
th
.
Basis
of Presentation
The
accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”). Certain prior year amounts have been combined and reclassified
to conform to the current year presentation.
Use
of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
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 at the date(s) of the financial statements and the reported amounts of revenues and expenses
during the reporting period(s).
Critical
accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and
judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact
of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates
and assumptions affecting the financial statements were:
|
(i)
|
Allowance
for doubtful accounts
: Management’s estimate of the allowance for doubtful
accounts is based on historical sales, historical loss levels, and an analysis of the
collectability of individual accounts; and general economic conditions that may affect
a client’s ability to pay. The Company evaluated the key factors and assumptions
used to develop the allowance in determining that it is reasonable in relation to the
financial statements taken as a whole.
|
|
(ii)
|
Assumption
as a going concern
:
Management
assumes that the Company will continue as a going concern, which contemplates continuity
of operations, realization of assets, and liquidation of liabilities in the normal course
of business
.
|
|
(iii)
|
Valuation
allowance for deferred tax assets
:
Management
assumes that the realization of the Company’s net deferred tax assets resulting
from its net operating loss (“NOL”) carry–forwards for Federal income
tax purposes that may be offset against future taxable income was not considered more
likely than not and accordingly, the potential tax benefits of the net loss carry-forwards
are offset by a full valuation allowance. Management made this assumption based on (a)
the Company has incurred recurring losses, (b) general economic conditions, and (c) its
ability to raise additional funds to support its daily operations by way of a public
or private offering, among other factors.
|
These
significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached
to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management
bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the
financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources.
Management
regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes
in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those
estimates are adjusted accordingly.
Actual
results could differ from those estimates.
Principles
of Consolidation
The
Company applies the guidance of Topic 810
“Consolidation”
of the FASB Accounting Standards Codification ("ASC")
to determine whether and how to consolidate another entity.
Pursuant to ASC Paragraph 810-10-15-10
all majority-owned subsidiaries—all entities in which a parent has a controlling financial
interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent
is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company
within the scope of Topic 946 of a non-investment-company investee.
Pursuant to ASC Paragraph 810-10-15-8
the
usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general
rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another
entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership,
for example, by contract, lease, agreement with other stockholders, or by court decree
. The Company consolidates
all
less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.
The
Company consolidates the following
entities
:
Name
of consolidated subsidiary or entity
|
State
or other jurisdiction of incorporation or organization
|
Date
of incorporation or formation
(date
of acquisition, if applicable)
|
Attributable
interest
|
Sweets
& Treats, Inc.
|
The
State of Delaware
|
July
7, 2014
|
100%
|
|
|
|
|
Sweets
& Treats, Inc.
|
The
State of California
|
April
13, 2011
|
100%
|
The
consolidated financial statements include all accounts of the Company and the subsidiary as of reporting period dates and for
the reporting periods then ended.
All
inter-company balances and transactions have been eliminated.
Fair
Value of Financial Instruments
The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial
instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to
measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in
generally accepted accounting principles (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency
and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy
which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described
below:
Level
1
|
|
Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date.
|
|
|
|
Level 2
|
|
Pricing inputs other
than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting
date.
|
|
|
|
Level 3
|
|
Pricing inputs that
are generally observable inputs and not corroborated by market data.
|
Financial
assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or
similar techniques and at least one significant model assumption or input is unobservable.
The
fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities
and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within
more than one level described above, the categorization is based on the lowest level input that is significant to the fair value
measurement of the instrument.
The
carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses,
accounts payable, accrued expenses, customer deposits and sales tax payable approximate their fair values because of the short
maturity of these instruments.
Transactions
involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive,
free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the
related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such
representations can be substantiated.
Cash
Equivalents
The
Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Related
Parties
The
Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure
of related party transactions.
Pursuant
to Section 850-10-20 the related parties include a. affiliates of the Company (“Affiliate” means, with respect
to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled
by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act);
b. entities for which investments in their equity securities would be required, absent the election of the fair value option
under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing
entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the
trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which
the Company may deal if one party controls or can significantly influence the management or operating policies of the other to
an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other
parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership
interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting
parties might be prevented from fully pursuing its own separate interests.
The
financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense
allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated
in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall
include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which
no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other
information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar
amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the
method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as
of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitment
and Contingencies
The
Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain
conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company
but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings
that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived
merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought therein.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the
assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but
cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable
and material, would be disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would
be disclosed.
Revenue
Recognition
The
Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes
revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all
of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably
assured.
Deferred
Tax Assets and Income Tax Provision
The
Company was a Subchapter S corporation, until July 17, 2014 during which time the Company was treated as a pass through entity
for federal income tax purposes. Under Subchapter S of the Internal Revenue Code stockholder of an S corporation are taxed separately
on their distributive share of the S corporation’s income whether or not that income is actually distributed.
