UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


(Mark One)


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


For the quarterly period ended December 31, 2016


OR


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


For the transition period from ________________ to ________________


Commission file number 000-55297


ALADDIN INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


Nevada

  

41-0990229

(State or other jurisdiction of

  

(I.R.S. Employer

incorporation or organization)

  

Identification No.)


Unit 907, 9/F, ICBC Tower, 3 Garden Road, Central, Hong Kong

(Address of principal executive offices, including zip code)

 

+852 3975 0600

(Registrant’s telephone number, including area code)


Not Applicable

(Former name, former address and former fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   þ      No   o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   þ      No   o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

o

 

Accelerated filer

o

Non-accelerated filer  

o

 

Smaller reporting company

þ

(Do not check if smaller reporting company)

 

 

 

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   þ      No   o

 

As of December 31, 2016, the registrant had 4,548,435 shares of common stock, par value $.001 per share, issued and outstanding.

 

  




 


TABLE OF CONTENTS

 

 

PART I FINANCIAL INFORMATION

 

                             

 

                             

ITEM 1.

FINANCIAL STATEMENTS.

1

 

 

 

 

Condensed Balance Sheets as of December 31, 2016 (Unaudited) and June 30, 2016

1

 

 

 

 

Condensed Statements of Operations and Comprehensive Loss for the Three Months and Six Months Ended December 31, 2016 and 2015 (Unaudited)

2

 

 

 

 

Condensed Statements of Cash Flows for the Six Months Ended December 31, 2016 and 2015 (Unaudited)

3

 

 

 

 

Notes to Condensed Financial Statements (Unaudited)

4

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

7

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

12

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES.

12

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS.

14

 

 

 

ITEM 1A.

RISK FACTORS.

14

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

14

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

14

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES.

14

 

 

 

ITEM 5.

OTHER INFORMATION.

14

 

 

 

ITEM 6.

EXHIBITS.

14

 

 

 

SIGNATURES

 

15

 



  





 


 

PART I – FINANCIAL INFORMATION

 

ITEM 1. 

FINANCIAL STATEMENTS.

 

ALADDIN INTERNATIONAL, INC.

CONDENSED BALANCE SHEETS


 

 

December 31,

 

 

June 30,

 

 

 

2016

 

 

2016

 

 

 

(Unaudited)

 

 

(Note 1)

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,617

 

 

$

50,149

 

Prepaid expenses

 

 

7,104

 

 

 

7,973

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

 

14,721

 

 

 

58,122

 

 

 

 

 

 

 

 

 

 

Fixed Assets:

 

 

 

 

 

 

 

 

Furniture and Equipment, net of accumulated depreciation of $483 at December 31, 2016 and $206 at June 30, 2016

 

 

1,776

 

 

 

2,053

 

 

 

 

 

 

 

 

 

 

Total Fixed Assets

 

 

1,776

 

 

 

2,053

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Security deposits

 

 

63,558

 

 

 

63,558

 

 

 

 

 

 

 

 

 

 

Total Other Assets

 

 

63,558

 

 

 

63,558

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

80,055

 

 

$

123,733

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

76,813

 

 

$

33,840

 

Related party note payable

 

 

343,840

 

 

 

343,840

 

 

 

 

 

 

 

 

 

 

Total Current Liabilities

 

 

420,653

 

 

 

377,680

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

420,653

 

 

 

377,680

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 1, 2, 4, 5 and 6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Preferred stock, $.001 par value 20,000,000 shares authorized, none issued and outstanding at December 31, 2016 and June 30, 2016

 

 

 

 

 

 

Common stock, $.001 par value 780,000,000 shares authorized, 4,548,435 issued and outstanding at December 31, 2016 and June 30, 2016

 

 

4,548

 

 

 

4,548

 

Additional paid-in capital

 

 

330,325

 

 

 

322,883

 

Accumulated deficit

 

 

(675,471

)

 

 

(581,378

)

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

 

 

(340,598

)

 

 

(253,947

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

$

80,055

 

 

$

123,733

 



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

  



1



 


ALADDIN INTERNATIONAL, INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)



 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

(Note 1)

 

 

 

 

 

(Note 1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Audit fees

 

 

2,700

 

 

 

1,850

 

 

 

9,700

 

 

 

9,350

 

Professional fees

 

 

8,043

 

 

 

36,830

 

 

 

8,610

 

 

 

42,570

 

