Item 7.
|
Management's Discussion and Analysis of Financial Condition and Results of Operation
|
Forward-Looking Statements
This Annual Report on
Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. The words "believe," "expect," "anticipate," "project," "target," "optimistic,"
"intend," "aim," "will" or similar expressions are intended to identify forward-looking statements.
Such statements include, among others, those concerning our expected financial performance and strategic and operational plans,
as well as all assumptions, expectations, predictions, intentions or beliefs about future events. These statements are based on
the beliefs of our management as well as assumptions made by and information currently available to us and reflect our current
view concerning future events. As such, they are subject to risks and uncertainties that could cause our results to differ materially
from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among many others: our
ability to consummate a successful business transaction; uncertainty of capital resources; the speculative nature of our business;
our ability to successfully implement new strategies; the loss of key personnel; any of the factors in the "Risk Factors"
section of this report; and any statements of assumptions underlying any of the foregoing. We assume no obligation and do not intend
to update these forward-looking statements, except as required by law.
By their nature, all
forward looking statements involve risk and uncertainties. All phases of the Company's operations involve risks and uncertainties,
many of which are outside of the Company's control, and any one of which, or a combination of which, could materially affect the
Company's results of operations and whether the forward looking statements ultimately prove to be correct. Actual results may differ
materially from those contemplated by the forward looking statements for a number of reasons.
Overview
The Company was organized
as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held corporation. Our principal business objective will be to achieve long-term growth potential through a
combination with a business rather than immediate, short-term earnings. There can be no assurance that the Company will ever consummate
a business combination and achieve long-term growth potential or immediate, short-term earnings from any business combination the
Company enters into.
Operating Expenses
During the fiscal years ended April 30,
2017 and 2016 we have incurred $38,881 and $36,329 in expenses, respectively, including fees paid to the Company’s U.S. securities
counsel and independent accounting firm and fees associated with the SEC filings.
Going Concern
The Company does not
currently engage in any business activities that provide cash flow. During the next 12 months we anticipate incurring costs related
to:
●
|
filing of Exchange Act reports,
|
●
|
payment of annual corporate fees, and
|
●
|
investigating, analyzing and consummating an acquisition.
|
As of April 30, 2017,
the Company has an accumulated deficit of $102,335 Management anticipates that fees associated with filing of Exchange Act reports
including accounting fees and legal fees and payment of annual corporate fees will not exceed $75,000 within next 12 months. We
do not currently intend to retain any entity to act as a "finder" to identify and analyze the merits of potential target
businesses. Management intends to search for a business combination by contacting various sources including, but not limited to,
our affiliates, lenders, investment banking firms, private equity funds, consultants and attorneys and does not plan to conduct
a complete and exhaustive investigation and analysis of a business opportunity. Management decisions, therefore, will likely be
made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds, would
be desirable. If the management can find a suitable target company, we will have to budget for additional fees relating to the
investigation into the target company (including due diligence and possibly visiting the facilities) and consummating the reverse
merger, which may cost between $125,000 to $150,000. We expect that the expenses for the next 12 months and beyond such time will
be paid with amounts that may be loaned to or invested in us by our stockholders, management or other investors. Since we have
minimal assets and will continue to incur losses due to the expenses associated with being a reporting company under the Exchange
Act, we may cease business operations if we do not timely consummate a business combination.
Currently, our ability
to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary
financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability
to continue as a going concern is also dependent on our ability to find a suitable target company and enter into a possible reverse
merger with such company. Management's plan includes obtaining additional funds by equity financing through a reverse merger transaction
and/or related party advances. However there is no assurance of additional funding being available.
The Company may consider
a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new
products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial
or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition
of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading
market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.
Any target business that
is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities
without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business
and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business
combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to
evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess
all significant risks.
Our management anticipates
that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of
interest for present and prospective stockholders, which is likely to occur as a result of our management's plan to offer a controlling
interest to a target business in order to achieve a tax-free reorganization.
