UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

 

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

 

 

 

For the quarterly period ended February 28, 2021

 

or

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from ____________to ____________

 

Commission File Number 333-208237

 

FELLAZO CORP.

(Exact name of registrant as specified in its charter)

 

Nevada

 

30-0840869

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

8th Floor, Wisma Huazong, Lot 15285, 0.7 km Lebuhraya Sungei Besi,

43300 Seri Kembangan, Selangor Darul Ehsan, Malaysia

 

43300

(Address of principal executive offices)

 

(Zip Code)

 

+603 9547 9638

http://fellazo.com

(Registrant’s telephone number, including area code)

 

N/A

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

None

None

 

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 ☒     NO ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒     NO ☐

 

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

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐     NO ☒

 

Fellazo Corp has 86,264,000 common shares issued and outstanding as of April 19, 2021.

 

 

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition or Plan of Operation

 

9

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

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

 

15

 

 

 

 

 

 

SIGNATURES

 

16

 

 

 
2

Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

FELLAZO CORP.

Consolidated Balance Sheets

(Unaudited)

 

 

 

February 28,

 

 

August 31,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalent

 

$ 11,890

 

 

$ 6,665

 

Prepaid expense and deposit

 

 

-

 

 

 

7,728

 

Total Current Assets

 

 

11,890

 

 

 

14,393

 

TOTAL ASSETS

 

$ 11,890

 

 

$ 14,393

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 24,151

 

 

$ 30,137

 

Due to related party

 

 

1,223,950

 

 

 

1,073,252

 

Total Current Liabilities

 

 

1,248,101

 

 

 

1,103,389

 

TOTAL LIABILITIES

 

 

1,248,101

 

 

 

1,103,389

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 1,000,000,000 shares authorized; 86,264,000 shares issued and outstanding

 

 

86,264

 

 

 

86,264

 

Additional paid-in capital

 

 

36,122

 

 

 

36,122

 

Accumulated deficit

 

 

(1,262,587 )

 

 

(1,143,619 )

Accumulated other comprehensive loss

 

 

(3,215 )

 

 

(1,094 )

Total Fellazo Corp. Stockholders' Deficit

 

 

(1,143,416 )

 

 

(1,022,327 )

Non-controlling interest

 

 

(92,795 )

 

 

(66,669 )

Total Stockholders' Deficit

 

 

(1,236,211 )

 

 

(1,088,996 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$ 11,890

 

 

$ 14,393

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
3

Table of Contents

 

FELLAZO CORP.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

 

 

 

Three months ended

 

 

Six Months Ended

 

 

 

February 28,

 

 

February 29,

 

 

February 28,

 

 

February 29,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

$ 185,960

 

 

$ 18,273

 

 

$ 202,976

 

 

$ 56,138

 

Cost of Goods Sold

 

 

140,456

 

 

 

13,442

 

 

 

150,014

 

 

 

40,531

 

Gross profit

 

 

45,504

 

 

 

4,831

 

 

 

52,962

 

 

 

15,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

$ 104,422

 

 

$ 79,909

 

 

$ 195,848

 

 

$ 153,238

 

Total operating expenses

 

 

104,422

 

 

 

79,909

 

 

 

195,848

 

 

 

153,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(58,918 )

 

 

(75,078 )

 

 

(142,886 )

 

 

(137,631 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before taxes

 

 

(58,918 )

 

 

(75,078 )

 

 

(142,886 )

 

 

(137,631 )

Provision for income tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

 

(58,918 )

 

 

(75,078 )

 

 

(142,886 )

 

 

(137,631 )

Net loss attributable to the non-controlling interest

 

 

(3,833 )

 

 

(14,163 )

 

 

(23,918 )

 

 

(22,235 )

Net Loss Attributable to The Shareholders of Fellazo Corp.

 

$ (55,085 )

 

$ (60,915 )

 

$ (118,968 )

 

$ (115,396 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

(625 )

 

 

893

 

 

 

(4,329 )

 

 

763

 

Total comprehensive loss

 

 

(59,543 )

 

 

(74,185 )

 

 

(147,215 )

 

 

(136,868 )

Comprehensive Loss attributable to the non-controlling interest

 

 

(4,152 )

 

 

(13,708 )

 

 

(26,126 )

 

 

(21,846 )

Comprehensive Loss Attributable to The Shareholders of Fellazo Corp.