Payroll expenses

 

 

 

 

 

43,881

 

 

 

 

 

 

43,881

 

Rent expense

 

 

30,047

 

 

 

 

 

 

60,093

 

 

 

 

Other

 

 

4,048

 

 

 

4,854

 

 

 

8,248

 

 

 

6,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

 

44,838

 

 

 

87,415

 

 

 

86,651

 

 

 

102,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(44,838

)

 

 

(87,415

)

 

 

(86,651

)

 

 

(102,387

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense (Income), net

 

 

3,721

 

 

 

4,196

 

 

 

7,442

 

 

 

4,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Expenses

 

 

3,721

 

 

 

4,196

 

 

 

7,442

 

 

 

4,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(48,559

)

 

$

(91,611

)

 

$

(94,093

)

 

$

(106,594

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Comprehensive Loss

 

$

(48,559

)

 

$

(91,611

)

 

$

(94,093

)

 

$

(106,594

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share

 

 

(0.01

)

 

 

(0.02

 

 

(0.02

)

 

 

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

4,548,435

 

 

 

4,548,435

 

 

 

4,548,435

 

 

 

4,548,435

 





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





2



 


ALADDIN INTERNATIONAL, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)


 

 

Six Months Ended

 

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net loss

 

$

(94,093

)

 

$

(106,594

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

277

 

 

 

 

Interest expense to accrete debt discount on beneficial conversion feature of related party convertible note

 

 

 

 

 

2,872

 

Imputed interest on related party convertible note

 

 

7,442

 

 

 

1,334

 

Increase in accounts payable & accrued expenses

 

 

42,973

 

 

 

164,015

 

Decrease (increase) in pre-paid expenses & deposits

 

 

869

 

 

 

(136,466

Increase in advance from affiliates

 

 

 

 

 

(5,839

)

Net Cash Used in Operating Activities

 

 

(42,532

)

 

 

(80,678

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from convertible note

 

 

 

 

 

200,000

 

Additional paid-in capital

 

 

 

 

 

1,223

 

Net Cash Provided by Financing Activities

 

 

 

 

 

201,223

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) in Cash

 

 

(42,532

)

 

 

120,545

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, Beginning of Period

 

 

50,149

 

 

 

1,195

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, End of Period

 

$

7,617

 

 

$

121,740

 

 

 

 

 

 

 

 

 

 

Interest Paid

 

$

 

 

$

11

 

 

 

 

 

 

 

 

 

 

Income Taxes Paid

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Non-Cash Transactions:

 

 

 

 

 

 

 

 

Debt discount on convertible note

 

$

 

 

$

8,059

 



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





3



ALADDIN INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2016

(Unaudited)



(1)

Basis of Presentation and Summary of Accounting Policies


Basis of Presentation


The accompanying unaudited condensed interim financial statements of Aladdin International, Inc. (the “Company” or “Aladdin”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of December 31, 2016 and 2015 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s June 30, 2016 audited financial statements. The results of operations for these interim periods are not necessarily indicative of the results for the entire year.


The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company has no business operations, has had recurring losses and has negative working capital and shareholders’ deficits, and due to the uncertainty of the Company’s ability to meet its current operating and capital expenses, there is substantial doubt about the Company’s ability to continue as a going concern, as the continuation and expansion of its business is dependent upon obtaining further financing. The Company has financed its operations primarily through the sale of stock and advances from a related party.  There is no assurance that these advances will continue in the future.  The condensed interim financial statements do not include any adjustments that might result from the outcome of these uncertainties.  


The accompanying condensed consolidated interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2016, filed on October 13, 2016 (“Annual Report”).  Interim results for the three and six months ended December 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2017.


(a)

Related Party Debt


Convertible Note


The Company occasionally obtains financing from related parties in the form of notes payable which are convertible into shares of the Company’s common stock. The Company accounts for convertible notes and debt issuance costs associated with convertible notes following the guidance set forth in ASC 470-20, Debt with Conversion and Other Options; ASC 480, Distinguishing Liabilities from Equity; ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity; EITF 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock; and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs.


The terms of such convertible notes payable are analyzed by management to determine their accounting treatment, including determining whether conversion features are required to be bifurcated and treated as a discount, allocation of fair value of the issuance to the debt instrument and any beneficial conversion features, and the applicable classification of the convertible notes payable as debt, equity or mezzanine temporary equity.