The Company anticipates
that the selection of a business combination will be complex and extremely risky. Our potential merger targets are firms seeking
either the benefits of a business combination with an SEC reporting company and/or the perceived benefits of becoming a publicly
traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating
or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors
in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater
flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. While a private operating company
may achieve the same benefits by filing its own Exchange Act registration statement, such benefits can be achieved at a potentially
faster rate with limited regulatory review through the completion of a business combination with a public reporting company. A
potentially available business combination may occur in many different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
The time required to select and evaluate a target business and to structure and complete a business combination cannot presently
be ascertained with any degree of certainty.
In identifying, evaluating
and selecting a target business, we may encounter intense competition from other entities having a business objective similar to
ours. There are numerous blank check companies that have gone public in the United States that have significant financial resources,
that are seeking to carry out a business plan similar to our business plan. Many of these entities are well established and have
extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors
also possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted
with those of many of these competitors.
Liquidity and Capital Resources
Net cash
used in operating activities was $38,881 and $
36,329
in the fiscal years ended April 30, 2017
and 2016, respectively. The increase was due to an increase in professional fees during the year ended April 30, 2017.
We suffered recurring
losses from operations and have an accumulated deficit of $102,335 as of April 30, 2017. Currently, we are a non-operating public
company. We seek suitable candidates for a business combination with a private company. In the event we use all of our cash resources,
the shareholders have indicated their willingness to loan us funds at the prevailing market rate, assuming we find a suitable candidate
for a business combination, until such business combination is consummated. Even though this is the shareholders current intention,
they have made no firm commitment and it is at their sole discretion whether or not to fund us. In the event the shareholders do
not fund us, we will not have the funds necessary to operate and will have to dissolve.
Off-Balance Sheet Arrangements
We have not entered into
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
and would be considered material to investors.
Critical Accounting Polices
See Note 2 to the financial
statements for a discussion on critical accounting policies.
Related Party Transactions
See Note 6 to the financial
statements regarding related party transactions.
Item 8.
|
Financial Statements and Supplementary Data.
|
INDEX TO FINANCIAL
STATEMENTS
|
Page
|
Report
of Independent Registered Public Accounting Firm – George Stewart
|
F-1
|
Report
of Independent Registered Public Accounting Firm – Fruci & Associates II PLLC
|
F-2
|
Financial
Statements:
|
|
Balance
Sheets
|
F-3
|
Statements
of Operations
|
F-4
|
Statement
of Changes in Stockholders' Deficit
|
F-5
|
Statements
of Cash Flows
|
F-6
|
Notes
to Financial Statements
|
F-7
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Lvyuan Green Building Material Technology
Corp.
I have audited the accompanying balance
sheets of Lvyuan Green Building Material Technology Corp. as of April 30, 2016 and 2015, and the related statements of operations,
stockholders? equity and cash flows for each of the years in the two year period ended April 30, 2016. Lvyuan Green Building Material
Technology Corp.?s management is responsible for these financial statements.. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of Lvyuan Green Building Material Technology
Corp., as of April 30, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two year
period ended April 30, 2016 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note # 5 to the financial statements,
the Company has had minimal operations. This raises substantial doubt about its ability to continue as a going concern. Management?s
plan in regard to these matters is also described in Note # 5. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/S/ George Stewart
Seattle, Washington
July 29, 2016
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Lvyuan Green Building Material Technology Corporation
We
have audited the accompanying balance sheet of Lvyuan Green Building Material Technology Corporation as of April 30, 2017, and
the related statements of operations, stockholders’ equity (deficit), and cash flows for the year ended April 30, 2017.
