UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
General Form for Registration of Securities
of Small Business Issuers Under Section 12(g) of the Securities Exchange Act of 1934
Melt, Inc.
(Exact Name Of Company As Specified In Its Charter)
Nevada
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333-10990
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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3445 Lawrence Ave., Oceanside, NY
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11572
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(Address of Principal Executive Offices)
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(ZIP Code)
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Company's Telephone Number, Including Area Code:
(310) 734-2626
Securities to be Registered Under Section 12(g)
of the Act: Common Stock, $0.001
(Title of Class)
Indicate by check mark whether the Company
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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Accelerated filer
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Non-accelerated
filer
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(Do not check if a smaller reporting company)
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Smaller
reporting company
x
Emerging
growth company
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If
an emerging growth company, indicate by check mark if the Company has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
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TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Some of the statements contained in this registration
statement on Form 10 of Melt, Inc. (hereinafter the "Company", "we" or the "Company") discuss future
expectations, contain projections of our plan of operation or financial condition or state other forward-looking information. In
this registration statement, forward-looking statements are generally identified by the words such as "anticipate", "plan",
"believe", "expect", "estimate", and the like. Forward-looking statements involve future risks and
uncertainties, there are factors that could cause actual results or plans to differ materially from those expressed or implied.
These statements are subject to known and unknown risks, uncertainties, and other factors that could cause the actual results to
differ materially from those contemplated by the statements. The forward-looking information is based on various factors and is
derived using numerous assumptions. A reader, whether investing in the Company's securities or not, should not place undue reliance
on these forward-looking statements, which apply only as of the date of this Registration Statement. Important factors that may
cause actual results to differ from projections include, for example:
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the
success or failure of Management's efforts to implement the Company's plan of operation;
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the
ability of the Company to fund its operating expenses;
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he ability of the Company to compete with other companies that have a similar plan of operation;
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the
effect of changing economic conditions impacting our plan of operation;
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the
ability of the Company to meet the other risks as may be described in future filings with the SEC.
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General Background of the Company
Melt Inc. was organized on July 18, 2003, under
the laws of the State of Nevada. The Company operates as a holding company for operating subsidiaries.
Melt (California), Inc. is a wholly owned subsidiary
(hereinafter referred to as Melt (CA)) of Melt Inc. and was organized on August 6, 2003, under the laws of the State of California.
Melt (CA) was in the business of owning and operating corporate owned stores of which none were in existence during the year ended
December 31, 2009, managing the construction process for both corporate and franchisee owned stores, securing retail space for
either corporate or franchise stores to operate from, as well as the sale and distribution of product to franchise owned stores
until October 2007. Melt (CA) ceased managing the construction of stores during September 2007. All assets, liabilities and operating
results related to store construction and retail leases are therefore included in discontinued operations as of December 31, 2009
and 2008.
Melt Franchising LLC (hereinafter referred
to as Melt (FA)) a wholly owned subsidiary was organized on February 2, 2005 under the laws of the State of Nevada. Melt (FA) is
responsible for selling franchises to allow franchisees to own and operate stores trading under the name of Melt – gelato
italiano, Melt – café & gelato bar and Melt – gelato & crepe café as well as the sale and distribution
of product to franchisees, marketing and the collection of royalties. Melt (FA) sold forty-nine franchises of which nineteen were
operating, seventeen agreements were terminated by the Company as a result of the franchisee’s not securing retail space
or other reasons, and thirteen closed their operations.
On June 27, 2018, the eight judicial District
Court of Nevada appointed Custodian Ventures, LLC as custodian for Melt Inc., proper notice having been given to the officers and
directors of Shentang International, Inc. There was no opposition.
On June 28, 2018, the Company filed a certificate
of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.
On May 31, 2018, the Company issued 27,000,000
shares of common stock, with par value $0.001 for par value for services valued at $27,000, to the Company’s Chief Executive
Officer, David Lazar.
On July 3, 2018, the Company obtained a promissory note in amount
of $68,305 from its custodian, Custodian Ventures, LLC, the managing member being David Lazar. The note bears an interest of 3%
and matures in 180 days from the date of issuance.
On July 3, 2018, the Company issued 78,000,000 shares of common
stock, with par value $0.001 for par value in cash and a promissory note issued on that same day for $68,305, to Custodian Ventures,
LLC.
On July 11, 2018, the Company terminated its
registration with the Securities and Exchange Commission.
Business Objectives of the Company
Since the custodial proceedings, the Company
had no business operations. Management has determined to direct its efforts and limited resources to pursue potential new business
opportunities. The Company does not intend to limit itself to a particular industry and has not established any particular criteria
upon which it shall consider a business opportunity.
The Company's common stock is subject to quotation
on the OTC Pink Sheets under the symbol MLTC. There is currently trading market in the Company's shares. There can be no assurance
that there will be an active trading market for our securities will continue following the effective date of this registration
statement under the Exchange Act. In the event that an active trading market continues, there can be no assurance as to the market
price of our shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading market
will be sustained.
Management of the Company (“Management”)
would have substantial flexibility in identifying and selecting a prospective new business opportunity. The Company is dependent
on the judgment of its Management in connection with this process. In evaluating a prospective business opportunity, we would consider,
among other factors, the following:
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costs
associated with pursuing a new business opportunity;
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growth
potential of the new business opportunity;
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experiences,
skills and availability of additional personnel necessary to pursue a potential new business opportunity;
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necessary
capital requirements;
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the
competitive position of the new business opportunity;
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stage
of business development;
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the
market acceptance of the potential products and services;
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proprietary
features and degree of intellectual property; and
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the
regulatory environment that may be applicable to any prospective business opportunity.
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The foregoing criteria are not intended to
be exhaustive and there may be other criteria that Management may deem relevant. In connection with an evaluation of a prospective
or potential business opportunity, Management may be expected to conduct a due diligence review.
The time and costs required to pursue new business
opportunities, which includes negotiating and documenting relevant agreements and preparing requisite documents for filing pursuant
to applicable securities laws, can not be ascertained with any degree of certainty.
Management intends to devote such time as it
deems necessary to carry out the Company's affairs. The exact length of time required for the pursuit of any new potential business
opportunities is uncertain. No assurance can be made that we will be successful in our efforts. We cannot project the amount of
time that our Management will actually devote to the Company's plan of operation.
The Company intends to conduct its activities
so as to avoid being classified as an "Investment Company" under the Investment Company Act of 1940, and therefore avoid
application of the costly and restrictive registration and other provisions of the Investment Company Act of 1940 and the regulations
promulgated thereunder.
Company is a Blank Check Company
At present, the Company is a development stage
company with no revenues, no assets and no specific business plan or purpose. The Company's business plan is to seek new business
opportunities or to engage in a merger or acquisition with an unidentified company. As a result, the Company is a "blank check
company" and, as a result, any offerings of the Company's securities under the Securities Act of 1933, as amended (the "Securities
Act") must comply with Rule 419 promulgated by the Securities and Exchange Commission (the "SEC") under the Act.
The Company's Common Stock is a "penny stock," as defined in Rule 3a51-1 promulgated by the SEC under the Securities
Exchange Act. The Penny Stock rules require a broker-dealer, prior to a transaction in penny stock not otherwise exempt from the
rules, to deliver a standardized risk disclosure document that provides information about Penny Stocks and the nature and level
of risks in the penny stock market.
The broker-dealer also must provide the customer
with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction,
and monthly account statements showing the market value of each Penny Stock held in the customer's account. In addition, the Penny
Stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that
the Penny Stock is suitable for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure
rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the
Penny Stock rules. So long as the common stock of the Company is subject to the Penny Stock rules, it may be more difficult to
sell the Company's common stock.
We are a “Shell Company,” as defined
in Rule 405 promulgated by the SEC under the Securities Act. A Shell Company is one that has no or nominal operations and either:
(i) no or nominal assets; or (ii) assets consisting primarily of cash or cash equivalents. As a Shell Company, we are restricted
in our use of Registrations on Form S-8 under the Securities Act; the lack of availability of the use of Rule 144 by security holders;
and the lack of liquidity in our stock.
Form S-8
Shell companies are prohibited from using Form
S-8 to register securities under the Securities Act. If a company ceases to be a Shell Company, it may use Form S-8 sixty calendar
days, provided it has filed all reports and other materials required to be filed under the Exchange Act during the preceding 12
months (or for such shorter period that it has been required to file such reports and materials after the company files "Form
10 information," which is information that a company would be required to file in a registration statement on Form 10 if it
were registering a class of securities under Section 12 of the Exchange Act. This information would normally be reported on a current
report on Form 8-K reporting the completion of a transaction that caused the company to cease being a Shell Company.
Unavailability of Rule 144 for Resale
Rule 144(i) "Unavailability to Securities
of Issuers With No or Nominal Operations and No or Nominal Non-Cash Assets" provides that Rule 144 is not available for the
resale of securities initially issued by an issuer that is a Shell Company. We have identified our company as a Shell Company and,
therefore, the holders of our securities may not rely on Rule 144 to have the restriction removed from their securities without
registration or until the Company is no longer identified as a Shell Company and has filed all requisite periodic reports under
the Exchange Act for the period of twelve (12) months.
As a result of our classification as a Shell
Company, our investors are not allowed to rely on the "safe harbor" provisions of Rule 144, promulgated pursuant to the
Securities Act, so as not to be considered underwriters in connection with the sale of our securities until one year from the date
that we cease to be a Shell Company. This will likely make it more difficult for us to attract additional capital through subsequent
unregistered offerings because purchasers of securities in such unregistered offerings will not be able to resell their securities
in reliance on Rule 144, a safe harbor on which holders of restricted securities usually rely to resell securities.
Very Limited Liquidity of our Common Stock
Our common stock occasionally trades on the
OTC Pink Sheet Market, as there is no active market maker in our common stock. As a result, there is only limited liquidity in
our common stock.
We will be deemed a blank check company
under Rule 419 of the Securities Act
The provisions of Rule 419 apply to registration
statements filed under the Securities Act by a blank check company, such as the Company. Rule 419 requires that a blank check company
filing a registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account
pending the execution of an agreement for an acquisition or merger. While we are not currently registering shares for an offering,
we may do so in the future.