Effective
July 18, 2014, the Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred
income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets
and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected
to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than
not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that
includes the enactment date.
The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25
addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the
financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based
on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section
740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim
periods and requires increased disclosures.
The
estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying
consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability
of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management
makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous
estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in
these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual
taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Earnings
per Share
Earnings
per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is
used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards
Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available
to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the
period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred
stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned)
from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation
of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect
the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options
or warrants.
Pursuant
to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate
or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and
their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method
unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied.
Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid
stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and
purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants
shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued.
b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the
period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the
number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted
EPS computation.
There
were no potentially dilutive common shares outstanding for the reporting period ended June 30, 2016 and July 31, 2015.
Cash
Flows Reporting
The
Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash
receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions
of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile
it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and
payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income
that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency
cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held
in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents
and separately provides information about investing and financing activities not resulting in cash receipts or payments in the
period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Subsequent
Events
The
Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent
events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant
to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued
when they are widely distributed to users, such as through filing them on EDGAR.
Recently
Issued Accounting Pronouncements
Management
does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material
effect on the Company's financial statements.
Note
3 – Going Concern
The
Company has elected to adopt early application of Accounting Standards Update No. 2014-15,
“Presentation of Financial
Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a
Going Concern (“ASU 2014-15”)
.
The
Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which
contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As
reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at June 30, 2016, a net
loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about
the Company’s ability to continue as a going concern.
The
Company is attempting to generate sufficient revenue; however, its cash position may not be sufficient to support its daily operations.
While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional
funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon
the Company’s ability to further implement its business plan, generate sufficient revenue and in its ability to raise additional
funds.
The
consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue
as a going concern.
Note
4 – Stockholders' Equity (Deficit)
Shares
Authorized
Upon
formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred and one Million
(101,000,000) shares of which One Million (1,000,000) shares shall be Preferred Stock, par value $0.00001 per share, and One Hundred
Million (100,000,000) shares shall be Common Stock, par value $0.00001 per share.
Common
Stock
From
August 25, 2014 to October 23, 2014, the Company issued 4,800,000 shares of its common stock in aggregate at $0.0006 per share,
or $30,000 in cash.
On
March 10, 2016, as a condition to a certain transaction involving the sale of controlling interest by Tiffany Aguayo, Company’s
majority shareholder and officer, Ms. Aguayo agreed to cancel 224,000,000 post-split shares. Upon completion of the share cancellation,
Ms. Aguayo beneficially held 16,000,000 shares of 20,800,000 total outstanding shares as of March 10, 2016, representing 76.92%.
Also as a condition to the consummation of the transaction, the Company approved a 1 for 16 forward split. The transaction has
not been consummated as of the date hereof. As a result of the share cancellation and the forward split, the Company currently
has 20,900,000 shares of common stock outstanding, 16,000,000 of which were beneficially held by Ms. Aguayo.
On
June 24, 2016, the Company entered into a consulting agreement with Bright Light Marketing and issued 100,000 post-split shares
of its common stock in exchange for services valued at $25,000.
Capital
Contribution
For
the reporting period ending July 31, 2015, the President, CEO and significant stockholder contributed $50 as capital.
Note
5 – Related Party Transactions
Related
Parties
Related
parties with whom the Company had transactions are:
Related
Parties
|
Relationship
|
Related
Party Transactions
|
Business
Purpose of transactions
|
|
|
|
|
Management
and significant stockholders
|
|
|
|
Tiffany
Aguayo
|
President,
CEO and Significant shareholder
|
(i)
Advances to the Company,
(ii)
Office space at no cost
|
(i)
Working capital,
(ii)
Cost is nominal.
|
Advances
from President, CEO and Significant Stockholder
From
time to time, the stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured,
non-interest bearing and due on demand.
The
president, Co-CEO and significant stockholder of the Company had advanced $54,800 and $10,152 as of June 30, 2016 and July 31,
2015, respectively, none of which has been repaid.
Free
Office Space
The
Company has been provided office space by one of our Co-Chief Executive Officer at no cost. The management determined that such
cost is nominal and did not recognize the rent expense in its financial statement.
Sale
of Common Shares from President, CEO and Significant Stockholder
Ahmad
Haris Tajyar assisted the President, CEO and Significant Stockholder with the sale of her shareholdings in SWTS. Mr. Tajyar was
not compensated by the Company nor will be compensated by the Company in the future for this transaction.
Note
6 – Commitments and Contingencies
Business
Advisory Agreements
On
June 24, 2016, the Company
entered into
consulting agreements
with Bright Light Marketing (“the Consultants”)
with the following terms and conditions
:
Services
The
Consultants will provide consulting support and advisory services to include public relations, advertising, business advise, crisis
communications and corporate publicity.
Terms
The
Agreement shall commence on the date above and shall continue for a period of twelve (12) months.