Lvyuan Green Building Material Technology Corporation’s management is responsible for these financial statements. Our responsibility
is to express an opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lvyuan
Green Building Material Technology Corporation as of April 30, 2017, and the results of its operations and its cash flows for
the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note
5 to the financial statements, the Company has not yet established an ongoing source of revenues sufficient to cover its operating
costs, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Fruci
& Associates II, PLLC
Spokane,
WA
July
28, 2017
LVYUAN GREEN BUILDING MATERIAL TECHNOLOGY CORP.
|
Balance Sheets
|
as of April 30,
|
|
|
|
|
2017
|
2016
|
ASSETS
|
|
|
Current Assets:
|
|
|
Cash
|
$ -
|
$ -
|
Prepaid legal
|
-
|
-
|
Total Current Assets
|
-
|
-
|
TOTAL ASSETS
|
$ -
|
$ -
|
|
|
|
LIABILITIES & STOCKHOLDERS’ DEFICIT
|
|
|
Current Liabilities
|
|
|
Accounts payable
|
$ 3,755
|
$ -
|
Loan from director
|
74,380
|
39,254
|
Total Current Liabilities
|
78,135
|
39,254
|
|
|
|
TOTAL LIABILITIES
|
78,135
|
39,254
|
|
|
|
Commitments and Contingencies
|
$ -
|
$ -
|
|
|
|
Shareholders' Deficit:
|
|
|
Preferred stock, $.001 par value, 30,000,000 authorized, no shares issued and outstanding at April 30, 2017 and April 30, 2016, respectively.
|
-
|
-
|
Common stock, $.001 par value, 300,000,000 shares authorized, 6,910,000 issued and outstanding at April 30, 2017; and 6,910,000 issued and outstanding at April 30, 2016.
|
6,910
|
6,910
|
Additional paid-in capital
|
17,290
|
17,290
|
Accumulated deficit
|
(102,335)
|
(63,454)
|
Total Stockholders’ Deficit
|
(78,135)
|
(39,254)
|
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT
|
$ -
|
$ -
|
See accompanying notes to financial statements.
LVYUAN GREEN BUILDING MATERIAL TECHNOLOGY CORP.
|
Statements of Operations
|
for the years ended April 30,
|
|
|
|
|
2017
|
2016
|
Revenue
|
$ -
|
$ -
|
|
|
|
Operating Expenses:
|
|
|
General administrative expense
|
38,881
|
36,329
|
Total operating expenses
|
38,881
|
36,329
|
|
|
|
Net loss from operations
|
(38,881)
|
(36,329)
|
Loss before income taxes
|
(38,881)
|
(36,329)
|
Provision for income taxes
|
-
|
-
|
Net Loss
|
$ (38,881)
|
$ (36,329)
|
|
|
|
Basic and diluted loss per share
|
$ (0.01)
|
$ (0.01)
|
|
|
|
Weighted average number of common shares outstanding basic and diluted
|
6,910,000
|
6,910,000
|
See accompanying notes to financial statements.
LVYUAN GREEN BUILDING MATERIAL TECHNOLOGY CORP.
|
Statement of Stockholders Deficit
|
as of April 30, 2017
|
|
|
Common Stock
.001 Par
|
|
|
|
Description
|
Shares
|
Amount
|
Additional Paid in Capital
|
Accumulated Deficit
|
Stock
holders' Deficit Totals
|
Balance 4/30/2015
|
6,910,000
|
$ 6,910
|
$ 17,290
|
$ (27,125)
|
$ (2,925)
|
|
|
|
|
|
|
Net Loss
|
|
|
|
(36,329)
|
(36,329)
|
4/30/2016
|
6,910,000
|
6,910
|
17,290
|
(63,454)
|
(39,254)
|
|
|
|
|
.
|
|
Net Loss
|
|
|
|
(38,881)
|
(38,881)
|
4/30/2017
|
6,910,000
|
6,910
|
17,290
|
(102,335)
|
(78,135)
|
See accompanying notes to financial statements.
