MANAGEMENTS 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 Companys real estate and the distribution of the sale proceeds to the Companys shareholders, each of Mr. Friess and Mr. Schwartz would purchase 1,819,374 shares of the Companys common stock (representing 40% of the then-to-be outstanding shares of the Companys 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 Companys 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 represent 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 Companys 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.
6
On June 3, 2017, a total of $343,840 of the third party loans
was converted to a total of 2,631,764 shares of Common Stock of the Company (Form 8-K, the
Debt Conversion Agreement),
As a result, Billion Rewards Development Limited held an aggregate of 6,270,512 shares of Common Stock of the Company
,
which represents 87.33% of the issued and outstanding shares of Common Stock as of June 30, 2017.
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.
7
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 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. Zhous 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 Companys 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 Chens 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 Companys 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 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.
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.
As of September 30, 2017, our accumulated deficit was ($868,650). Our net loss for the three months ended September 30, 2017 was ($9,420). Our losses have principally been attributed to a lack of revenues while incurring operating expenses.
8
The following table provides selected condensed interim financial data about our company for the periods ended September 30, 2017 and the year ended June 30, 2017. For detailed financial information, see the condensed interim financial statements included elsewhere herein.
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September 30,
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June 30,
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Balance Sheet Data
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2017
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2017
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Cash
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$
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15,886
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$
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59,529
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Total assets
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26,572
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62,870
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Total liabilities
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25,135
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52,013
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Shareholders' equity
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1,437
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10,857
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Results of Operations
For the three months ended September 30, 2017 compared to the three months ended September 30, 2016.
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 September 30, 2017 and 2016 are summarized as follows:
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Periods Ended
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September 30
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2017
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2016
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Revenue
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$
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$
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Operating Expenses
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9,422
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41,813
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Net Loss
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$
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(9,420
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)
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$
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(45,534
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)
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Revenues
We did not earn any revenues for the three months periods ended September 30, 2017. 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 September 30, 2017 and 2016 (unaudited) are outlined in the table below:
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Periods Ended
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September 30
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2017
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2016
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Audit fees
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$
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3,500
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7,000
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Professional fees
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525
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568
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Rent expense
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30,047
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Filing fees
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1,781
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License and permits
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3,425
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2,533
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Other
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191
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1,665
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Total Expenses
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$
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9,422
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$
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41,813
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Net Loss
Operating expenses were composed of audit and professional fees and general and administrative expenses. The net loss for the periods ended September 30, 2017 and 2016 were $9,420, and $45,534, 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.
9
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 September 30, 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 September 30, 2017, there was 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 Companys ability to meet its current operating and capital expenses, there is substantial doubt about the Companys 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, 2017, filed on October 16, 2017 (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
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, InterestImputation 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.