In addition, an issuer is required to file
a post-effective amendment to a registration statement upon the execution of an agreement for an acquisition or merger. The rule
provides procedures for the release of the offering funds, if any, in conjunction with the post effective acquisition or merger.
The obligations to file post-effective amendments are in addition to the obligations to file Forms 8-K to report for both the entry
into a material definitive (non-ordinary course of business) agreement and the completion of the transaction. Rule 419 applies
to both primary and re-sale or secondary offerings.
Within five (5) days of filing a post-effective
amendment setting forth the proposed terms of an acquisition, the Company must notify each investor whose shares are in escrow,
if any. Each such investor then has no fewer than 20 and no greater than 45 business days to notify the Company in writing if they
elect to remain an investor. A failure to reply indicates that the person has elected to not remain an investor. As all investors
are allotted this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon enough
funds remaining in escrow to close the transaction.
Effecting a business combination
Prospective investors in the Company's common
stock will not have an opportunity to evaluate the specific merits or risks of any of the one or more business combinations that
we may undertake A business combination may involve the acquisition of, or merger with, a company which needs to raise substantial
additional capital by means of being a publicly trading company, while avoiding what it may deem to be adverse consequences of
undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with
various Federal and State securities laws. A business combination may involve a company which may be financially unstable or in
its early stages of development or growth.
The Company has not identified a target
business or target industry
The Company's effort in identifying a prospective
target business will not be limited to a particular industry and the Company may ultimately acquire a business in any industry
Management deems appropriate. To date, the Company has not selected any target business on which to concentrate our search for
a business combination. While the Company intends to focus on target businesses in the United States, it is not limited to U.S.
entities and may consummate a business combination with a target business outside of the United States. Accordingly, there is no
basis for investors in the Company's common stock to evaluate the possible merits or risks of the target business or the particular
industry in which we may ultimately operate. To the extent we effect a business combination with a financially unstable company
or an entity in its early stage of development or growth, including entities without established records of sales or earnings,
we may be affected by numerous risks inherent in the business and operations of financially unstable and early stage or potential
emerging growth companies. In addition, to the extent that we effect a business combination with an entity in an industry characterized
by a high level of risk, we may be affected by the currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes many industries which experience rapid growth. In addition, although the Company's Management will
endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly
ascertain or assess all significant risk factors.
Sources of target businesses
Our Management anticipates that target business
candidates will be brought to our attention from various unaffiliated sources, including securities broker-dealers, investment
bankers, venture capitalists, bankers and other members of the financial community, who may present solicited or unsolicited proposals.
Our Management may also bring to our attention target business candidates. While we do not presently anticipate engaging the services
of professional firms that specialize in business acquisitions on any formal basis, we may engage these firms in the future, in
which event we may pay a finder's fee or other compensation in connection with a business combination. In no event, however, will
we pay Management any finder's fee or other compensation for services rendered to us prior to or in connection with the consummation
of a business combination.
Selection of a target business and structuring
of a business combination
Management owns 78.56% of the issued and outstanding
shares of common stock and 100% of the issued and outstanding preferred shares of the Company, and will have broad flexibility
in identifying and selecting a prospective target business. In evaluating a prospective target business, our Management will consider,
among other factors, the following:
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financial
condition and results of operation of the target company;
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experience
and skill of Management and availability of additional personnel;
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stage
of development of the products, processes or services;
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degree
of current or potential market acceptance of the products, processes or services;
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proprietary
features and degree of intellectual property or other protection of the products, processes or services;
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regulatory
environment of the industry; and
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costs
associated with effecting the business combination.
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These criteria are not intended to be exhaustive. Any evaluation
relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our Management in effecting a business combination consistent with our business objective.
In evaluating a prospective target business, we will conduct a due diligence review which will encompass, among other things, meetings
with incumbent Management and inspection of facilities, as well as review of financial and other information which will be made
available to us.
We will endeavor to structure a business combination
so as to achieve the most favorable tax treatment to us, the target business and both companies' stockholders. However, there can
be no assurance that the Internal Revenue Service or applicable state tax authorities will necessarily agree with the tax treatment
of any business combination we consummate.
The time and costs required to select and evaluate
a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty.
Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination
is not ultimately completed will result in a loss to us.
Probable lack of business diversification
While we may seek to effect business combinations
with more than one target business, it is more probable that we will only have the ability to effect a single business combination,
if at all. Accordingly, the prospects for our success may be entirely dependent upon the future performance of a single business.
Unlike other entities which may have the resources to complete several business combinations with entities operating in multiple
industries or multiple areas of a single industry, it is probable that we will lack the resources to diversify our operations or
benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single
entity, our lack of diversification may:
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subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to a business combination, and
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result
in our dependency upon the development or market acceptance of a single or limited number of products, processes or services.
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Limited ability
to evaluate the target business' Management
We cannot assure
you that our assessment of the target business' Management will prove to be correct. In addition, we cannot assure you that the
future Management will have the necessary skills, qualifications or abilities to manage a public company intending to embark on
a program of business development. Furthermore, the future role of our director, if any, in the target business cannot presently
be stated with any certainty.
While it is possible that our director will
remain associated in some capacity with us following a business combination, it is unlikely that he will devote his full efforts
to our affairs subsequent to a business combination. Moreover, we cannot assure you that our director will have significant experience
or knowledge relating to the operations of the particular target business.
Following a business combination, we may seek
to recruit additional managers to supplement the incumbent Management of the target business. We cannot assure you that we will
have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience
necessary to enhance the incumbent Management.
Our auditors have expressed substantial
doubt about our ability to continue as a going concern
Our audited financial statements for the years
ended December 31, 2017 and 2016, were prepared using the assumption that we will continue our operations as a going concern. Our
independent accountants in their audit report have expressed substantial doubt about our ability to continue as a going concern.
Our operations are dependent on our ability to raise sufficient capital or complete business combination as a result of which we
become profitable. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.
There is not enough cash on hand to fund our administrative expenses and operating expenses for the next twelve months. Therefore,
we may be unable to continue operations in the future as a going concern. If we cannot continue as a viable entity, our stockholders
may lose some or all of their investment in the Company's shares of common stock.
Competition
In identifying, evaluating and selecting a
target business, we expect to encounter intense competition from other entities having a business objective similar to ours. Many
of these entities are well established and have extensive experience identifying and effecting business combinations, either directly
or through affiliates. Many if not virtually most of these competitors possess far greater financial, human and other resources
compared to our resources. While we believe that there are numerous potential target businesses that we may identify, our ability
to compete in acquiring certain of the more desirable target businesses will be limited by our limited financial and human resources.
Our inherent competitive limitations are expected by Management to give others an advantage in pursuing the acquisition of a target
business that we may identify and seek to pursue. Further, any of these limitations may place us at a competitive disadvantage
in successfully negotiating a business combination. Our Management believes, however, that our status as a reporting public entity
with potential access to the United States public equity markets may give us a competitive advantage over certain privately-held
entities having a similar business objective in acquiring a desirable target business with growth potential on favorable terms.
If we succeed in effecting a business combination,
there will be, in all likelihood, intense competition from existing competitors of the business we acquire. In particular, certain
industries which experience rapid growth frequently attract an increasingly larger number of competitors, including those with
far greater financial, marketing, technical and other resources than the initial competitors in the industry in which we seek to
operate. The degree of competition characterizing the industry of any prospective target business cannot presently be ascertained.
We cannot assure you that, subsequent to a business combination, we will have the resources to compete effectively, especially
to the extent that the target business is in a high-growth industry.
Employees
David Lazar, our Chief Executive Officer, is
our sole executive officer. Mr. Lazar is not obligated to devote any specific number of hours per week and, in fact, intends to
devote only as much time as he deem reasonably necessary to administer the Company's affairs until such time as a business combination
is consummated. The amount of time he will devote in any time period will vary based on the availability of suitable target businesses
to investigate. We do not intend to have any full-time employees prior to the consummation of a business combination.
Conflicts of Interest
The Company's Management is not required to
commit its full time to the Company's affairs. As a result, pursuing new business opportunities may require a longer period of
time than if Management would devote full time to the Company's affairs. Management is not precluded from serving as an officer
or director of any other entity that is engaged in business activities similar to those of the Company. Management has not identified
and is not currently negotiating a new business opportunity for us. In the future, Management may become associated or affiliated
with entities engaged in business activities similar to those we intend to conduct. In such event, Management may have conflicts
of interest in determining to which entity a particular business opportunity should be presented. In the event that the Company's
Management has multiple business affiliations, our Management may have legal obligations to present certain business opportunities
to multiple entities. In the event that a conflict of interest shall arise, Management will consider factors such as reporting
status, availability of audited financial statements, current capitalization and the laws of jurisdictions. If several business
opportunities or operating entities approach Management with respect to a business combination, Management will consider the foregoing
factors as well as the preferences of the Management of the operating company. However, Management will act in what it believes
will be in the best interests of the shareholders of the Company. The Company shall not enter into a transaction with a target
business that is affiliated with Management.
ITEM 1A. RISK FACTORS
Forward-Looking Statements
This registration statement on Form 10 contains
forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance,
the market in which we operate, our beliefs and our Management's assumptions. In addition, other written or oral statements that
constitute forward-looking statements may be made by us or on our behalf. Words such as "expects", "anticipates",
"targets", "goals", "projects", "intends", "plans", "believes", "seeks",
"estimates", variations of such words and similar expressions are intended to identify such forward-looking statements.
These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult
to predict or assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking
statements.
Any investment in our shares of common stock
involves a high degree of risk. You should carefully consider the following information about these risks, together with the other
information contained in this annual report before you decide to invest in our common stock. Each of the following risks may materially
and adversely affect our business objective, plan of operation and financial condition. These risks may cause the market price
of our common stock to decline, which may cause you to lose all or a part of the money you invested in our common stock. We provide
the following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business plan.
In addition to other information included in this annual report, the following factors should be considered in evaluating the Company's
business and future prospects.
The Company has a limited operating history
and very limited resources.
Since being acquired through custodial proceedings,
the Company's operations have been limited to seeking a potential business combination and has had no revenues from operations.