LVYUAN GREEN BUILDING MATERIAL TECHNOLOGY CORP.
|
Statement of Cash Flows
|
for the years ended April 30,
|
|
|
|
|
2017
|
2016
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
Net loss
|
$ (38,881)
|
$ (36,329)
|
Adjustments to reconcile net loss to net
|
|
|
cash used in operating activities:
|
|
|
Changes in operating assets and liabilities:
|
|
|
Prepaid legal
|
-
|
|
Accounts payable
|
3,755
|
-
|
|
|
|
Net cash used in operating activities
|
(35,126)
|
(36,329)
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
-
|
-
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
Loan from related party
|
35,126
|
35,860
|
Net
cash provided by financing activities
|
35,126
|
35,860
|
|
|
|
Net increase (decrease) in cash
|
-
|
(469)
|
|
|
|
Cash at beginning of period
|
-
|
469
|
|
|
|
Cash at end of period
|
$ -
|
$ -
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
Cash paid for interest
|
-
|
-
|
Cash paid for taxes
|
-
|
-
|
See accompanying notes to financial statements.
LVYUAN GREEN BUILDING MATERIAL TECHNOLOGY
CORP.
NOTES TO FINANCIAL
STATEMENTS
1.
|
ORGANIZATION AND PRINCIPAL ACTIVITIES
|
Lvyuan Green Building Material Technology
Corp. (the “Company”) was incorporated in the State of Nevada on January 10, 2013 as Green Supplements Online Inc.
We changed our name to Lvyuan Green Building Material Technology Corp. on September 24, 2015. Our principal executive offices are
located at Room 01, 25/F, Kerry Center, No. 2008 Renmin South Road, Luohu District, Shenzhen City, Guangdong, People’s Republic
of China. Our phone number is +86-755-2218-4466.
Our business model was to buy nutrition
and dietary products from different manufacturers and resell those products under our private label. Our source of revenue from
operations was to be reselling nutrition and dietary supply products. The line of nutrition and dietary products that we intended
to market was to be standard non-proprietary supplements and other products that contained our label. Currently, we have not
yet initiated any product development efforts nor generated any revenue to date.
At present we have no employees, other
than our officers and directors, listed below.
Name
|
|
Age
|
|
Position
|
Wenbo Yu
|
|
58
|
|
President, Chairman of the Board of Directors, Chief Executive Officer, Director
|
Ming Huang
|
|
57
|
|
Chief Financial Officer, Treasurer and Director
|
Enlong Pan
|
|
59
|
|
Secretary and Director
|
Carmen Xiao Yan Yu
|
|
36
|
|
Director
|
Peter Tong
|
|
63
|
|
Director
|
Long Pan
|
|
29
|
|
Director
|
Jianfei Sun
|
|
43
|
|
Director
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
(a)
|
Basis of Presentation
|
The Company maintains its general ledger
and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations
of management. Accounting policies adopted by the Company conform to U.S. GAAP and have been consistently applied in the presentation
of financial statements. The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles
generally accepted in the United States of America and pursuant to the rules and regulations of the SEC.
|
(b)
|
Net loss per common share
|
The Company complies with accounting
and disclosure requirements of FASB ASC 260, “Earnings Per Share.” Net loss per common share is computed by dividing
net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. At April
30, 2017 and 2016, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or
converted into common stock and then share in the earnings of the Company. As a result, diluted loss per common share is the same
as basic loss per common share for the period.
The preparation of the financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at
the time the estimates are made; however actual results could differ materially from those estimates.
|
(d)
|
Recently issued or adopted standards
|
The Company does not expect the adoption
of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial
position or cash flow.
As of April 30, 2017,
and 2016, the Company had $78,135 and $39,254 in accrued liabilities, respectively. The accrued liabilities mainly consist of Professional
fees.
The Company
complies with the accounting and reporting requirements of FASB ASC, 740, "Income Taxes," which requires an asset and
liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed
for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
There were no unrecognized tax benefits as of April 30, 2017. FASB ASC 740 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.
For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were
accrued for the payment of interest and penalties at April 30, 2017. The Company is currently not aware of any issues under review
that could result in significant payments, accruals or material deviation from its position. The adoption of the provisions of
FASB ASC 740 did not have a material impact on the Company's financial position and results of operation and cash flows as of and
for the period ended April 30, 2017.