 

$ (55,391 )

 

$ (60,477 )

 

$ (121,089 )

 

$ (115,022 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and dilutive net loss per common share

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

$ (0.00 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

 

183,792,000

 

 

 

86,264,000

 

 

 

86,264,000

 

 

 

86,264,000

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
4

Table of Contents

 

FELLAZO CORP.

Consolidated Statements of Changes in Stockholders’ Deficit

(Unaudited)

 

For the six months ended February 28, 2021

 

 

 

 

 

 

 

Additional

 

 

 

 

Accumulated other

 

 

Non

 

 

 

 

 

Common Stock

 

 

Paid in

 

 

Accumulated

 

 

comprehensive

 

 

controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

loss

 

 

Interest

 

 

Total

 

Balance, August 31, 2020

 

 

86,264,000

 

 

$ 86,264

 

 

$ 36,122

 

 

$ (1,143,619 )

 

$ (1,094 )

 

$ (66,669 )

 

$ (1,088,996 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(63,883 )

 

 

-

 

 

 

(20,085 )

 

 

(83,968 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,815 )

 

 

(1,889 )

 

 

(3,704 )

Balance, November 30, 2020

 

 

86,264,000

 

 

$ 86,264

 

 

$ 36,122

 

 

$ (1,207,502 )

 

$ (2,909 )

 

$ (88,643 )

 

$ (1,176,668 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(55,085 )

 

 

-

 

 

 

(3,833 )

 

 

(58,918 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(306 )

 

 

(319 )

 

 

(625 )

Balance, February 28, 2021

 

 

86,264,000

 

 

$ 86,264

 

 

$ 36,122

 

 

$ (1,262,587 )

 

$ (3,215 )

 

$ (92,795 )

 

$ (1,236,211 )

 

For the six months ended February 29, 2020

 

 

 

Common Stock

 

 

Additional

Paid in

 

 

Accumulated

 

 

Accumulated other

comprehensive

 

 

Non

controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

loss

 

 

Interest

 

 

Total

 

Balance, August 31, 2019

 

 

86,264,000

 

 

$ 86,264

 

 

$ 36,122

 

 

$ (889,870 )

 

$ (209 )

 

$ (10,434 )

 

$ (778,127 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(54,481 )

 

 

-

 

 

 

(8,072 )

 

 

(62,553 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(64 )

 

 

(66 )

 

 

(130 )

Balance, November 30, 2019

 

 

86,264,000

 

 

$ 86,264

 

 

$ 36,122

 

 

$ (944,351 )

 

$ (273 )

 

$ (18,572 )

 

$ (840,810 )

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(60,915 )

 

 

-

 

 

 

(14,163 )

 

 

(75,078 )

Foreign currency translation gain

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

438

 

 

 

455

 

 

 

893

 

Balance, February 29, 2020

 

 

86,264,000

 

 

$ 86,264

 

 

$ 36,122

 

 

$ (1,005,266 )

 

$ 165

 

 

$ (32,280 )

 

$ (914,995 )

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

 
5

Table of Contents

 

FELLAZO CORP.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended

 

 

 

February 28,

 

 

February 29,

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net loss

 

$ (142,886 )

 

$ (137,631 )

Adjustments to reconcile net loss to net cash used in operations:

 

 

 

 

 

 

 

 

Expenses paid by related party

 

 

200,002

 

 

 

155,377

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid

 

 

1,133

 

 

 

5,240

 

Deposit

 

 

6,712

 

 

 

993

 

Accounts payable and accrued liabilities

 

 

(6,034 )

 

 

(16,200 )

Net Cash Provided by Operating Activities

 

 

58,927

 

 

 

7,779

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Expenses paid on behalf of related party

 

 

-

 

 

 

(350,642 )

Advances from related party

 

 

10,458

 

 

 

298,572

 

Repayment to related party

 

 

(64,122 )

 

 

(4,368 )

Net Cash Used in Financing Activities

 

 

(53,664 )

 

 

(56,438 )

 

 

 

 

 

 

 

 

 

Effects on changes in foreign exchange rate

 

 

(38 )

 

 

425

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

5,225

 

 

 

(48,234 )

Cash and cash equivalents, beginning of period

 

 

6,665

 

 

 

54,467

 

Cash and cash equivalents, end of period

 

$ 11,890

 

 

$ 6,233

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Interest paid

 

$ -

 

 

$ -

 

Income taxes paid

 

$ -

 

 

$ -

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements

 

 
6

Table of Contents

 

FELLAZO CORP.