Investors will have no basis upon which to evaluate the Company's ability to achieve the Company's business objective, which is
to effect a merger, capital stock exchange and/or acquire an operating business. The Company will not generate any revenues until,
at the earliest, after the consummation of a business combination or acquiring an operating business.
Our auditors have expressed substantial doubt about our ability
to continue as a going concern.
As of December 31, 2017, we had zero cash and
cash equivalents and an accumulated deficit of $nil. As of June 30, 2018, we had $5,500 cash and cash equivalents and an accumulated
deficit of $1,869,658. Our audited financial statements for the years ended December 31, 2017 and December 31, 2016, were prepared
using the assumption that we will continue our operations as a going concern. Our independent accountants in their audit report
have expressed substantial doubt about our ability to continue as a going concern. Our operations are dependent on our ability
to raise sufficient capital or complete business combination as a result of which we become profitable. Our financial statements
do not include any adjustments that may result from the outcome of this uncertainty.
There is not enough cash on hand to fund our administrative expenses
and operating expenses for the next twelve months. Therefore, we may be unable to continue operations in the future as a going
concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in the Company's shares
of common stock.
Since the Company has not yet selected
a particular target industry or target business with which to complete a business combination, the Company is unable to ascertain
the merits or risks associated with any particular business or industry.
Since the Company has not yet identified a
particular industry or prospective target business, there is no basis for investors to evaluate the possible merits or risks of
the target business which the Company may ultimately acquire. If the Company completes a business combination with a financially
unstable company or an entity in its development stage, the Company may be affected by numerous risks inherent in the operations
of those entities. Although the Company's Management intends to evaluate the risks inherent in a particular industry or target
business, the Company cannot assure you that it will properly ascertain or assess all of the significant risk factors. There can
be no assurance that any prospective business combination will benefit shareholders or prove to be more favorable to shareholders
than any other investment that may be made by shareholders and investors.
Unspecified and unascertainable risks
There is no basis for shareholders to evaluate
the possible merits or risks of potential business combination. To the extent that the Company effects a business combination with
a financially unstable operating company or an entity that is in its early stage of development or growth, the Company will become
subject to numerous risks. If the Company effects a business combination with an entity in a high-risk industry, the Company will
become subject to the currently unascertainable risks of that industry. Although Management will endeavor to evaluate the risks
inherent in a particular business or industry, there can be no assurance that Management will properly ascertain or assess all
such risks that the Company perceived at the time of the consummation of a business combination.
It is likely that the Company's current
sole officer and director will resign upon consummation of a business combination and the Company will have only limited ability
to evaluate the Management of the target business.
The Company's ability to successfully effect
a business combination will be dependent upon the efforts of the Company's Management. The future role of Management in the target
business cannot presently be ascertained. Although it is possible that Management may remain associated with the target business
following a business combination, it is likely that the Management of the target business will remain in place. Although the Company
intends to closely scrutinize the management of a target business in connection with evaluating the desirability of effecting a
business combination, the Company cannot assure you that the Company's assessment of Management will prove to be correct.
Dependence on key personnel
The Company is dependent upon the continued
services of Management. To the extent that his services become unavailable, the Company will be required to obtain other qualified
personnel and there can be no assurance that it will be able to recruit qualified persons upon acceptable terms.
The Company's sole officer and director
may allocate his time to other businesses activities, thereby causing conflicts of interest as to how much time to devote to the
Company's affairs. This could have a negative impact on the Company's ability to consummate a business combination in a timely
manner, if at all.
The Company's officer and director is not required
to commit his full time to the Company's affairs, which may result in a conflict of interest in allocating his time between the
Company's business and other businesses. The Company does not intend to have any full-time employees prior to the consummation
of a business combination. Management of the Company is engaged in other business endeavors and is not obligated to contribute
any specific number of his hours per week to the Company's affairs. Mr. Lazar owes fiduciary duties to Zongchai Machinery, Inc.
and Shentang International, Inc., of which he is the sole officer and director. Zongchai Machinery, Inc. and Shentang International,
Inc. are corporations engaged in substantially similar businesses as the Company.
If Management's other business affairs require
him to devote more time to such affairs, it could limit his ability to devote time to the Company's affairs and could have a negative
impact on the Company's ability to consummate a business combination. Furthermore, we do not have an employment agreement with
Mr. Lazar. On July 3, 2018, the Company obtained a promissory note in amount of $68,305 from its custodian, Custodian Ventures,
LLC, the managing member of which is David Lazar. The note bears an interest of 3% and matures in 180 days from the date of issuance.
On July 3, 2018, the Company issued 78,000,000 shares of common stock, with par value $0.001 for par value in cash and a promissory
note issued on that same day for $68,305, to Custodian Ventures, LLC.
The Company may be unable to obtain additional
financing, if and when required, to complete a business combination or to fund the operations and growth of the business combination
target, which could compel the Company to restructure a potential business combination transaction or to entirely abandon a particular
business combination.
The Company has not yet identified any prospective
target business. If we require funds for a particular business combination, because of the size of the business combination or
otherwise, we will be required to seek additional financing, which may or may not be available a terms and conditions satisfactory
to the Company, if at all. To the extent that additional financing proves to be unavailable when and if needed to consummate a
particular business combination, we would be compelled to restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional
financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target business. The Company's officer, director or stockholders are
not required to provide any financing to us in connection with or after a business combination.
It is probable that the Company will
only be able to enter into one business combination, which will cause us to be solely dependent on such single business and a limited
number of products or services.
It is probable that the Company will enter
into a business combination with a single operating business. Accordingly, the prospects for the Company's success may be:
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solely
dependent upon the performance of a single operating business, or
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dependent
upon the development or market acceptance of a single or limited number of products or services.
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In this case, the Company will not be able
to diversify the Company's operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business combinations in different industries or different areas of a single industry.
The Company has limited resources and
there is significant competition for business combination opportunities. Therefore, the Company may not be able to enter into or
consummate an attractive business combination.
The Company expects to encounter intense competition
from other entities having a business objective similar to the Company's, including venture capital funds, leveraged buyout funds
and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience
in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical,
human and other resources than the Company does and the Company's financial resources are limited when contrasted with those of
many of these competitors. While the Company believes that there are numerous potential target businesses that it could acquire,
the Company's ability to compete in acquiring certain sizable target businesses will be limited by the Company's limited financial
resources and the fact that the Company will use its common stock to acquire an operating business. This inherent competitive limitation
gives others an advantage in pursuing the acquisition of certain target businesses.
The Company may be unable to obtain additional
financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could
compel the Company to restructure a potential business transaction or abandon a particular business combination.
We may be required to seek additional financing.
We cannot assure you that such financing would be available on acceptable terms, if at all. If additional financing proves to be
unavailable, we would be compelled to restructure the transaction or abandon that particular business combination and seek an alternative
target business. In addition, if we consummate a business combination, we may require additional financing to fund the operations
or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued
development or growth of the target business.
Financing requirements to fund operations
associated with reporting obligations under the Exchange Act.
The Company has no revenues and is dependent
upon the willingness of the Company's Management to fund the costs associated with the reporting obligations under the Exchange
Act, other administrative costs associated with the Company's corporate existence and expenses related to the Company's business
objective. The Company is not likely to generate any revenues until the consummation of a business combination, at the earliest.
The Company believes that it will have available sufficient financial resources available from its Management to continue to pay
accounting and other professional fees and other miscellaneous expenses that may be required until the Company commences business
operations following a business combination.
We are dependent upon interim funding provided
by Management or an affiliated party to pay professional fees and expenses. Our Management has provided funding, without formal
agreement, as has been required to pay for accounting fees and other administrative expenses of the Company.
The Company does not currently engage in any business activities
that provide cash flow. The costs of investigating and analyzing potential business combination candidates and preparing and filing
Exchange Act reports for what may be an unlimited period of time will be paid by our sole officer and director, or an affiliated
party notwithstanding the fact that there is no written agreement to pay such costs. Mr. Lazar and/or an affiliated party have
informally agreed to pay the Company's expenses in the form of advances that are
unsecured, non-interest
bearing
. The Company intends to repay these advances when it has the cash resources to do so. On July 3, 2018, the Company
obtained a promissory note in amount of $68,305 from its custodian, Custodian Ventures, LLC, the managing member being David Lazar.
The note bears an interest of 3% and matures in 180 days from the date of issuance. On July 3, 2018, the Company issued 78,000,000
shares of common stock, with par value $0.001 for par value in cash and a promissory note issued on that same day for $68,305,
to Custodian Ventures, LLC.
Based on Mr. Lazar's resource commitment to
fund our operations, we believe that we will be able to continue as a going concern until such time as we conclude a business combination.
During the next 12 months we anticipate incurring costs related to:
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filing
of Exchange Act reports.
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franchise
fees, registered agent fees, legal fees and accounting fees, and
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investigating,
analyzing and consummating an acquisition or business combination.
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We estimate that these costs will range from
five to six thousand dollars per year, and that we will be able to meet these costs as necessary through loans/advances from Management
or affiliated parties until we enter into a business combination.
The Company's sole officer and director
has a 78.56% common stock equity interest in the Company and thus is in a position to influence certain actions requiring stockholder
vote.
Management has no present intention to call
for an annual meeting of stockholders to elect new directors prior to the consummation of a business combination. As a result,
our current director will continue in office at least until the consummation of the business combination. If there is an annual
meeting of stockholders for any reason, the Company's Management has broad discretion regarding proposals submitted to a vote by
shareholders as a consequence of Management's significant equity interest. Accordingly, the Company's Management will continue
to exert substantial control at least until the consummation of a business combination.
Broad discretion of Management
Any person who invests in the Company's common
stock will do so without an opportunity to evaluate the specific merits or risks of any prospective business combination. As a
result, investors will be entirely dependent on the broad discretion and judgment of Management in connection with the selection
of a prospective business combination. There can be no assurance that determinations made by the Company's Management will permit
us to achieve the Company's business objectives.
Reporting requirements may delay or preclude
a business combination
Pursuant to the requirements of Section 13
of the Exchange Act, the Company is required to provide certain information about significant acquisitions and other material events.