The intrinsic value of the embedded conversion feature of related party convertible notes payable are included in the discount to notes payable, which is accreted to interest expense over the expected term of the note using the effective interest method. The Company’s management also estimates the total fair value of any beneficial conversion feature in allocating debt proceeds. The proceeds allocated to the beneficial conversion feature are determined by taking the estimated fair value of shares issuable under the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of the Company’s common stock as of the date of issuance.


Non-convertible Note


The Company occasionally obtains financing from related parties in the form of notes payable. The Company accounts for such notes following the guidance set forth in ASC 470, Debt, and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) simplifying the Presentation of Debt Issuance Costs.



4



ALADDIN INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2016

(Unaudited)



(1)

Basis of Presentation and Summary of Accounting Policies (Continued)


(b)

Concentrations


Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents.  At December 31, 2016 and June 30, 2016, the Company had no amounts of cash or cash equivalents in financial institutions in excess of amounts insured by agencies of the U.S. Government.


(c)

Reclassifications


Certain amounts previously reported have been reclassified to conform to current presentation.


(d)

Operating Leases


The Company accounts for operating leases in accordance with SFAS No. 13, “Accounting for Leases,” and Financial Accounting Standards Board (“FASB”) Technical Bulletin 88 1, Issues Relating to Accounting for Leases. Accordingly, rent expense under operating leases for the Company s administrative office is recognized on a straight-line basis over the original term of each lease, inclusive of predetermined rent escalations or modifications.


(2)

Capital Stock


Pursuant to the Articles of Incorporation of the Company, the Company is authorized to issue 780,000,000 shares of common stock with $.001 par value and 20,000,000 shares of preferred stock with $.001 par value. There were 4,548,435 shares of common stock issued and outstanding on December 31, 2016 and June 30, 2016.


There were no preferred shares outstanding as of December 31, 2016.


The Company occasionally incurs expenses that are paid by related parties. When the related parties do not expect repayment these amounts are recorded as increases in additional paid-in capital. However, during the six months ended December 31, 2016 related parties paid no expenses. Also included in additional paid in capital is $7,442 of imputed interest incurred during the six months ended December 31, 2016.


(3)

Related Party Transactions


Before February 7, 2016, the Company used the offices of its former President for its minimal office facility needs for no consideration. No provision for these costs has been provided since it has been determined that they are immaterial.


On October 23, 2015, the Company and Billion Rewards Development (Billion Rewards), a British Virgin Island corporation whose beneficial owner is Mr. Shi Jianxiang, entered into a Loan Agreement (“October Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $200,000 (the “October Loan”) to the Company with an original maturity date of April 30, 2016 extended to January 31, 2017 and bearing no interest. Under the October Loan Agreement, if the Company conducted an offering for a total amount of $2,000,000 (the “Offering”) on or before February 28, 2016, the October Loan would be automatically converted into shares of common stock, par value $.001 per share of the Company at the conversion price equal to the purchase price in the Offering. In addition, pursuant to the October Loan Agreement, Billion Rewards would be entitled to convert any portion or all of the October Loan into shares of Common Stock of the Company, at the conversion price of volume weighted average price of the Common Stock as reported by Bloomberg for twenty trading days prior to such conversion. The Company estimated the intrinsic value of this embedded conversion feature and recorded it as a discount to related party convertible debt of $8,059 and amortized it fully as of June 30, 2016. On November 5, 2015 the Company received the October Loan in the amount of $200,000; the October Loan remains outstanding as of December 31, 2016.  On May 5, 2016 the Company and Billion Rewards entered into an amendment  agreement (“Amendment No 1 to October Loan Agreement”), whereby Billion Rewards agreed to modify and amend the October Loan to make it nonconvertible and to extend the due date from April 30, 2016 to January 31, 2017 and bearing no interest.


On January 7, 2016 the Company and Billion Rewards entered into a loan agreement (“January Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $100,000 (the “January Loan”) to the Company with the maturity date of January 31, 2017 and bearing no interest. On January 12, 2016 the Company received the January Loan in the amount of $100,000; the January loan remains outstanding as of December 31, 2016.



5



ALADDIN INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2016

(Unaudited)



(3)

Related Party Transactions (Continued)


On May 19, 2016 the Company and Billion Rewards entered into a loan agreement (“June Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $43,840 (the “June Loan”) to the Company with the maturity date of April 30, 2017 and bearing no interest. On June 9, 2016 the Company received the June Loan in the amount of $43,840; the June loan remains outstanding as of December 31, 2016.


