ITEM 1
|
FINANCIAL STATEMENTS
|
EXCEED
WORLD, INC.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
|
|
|
As of
|
|
As of
|
|
|
December 31, 2017
|
|
September 30, 2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current Assets
|
|
|
|
|
Cash and cash equivalents
|
$
|
13,357
|
$
|
46,295
|
Accounts receivable
|
|
7,005
|
|
1,011
|
Inventories
|
|
78,129
|
|
78,268
|
Prepaid expenses
|
|
7,286
|
|
9,652
|
|
|
|
|
|
Total current assets
|
|
105,777
|
|
135,226
|
|
|
|
|
|
Intangible assets, net
|
|
644,558
|
|
656,828
|
|
|
|
|
|
Total assets
|
$
|
750,335
|
$
|
792,054
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
Current Liabilities
|
|
|
|
|
Accounts payable
|
$
|
5,373
|
$
|
5,382
|
Due to related party
|
|
158,960
|
|
159,243
|
Accrued expenses
|
|
6,368
|
|
4,512
|
|
|
|
|
|
Total current liabilities
|
|
170,701
|
|
169,137
|
|
|
|
|
|
Long-term notes payables
|
|
488,151
|
|
489,019
|
Long-term notes payables – related party
|
|
221,887
|
|
222,281
|
|
|
|
|
|
Total liabilities
|
|
880,739
|
|
880,437
|
|
|
|
|
|
Shareholders' Deficit
|
|
|
|
|
Preferred stock ($.0001 par value, 20,000,000 shares authorized; none issued and outstanding as of December 31, 2017 and September 30, 2017)
|
|
-
|
|
-
|
Common stock ($.0001 par value, 500,000,000 shares authorized, 20,000,000 shares issued and outstanding as of December 31, 2017 and September 30, 2017)
|
|
2,000
|
|
2,000
|
Additional paid-in capital
|
|
10,517
|
|
10,517
|
Accumulated deficit
|
|
(144,640)
|
|
(102,543)
|
Accumulated other comprehensive income
|
|
1,719
|
|
1,643
|
|
|
|
|
|
Total shareholders' deficit
|
|
(130,404)
|
|
(88,383)
|
|
|
|
|
|
Total liabilities and shareholders' deficit
|
$
|
750,335
|
$
|
792,054
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
|
-F1-
Table
of Contents
EXCEED
WORLD, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
|
|
|
|
|
Three months
|
|
Three months
|
|
|
|
|
Ended
|
|
Ended
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
9,987
|
$
|
8,486
|
|
Cost of revenues
|
|
28,522
|
|
5,658
|
|
Gross profit (loss)
|
|
(18,535)
|
|
2,828
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
General and administrative expenses
|
|
21,237
|
|
14,119
|
|
Total Operating Expenses
|
|
21,237
|
|
14,119
|
|
Loss from operations
|
|
(39,772)
|
|
(11,291)
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
Interest expense
|
|
2,325
|
|
-
|
|
Total other expense
|
|
2,325
|
|
-
|
|
|
|
|
|
|
|
|
Loss before tax
|
|
(42,097)
|
|
(11,291)
|
|
Income tax expense
|
|
-
|
|
410
|
|
Net loss
|
$
|
(42,097)
|
$
|
(11,701)
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
Net loss
|
$
|
(42,097)
|
$
|
(11,701)
|
|
Other comprehensive income
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
76
|
|
4,781
|
|
Total comprehensive loss
|
$
|
(42,021)
|
$
|
(6,920)
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
$
|
(0.00)
|
$
|
(0.00)
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding, basic and diluted
|
|
20,000,000
|
|
120,219,780
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited consolidated financial statements.