The Company will continue to be required to file quarterly reports on Form 10-Q and annual reports on Form 10-K, which annual report
must contain the Company's audited financial statements. As a reporting company under the Exchange Act, following any business
combination, we will be required to file a report on Form 8-K, which report contains audited financial statements of the acquired
entity. These audited financial statements must be filed with the SEC within 5 days following the closing of a business combination.
While obtaining audited financial statements is typically the responsibility of the acquired company, it is possible that a potential
target company may be a non-reporting company with unaudited financial statements. The time and costs that may be incurred by some
potential target companies to prepare such audited financial statements may significantly delay or may even preclude consummation
of an otherwise desirable business combination. Acquisition prospects that do not have or are unable to obtain the required audited
statements may not be appropriate for acquisition because we are subject to the reporting requirements of the Exchange Act.
If the Company is deemed to be an investment
company, the Company may be required to institute burdensome compliance requirements and the Company's activities may be restricted,
which may make it difficult for the Company to enter into a business combination.
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restrictions
on the nature of the Company's investments; and
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restrictions
on the issuance of securities, which may make it difficult for us to complete a business combination.
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In addition, we may have imposed upon us burdensome
requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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The Company does not believe that its anticipated
principal activities will subject it to the Investment Company Act of 1940.
The Company has no "Independent
Director", so actions taken and expenses incurred by our officer and director on behalf of the Company will generally not
be subject to "Independent Review".
Our director owns shares of our common stock
and, although no compensation will be paid to him for services rendered prior to or in connection with a business combination,
he may receive reimbursement for out-of-pocket expenses incurred by him in connection with activities on the Company's behalf such
as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on
the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than
our board of director, which consist of one directors who may seek reimbursement. If our director will not be deemed "independent,"
he will generally not have the benefit of independent director examining the propriety of expenses incurred on our behalf and subject
to reimbursement. Although the Company believes that all actions taken by our director on the Company's behalf will be in the Company's
best interests, the Company cannot assure the investor that this will actually be the case. If actions are taken, or expenses are
incurred that are actually not in the Company's best interests, it could have a material adverse effect on our business and plan
of operation and the price of our stock held by the public stockholders.
General Economic Risks.
The Company's current and future business objectives
and plan of operation are likely dependent, in large part, on the state of the general economy. Adverse changes in economic conditions
may adversely affect the Company's business objective and plan of operation. These conditions and other factors beyond the Company's
control include also, but are not limited to regulatory changes.
Risks Related to Our Common Stock
The Company's shares of common stock
are traded from time to time on the OTC Pink Sheet Market.
Our common stock is traded on the OTC Pink
Sheet Market from time to time. There can be no assurance that there will be a liquid trading market for the Company's common stock
following a business combination. In the event that a liquid trading market commences, there can be no assurance as to the market
price of the Company's shares of common stock, whether any trading market will provide liquidity to investors, or whether any trading
market will be sustained.
Our common stock is subject to the Penny Stock Rules of the
SEC and the trading market in our common stock is limited, which makes transactions in our stock cumbersome and may reduce the
value of an investment in our common stock.
The Securities and Exchange Commission has
adopted Rule 3a51-1 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity
security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 require:
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that
a broker or dealer approve a person's account for transactions in penny stocks; and
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the
broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of
the penny stock to be purchased.
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In order to approve a person’s account for transactions in
penny stocks, the broker or dealer must:
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obtain
financial information and investment experience objectives of the person; and
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make
a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
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The broker or dealer must also deliver, prior
to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in
highlight form:
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sets
forth the basis on which the broker or dealer made the suitability determination; and
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that
the broker or dealer received a signed, written agreement from the investor prior to the transaction.
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Generally, brokers may be less willing to execute
transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose
of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks
of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the rights and remedies available to an investor in
cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for
the penny stock held in the account and information on the limited market in penny stocks.
State blue sky registration; potential
limitations on resale of the Company's common stock
The holders of the Company's shares of common
stock registered under the Exchange Act and those persons who desire to purchase them in any trading market that may develop in
the future, should be aware that there may be state blue-sky law restrictions upon the ability of investors to resell the Company's
securities. Accordingly, investors should consider the secondary market for the Company's securities to be a limited one.
It is the intention of the Company's Management
following the consummation of a business combination to seek coverage and publication of information regarding the Company in an
accepted publication manual which permits a manual exemption. The manual exemption permits a security to be distributed in a particular
state without being registered if the Company issuing the security has a listing for that security in a securities manual recognized
by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1)
the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the
fiscal year preceding the balance sheet or for the most recent fiscal year of operations. Furthermore, the manual exemption is
a non-issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published
by Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly
recognize these manuals. A smaller number of states declare that they "recognize securities manuals" but do not specify
the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption:
Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Rule 144 Related Risks
The SEC adopted amendments to Rule 144
which became effective on February 15, 2008. These Rule 144 amendments apply to securities acquired both before and after
that date. Generally, under the Rule 144 amendments, a person who has beneficially owned restricted shares for at least six months
would be entitled to sell their securities provided that: (i) such person is not deemed to have been an affiliate at the time
of, or at any time during the three months preceding, a sale; (ii) we are subject to and are current in the Exchange Act periodic
reporting requirements for at least 90 days before the sale; and (iii) if the sale occurs prior to satisfaction of a
one-year holding period, provided current information is available at the time of sale.
Persons who have beneficially owned restricted
shares for at least six months but who are affiliates at the time of, or at any time during the three months preceding a sale,
would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only
a number of securities that does not exceed the greater of either of the following: (i) 1% of the total number of securities of
the same class then outstanding; or (ii) the average weekly trading volume of such securities during the four calendar weeks preceding
the filing of a notice on Form 144 with respect to the sale; provided, in each case, that we are subject to the Exchange Act
periodic reporting requirements for at least three months before the sale. Such sales by affiliates must also comply with the manner
of sale, current public information and notice provisions of Rule 144.
These Rule 144 related risks are subject to
further restrictions in the event that the Exchange Act reporting company is deemed to be a Shell Company, such as the Company.
Restrictions on the Reliance of Rule 144 by Shell Companies
or Former Shell Companies
Historically, the SEC staff has taken the position
that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank
check companies, like us. The SEC has codified and expanded this position in the amendments discussed above by prohibiting the
use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies)
or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition,
however, if the following conditions are met:
- The issuer of the securities that was formerly
a shell company has ceased to be a shell company;
- The issuer of the securities is subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act;
- The issuer of the securities has filed
all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter
period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and
-At least one year has elapsed from the time
that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company.
As a result, it is likely that pursuant to
Rule 144, stockholders who receive our restricted securities in a business combination will not be able to sell our shares
without registration until one year after we have completed our initial business combination.
Rule 145 Related Risk
Under the new amendments, affiliates of a target
company who receive registered shares in a Rule 145 business combination transaction, and who do not become affiliates of the acquirer,
will be able to immediately resell the securities received by them into the public markets without registration (except for affiliates
of a shell company as discussed in the following section). However, those persons who are affiliates of the acquirer, and those
who become affiliates of the acquirer after the acquisition, will still be subject to the Rule 144 resale conditions generally
applicable to affiliates, including the adequate current public information requirement, volume limitations, manner-of-sale requirements
for equity securities, and, if applicable, a Form 144 filing.
Application of Rule 145 to Shell
Companies
Public resale of securities acquired by affiliates
of acquirers and target companies in business combination transactions involving shell companies will continue to be subject to
restrictions imposed by Rule 145. If the business combination transaction is not registered under the Securities Act, then
the affiliates must look to Rule 144 to resell their securities (with the additional Rule 144 conditions applicable to shell
company securities). If the business combination transaction is registered under the Securities Act, then affiliates of the acquirer
and target company may resell the securities acquired in the transaction, subject to the following conditions:
- The issuer must meet all of the
conditions applicable to shell companies under Rule 144;
- After 90 days from the date of the acquisition,
the affiliates may resell their securities subject to Rule 144's volume limitations, adequate current public information requirement,
and manner-of-sale requirements;
- After six months from the date of the acquisition,
selling security-holders who are not affiliates of the acquirer may resell their securities subject only to the adequate current
public information requirement of Rule 144; and
- After one year from the date of the acquisition,
selling security-holders who are not affiliates or the acquirer may resell their securities without restriction.
Application of Rule 419 to Shell Companies
The provisions of Rule 419 apply to registration
statements filed under the Securities Act of 1933, as amended, by a blank check company. Rule 419 requires that a blank check company
filing such registration statement deposit the securities being offered and proceeds of the offering into an escrow or trust account
pending the execution of an agreement for an acquisition or merger.
In addition, the Company is required to file
a post-effective amendment to the registration statement upon the execution of an agreement for such acquisition or merger. The
rule provides procedures for the release of the offering funds in conjunction with the post effective acquisition or merger. The
obligations to file post-effective amendments are in addition to the obligations to file Forms 8-K to report for both the entry
into a material non-ordinary course agreement and the completion of the transaction. Rule 419 applies to both primary and re-sale
or secondary offerings.
Within five (5) days of filing a post-effective
amendment setting forth the proposed terms of an acquisition, the Company must notify each investor whose shares are in escrow.
Each investor then has no fewer than 20 and no greater than 45 business days to notify the Company in writing if they elect to
remain an investor. A failure to reply indicates that the person has elected to not remain an investor. As all investors are allotted
this second opportunity to determine to remain an investor, acquisition agreements should be conditioned upon enough funds remaining
in escrow to close the transaction.
You May Not Be Entitled to Protections
Normally Afforded to Investors of Bank Check Companies.
If the net proceeds of an offering under the
Securities Act of 1933 is used to complete a initial business combination with a target business that has not been identified,
and we will have net tangible assets in excess of $5,000,001 upon the successful consummation of this offering and will file a
Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by
the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits
or protections of those rules which would, for example, completely restrict the transferability of our securities, require us to
complete our initial business combination within 18 months of the effective date of the initial registration statement and restrict
the use of interest earned on the funds held in the trust account.
Investors will then not be entitled to protections
normally offered to investors in Rule 419 blank check offerings.
Possible Issuance of Additional Securities.