During the year ended June 30, 2016, Billion Rewards advanced $24,706 as additional paid in capital to the Company.


No additional advances occurred in the six months ended December 31, 2016.


(4)

Commitments and Contingencies


Operating Lease


The Company entered into a non-cancelable operating sub-lease for office space on December 22, 2015 for a term that expires August 18, 2017 and paid $116,523 to the landlord of which $63,558 is a security deposit and $52,965 for five months prepaid rent of which $52,965 has been expensed as of December 31, 2016. The sub-lease commenced on February 7, 2016 and expires on August 18, 2017. As of December 31, 2016, the Company owed $54,789 related to this lease. Management is attempting to transfer the sub-lease to a related party.


(5)

Subsequent Events


The Company has evaluated events subsequent to December 31, 2016 and through the date the financial statements were available to be issued, to assess the need for potential recognition or disclosure in this report.


No subsequent events were noted that require recognition or disclosure in the financial statements.








6



 


ITEM 2. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements and the notes to those financial statements appearing elsewhere in this Report.


Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.


The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.


The "Company", "we," "us," and "our," refer to Aladdin International, Inc.


Overview


Aladdin International, Inc. (the "Company") was incorporated under the laws of the state of Minnesota on May 3, 1972. The Company was a franchisee of fast food restaurants in Milwaukee, Wisconsin until the franchised restaurants were sold in October 1998. Since June 2010, the Company has had insignificant operations and assets consisting solely of cash. As such, the Company is presently defined as a "shell" company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).


On February 14, 2008, the Company entered into a Stock Purchase Agreement with Michael Friess and Sanford Schwartz, both of whom have been successful in completing merger transactions between public blank-check companies they controlled with private operating companies. The Stock Purchase Agreement provided that some time following the sale of the Company’s real estate and the distribution of the sale proceeds to the Company’s shareholders, each of Mr. Friess and Mr. Schwartz would purchase 1,819,374 shares of the Company’s common stock (representing 40% of the then-to-be outstanding shares of the Company’s common stock) for $10,000. On June 24, 2010, the Company sold the real estate. The Board of Directors declared a dividend of $0.148 per share paid on May 6, 2011, to its shareholders of record on March 31, 2011. On July 16, 2014, in connection with the sale of the shares to Mr. Friess and Mr. Schwartz, Mr. Friess and Mr. Schwartz were appointed to the Company’s Board of Directors, the then current Directors resigned from the Board, Mr. Friess was appointed CEO of the Company, and Mr. Schwartz was appointed CFO and Secretary.


On November 25, 2014, the Company held a shareholder meeting to reincorporate the Company in the State of Nevada and amend the Articles of Incorporation to increase the authorized common stock of the Company to seven hundred eighty million (780,000,000) shares of common stock and to authorize the creation of 20,000,000 shares of preferred stock.


On July 20, 2015, Mr. Michael Friess and Mr. Sanford Schwartz (each, a “Seller,” together, the “Sellers”) and Billion Rewards Development Limited, a British Virgin Islands corporation (the “Purchaser”), entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Sellers sold to the Purchaser, and the Purchaser purchased from the Sellers, an aggregate of 3,638,748 shares of Common Stock of the Company (the “Shares”), which represented 80% of the issued and outstanding shares of Common Stock for the purchase price of $300,000.


The closing of the transaction occurred on July 20, 2015 (the “Closing”). In connection with the Purchase Agreements, Mr. Sanford Schwartz resigned as the CFO and director of the Company, and Mr. Michael Friess resigned as a CEO and president of the Company. Mr. Ningdi Chen was appointed as the Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary, and director of the Company as of July 20, 2015. As a result of the transactions, control of the Company passed to the Purchaser (the “Change of Control Transaction”). Post-Closing, Michael Friess resigned as a director effective on the tenth day following the Company’s mailing of this Information Statement on Schedule 14f-1 to its shareholders (the “Effective Date”), which occurred on July 23, 2015. Immediately after the Closing, the Shares acquired by the Purchaser comprised 80% of the issued and outstanding Common Stock of the Company.




7



 


The Company has opted to become a "blank check" company and to further engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. At this time, the Company's purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation.


The Company has opted to register its common stock pursuant to section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) in an effort to maximize shareholder value. The best use and primary attraction of the Company as a merger partner or acquisition vehicle will be its status as a reporting public company. Any business combination or transaction is expected to result in a significant issuance of shares and substantial dilution to present stockholders of the Company.