Notes to the Consolidated Financial Statements

For the Period Ended February 28, 2021

(Unaudited)

 

NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN

 

Fellazo Corp. (“the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada on May 28, 2014.

 

The Company had commenced to be engaged in the industry of “Healthcare and Personal Wellness” products and related products. Activities include but not limited to sourcing raw materials or partly or fully finished products, manufacturing, wholesale and trading of these products.

 

Our office is located at 8th Floor, Wisma Huazong, Lot 15285, 0.7km Lebuhraya SungeiBesi, 43300 Seri Kembangan, Selangor Darul Ehsan, Malaysia.

 

Going Concern Uncertainties

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

As of February 28, 2021, the Company had an accumulated deficit of $1,262,587, and net loss of $142,886 for the six months ended February 28, 2021. Losses have principally occurred as a result of the substantial resources required for general and administrative expenses associated with our operations. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by U.S. GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended August 31, 2020.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the financial statements of the Company and its 49% owned subsidiary Fellazo Berhad, an entity under common control. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

 

 
7

Table of Contents

 

Variable Interest Entities

 

The Company holds both the power to direct the most significant activities of FB, as well as an economic interest in FB and, as such, is deemed to be the primary beneficiary or consolidator of FB. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

 

Revenue recognition

 

The Company commenced its operation in mid-October 2019. At this initial stage revenue is earned from the trading of raw bird-nest only.

 

The Company’s revenue recognition procedures consist of the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations pursuant to each of its sales transactions:

 

 

identify the contract with a customer;

 

identify the performance obligations in the contract;

 

determine the transaction price;

 

allocate the transaction price to performance obligations in the contract; and

 

recognize revenue as the performance obligation is satisfied.

 

However, at this initial stage of our operations which started with trading of raw bird-nest, the management is using this stage as exposure of management to the bird-nest business in order to learn and experience with our suppliers. who are bird-nest farmers or their agents, determination of quality of the raw material, the process of raw bird-nest cleaning of the different class of the raw material and market for these clean bird-nest.

 

At this initial stage we have not entered into any formal contracts with our suppliers and purchasers, most of the suppliers and purchasers are known to our management or introduced to the management by closed business friends.

 

Cost of Goods Sold – Trading of Raw Bird-Nest

 

At this initial stage of business operations which the management considered as exposure, gaining of knowledge and experience of the overall bird-nest business, our Cost of goods sold only include the actual cost of the raw bird-nest.

 

Foreign Currency Translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

 

Exchange Rates

 

February 28,

2021

 

 

August 31,

2020

 

Spot rate RM : USD exchange rate

 

 

0.2466

 

 

 

0.2401

 

Average period RM : USD exchange rate

 

 

0.2470

 

 

 

0.2357

 

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

Our Management Agent, Swipypay Berhad (a company established in Malaysia) is 80% owned by our Director – Mr. Yap Kit Chuan. Total outstanding amount due to our Management Agent was $1,223,950 and $1,073,252 as at February 28, 2021 and August 31, 2020 respectively. The additional amount of $150,698 incurred in the six months ended February 28, 2021 consisted of operating expenses paid on behalf of the Company of $200,002 and advances from a related party of $10,458, and a repayment to related party of $64,122. The difference of amount was a result of change of exchange rate.

  

 
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Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our unaudited consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

 

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

 

As used in this quarterly report, the terms “we”, “us”, “our”, “our company” or “the Company” mean Fellazo Corp., and Fellazo Berhad, a Malaysian company, of which we own 49%, unless otherwise indicated.

 

Overview of Corporate History

 

Fellazo Corp. was incorporated in the State of Nevada on May 28, 2014. The Company’s fiscal year end is August 31.

 

Overview of Current Business

 

The Company’s core business is “Healthcare and Personal Wellness” products - primarily bird-nest based, which include manufacturing and retail (retail chain and online). With our expertise in online applications platforms, we will be developing an online network platform to market and sell our products, and also create a system to source and purchase raw materials we required.

 

In mid of October 2019, the Company’s 49% subsidiary Fellazo Berhad (“FB”) started purchases of raw bird-nests directly from bird-nest farmers or their agents, and re-selling them to bird-nest processors; wherever possible these raw bird-nests are delivered directly from the farmer to the processor, so that we would not have to maintain a facility to store these raw bird-nests at an early stage of our business development.