Our Articles of Incorporation authorize the
issuance of 100,000,000 shares of common stock, par value $0.001. As of July 23, 2018, we had 21,290,000 shares issued and outstanding.
We may be expected to issue additional shares in connection with our pursuit of new business opportunities and new business operations.
To the extent that additional shares of common stock are issued, our shareholders would experience dilution of their respective
ownership interests. If we issue shares of common stock in connection with our intent to pursue new business opportunities, a change
in control of the Company may be expected to occur. The issuance of additional shares of common stock may adversely affect the market
price of our common stock, in the event that an active trading market commences.
Dividends unlikely
The Company does not expect to pay dividends
for the foreseeable future because it has no revenues or cash resources. The payment of dividends will be contingent upon the Company's
future revenues and earnings, if any, capital requirements and overall financial conditions. The payment of any future dividends
will be within the discretion of the Company's board of directors as then constituted. It is the Company's expectation that future
Management following a business combination will determine to retain any earnings for use in its business operations and accordingly,
the Company does not anticipate declaring any dividends in the foreseeable future.
ITEM 2. FINANCIAL INFORMATION
Management's Plan of Operation
The following discussion contains forward-looking
statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements
by the fact that they do not relate strictly to historical or current facts. They use of words such as "anticipate",
"estimate", "expect", "project", "intend", "plan", "believe", and other
words and terms of similar meaning in connection with any discussion of future operating or financial performance. From time to
time, we also may provide forward-looking statements in other materials we release to the public.
Overview
The Company's current business objective is
to seek a business combination with an operating company. We intend to use the Company's limited personnel and financial resources
in connection with such activities. The Company will utilize its capital stock, debt or a combination of capital stock and debt,
in effecting a business combination. It may be expected that entering into a business combination will involve the issuance of
restricted shares of capital stock. The issuance of additional shares of our capital stock:
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may
significantly reduce the equity interest of our stockholders;
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will
likely cause a change in control if a substantial number of our shares of capital stock are issued, and most likely will also
result in the resignation or removal of our present officer and director; and
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may
adversely affect the prevailing market price for our common stock.
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Similarly, if we issued debt securities, it
could result in:
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default
and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security
contained covenants that required the maintenance of certain financial ratios or reserves and any such covenants were breached
without a waiver or renegotiations of such covenants;
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our
immediate payment of all principal and accrued interest, if any, if the debt security was payable on demand; and
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our
inability to obtain additional financing, if necessary, if the debt security contained covenants restricting our ability to obtain
additional financing while such security was outstanding.
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Results of Operations during the year ended December 31, 2017
as compared to the year ended December 31, 2016
We have not generated any revenues during the
years 2017 and 2016. We had total operating expenses of $nil during the years ended December 31, 2017 and the year ended December
31, 2016. We incurred zero interest expense during both years ended December 31, 2017 and December 31, 2016. During the years ended
December 31, 2017 and 2016, we had a net loss of $0.
Results of Operations during the three and six months ended June
30, 2018, as compared to the three and six months ended June 30, 2017
We have not generated any revenues during the
three and six months ended June 30, 2018 and 2017. We had total operating expenses of $11,195, related to general and administrative
expenses during the three ended June 30, 2018 compared to total operating expenses of $0 during the three months ended June 30,
2017. We had total operating expenses of $11,195, related to general and administrative expenses during the six ended June 30,
2018 compared to total operating expenses of $0 during the six months ended June 30, 2017. We incurred zero interest expense during
three and six months ended June 30, 2018 and June 30, 2017. During the three months ended June 30, 2018 and 2017, we had a net
loss of $11,195 and $0, respectively mainly due to our general and administrative expenses. During the six months ended June 30,
2018 and 2017, we had a net loss of $11,195 and $0, respectively mainly due to our general and administrative expenses.
Liquidity and Capital Resources
As of June 30, 2018, the Company has no business
operations and no cash resources other than that provided by Management. We are dependent upon interim funding provided by Management
or an affiliated party to pay professional fees and expenses. Our Management and an affiliated party have agreed to provide funding
as may be required to pay for accounting fees and other administrative expenses of the Company until the Company enters into a
business combination. The Company would be unable to continue as a going concern without interim financing provided by Management.
As of June 30, 2018, we had $5,500 in cash. As of December 31, 2017, we had $0 in cash.
If we require additional financing, we cannot
predict whether equity or debt financing will become available at terms acceptable to us, if at all. The Company depends upon services
provided by Management and an affiliated party to fulfill its filing obligations under the Exchange Act. At present, the Company
has no financial resources to pay for such services.
The Company does not currently engage in any
business activities that provide cash flow. The costs of investigating and analyzing business combinations, maintaining the filing
of Exchange Act reports, the investigation, analyzing, and consummation of an acquisition for an unlimited period of time will
be paid from additional money contributed by David Lazar, our sole officer and director, or an affiliated party.
During the next 12 months we anticipate incurring
costs related to:
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filing
of Exchange Act reports.
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franchise
fees, registered agent fees, legal fees and accounting fees, and
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investigating,
analyzing and consummating an acquisition or business combination.
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We estimate that these costs will be in the
range of five to six thousand dollars per year, and that we will be able to meet these costs as necessary, to be advanced/loaned
to us by Management and/or an affiliated party.
On June 30, 2018 and December 31, 2017, we
have had $5,500 in current assets and $0 in current assets, respectively. As of June 30, 2018, we had $11,195 in liabilities and
stockholders’ deficit, consisting of amounts due to related party. As of December 31, 2017, we had $0 in liabilities.
We had a negative cash flow from operations
of $11,195 during the six months ended June 30, 2018. We financed our negative cash flow from operations during the six months
ended June 30, 2018 through advances made by Custodian Ventures, LLC.
We had $0 cash flow from operations during
the six months ended June 30, 2017.
The Company currently plans to satisfy its
cash requirements for the next 12 months through borrowings from its CEO or companies affiliated with its CEO and believes it can
satisfy its cash requirements so long as it is able to obtain financing from these affiliated parties. The Company expects that
money borrowed will be used during the next 12 months to satisfy the Company's operating costs, professional fees and for general
corporate purposes. There is no written funding agreement between the Company and Mr. Lazar, our sole officer and director On July
3, 2018, the Company obtained a promissory note in amount of $68,305 from its custodian, Custodian Ventures, LLC, the managing
member being David Lazar. The note bears an interest of 3% and matures in 180 days from the date of issuance. On July 3, 2018,
the Company issued 78,000,000 shares of common stock, with par value $0.001 for par value in cash and a promissory note issued
on that same day for $68,305, to Custodian Ventures, LLC.
The Company has only limited capital. Additional
financing is necessary for the Company to continue as a going concern. Our independent auditors have unqualified audit opinion
for the years ended December 31, 2017 and 2016 with an explanatory paragraph on going concern.
Off-Balance Sheet Arrangements
As of June 30, 2018 and 2017, we did not have
any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act
of 1934.
Contractual Obligations and Commitments
As of June 30, 2018 and 2017, we did not have
any contractual obligations.
Critical Accounting Policies
Our significant accounting policies are described
in the notes to our financial statements for the six months ended June 30, 2018 and 2017, and are included elsewhere in this registration
statement.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's corporate office is located at
3445 Lawrence Avenue, Oceanside, NY 11572, which space is provided to us on a rent-free basis. The Company believes that the
office facilities are sufficient for the foreseeable future and this arrangement will remain until we find a new business opportunity.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information
regarding the beneficial ownership of our common stock as of June 30, 2018. The information in this table provides the ownership
information for: each person known by us to be the beneficial owner of more than 5% of our common stock; each of our directors;
each of our executive officers; and our executive officers and directors as a group.
Beneficial ownership has been determined in
accordance with the rules and regulations of the SEC and includes voting or investment power with respect to the shares. Unless
otherwise indicated, the persons named in the table below have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them.
Name of Beneficial Owner
|
|
Common Stock Beneficially Owned (1)
|
|
|
Percentage of Common Stock Owned (1)
|
|
Custodian Ventures, LLC (2)
|
|
|
27,000,000
|
|
|
|
78.56
|
%
|
3445 Lawrence Avenue
|
|
|
|
|
|
|
|
|
Oceanside, NY 11572
|
|
|
|
|
|
|
|
|
Director and Officer (1 person)
|
|
|
27,000,000
|
|
|
|
78.56
|
%
|
(1) Applicable percentage ownership is based
on 21,290,000 shares of common stock outstanding as of June 30, 2018. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares
of common stock that are currently exercisable or exercisable within 60 days of June 30, 2018 are deemed to be beneficially owned
by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated
as outstanding for the purpose of computing the percentage ownership of any other person.
(2) David Lazar is the sole and managing member
of Custodian Ventures, LLC, and has sole investment control.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Back to Table of Contents
The following table sets forth the names and ages of the member
of our Board of Director and our executive officers and the positions held by each.
Name
|
|
Age
|
|
Title
|
David Lazar
|
|
28
|
|
CEO and Chairman
|
David Lazar, 28, has been CEO and Chairman
of the Company since June 28, 2018. David Lazar is a private investor who brings seven (7) years of business experience. David
has a diverse knowledge of financial, legal and operations management; public company management, accounting, audit preparation,
due diligence reviews and SEC regulations.
Other expertise includes early stage company
capital restructuring, debt financing, capital introductions, and mergers and acquisitions.
Mr. Lazar was selected to serve as a director
due to his extensive knowledge of the capital markets, his judgment in assessing business strategies and accompanying risks, and
his expertise with emerging growth companies.
Our director holds office until the next annual
meeting of stockholders and until his successors have been duly elected and qualified. There are no agreements with respect to
the election of directors. We do not compensate our directors. Officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors. We do not have any standing committees at this time.
Our director, officer or affiliates have not,
within the past five years, filed any bankruptcy petition, been convicted in or been the subject of any pending criminal proceedings,
or is any such person the subject or any order, judgment or decree involving the violation of any state or federal securities laws.
Section 16(a) Compliance
Section 16(a) of the Securities and Exchange
Act of 1934 requires the Company's directors and executive officers, and persons who own beneficially more than ten percent (10%)
of the Company's Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission.