The proposed business activities described herein classify the Company as a "blank check" company. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any additional offerings of the Company's securities, either debt or equity, until such time as the Company has successfully implemented its business plan described herein.


At this time, the Company's purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is intentionally general and is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.


The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The Company may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. However, there is no guarantee that any of such merger or acquisition will be successful.


The Company intends to advertise and promote the Company privately. The Company has not yet prepared any notices or advertisements.


The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes), for all shareholders and other factors.


The Company has little or no capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes the Company will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly registered company without incurring the cost and time required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including the costs of preparing Form 8- K's, 10-K's and 10-Q's, agreements and related reports and documents. The Exchange Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the Exchange Act. The officers and directors of the Company have not conducted market research and are not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.




8



 


The analysis of new business opportunities will be undertaken by, or under the supervision of, the officer and director of the Company. Management intends to concentrate on identifying preliminary prospective business opportunities, which may be brought to its attention through present associations of the Company's officer and director. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition of acceptance of products, services, or trades; name identification; and other relevant factors. The Company will not acquire or merge with any company for which audited financial statements cannot be obtained prior to the closing of the proposed transaction.


The Company will not restrict its search for any specific kind of firms, but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer. The Company may also, at its discretion, obtain funds in one or more private placements to be used to finance and consummate a merger or acquisition of a business opportunity.


On October 1, 2015, Kai Ming Zhao accepted an offer prescribed in the offer letter ("Offer Letter") from the Company to serve as the Chief Executive Officer of the Company. Under the Offer Letter, Mr. Zhao's total salary was $150,000 per year, with cash bonus based on performance. On October 20, 2015, the Board of Directors of the Company accepted the resignation of Mr. Ningdi Chen as the Chief Executive Officer, Chief Financial Officer, President, Secretary, and Treasurer of the Company. Also on October 20, 2015, the Board of Directors appointed Mr. Kai Ming Zhao as the Chief Executive Officer, President, Secretary, and Treasurer of the Company. Mr. Kai Ming Zhao is also the principal accounting officer of the Company.


On May 20, 2016, the Board of Directors of Aladdin International Inc. (“Company”) accepted the resignation of Mr. Kai Ming Zhao as the Chief Executive Officer, Chief Financial Officer, President, Secretary, and Treasurer of the Company, effective immediately after the election of Mr. Qinghua Chen to the Board of Directors as described below and the filing of this Form 8-K. Mr. Zhou’s resignation as an officer does not result from any disagreement with the Company, its management, or the Board of Directors, on any matter relating to the Company’s operations, policies or practices. Also on May 20, 2016, the Board of Directors appointed Mr. Qinghua Chen as a Director and, effective upon the resignation of Mr. Zhao referenced above, as the Chief Executive Officer, President, Secretary, and Treasurer of the Company. Also on May 20, 2016, the Board of Directors of the Company accepted the resignation of Mr. Ningdi Chen as, effective immediately after the election of Mr. Qinghua Chen to the Board of Directors. Mr. Ningdi Chen’s resignation as a Director does not result from any disagreement with the Company, its management, or the Board of Directors, on any matter relating to the Company’s operations, policies or practices.


On October 23, 2015, the Company and Billion Reward Development Limited ("Billion Reward"), our majority shareholder which owns 80% of total issued and outstanding shares of the common stock of the Company, entered into a Loan Agreement ("October Loan Agreement"), whereby Billion Reward agrees to provide a loan in the amount of $200,000 (the "October Loan") to the Company with an original maturity date of April 30, 2016 extended to January 31, 2017 and bearing no interest. Under the October Loan Agreement, if the Company conducts an offering for a total amount of $2,000,000 (the "Offering") on or before February 28, 2016, the Loan will be automatically converted into shares of common stock, par value $.001 per share ("Common Stock") of the Company at the conversion price equal to the purchase price in the Offering. Pursuant to the October Loan Agreement, Billion Reward will be entitled to convert any portion or all of the October Loan into shares of Common Stock of the Company, at the conversion price of volume weighted average price of the Common Stock as reported by Bloomberg for twenty trading days prior to such conversion. On November 5, 2015, the Company received the October Loan in the amount of $200,000; the October Loan remains outstanding as of December 31, 2016. On May 5, 2016 the Company and Billion Rewards entered into an amendment  agreement (“Amendment No 1 to October Loan Agreement”), whereby Billion Rewards agreed to modify and amend the October Loan to make it nonconvertible and to extend the due date from April 30, 2016 to January 31, 2017 and bearing no interest.