|
|
-F2-
Table
of Contents
EXCEED WORLD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
Three months
|
|
Three months
|
|
|
|
Ended
|
|
Ended
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net loss
|
$
|
(42,097)
|
$
|
(11,701)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
Amortization of intangible assets
|
|
11,083
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
(5,985)
|
|
(8,486)
|
|
Inventories
|
|
-
|
|
5,657
|
|
Accounts payable
|
|
-
|
|
-
|
|
Prepaid expenses
|
|
2,344
|
|
286
|
|
Accrued expenses
|
|
1,861
|
|
(256)
|
|
Income tax payables
|
|
-
|
|
(363)
|
Net cash used in operating activities
|
|
(32,794)
|
|
(14,863)
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(144)
|
|
(4,199)
|
|
|
|
|
|
|
Net Change in cash and cash equivalents
|
$
|
(32,938)
|
$
|
(19,062)
|
Cash and cash equivalents, beginning of period
|
|
46,295
|
|
38,410
|
Cash and cash equivalents, end of period
|
$
|
13,357
|
$
|
19,348
|
|
|
|
|
|
|
Non-cash investing and financing activities
|
|
|
|
|
|
Stock cancellation
|
$
|
-
|
$
|
38,000
|
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
|
Interest paid
|
$
|
-
|
$
|
-
|
|
Income taxes paid
|
$
|
-
|
$
|
837
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these unaudited consolidated financial statements.
-F3-
Table of Contents
EXCEED WORLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2017
(UNAUDITED)
NOTE
1 - ORGANIZATION, DESCRIPTION OF BUSINESS, AND BASIS OF PRESENTATION
Exceed World, Inc., formerly known as
Brilliant Acquisition, Inc. (the “Company”), was incorporated under the laws of the State of Delaware on November 25,
2014.
As of December 31, 2017, we operate
through our wholly owned subsidiary, School TV Co., Ltd. (“School TV”), which is engaged in various business activities
and industries including:
- The sale and distribution of health related products;
- The promotion of third party consumer goods and services;
- RE/MAX business in Kanagawa, Okinawa and Tokyo.
The accompanying unaudited consolidated financial statements
of Exceed World, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission,
or the SEC, including the instructions to Form 10-Q and Regulation S-X. In the opinion of the management of the Company, all adjustments,
which are of a normal recurring nature, necessary for a fair statement of the results for the three month period, have been made.
Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire
fiscal year. When used in these notes, the terms “Company”, “we”, “us” or “our”
mean the Company. Certain information and note disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles in the United States of America has been omitted from these statements pursuant to such
accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive financial
statements and should be read in conjunction with our consolidated financial statements for the year ended September 30, 2017,
included in our Form 10-K.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES
OF CONSOLIDATION
The consolidated financial statements
include the financial statements of its wholly-owned subsidiary, School TV. Intercompany transactions are eliminated.
USE OF ESTIMATES
The presentation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates and assumptions
made by management include going concern, allowance for doubtful accounts, valuation allowance on deferred income tax, inventory
obsolescence and sales allowance. Operating results in the future could vary from the amounts derived from management's estimates
and assumptions.
FOREIGN CURRENCY TRANSLATION
The Company maintains its books and
record in its local currency, Japanese YEN (“JPY”), which is a functional currency as being the primary currency of
the economic environment in which its operation is conducted. 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 statements
of operations.
The reporting currency of the Company
is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in
US$. In accordance with ASC Topic 830-30, “Translation of Financial Statement”, assets and liabilities of the Company
whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses
are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements
are recorded as a separate component of accumulated other comprehensive income within the statements of shareholders’ equity.
Translation of amounts from the local
currency of the Company into US$1 has been made at the following exchange rates:
|
December 31, 2017
|
Current JPY: US$1 exchange rate
|
112.67
|
Average JPY: US$1 exchange rate
|
112.88
|
NOTE
3 - INCOME TAXES
The Company conducts its major businesses
in Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that
are subject to examination by the local tax authority.
National income tax in Japan is charged
at 15% of a company’s assessable profit. The Company’s subsidiary, School TV, was incorporated in Japan and is subject
to Japanese national income tax and city income tax at the applicable tax rates on the taxable income as reported in their Japanese
statutory accounts in accordance with the relevant enterprises income tax laws applicable to foreign enterprises.
School
TV’s operation during the three months ended December 31, 2017 has resulted a net taxable loss, as such School TV was
not subject to income tax for the three months ended December 31, 2017. The effective income tax rate of School TV is 0%.
Deferred tax assets arise from net operating loss of $39,30 is fully allowed as the Company is not able to estimate future
operating results due to limited operating history. The net operating loss carry forward will start to expire in the year
2026.
For the three months ended December
31, 2016, income tax for School TV was $410. The effective tax rate of School TV is 15%.