Copies of all filed reports are required to be furnished to the Company pursuant to Section 16(a). Once the Company becomes subject
to the Exchange Act of 1934, our office and director has informed us that he intends to file reports required to be filed under
Section 16(a).
ITEM 6. EXECUTIVE COMPENSATION
No executive compensation was paid during the
fiscal years ended December 31, 2017, 2016 and 2015. The Company has no employment agreement with any of its officers and directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE
On July 3, 2018, the Company obtained a promissory note in amount
of $68,305 from its custodian, Custodian Ventures, LLC, the managing member being David Lazar. The note bears an interest of 3%
and matures in 180 days from the date of issuance. On July 3, 2018, the Company issued 78,000,000 shares of common stock, with
par value $0.001 for par value in cash and a promissory note issued on that same day for $68,305, to Custodian Ventures, LLC. The
largest principal amount in advances during the quarter ended June 30, 2018 was $1,500 of audit fees. As of June 30, 2018, the
Company owed a total of $16,695 to Mr. Lazar, through Custodian Ventures, LLC. As of June 30, 2018 and 2017, the Company owed $16,695
and $0, respectively in cash advances made Custodian Ventures, LLC to the Company, which bears an interest of 3% and matures in
180 days from the date of issuance.
ITEM 8. LEGAL PROCEEDING
None.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is currently quoted on the
OTC market "Pink Sheets" under the symbol MLTC. For the periods indicated, the following table sets forth the high and
low bid prices per share of common stock. The below prices represent inter-dealer quotations without retail markup, markdown, or
commission and may not necessarily represent actual transactions.
|
|
Price Range
|
|
Period
|
|
High
|
|
|
Low
|
|
Year Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
-
|
|
|
$
|
-
|
|
Second Quarter
|
|
$
|
-
|
|
|
$
|
-
|
|
Third Quarter
|
|
$
|
0.001
|
|
|
$
|
0.001
|
|
Fourth Quarter
|
|
$
|
0.004
|
|
|
$
|
0.001
|
|
First Quarter, March 2018
|
|
$
|
0.004
|
|
|
$
|
0.001
|
|
Second Quarter, June 2018
|
|
$
|
0.07
|
|
|
$
|
0.001
|
|
|
|
|
|
|
|
$
|
0.002
|
|
As of August 10, 2018, our shares of common stock were held by approximately
73 stockholders of record. The transfer agent of our common stock is Nevada Agency and Transfer Company. Phone (702) 818-5898.
Dividends
Holders of common stock are entitled to dividends
when, as, and if declared by the Board of Directors, out of funds legally available therefore. We have never declared cash dividends
on its common stock and our Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends
to retain future earnings to finance the growth of our businesses. There are no restrictions in our articles of incorporation or
bylaws that restrict us from declaring dividends.
Securities Authorized for Issuance Under Equity Compensation
Plans
No equity compensation plan or agreements under
which our common stock is authorized for issuance has been adopted during the fiscal years ended December 31, 2017 and 2016.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On July 3, 2018, the Company issued 78,000,000 shares of common
stock, with par value $0.001, for par value in cash and a promissory note issued on that same day for $68,305, to Custodian Ventures,
LLC.
The issuance was completed pursuant to Section
4(a)(2) of the Securities Act.
ITEM 11. DESCRIPTION OF COMPANY'S SECURITIES
TO BE REGISTERED
The following statements relating to the capital
stock set forth the material terms of the Company's securities; however, reference is made to the more detailed provisions of our
Certificate of Incorporation and by-laws, copies of which are filed herewith.
Common Stock
Our Certificate of Incorporation authorize
the issuance of 100,000,000 shares of common stock, par value $0.001. Our holders of shares of common stock are entitled to one
vote for each share on all matters to be voted on by the shareholders. Holders of common stock do not have cumulative voting rights.
Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of
directors in its discretion from legally available funds. In the event of a liquidation, dissolution or winding up of the Company,
the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders
of common stock have no preemptive rights to purchase the Company's common stock. There are no conversion or redemption rights
or sinking fund provisions with respect to the common stock.
Dividends
Dividends, if any, will be contingent upon
our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within
the discretion of our board of directors. We intend to retain earnings, if any, for use in our business operations and accordingly,
the board of directors does not anticipate declaring any dividends prior to a business combination transaction, nor can there be
any assurance that any dividends will be paid following any business combination.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our articles of incorporation, by-laws and
director indemnification agreements provide that each person who was or is made a party or is threatened to be made a party to
or is otherwise involved (including, without limitation, as a witness) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is or was a director or an officer of Brenham or, in the
case of a director, is or was serving at our request as a director, officer, or trustee of another corporation, or of a partnership,
joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such
proceeding is alleged action in an official capacity as a director, officer or trustee or in any other capacity while serving as
a director, officer or trustee, shall be indemnified and held harmless by us to the fullest extent authorized by the Nevada General
Corporation Law against all expense, liability and loss reasonably incurred or suffered by such.
Section 145 of the Nevada General Corporation
Law permits a corporation to indemnify any director or officer of the corporation against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding
brought by reason of the fact that such person is or was a director or officer of the corporation, if such person acted in good
faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and,
with respect to any criminal action or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a
derivative action, ( i.e ., one brought by or on behalf of the corporation), indemnification may be provided only for expenses
actually and reasonably incurred by any director or officer in connection with the defense or settlement of such an action or suit
if such person acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests
of the corporation, except that no indemnification shall be provided if such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which the action or suit was brought shall determine that the defendant
is fairly and reasonably entitled to indemnity for such expenses despite such adjudication of liability.
Pursuant to Section 102(b)(7) of the Nevada
General Corporation Law, Article Seven of our articles of incorporation eliminates the liability of a director to us for monetary
damages for such a breach of fiduciary duty as a director, except for liabilities arising:
|
Ÿ
|
from
any breach of the director's duty of loyalty to us;
|
|
Ÿ
|
from
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
|
Ÿ
|
under
Section 174 of the Nevada General Corporation Law; and
|
|
Ÿ
|
from
any transaction from which the director derived an improper personal benefit.
|
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting
Firm
To the shareholders and the board of directors
of Melt, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Melt, Inc. as of December 31, 2017 and 2016, the related statements of operations, stockholders’ equity (deficit),
and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
Substantial Doubt about the Company’s
Ability to Continue as a Going Concern
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements,
the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company
continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
/S/ BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company’s auditor
since 2018.
Lakewood, CO
August 13, 2018
MELT INC. AND
SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
-
|
|
Accounts receivable, net of allowance of $0, respectively
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
Accrued management fees
|
|
|
-
|
|
|
|
-
|
|
Notes payable-related party
|
|
|
-
|
|
|
|
-
|
|
Accrued interest – related party
|
|
|
-
|
|
|
|
-
|
|
Notes payable
|
|
|
-
|
|
|
|
-
|
|
Accrued interest
|
|
|
-
|
|
|
|
-
|
|
Deferred revenue
|
|
|
-
|
|
|
|
-
|
|
Total current liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Liabilities from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
TOTAL LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 21,290,000 shares issued and outstanding, respectively
|
|
|
21,290
|
|
|
|
21,290
|
|
Additional paid in capital
|
|
|
1,837,173
|
|
|
|
1,837,173
|
|
Accumulated (deficit) earnings
|
|
|
(1,858,463
|
)
|
|
|
(1,858,463
|
)
|
Total stockholders' equity
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these
financial statements.
MELT, INC.
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE PERIODS
DECEMBER 31
|
|
2017
|
|
|
2016
|
|
SALES
|
|
$
|
-
|
|
|
|
-
|
|
COST OF SALES
|
|
|
|
|
|
|
|
|
GROSS MARGIN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
Marketing
|
|
|
-
|
|
|
|
-
|
|
Bad debt expense
|
|
|
-
|
|
|
|
-
|
|
Professional fees
|
|
|
-
|
|
|
|
-
|
|
Management fees
|
|
|
-
|
|
|
|
-
|
|
General and Administrative
|
|
|
-
|
|
|
|
-
|
|
Total operating expenses
|
|
|
-
|
|
|
|
-
|
|
INCOME FROM OPERATIONS
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSE:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
Gain (Loss) on litigation settlements
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME BEFORE INCOME TAXES
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET INCOME FROM CONTINUING OPERATIONS
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these
financial statements.
MELT, INC. AND SUBSIDIARIES
STATEMENT OF STOCKHOLDERS’
EQUITY (DEFICIT)
FOR THE PERIOD DECEMBER 31, 2017 AND DECEMBER
31, 2016
|
|
Common
|
|
|
Common
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Stock:
|
|
|
Stock:
|
|
|
Paid in
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income
|
|
|
Totals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
– December 31, 2016
|
|
|
21,290,000
|
|
|
$
|
21,290
|
|
|
$
|
1,837,173
|
|
|
$
|
(1,858,463
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance
- December 31, 2017
|
|
|
21,290,000
|
|
|
|
21,290
|
|
|
|
1,837,173
|
|
|
|
(1,858,463
|
)
|
|
|
-
|
|
|
|
-
|
|
The accompanying notes are an integral
part of these financial statements.
MELT, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE PERIOD DECEMBER
31, 2017 and DECEMBER 31, 2016
|
|
2017
|
|
|
2016
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
-
|
|
|
$
|
-
|
|
Adjustments to reconcile net loss to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
Bad debt expense
|
|
|
-
|
|
|
|
-
|
|
Amortization of deferred debt issuance costs
|
|
|
-
|
|
|
|
-
|
|
Loss from discontinued operations
|
|
|
|
|
|
|
|
|
Changes in net assets and liabilities - Accounts receivable
|
|
|
-
|
|
|
|
-
|
|
Deferred revenue
|
|
|
-
|
|
|
|
-
|
|
Accounts payable
|
|
|
-
|
|
|
|
-
|
|
Accrued interest – related party
|
|
|
-
|
|
|
|
-
|
|
Accrued interest
|
|
|
-
|
|
|
|
-
|
|
Accruals and other payables
|
|
|
-
|
|
|
|
-
|
|
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
-
|
|
|
|
-
|
|
Effect of exchange rate fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET (DECREASE) IN CASH
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH – BEGINNING OF PERIOD
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH – END OF PERIOD
|
|
$
|
0
|
|
|
$
|
0
|
|
The accompanying notes are an integral part of these
financial statements.