On January 7, 2016 the Company and Billion Rewards entered into a loan agreement (“January Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $100,000 (the “January Loan”) to the Company with the maturity date of January 31, 2017 and bearing no interest. On January 12, 2016 the Company received the January Loan in the amount of $100,000; the January loan remains outstanding as of December 31, 2016.




9



 


On May 19, 2016 the Company and Billion Rewards entered into a loan agreement (“June Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $43,840 (the “June Loan”) to the Company with the maturity date of April 30, 2017 and bearing no interest. On June 9, 2016 the Company received the June Loan in the amount of $43,840; the June loan remains outstanding as of December 31, 2016.


As of December 31, 2016, our accumulated deficit was $675,471. Our net loss for the three months and six months ended December 31, 2016 were $48,559 and $94,093, respectively. Our losses have principally been attributed to a lack of revenues while incurring operating expenses.


The following table provides selected condensed interim financial data about our company for the periods ended December 31, 2016 and 2015 and the year ended June 30, 2016. For detailed financial information, see the condensed interim financial statements included elsewhere herein.





 

 

December 31,

 

 

June 30,

 

Balance Sheet Data

 

2016

 

 

2016

 

Cash

 

$

7,617

 

 

$

50,149

 

Total assets

 

 

80,055

 

 

 

123,733

 

Total liabilities

 

 

420,653

 

 

 

377,680

 

Shareholders' equity (deficit)

 

 

(340,598

)

 

 

(253,947


Results of Operations


For the three months ended December 31, 2016 compared to the three months ended December 31, 2015


The following summary of our results of operations should be read in conjunction with our unaudited condensed interim financial statements included herein. Our unaudited operating results for the periods ended December 31, 2016 and 2015 are summarized as follows:


 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

 

 

$

 

 

$

 

 

$

 

Operating Expenses

 

 

44,838

 

 

 

87,415

 

 

 

86,651

 

 

 

102,387

 

Net Loss

 

 

(48,559

)

 

 

(91,611

)

 

 

(94,093

)

 

 

(106,594

)


Revenues


We did not earn any revenues for the three months periods ended December 31, 2016. We are presently in the development stage of our business and we can provide no assurance that we will begin earning revenues.


Operating Expenses


Our operating expenses for the three month periods ended December 31, 2016 and 2015 (unaudited) are outlined in the table below:


 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Audit fees

 

$

2,700

 

 

$

1,850

 

 

$

9,700

 

 

$

9,350

 

Professional fees

 

 

8,043

 

 

 

36,830

 

 

 

8,610

 

 

 

42,570

 

Payroll expenses

 

 

 

 

 

43,881

 

 

 

 

 

 

43,881

 

Rent expenses

 

 

30,047

 

 

 

 

 

 

60,093

 

 

 

 

Other

 

 

4,048

 

 

 

4,854

 

 

 

8,248

 

 

 

6,586

 

Total Operating Expenses

 

$

44,838

 

 

$

87,415

 

 

$

86,651

 

 

$

102,387

 




10



 


Net Loss


Operating expenses were composed of audit and professional fees and general and administrative expenses. The net loss for the six months ended December 31, 2016 and 2015 were $94,093 and $106,594, respectively.


Liquidity and Capital Resources  


The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern.


It is the intent of management to provide the working capital necessary to support and preserve the integrity of the Company but there is no legal obligation for management to provide any additional funding to the Company. It is anticipated that the Company will require approximately $200,000 during the next 12 months to implement its business plan. As of December 31, 2016, the Company has limited capital with which to pay anticipated expenses.


In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments relative to the recoverability of assets and classification of liabilities that might be necessary should the company be able to continue as a going concern. The Company has financed its operations primarily through the sale of stock and advances from a related party. There is no assurance there will be future sales of stock or that these advances will continue in the future.


As of December 31, 2016, there is substantial doubt about the Company's ability to continue as a going concern.


Critical Accounting Policies and Estimates


Management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, (“U.S. GAAP”), on the basis that the Company will continue as a going concern. Due to the uncertainty of the Company’s ability to meet its current operating and capital expenses, there is substantial doubt about the Company’s ability to continue as a going concern, as the continuation and expansion of our business is dependent upon obtaining further financing. Our condensed interim financial statements do not include any adjustments that might result from the outcome of these uncertainties.