As of April 30, 2017, we had a net operating loss carry-forward of approximately $(102,335)
and a deferred tax asset of approximately $34,794 using the statutory rate of 34%. The deferred tax asset may be recognized
in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance
of $(34,794)
|
April 30, 2017
|
January 31, 2017
|
Deferred Tax Asset
|
$34,794
|
$21,574
|
Valuation Allowance
|
(34,794)
|
(21,574)
|
Deferred Tax Asset (Net)
|
$ -
|
$ -
|
The Company files an
income tax return in the U.S. federal jurisdiction and may file income tax returns in various U.S. states and foreign jurisdictions.
Generally, the Company is subject to income tax examinations by major taxing authorities during the three year period prior to
the period covered by these financial statements.
Due to the change
in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $102,335 for Federal
income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards
may be limited as to use in future years.
5.
|
GOING CONCERN AND CAPITAL RESOURCES
|
The Company does not
currently engage in any business activities that provide cash flow. During the next 12 months we anticipate incurring costs related
to:
●
|
filing of Exchange Act reports,
|
●
|
payment of annual corporate fees, and
|
●
|
investigating, analyzing and consummating an acquisition.
|
As of April 30, 2017,
the Company had an accumulated deficit of $102,335. Management anticipates that fees associated with filing of Exchange Act reports
including accounting fees and legal fees and payment of annual corporate fees will not exceed $75,000 within next 12 months. We
do not currently intend to retain any entity to act as a "finder" to identify and analyze the merits of potential target
businesses. Management intends to search for a business combination by contacting various sources including, but not limited to,
our affiliates, lenders, investment banking firms, private equity funds, consultants and attorneys and does not plan to conduct
a complete and exhaustive investigation and analysis of a business opportunity. Management decisions, therefore, will likely be
made without detailed feasibility studies, independent analysis, market surveys and the like which, if we had more funds, would
be desirable. If the management can find a suitable target company, we will have to budget for additional fees relating to the
investigation into the target company (including due diligence and possibly visiting the facilities) and consummating the reverse
merger, which may cost between $125,000 to $150,000. We expect that the expenses for the next 12 months and beyond such time will
be paid with amounts that may be loaned to or invested in us by our stockholders, management or other investors. Since we have
minimal assets and will continue to incur losses due to the expenses associated with being a reporting company under the Exchange
Act, we may cease business operations if we do not timely consummate a business combination.
Currently, our ability to continue as
a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing
to meet our obligations and repay our liabilities arising from normal business operations when they come due. Our ability to continue
as a going concern is also dependent upon our ability to find a suitable target company and enter into a possible reverse merger
with such company. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction
and/or related party advances. However, there is no assurance of additional funding being available.
The Company may consider a
business which has recently commenced operations, is a developing company in need of additional funds for expansion into new
products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing
financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may
involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires
to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant
expense, and loss of voting control which may occur in a public offering.
Any target business that is selected
may be a financially unstable company or an entity in its early stages of development or growth, including entities without established
records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially
unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity
in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent
in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
Our management anticipates that it will
likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for
present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling
interest to a target business in order to achieve a tax-free reorganization.
The Company anticipates that the selection
of a business combination will be complex and extremely risky. Our potential merger targets are firms seeking either the benefits
of a business combination with an SEC reporting company and/or the perceived benefits of becoming a publicly traded corporation.
Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms
on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating
a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring
acquisitions, joint ventures and the like through the issuance of stock. While a private operating company may achieve the same
benefits by filing its own Exchange Act registration statement, such benefits can be achieved at a potentially faster rate with
limited regulatory review through the completion of a business combination with a public reporting company. A potentially available
business combination may occur in many different industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities extremely difficult and complex. The time required to
select and evaluate a target business and to structure and complete a business combination cannot presently be ascertained with
any degree of certainty.
In identifying, evaluating and selecting
a target business, we may encounter intense competition from other entities having a business objective similar to ours. There
are numerous blank check companies that have gone public in the United States that have significant financial resources, that are
seeking to carry out a business plan similar to our business plan. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater
technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those
of many of these competitors.
6. LOANS FROM OFFICERS AND DIRECTORS
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As of April 30,
2017, the Company had received loans from its officers and directors aggregating $74,380. The loans are non-interest bearing and
contain no specific repayment terms.