MELT, INC. AND SUBSIDIARIES.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 31, 2017 and DECEMBER
31, 2016
Note 1 – Organization and basis of accounting
Basis of Presentation and Organization
This summary of significant accounting policies of Melt
Inc. and its Subsidiaries is presented to assist in understanding the Company’s consolidated financial statements. The consolidated
financial statements and notes are representations of the Company’s management, which is responsible for their integrity
and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America
and have been consistently applied in the preparation of the consolidated financial statements.
a.
Organization and Business Activities
Melt Inc. (hereinafter referred to as the Company) was
organized on July 18, 2003, under the laws of the State of Nevada. The Company operates as a holding company for operating subsidiaries.
Melt (California), Inc. is a wholly owned subsidiary
(hereinafter referred to as Melt (CA)) of Melt Inc. and was organized on August 6, 2003, under the laws of the State of California.
Melt (CA) was in the business of owning and operating corporate owned stores of which none were in existence during the year ended
December 31, 2009, managing the construction process for both corporate and franchisee owned stores, securing retail space for
either corporate or franchise stores to operate from, as well as the sale and distribution of product to franchise owned stores
until October 2007. Melt (CA) ceased managing the construction of stores during September 2007. All assets, liabilities and operating
results related to store construction and retail leases are therefore included in discontinued operations as of December 31, 2009
and 2008 (see note 6).
Melt Franchising LLC (hereinafter referred to as Melt
(FA)) a wholly owned subsidiary was organized on February 2, 2005 under the laws of the State of Nevada. Melt (FA) is responsible
for selling franchises to allow franchisee’s to own and operate stores trading under the name of Melt – gelato italiano,
Melt – café & gelato bar and Melt – gelato & crepe café as well as the sale and distribution
of product to franchisees, marketing and the collection of royalties. To date, Melt (FA) has sold forty-nine franchises of which
nineteen are operating, seventeen agreements have been terminated by the Company as a result of the franchisee’s not securing
retail space or other reasons, and thirteen have closed their operations.
The accompanying financial statements
are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The
Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising
capital, and research into products which may become part of the Company’s product portfolio. The Company has not realized
significant sales through since inception. A development stage company is defined as one in which all efforts are devoted substantially
to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.
The accompanying financial statements
have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations.
Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding
facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned
operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful
in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue
as a going concern.
Note 2 – Going Concern
The accompanying financial statements have been prepared assuming the continuation of the Company as
a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and
is dependent on debt and equity financing to fund its operations. Management of the Company is making efforts to raise additional
funding until a registration statement relating to an equity funding facility is in effect. While management of the Company believes
that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company
will be able to raise additional equity capital or be successful in the development and commercialization of the products it develops
or initiates collaboration agreements thereon. The accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result from the possible inability of the Company to continue as a going concern.
Note
3 – Summary of significant accounting policies
Cash and Cash Equivalents
For purposes of reporting within the statements of cash
flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly
liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Revenue Recognition
The Company recognize revenues when
delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has
been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection
of any related receivable is probable.
Property and equipment
Property and equipment are stated at historical cost
less accumulated depreciation and impairment. The historical cost of acquiring an item of property and equipment includes the costs
necessarily incurred to bring it to the condition and location necessary for its intended use.
Income Taxes
The Company accounts for income
taxes pursuant to FASB ASC Topic 740,
Income Taxes
. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined
based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.
The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities
generating the differences.
The Company maintains a valuation
allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood
of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations
for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within
the carry- forward period under the Federal tax laws.
Changes in circumstances, such as the Company generating
taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change in the valuation
allowance will be included in income in the year of the change in estimate.
Fair Value Measurement
The Company values its convertible notes and amounts
due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).
The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including
assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable,
market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those
inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and
the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1 – Quoted prices are available in active
markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset
or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists
of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 - Valuations for assets and liabilities that
can be obtained from readily available pricing sources via independent providers for market transactions involving similar assets
or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and valuations
are based on observable market data in those markets.
Level 3 – Pricing inputs include significant inputs
that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that
result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
Employee Stock-Based Compensation
The Company accounts for stock-based
compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms
of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive
shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated
number of awards that are expected to vest and will result in a charge to operations.
Estimates
The financial statements are prepared
on the basis of accounting principles generally accepted in the United States of America. The preparation 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 as of December 31, 2010 and 2009, and expenses for the years ended December 31, 2010
and 2009, and cumulative from inception. Actual results could differ from those estimates made by management.
Subsequent Event
The Company evaluated subsequent events through the date
when financial statements are issued for disclosure consideration.
Adoption of Recent Accounting Pronouncements
As of December 31, 2015, the Company
adopted guidance codified in ASU 2015-03,
Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation
of Debt Issuance Costs.
The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to
be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance
for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense using the effective
interest method pursuant to ASC 835-30-35-2 through 35-3. The Company has applied this guidance retrospectively to all prior periods
presented in the Company's financial statements.
The Company has implemented all new accounting pronouncements
that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements
that have been issued that might have a material impact on its financial position or results of operations.
Recent Accounting Pronouncements
In February 2016, the FASB issued
an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The
new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance
as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining
lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific
quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows
arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim
periods within fiscal years beginning after December 15, 2020, for nonpublic entities using a modified retrospective approach.
Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its consolidated
financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.
In March 2016, the FASB issued an accounting standards
update that provides a new requirement to record all of the tax effects related to share-based payments at settlement (or expiration)
through the income statement. This pronouncement is effective for annual reporting periods beginning after December 15, 2017, and
interim periods within fiscal years beginning after December 15, 2018, for nonpublic entities. The Company is still evaluating
the impact that the new accounting guidance will have on its consolidated financial statements and related disclosures
In August 2016, the FASB issued
an accounting standards update addressing the classification and presentation of eight specific cash flow issues that
currently result in diverse practices. The amendments provide guidance in the presentation and classification of certain cash
receipts and cash payments in the statement of cash flows including debt prepayment or debt extinguishment costs, settlement
of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the
settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions
received from equity method investees. This pronouncement is effective for annual reporting periods beginning after December
15, 2018, and interim periods within fiscal years beginning after December 15, 2019, for nonpublic entities. The amendments
in this ASU should be applied using a retrospective approach. The Company is still evaluating the impact that the new
accounting guidance will have on its consolidated financial statements and related disclosures.
Note
4 – Discontinued Operations
The Company has fully impaired all
assets since the shutdown of its operations in 2010 and has recorded the effects of this impairment as part of its discontinued
operations. With the absence of a substantial amount of the old records and the passage of the statute of limitations the company
has recorded a discontinued operations expense in 2010 the most current year since operations shutdown based on the accumulated
records obtained to date through the second quarter 2018.
Note
5 – Subsequent Events
On June 27, 2018, the eight judicial
District Court of Nevada appointed Custodian Ventures, LLC as custodian for Melt Inc., proper notice having been given to the officers
and directors of Melt, Inc. There was no opposition.
On June 28, 2018, the Company filed
a certificate of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.
On July 3, 2018, the Company obtained
a promissory note in amount of $68,305 from its custodian, Custodian Ventures, LLC. The note bears an interest of 3% and matures
in 180 days from the date of issuance.
On July 3, 2018, the Company issued
78,000,000 shares of common stock, with par value $0.001 for par value in cash and a promissory note issued on that same day for
$68,305, to Custodian Ventures, LLC.
MELT INC.
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,500
|
|
|
$
|
-
|
|
Accounts receivable, net of allowance of $0, respectively
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
5,500
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
5,500
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
Accrued management fees
|
|
|
-
|
|
|
|
-
|
|
Due to related party
|
|
|
16,695
|
|
|
|
-
|
|
Accrued interest – related party
|
|
|
-
|
|
|
|
-
|
|
Notes payable
|
|
|
-
|
|
|
|
-
|
|
Accrued interest
|
|
|
-
|
|
|
|
-
|
|
Deferred revenue
|
|
|
-
|
|
|
|
-
|
|
Total current liabilities
|
|
|
16,695
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Liabilities from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
TOTAL LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 21,290,000 shares issued and outstanding, respectively
|
|
|
21,290
|
|
|
|
21,290
|
|
Additional paid in capital
|
|
|
1,837,173
|
|
|
|
1,837,173
|
|
Accumulated (deficit) earnings
|
|
|
(1,869,658
|
)
|
|
|
(1,858,463
|
)
|
Total stockholders' equity
|
|
|
(11,195
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
5,500
|
|
|
$
|
-
|
|
The accompanying notes are an integral
part of these financial statements.
MELT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF OPERATIONS
(Unaudited)
|
|
For the three months ended
|
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
General and administrative
|
|
|
11,195
|
|
|
|
-
|
|
|
|
11,195
|
|
|
|
-
|
|
Total operating expense
|
|
|
11,195
|
|
|
|
-
|
|
|
|
11,195
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(11,195
|
)
|
|
|
-
|
|
|
|
(11,195
|
)
|
|
|
-
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Foreign exchange (gain) loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(11,195
|
)
|
|
$
|
-
|
|
|
$
|
(11,195
|
)
|
|
$
|
-
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
$
|
(11,195
|
)
|
|
$
|
-
|
|
|
$
|
(11,195
|
)
|
|
$
|
-
|
|
Net loss per common share – basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Weighted average common shares outstanding – basic and diluted
|
|
|
21,290,000
|
|
|
|
21,290,000
|
|
|
|
21,290,000
|
|
|
|
21,290,000
|
|
The accompanying notes are an integral
part of these financial statements.
MELT, INC.