The preparation of these condensed interim financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the present circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.


While our significant accounting policies are more fully described in Note 1 to our financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2016, filed on October 13, 2016 (“Annual Report”) , we believe that the following accounting policies are the most critical to assist you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.


(a)

Related Party Debt


Convertible Notes


The Company occasionally obtains financing from related parties in the form of notes payable which are convertible into shares of the Company’s common stock. The Company accounts for convertible notes and debt issuance costs associated with convertible notes following the guidance set forth in ASC 470-20, Debt with Conversion and Other Options; ASC 480, Distinguishing Liabilities from Equity; ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity; EITF 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock; and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs.




11



 


The terms of such convertible notes payable are analyzed by management to determine their accounting treatment, including determining whether conversion features are required to be bifurcated and treated as a discount, allocation of fair value of the issuance to the debt instrument and any beneficial conversion features, and the applicable classification of the convertible notes payable as debt, equity or mezzanine temporary equity.


The intrinsic value of the embedded conversion feature of related party convertible notes payable are included in the discount to notes payable, which is accreted to interest expense over the expected term of the note using the effective interest method. The Company’s management also estimates the total fair value of any beneficial conversion feature in allocating debt proceeds. The proceeds allocated to the beneficial conversion feature are determined by taking the estimated fair value of shares issuable under the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of the Company’s common stock as of the date of issuance.


Non-convertible Notes


The Company occasionally obtains financing from related parties in the form of notes payable. The Company accounts for such notes following the guidance set forth in ASC 470, Debt, and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) simplifying the Presentation of Debt Issuance Costs.


Off-Balance Sheet Arrangements


We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


ITEM 3. 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).  


ITEM 4. 

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures


Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.


In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2016.


Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.


Changes in Internal Controls over Financial Reporting


As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting during the three months ended December 31, 2016, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.




12



 


Management’s Report on Internal Control over Financial Reporting


Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of December 31, 2016, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – Intergrated Framework as a basis for our assessment.


Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.


A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified the following material weaknesses in our internal control over financial reporting. (1) The Company has inadequate staffing and supervision within the bookkeeping and accounting operations of our company. The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. (3) The Company has a limited corporate governance structure. Our corporate governance responsibilities are performed by the Board of Directors, none of whom are independent under applicable standards: we do not have an audit committee or compensation committee. Because our Board of Directors only meets periodically throughout the year, some of our corporate governance functions are not performed concurrent (or timely) with the underlying transactions including evaluation of the application of accounting principles and disclosures relating to those transactions. (4) Certain internal controls were not fully operating and effective in a manner to effectively support the requirements of the financial reporting and period-end close process. Principally, this related to the controls and procedures surrounding the consistent completion, review and approval of key balance sheet account analyses and reconciliations. Material errors were corrected in the preparation of the financial statements for the year ended June 30, 2016 and the three months ended September 30, 2016. It is reasonably possible that, if not remediated, these control deficiencies could result in a material misstatement of the Company's financial statements in a future annual or interim period. Management is aware of these issues and is planning to implement more stringent controls in the future.


As we are not aware of any instance in which the company failed to identify or resolve a disclosure matter or failed to perform a timely and effective review, we determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our resources at this time and not in the interest of shareholders.


Because of the above condition, the Company’s internal controls over financial reporting were not effective as of December 31, 2016.







13



 


PART II – OTHER INFORMATION

 

ITEM 1. 

LEGAL PROCEEDINGS.


None.

 

ITEM 1A.

RISK FACTORS.

 

Not applicable to a smaller reporting company.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.


None.


ITEM 3. 

DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. 

MINE SAFETY DISCLOSURES.


Not Applicable.


ITEM 5. 

OTHER INFORMATION.


None


ITEM 6. 

EXHIBITS.

 

Exhibit
Number

 

Description of Exhibit

31.1

     

Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive and financial officer

32.1

 

Section 1350 Certification of principal executive officer and principal financial and accounting officer

101

 

XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.






14



 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 

Aladdin International, Inc.

 

 

 

 

 

 

Date: January 27, 2017

By

/s/ Qinghua Chen

 

 

Name: Qinghua Chen

 

 

Title: Chief Executive Officer, President, Treasurer, Secretary



 

 








15