7.
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COMMON STOCK TRANSACTIONS
During the past two years there have been
no stock issuances.
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None.
Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Change
in Registrant’s Certifying Accountant
As
reported on Form 8-K filed November 8, 2016, on November 8, 2016, the Board of Directors approved the engagement of Fruci &
Associates II, PLLC (“Fruci”) as the Company’s independent registered public accounting firm for the Company’s
fiscal year ended April 30, 2016, effective immediately, and dismissed George Stewart, CPA (“Stewart”) as the Company’s
independent registered public accounting firm. Stewart’s audit reports on the Company’s consolidated financial statements
as of and for the fiscal year ended April 30, 2016 did not contain an adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
The
former Accountant was engaged on August 25, 2015. During the fiscal year ended April 30, 2016 and the subsequent interim periods
through November 8, 2016, there were (i) no disagreements (as described in Item 304(a)( I)(iv) of Regulation S-K) between the Company
and Stewart on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to Stewart’s satisfaction, would have caused Stewart to make reference thereto in their reports on
the financial statements for such years, and (ii) no “reportable events” within the meaning of Item 304(a)(I)(v) of
Regulation.
During
the fiscal year ended April 30, 2016, and the subsequent interim periods through November 8, 2016, neither the Company nor anyone
acting on its behalf has consulted with Fruci regarding (i) the application of accounting principles to a specific transaction,
either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements or
the effectiveness of internal control over financial reporting, and neither a written report or oral advice was provided to the
Company that Fruci concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing,
or financial reporting issue, (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of
Regulation S-K, or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.
Item 9A.
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Controls and Procedures
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Evaluation of Disclosure Controls and
Procedures
Based on an evaluation
of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act
of 1934, as amended), as of April 30, 2017, the Company's Chief Executive Officer and Chief Financial Officer (its principal executive
officer and principal financial and accounting officer, respectively) has concluded that the Company's disclosure controls and
procedures were not effective at a reasonable assurance level.
Limitations on the Effectiveness of
Controls
A control system,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our
disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives.
Management's Report on Internal Control
over Financial Reporting
The Company's management
is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange
Act Rule 13a-15(f). Internal control over financial reporting is a process used to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of the Company's financial statements for external reporting in accordance with U.S.
GAAP. Internal control over financial reporting includes policies and procedure that pertain to the maintenance of records that
in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance
that transactions are recorded as necessary to permit preparation of our financial statements in accordance with U.S. GAAP; that
our receipts and expenditures are being made only in accordance with the authorization of the Company's board of directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's
assets that could have a material effect on the Company's financial statements.
An internal control system
over financial reporting has inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, 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 or procedures may deteriorate. However, these inherent limitations
are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce,
though not eliminate, the risk.
Management, under the
supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness
of the Company’s internal control over financial reporting as of April 30, 2017. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013) in Internal Control
Integrated Framework. Because of the material weaknesses described in the following paragraphs, management believes that, as of
April 30, 2017, the Company’s internal control over financial reporting was not effective based on those criteria.
Material weakness
Management identified
two material weaknesses in the design and operation of its internal controls: (i) the failure to retain sufficient qualified accounting
personnel to prepare financial statements in accordance with accounting principles generally accepted in the United States (including
a qualified Chief Financial Officer); and (ii) the Company’s accounting department personnel has limited knowledge and experience
in U.S. GAAP.
To remediate the material
weaknesses identified in internal control over financial reporting, the Company intends to: (i) hire additional personnel with
sufficient knowledge and experience in U.S. GAAP; and (ii) provide ongoing training courses in U.S. GAAP to existing personnel.
The Company will continue to monitor and assess our remediation initiatives to ensure that the aforementioned material weaknesses
are remediated.
Changes in Internal Control over Financial
Reporting
Other than as described
above, there have not been any changes in the Company's internal controls over financial reporting that occurred during the Company's
fiscal quarter ended April 30, 2017 that has materially affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.