AND SUBSIDIARIES
STATEMENTS
OF CASH FLOWS
(Unaudited)
|
|
For the six
months ended June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
(11,195
|
)
|
|
$
|
-
|
|
Adjustments to reconcile
net loss to net cash (used in) operating activities:
|
|
|
|
|
|
|
|
|
Bad debt expense
|
|
|
-
|
|
|
|
-
|
|
Amortization of deferred
debt issuance costs
|
|
|
-
|
|
|
|
-
|
|
Loss from discontinued
operations
|
|
|
|
|
|
|
|
|
Changes in net assets
and liabilities - Accounts receivable
|
|
|
-
|
|
|
|
-
|
|
Deferred revenue
|
|
|
-
|
|
|
|
-
|
|
Accounts payable
|
|
|
-
|
|
|
|
-
|
|
Accrued interest –
related party
|
|
|
-
|
|
|
|
-
|
|
Accrued interest
|
|
|
-
|
|
|
|
-
|
|
Accruals
and other payables
|
|
|
-
|
|
|
|
-
|
|
NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
|
|
(11,195
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
NET
CASH USED IN INVESTING ACTIVITIES
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds
from related party
|
|
|
16,695
|
|
|
|
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
16,695
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
NET (DECREASE) IN CASH
|
|
|
5,500
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH – BEGINNING
OF PERIOD
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
CASH – END
OF PERIOD
|
|
$
|
5,500
|
|
|
$
|
0
|
|
The accompanying notes are an
integral part of these financial statements.
MELT, INC. AND SUBSIDIARIES.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD JUNE 30, 2018 and DECEMBER
31, 2017
Note 1 – Organization and
basis of accounting
Basis of Presentation and Organization
This summary of significant accounting
policies of Melt Inc. and its Subsidiaries is presented to assist in understanding the Company’s consolidated financial statements.
The consolidated financial statements and notes are representations of the Company’s management, which is responsible for
their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States
of America and have been consistently applied in the preparation of the consolidated financial statements.
Melt Inc. (hereinafter referred
to as the Company) was organized on July 18, 2003, under the laws of the State of Nevada. The Company operates as a holding company
for operating subsidiaries.
Melt (California), Inc. is a wholly
owned subsidiary (hereinafter referred to as Melt (CA)) of Melt Inc. and was organized on August 6, 2003, under the laws of the
State of California. Melt (CA) was in the business of owning and operating corporate owned stores of which none were in existence
during the year ended December 31, 2009, managing the construction process for both corporate and franchisee owned stores, securing
retail space for either corporate or franchise stores to operate from, as well as the sale and distribution of product to franchise
owned stores until October 2007. Melt (CA) ceased managing the construction of stores during September 2007. All assets, liabilities
and operating results related to store construction and retail leases are therefore included in discontinued operations as of December
31, 2009 and 2008 (see note 6).
Melt Franchising LLC (hereinafter
referred to as Melt (FA)) a wholly owned subsidiary was organized on February 2, 2005 under the laws of the State of Nevada. Melt
(FA) is responsible for selling franchises to allow franchisee’s to own and operate stores trading under the name of Melt
– gelato italiano, Melt – café & gelato bar and Melt – gelato & crepe café as well as the
sale and distribution of product to franchisees, marketing and the collection of royalties. To date, Melt (FA) has sold forty-nine
franchises of which nineteen are operating, seventeen agreements have been terminated by the Company as a result of the franchisee’s
not securing retail space or other reasons, and thirteen have closed their operations.
On June 27, 2018, the eight judicial
District Court of Nevada appointed Custodian Ventures, LLC as custodian for Melt Inc., proper notice having been given to the officers
and directors of Shentang International, Inc. There was no opposition.
On June 28, 2018, the Company filed
a certificate of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.
The accompanying financial statements
are prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The
Company is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising
capital, and research into products which may become part of the Company’s product portfolio. The Company has not realized
significant sales through since inception. A development stage company is defined as one in which all efforts are devoted substantially
to establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.
The accompanying financial statements
have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations.
Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding
facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned
operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful
in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue
as a going concern.
Note 2 – Going Concern
The accompanying financial statements
have been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations.
Management of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding
facility is in effect. While management of the Company believes that it will be successful in its capital formation and planned
operating activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful
in the development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification
of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue
as a going concern.
Note 3 – Summary
of significant accounting policies
Cash and Cash Equivalents
For purposes of reporting within
the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties,
and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Revenue Recognition
The Company recognize revenues when
delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has
been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection
of any related receivable is probable.
Property and equipment
Property and equipment are stated
at historical cost less accumulated depreciation and impairment. The historical cost of acquiring an item of property and equipment
includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use.
Income Taxes
The Company accounts for income
taxes pursuant to FASB ASC Topic 740,
Income Taxes
. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined
based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.
The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities
generating the differences.
The Company maintains a valuation
allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood
of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations
for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within
the carry- forward period under the Federal tax laws.
Changes in circumstances, such as
the Company generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset.
Any change in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value Measurement
The Company values its convertible
notes and amounts due to related partings and short term loans payable under FASB ASC 820 which defines fair value, establishes
a framework for measuring fair value, and expands disclosures about fair value measurements.
Fair value is the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable,
market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those
inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and
the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value
hierarchy are as follows:
Level 1 – Quoted prices are
available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions
for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1
primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 - Valuations for assets
and liabilities that can be obtained from readily available pricing sources via independent providers for market transactions involving
similar assets or liabilities. The Company’s principal markets for these securities are the secondary institutional markets,
and valuations are based on observable market data in those markets.
Level 3 – Pricing inputs include
significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed
methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
Employee Stock-Based Compensation
The Company accounts for stock-based
compensation in accordance with ASC 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms
of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive
shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated
number of awards that are expected to vest and will result in a charge to operations.
Estimates
The financial statements are prepared
on the basis of accounting principles generally accepted in the United States of America. The preparation 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 as of December 31, 2010 and 2009, and expenses for the years ended December 31, 2010
and 2009, and cumulative from inception. Actual results could differ from those estimates made by management.
Subsequent Event
The Company evaluated subsequent
events through the date when financial statements are issued for disclosure consideration.
Adoption of Recent Accounting
Pronouncements
As of December 31, 2015, the Company
adopted guidance codified in ASU 2015-03,
Interest - Imputation of Interest (Subtopic 835-30), Simplifying the Presentation
of Debt Issuance Costs.
The guidance simplifies the presentation of debt issuance costs by requiring debt issuance costs to
be presented as a deduction from the corresponding liability, consistent with debt discounts. The recognition and measurement guidance
for debt issuance costs is not affected. Therefore, these costs will continue to be amortized as interest expense using the effective
interest method pursuant to ASC 835-30-35-2 through 35-3. The Company has applied this guidance retrospectively to all prior periods
presented in the Company's financial statements.
The Company has implemented all
new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are
any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results
of operations.
Recent Accounting Pronouncements
In February 2016, the FASB issued
an accounting standards update for leases. The ASU introduces a lessee model that brings most leases on the balance sheet. The
new standard also aligns many of the underlying principles of the new lessor model with those in the current accounting guidance
as well as the FASB's new revenue recognition standard. However, the ASU eliminates the use of bright-line tests in determining
lease classification as required in the current guidance. The ASU also requires additional qualitative disclosures along with specific
quantitative disclosures to better enable users of financial statements to assess the amount, timing, and uncertainty of cash flows
arising from leases. The pronouncement is effective for annual reporting periods beginning after December 15, 2019, and interim
periods within fiscal years beginning after December 15, 2020, for nonpublic entities using a modified retrospective approach.
Early adoption is permitted. The Company is still evaluating the impact that the new accounting guidance will have on its consolidated
financial statements and related disclosures and has not yet determined the method by which it will adopt the standard.
In March 2016, the FASB issued an
accounting standards update that provides a new requirement to record all of the tax effects related to share-based payments at
settlement (or expiration) through the income statement. This pronouncement is effective for annual reporting periods beginning
after December 15, 2017, and interim periods within fiscal years beginning after December 15, 2018, for nonpublic entities. The
Company is still evaluating the impact that the new accounting guidance will have on its consolidated financial statements and
related disclosures
In August 2016, the FASB issued
an accounting standards update addressing the classification and presentation of eight specific cash flow issues that currently
result in diverse practices. The amendments provide guidance in the presentation and classification of certain cash receipts and
cash payments in the statement of cash flows including debt prepayment or debt extinguishment costs, settlement of zero-coupon
debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance
claims, proceeds from the settlement of corporate-owned life insurance policies, and distributions received from equity method
investees. This pronouncement is effective for annual reporting periods beginning after December 15, 2018, and interim periods
within fiscal years beginning after
December 15, 2019, for nonpublic
entities. The amendments in this ASU should be applied using a retrospective approach. The Company is still evaluating the impact
that the new accounting guidance will have on its consolidated financial statements and related disclosures.
Note 4 – Discontinued
Operations
The Company has fully impaired all
assets since the shutdown of its operations in 2010 and has recorded the effects of this impairment as part of its discontinued
operations. With the absence of a substantial amount of the old records and the passage of the statute of limitations the company
has recorded a discontinued operations expense in 2010 the most current year since operations shutdown based on the accumulated
records obtained to date through the second quarter 2018.
Note 5 – Subsequent
Events
On July 3, 2018, the Company obtained
a promissory note in amount of $68,305 from its custodian, Custodian Ventures, LLC. The note bears an interest of 3% and matures
in 180 days from the date of issuance.
On July 3, 2018, the Company issued
78,000,000 shares of common stock, with par value $0.001 for par value in cash and a promissory note issued on that same day for
$68,305, to Custodian Ventures, LLC.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
In its two most recent fiscal years, the Company
has had no disagreements with its independent accountants.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No.
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Description
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2
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Notice of Entry of Order, Eight Judicial District Court, Clark County, Nevada, Case No.: A-18-774598-P
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3.1
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Certificate of Incorporation – (Incorporated by reference from Form SB-2, filed on October 24, 2003, Exhibit 3.1)
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3.2
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By-laws (Incorporated by reference from Form SB2, filed on October 24., 2003, Exhibit 3.2)
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3.3
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Certificate of Revival with the state of Nevada, dated June 28, 2018, appointing David Lazar as, President, Secretary, Treasurer and Director.
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23
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Consent of Independent Auditor
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SIGNATURES
Pursuant to the requirements of Section 12
of the Securities Exchange Act of 1934, the Company has duly caused this amended registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: August 13, 2018
Melt, Inc.
By: David Lazar, CEO
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/s/
David Lazar
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