 

FB had an arrangement to utilize a raw bird-nest processing factory located at our office building as a show factory for visits by our potential customers for processed bird-nest and bird-nest based health supplement.

 

FB had also placed an initial deposit for our OEM personal cleansing and nourishing facial products, these initial batches of products would generally be used for marketing purposes, such as trial samples for potential customers. FB is working with our Management Agent to seek out potential partners for our wellness and personal care products

 

 
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Due to the outbreak of Covid-19 pandemic and a government-imposed lockdown, we ceased operations mid-January 2020, and have yet to recover even with partial lifting of lockdown.

 

In view of the still unknown market, economy uncertainty and further regional and district lockdowns, and the fact that bird-nest has been considered a prestige product, our market may take a longer time to recover than other industries.

 

On August 1, 2020, FB executed an Addendum and Update to the existing Management Agent agreement with Swipypay Berhad to include additional functions (which include provision of the show factory) and a new monthly management fee increase from $5,000 to $10,000 per month, in anticipation of FB’s increase in operational volume in the 2021.

 

Our office is located at 8th Floor, Wisma Huazong, Lot 15285, 0.7 km Lebuhraya Sungei Besi, 43300 Seri Kembangan, Selangor Darul Ehsan, Malaysia. Our corporate website is http://fellazo.com.

 

We have never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.

 

Results of Operations

 

The following summary of our results of operations should be read in conjunction with our financial statements included elsewhere in this quarterly report.

 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.

 

Comparison of the three months ended February 28, 2021 and 2020

 

 

 

Three months ended

 

 

 

 

 

 

 

 

February 28,

 

 

February 29,

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Revenue

 

$ 185,960

 

 

$ 18,273

 

 

$ 167,687

 

 

 

918 %

Cost of Goods Sold

 

 

140,456

 

 

 

13,442

 

 

 

127,014

 

 

 

945 %

General and administrative expenses

 

 

104,422

 

 

 

79,909

 

 

 

24,513

 

 

 

31 %

Net loss

 

$ 58,918

 

 

$ 75,078

 

 

$ (16,160 )

 

(22

%)

 

For the three months ended February 28, 2021, we had revenue of $185,960 and cost of goods sold of $140,456, as compared to $18,273 and $13,442 for the same period in 2020. The Company started with trading of raw bird-nest since fiscal year 2020 and it is an initial stage of our operations. Due to the outbreak of Covid-19 pandemic and a government-imposed lockdown, we ceased operations mid-January 2020.

 

Our general and administrative expenses were $104,422 for the three months ended February 28, 2021, as compared to $79,909 for the same period in 2020. The increase in general and administrative expenses was primarily due to increased management fees and payroll expense.

 

Our net loss decreased by $16,160 due to an increase in gross profit offset by an increase in operating expense.

 

 
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Comparison of the six months ended February 28, 2021 and 2020

 

 

 

Six Months Ended

 

 

 

 

 

 

 

 

February 28,

 

 

February 29,

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Revenue

 

$ 202,976

 

 

$ 56,138

 

 

$ 146,838

 

 

 

262 %

Cost of Goods Sold

 

 

150,014

 

 

 

40,531

 

 

 

109,483

 

 

 

270 %

General and administrative expenses

 

 

195,848

 

 

 

153,238

 

 

 

42,610

 

 

 

28 %

Net loss

 

$ 142,886

 

 

$ 137,631

 

 

$ 5,255

 

 

 

4 %

 

For the six months ended February 28, 2021, we had revenue of $202,976 and cost of goods sold of $150,014, as compared to $56,138 and $40,531 for the same period in 2020. We started with trading of raw bird-nest since fiscal year 2020 and it is an initial stage of our operations and due to the outbreak of Covid-19 pandemic and a government-imposed lockdown, we ceased operations mid-January 2020.

 

Our general and administrative expenses were $195,848 for the six months ended February 28, 2021, as compared to $153,238 for the same period in 2020. The increase in general and administrative expenses was primarily due to increased management fees and payroll expense.

 

Our net loss increased by $5,255 due to an increase in operating expense offset by an increase in gross profit.

 

Liquidity and Capital Resources

 

Working Capital

 

 

 

February 28,

 

 

August 31,

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

 

%

 

Current assets

 

$ 11,890

 

 

$ 14,393

 

 

$ (2,503 )

 

(17

%)

Current liabilities

 

$ 1,248,101

 

 

$ 1,103,389

 

 

$ 144,712

 

 

 

13 %

Working capital deficiency

 

$ (1,236,211 )

 

$ (1,088,996 )

 

$ (147,215 )

 

 

14 %

 

The Company’s current assets consists of cash and cash equivalents of $11,890 at February 28, 2021, as compared to cash and cash equivalents of $6,665 and prepaid expense and deposit of $7,728 at August 31, 2020.