Exceed World, Inc., which acts as a
holding company on a non-consolidated basis, does not plan to engage any business activities and current or future loss will be
fully allowed. For the three months ended December 31, 2017 and 2016, respectively, Exceed World, Inc., as a holding company registered
in the state of Delaware, has incurred net loss and, therefore, has no tax liability. The net deferred tax asset generated by the
loss carry forward has been fully reserved.
NOTE 4 - GOING CONCERN
The accompanying consolidated financial
statements are prepared on a basis of accounting assuming that the Company is a going concern that contemplates realization of
assets and satisfaction of liabilities in the normal course of business. For the three months ended December 31, 2017, the Company
had generated net loss of $42,097 and negative cash flows from operations of $32,794. As of December 31, 2017, the Company had
working deficit of $64,924. These factors raise substantial doubt about the Company’s ability to continue as a going
concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as
a going concern.
As a first priority, we plan to increase
sufficient revenues for necessary working capital from our business. If we cannot generate sufficient revenues, we plan to borrow
working capital from the director or parent company.
NOTE 5 - RELATED-PARTY TRANSACTIONS
As of December 31, 2017 and
September 30, 2017, the Company had $158,960 and $159,243, respectively, owed to Tomoo Yoshida, Chief Executive Officer and
Chief Financial Officer of the Company, respectively. The advance is due on demand and bears no interest.
On May 24, 2017, the Company borrowed
JPY 25,000,000, or $223,534 from e-Learning Laboratory Co., Ltd., the beneficial owner of the Company, primarily for the payment
to lease the regional franchise rights of the RE/MAX System. The loan matures on May 24, 2023 with an interest rate of 2% per annum.
For the three months ended December 31, 2017, the interest expense related to this note payable was $1,107.
For the three months ended December
31, 2017, e-Learning Laboratory Co. Ltd. provided 10 square meters of office space and 2 square meters of storage space to the
Company free of charge.
NOTE 6 - LONG-TERM NOTE PAYABLE
On May 22, 2017, the Company entered into a loan agreement
to borrow JPY 55,000,000, or $492,436 from Mr. Toshihiro Hirai, the CEO of Actcall Inc., the 100% owner of Kidding Co., for the
initial payment required upon the execution of the RE/MAX Regional Franchise Agreement entered on July 7, 2017. The loan matures
on May 31, 2022 with an interest rate of 1% per annum. For the three months ended December 31, 2017, the interest expense
related to this note payable was $1,218.
NOTE 7 - INTANGIBLE ASSETS, NET
The following table presents the detail of intangible
assets:
|
|
|
12/31/2017
|
|
|
9/30/2017
|
Franchise rights
|
|
|
|
|
|
|
Gross carrying value
|
|
$
|
666,193
|
|
$
|
667,378
|
Less: accumulated amortization total
|
|
|
21,635
|
|
|
10,550
|
Franchise rights, net
|
|
|
644,558
|
|
|
656,828
|
NOTE 8 – COMMITMENTS
Under
the lease of franchise rights, the Company is subjected to the following potential payment commitments: (1) membership fee in the
amount of JPY42,000 (approximately $400) per year per sales associate operating
under
the RE/MAX brokerage office franchised from the Company (“RE/MAX Office”); (2) monthly ongoing fees comprised of monthly
fixed fees, in the amount of JPY60,000 (approximately $500) per RE/MAX Office, and monthly percentage fees, in the amount of 3%
of the commission the Company charges from the RE/MAX Office; (3) monthly advertising fee of JPY10,000 (approximately $100) per
RE/MAX Office; and (4) unconditional monthly fixed technology fee of JPY10,000 (approximately $100) per leased franchise right.
The membership fee and monthly fixed fee are subjected to increase in every two years, and the monthly advertising fee is subjected
to increase upon request and negotiation.
As of December 31, 2017, the Company
has not had any RE/MAX Office or sales associate, and was not subject to any non-cancellable payments.
NOTE 9 – CONCENTRATIONS
Concentration of revenues
For the three months ended December
31, 2017, the Company generated revenue from two customers in relation to its RE/MAX business in the amount of $2,840 and $6,761,
accounting for 28% and 68% of the total revenues, respectively.
For the three months ended December
31, 2016, the Company sold health products in the amount of $8,486 to a major customer which accounts for 100% of the total revenues.