Consideration
Upon
signing of the Agreements, the Consultants will be granted 100,000 shares of the Company's common stock.
Accounting
Treatment of the Consideration
The
Company valued 100,000 common shares issued to the Consultants for obtaining services at $0.25 per share, the most recent market
trading price, or $25,000 in aggregate, and booked the fair value of the equity instruments issued as prepaid consulting fees
on the date of grant. The expenses of the consulting services are recognized as those services are received
.
The
Company recognized $414 in consulting fees for the reporting period ended June 30, 2016.
Note
7 – Deferred Tax Assets and Income Tax Provision
Deferred
Tax Assets
At
June 30, 2016, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of
approximately $90,000 that may be offset against future taxable income through 2035. No tax benefit has been reported with respect
to these net operating loss carry-forwards because the Company believes that the realization of the Company’s net deferred
tax assets of approximately $30,580 was not considered more likely than not and accordingly, the potential tax benefits of the
net loss carry-forwards are offset by a full valuation allowance.
Deferred
tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance
on the deferred tax assets because of the uncertainty regarding the probability of its realization. The valuation allowance
increased approximately $8,978 and $21,602 for the reporting period ended June 30, 2016 and July 31, 2015, respectively.
Components
of deferred tax assets in the consolidated balance sheets are as follows:
|
|
June 30, 2016
|
|
July 31, 2015
|
Net deferred tax assets – non-current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax benefit from NOL carry-forwards
|
|
$
|
30,580
|
|
|
$
|
21,602
|
|
|
|
|
|
|
|
|
|
|
Less valuation allowance
|
|
|
(30,580
|
)
|
|
|
(21,602
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets, net of valuation allowance
|
|
$
|
—
|
|
|
$
|
—
|
|
Income
Tax Provision in the Consolidated Statements of Operations
A
reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income
tax provision is as follows:
|
|
For the reporting period ended June 30, 2016
|
|
For the reporting period ended July 31, 2015
|
|
|
|
|
|
Federal statutory income tax rate
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance on net operating loss carry-forwards
|
|
|
(34.0
|
)
|
|
|
(34.0
|
)
|
|
|
|
|
|
|
|
|
|
Effective income tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Note
8 – Subsequent Events
The
Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued
to determine if they must be reported. The Management of the Company determined that the following reportable subsequent event(s)
had to be disclosed:
On
July 5, 2016, Tiffany Aguayo, the majority shareholder
, owning approximately 76.9% of the
total issued and outstanding shares of SWTS, entered into two separate Stock Purchase Agreements for the sale of 13,000,000 and
3,000,000 shares of SWTS common stock equivalent to her complete ownership of SWTS with Ying-Chien Lin and Lynx Consulting Group
Ltd (“Lynx”), respectively. Pursuant to the execution of the Stock Purchase Agreements, Mr. Lin and Lynx owned approximately
62.5% and 14.4% of the total voting rights of SWTS, respectively.
On
July 5, 2016, Tiffany Aguayo, the major debtholder, owning approximately 85.8% of the total liabilities as of June 30, 2016, entered
into a Debt Assignment Agreement and sold $40,000 of the outstanding debt from advances made on behalf of the Company to Growth
Point Advisors Ltd. Pursuant to this Agreement, the Company entered into a Convertible Promissory Note (the “Note”)
with Growth Point Advisors Ltd. to replace the Debt Assignment Agreement. The Note bears an interest rate of 8% per annum, due
on July 4
th
2017, and convertible by giving five days’ notice to the Company.
On
July 10, 2016, the Company issued 15,000,000 shares of its common stock to Mr. Ying-Chien Lin for services of being a Director
and Chairman of the Board valued at $15,000.
On
July 10, 2016, the Company issued 10,000,000 shares of its common stock to Mr. Ming-Shu Tsai for services of being a Director
of the Board valued at $10,000.
On
July 14, 2016, the Company entered into a consulting agreement with Chronos Investments Ltd for the term of twelve months. Under
the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 to make better
strategic decisions in corporate performance, value creating, macro economical forces and global & local markets.
On
July 14, 2016, the Company entered into a consulting agreement with Cygnus Management Ltd for the term of twelve months. Under
the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 in assisting
clients to best benefit from M&A or improving operating and financial efficiency.
On
July 15, 2016, the Company entered into a consulting agreement with Silverciti Group Ltd for the term of twelve months. Under
the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 in asset management.
On
July 19, 2016, the Company filed with the Secretary of State of Delaware, amending its Articles of Incorporation by changing the
name of the Company to “Atlas Technology International, Inc.”
On
August 18, 2016, the Company created a wholly-owned Hong Kong limited company (“subsidiary”) under the name Atlas
Tech Trading Limited.
On
August 23, 2016, the Company filed with the Secretary of State of Delaware an Amended and Restated Certificate of Incorporation
in which the Company confirmed its name change to Atlas Technology International, Inc. and set forth therein the designations
for the Series A, B and C Preferred Stock.