 

As at February 28, 2021, current liabilities consisted of accounts payable and accrued liabilities of $24,151 and due to a related party of $1,223,950, as compared to August 31, 2020, current liabilities consisted of accounts payable and accrued liabilities of $30,137 and due to a related party of $1,073,252. The increase in current liabilities is primarily due to the operating expenses paid by the related party.

 

Cash Flows

 

 

 

Six Months Ended

 

 

 

 

 

February 28,

 

 

February 29,

 

 

 

 

 

2021

 

 

2020

 

 

Change

 

Cash provided by operating activities

 

$ 58,927

 

 

$ 7,779

 

 

$ 51,148

 

Cash used in financing activities

 

 

(53,664 )

 

 

(56,438 )

 

 

2,774

 

Effects on changes in foreign exchange rate

 

 

(38 )

 

 

425

 

 

 

(463 )

Net change in cash and cash equivalents

 

$ 5,225

 

 

$ (48,234 )

 

$ 53,459

 

 

Cash Flow from Operating Activities

 

Cash flows provided by operations was $58,927 during the six months ended February 28, 2021, compared with $7,779 during the same period in 2020 The increase in cash provided by operating activities is mainly due to expenses paid by related party.

 

 
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Cash Flow from Financing Activities

 

During the six months ended February 28, 2021, the Company received $10,458 from a related party, and repaid $64,122 to a related party. During the six months ended February 29, 2020, the Company received $298,572 from a related party, paid $350,642 for expenses on behalf of a related party and repaid $4,368 to a related party.

 

Off-Balance Sheet Arrangements

 

We have no 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 stockholders.

 

Critical Accounting Policies and Estimates

 

Management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses and related disclosure of contingent liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates.

 

For a complete description of our critical accounting policies and estimates, refer to our 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 28, 2020.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable to smaller reporting companies.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

 
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An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2021. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms as a result of the following material weaknesses:

 

(1) lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;

 

(2) inadequate segregation of duties consistent with control objectives;

 

(3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S. GAAP and SEC disclosure requirements; and

 

(4) ineffective controls over period end financial disclosure and reporting processes.

 

The specific material weakness identified by our management was ineffective controls over certain aspects of the financial reporting process because of a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and inadequate segregation of duties. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements would not be prevented or detected on a timely basis.

 

We expect to be materially dependent upon third parties to provide us with accounting consulting services for the foreseeable future which we believe mitigates the impact of the material weaknesses discussed above. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP and establish an audit committee and implement internal controls and procedures, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements.

 

Changes in Internal Controls

 

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended February 28, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART –I - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

As of the date of this Quarterly Report on Form 10-Q, we are not a party to any legal proceedings that could have a material adverse effect on the Company’s business, financial condition or operating results. Further, to the Company’s knowledge no such proceedings have been threatened against the Company.

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

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.

 

 
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Table of Contents

 

Item 6. Exhibits

 

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the SEC:

 

Incorporated by Reference

Exhibit No.

Title

Form

Exhibit

Filing Date

3.1

Articles of Incorporation

S-1

3.1

11/27/2015

3.3

Bylaws

S-1

3.2

11/27/2015

3.4

Certificate of Amendment to Articles of Incorporation, effective as of September 19, 2017

8-K

3.1

09/22/2017

10.1

 

Stock purchase agreement

10-Q

10.1

04/23/2019

31.1*

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1+

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS+

XBRL Instance Document

101.SCH+

 

XBRL Taxonomy Extension Schema Document

 

101.CAL+

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.LAB+

 

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE+

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

101.DEF+

 

XBRL Taxonomy Extension Definition Linkbase Document

___________

* Filed herewith

+ In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

 
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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.

 

 

FELLAZO CORP.

 

(Registrant)

 

Dated: April 19, 2021

 

/s/ YAP KIT CHUAN

 

YAP KIT CHUAN

 

President, CEO, CFO, Treasurer,

Secretary and Chairman of the Board of Directors of the Company

 

(Principal Executive Officer, Principal Financial Officer

and Principal Accounting Officer)

 

 
16

 

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