Concentration of accounts receivable
As of December 31, 2017, the Company
has accounts receivable in the amount of $6,774 from a customer which accounts for 97% of the total accounts receivable,
As of December 31, 2016, the Company
has accounts receivable in the amount of $7,968 from a customer which accounts for 100% of the total accounts receivable.
-F4-
Table of Contents
ITEM 2
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Forward-Looking Statements
Certain statements, other than purely historical information,
including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the
assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement
for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.
Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could
have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally
accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.
Any references to “the Company” refer to Exceed
World, Inc., which operates through its wholly owned subsidiary School TV Co., Ltd.
Company Overview
Corporate History
The Company was originally incorporated with the name Brilliant
Acquisition, Inc., under the laws of the State of Delaware on November 25, 2014, with an objective to acquire, or merge with, an
operating business.
On January 12, 2016, Thomas DeNunzio of 780 Reservoir Avenue,
#123, Cranston, RI 02910, the sole shareholder of the Company, entered into a Share Purchase Agreement (the “Agreement”)
with e-Learning Laboratory Co., Ltd. (“e-Learning”), with an address at 1-23-38-6F, Esakacho, Suita-shi, Osaka 564-0063
Japan. Pursuant to the Agreement, Mr. DeNunzio transferred to e-Learning Laboratory Co., Ltd., 20,000,000 shares of our common
stock which represents all of our issued and outstanding shares.
Following the closing of the share purchase transaction,
e-Learning gained a 100% interest in the issued and outstanding shares of our common stock and became the controlling shareholder
of the Company.
On January 12, 2016, the Company changed its name to Exceed
World, Inc. and filed with the Delaware Secretary of State, a Certificate of Amendment.
On January 12, 2016, Mr. Thomas DeNunzio resigned as our
Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer. The resignation was not the result
of any disagreement with us on any matter relating to our operations, policies or practices.
On January 12, 2016, Mr. Tomoo Yoshida was appointed as our
Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
On February 29, 2016, the Company entered into a Stock Purchase
Agreement with Tomoo Yoshida, our Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
Pursuant to this Agreement, Tomoo Yoshida transferred to Exceed World, Inc., 10 shares of the common stock of E&F Co., Ltd.,
a Japan corporation (“E&F”), which represents all of its issued and outstanding shares in consideration of $4,835
(JPY 500,000). Following the effective date of the share purchase transaction on February 29, 2016, Exceed World, Inc. gained a
100% interest in the issued and outstanding shares of E&F’s common stock and E&F became a wholly owned subsidiary
of Exceed World. On August 4, 2016, the E&F changed its name to School TV Co., Ltd (“School TV”) and filed
with the Legal Affairs Bureau in Osaka, Japan.
On April 1, 2016, e-Learning Laboratory Co., Ltd. entered
into stock purchase agreements with 7 Japanese shareholders. Pursuant to these agreements, e-Learning Laboratory Co., Ltd. sold
140,000 shares of common stock in total to these individuals and received $270 as aggregate consideration. Each shareholder paid
.215 Japanese Yen per share. At the time of purchase the price paid per share by each shareholder was the equivalent of about .002
USD.
The aforementioned sale of shares was exempt from registration
in accordance with Regulation S of the Securities Act of 1933, as amended ("Regulation S") because the above sales of
the stock were made to non-U.S. persons (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant to offshore transactions,
and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates,
or any person acting on behalf of any of the foregoing.
On August 1, 2016, the Company changed its fiscal year end
from November 30 to September 30.
On August 9, 2016, e-Learning Laboratory Co., Ltd. entered
into stock purchase agreements with 33 Japanese shareholders. Pursuant to these agreements, e-Learning Laboratory Co., Ltd. sold
3,300 shares of common stock in total to these individuals and received $330 as aggregate consideration. Each shareholder paid
10 Japanese Yen per share. At the time of purchase the price paid per share by each shareholder was the equivalent of about 0.1
USD.
These shares were sold pursuant to the Company’s effective
S-1 Registration Statement deemed effective on July 20, 2016 at 4pm EST.
On October 28, 2016, Exceed World, Inc., a Delaware corporation,
(the “Company”), with the approval of its board of directors and its majority shareholders by written consent in lieu
of a meeting, authorized the cancellation of shares owned by e-Learning Laboratory Co, Ltd. e-Learning Laboratory Co, Ltd. has
provided consent for the cancellation of shares. The total number of shares cancelled was 19,000,000 shares which was comprised
of 16,500,000 restricted common shares and 2,500,000 free trading shares.
Shareholder’s name: e-Learning
Laboratory Co., Ltd.
Total amount of shares cancelled
|
19,000,000
|
shares
|
|
Restricted shares
|
16,500,000
|
shares
|
|
Free trading shares
|
2,500,000
|
shares
|
On October 28, 2016, every one (1) share
of Common Stock, par value $.0001 per share, of the Corporation issued and outstanding was automatically reclassified and changed
into twenty (20) shares fully paid and non-assessable shares of Common Stock of the Corporation, par value $.0001 per share. (“20-for-1
Forward Stock Split”) No fractional shares were issued. The authorized number of shares, and par value per share, of Common
Stock are not affected by the 20-for-1 Forward Stock Split.
On October 28, 2016, we filed a Certificate
of Amendment with the Delaware Secretary of State. The effective date of the 20-for-1 Forward Stock Split was upon the acceptance
of the Certificate of Amendment with the Secretary of State of the State of Delaware. The Certificate of Amendment can be found
as Exhibit 3.1 to Form 8-K filed November 1, 2016.
Business Information
The Company is a start-up stage company operates through
our wholly owned subsidiary, School TV Co., Ltd. (“School TV”), which is engaged in various business activities and
industries including:
- The sale and distribution of health related products;
- The promotion of third party consumer goods and services;
- RE/MAX business in Kanagawa, Okinawa and Tokyo.
Our principal executive offices are located at 1-2-38-8F,
Esaka-cho, Suita-shi, Osaka 564-0063, Japan. Our phone number is +81-6-6339-4117.
Liquidity and Capital Resources
Our cash balance is $13,357 as of December 31, 2017. Our
cash balance is not sufficient to fund our limited levels of operations for any period of time. We have been utilizing and may
utilize funds from Tomoo Yoshida, our sole Officer and Director who has informally agreed to advance funds to allow us to pay for
filing fees, and professional fees. Tomoo Yoshida, however, has no formal commitment, arrangement or legal obligation to advance
or loan funds to the company. In order to implement our plan of operations for the next twelve-month period, we require further
funding. Being a start-up stage company, we have very limited operating history. After a twelve-month period we may need additional
financing but currently do not have any arrangements for such financing.
As of December 31, 2017, the company has a due to the related
party of Mr. Tommo Yoshida, our sole Officer and Director, in the amount of $158,960.
As of December 31, 2017, the Company had $221,887 owed to
e-Learning Laboratory Co., Ltd., the beneficial owner of the Company.
As of December 31, 2017, the Company had $488,151 owed to
Mr. Toshihiro Hirai.
If we need additional cash and cannot raise it, we will either
have to suspend operations until we do raise the cash we need, or cease operations entirely.
Inventory
As of December 31, 2017, we have $78,129 in inventory which
primarily consists of a health beauty equipment. Any goods that are purchased from our supply of physical inventory are sent out
to the purchaser. We are responsible for any shipping and or related costs.
Net Loss
We have recorded a net loss of $42,097 and $11,701 for the
three months ended December 31, 2017 and 2016, respectively. The larger net loss we experienced for the three months ended December
31, 2017 is attributed to the fact that we have increased our level of our operations and thus experienced increased expenses to
operate our business.
Going Concern
The accompanying consolidated financial statements are prepared
on a basis of accounting assuming that the Company is a going concern that contemplates realization of assets and satisfaction
of liabilities in the normal course of business. For the three months ended December 31, 2017, the Company had generated net loss
of $42,097 and negative cash flows from operations of $32,794. As of December 31, 2017, the Company had working deficit of $64,924.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. These conditions and uncertainties
raise substantial doubt as to the Company's ability to continue as a going concern. The financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a going concern. The Company will offer noncash consideration
and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue-producing contracts or
financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially
curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements
that may dilute the interests of existing stockholders.
As a first priority, the Company plans to increase sufficient
revenues for necessary working capital from our business. If the Company cannot generate sufficient revenues, it plans to borrow
working capital from the director or parent company.