The accompanying notes are an integral part of these unaudited consolidated financial statements.
The accompanying notes are an
integral part of these unaudited consolidated financial statements.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February
28, 2023
(UNAUDITED)
NOTE 1
- ORGANIZATION, DESCRIPTION OF BUSINESS
Photozou Holdings, Inc., (the “Company”)
was incorporated under the laws of the State of Delaware on September 29, 2014.
On May 8, 2018, the Company
conducted a stock cancellation of the above 3,037,300 shares and the total funds of $75,933 were returned to investors. The cancellation
of the shares and return of funds was due to the fact that we did not make an acquisition in the allotted time granted by Rule 419.
On May 31, 2018, the Company
entered into and consummated a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Koichi Ishizuka, our President,
CEO, and Director. At the closing of the Stock Purchase Agreement, Koichi Ishizuka transferred to the Company, 10,000 shares of common
stock of Photozou Koukoku Co., Ltd., a Japan corporation (“Photozou Koukoku”), which represented all of its issued and outstanding
shares, in consideration of 1,000,000 JPY ($9,190 USD as of the exchange rate May 31, 2018). The Company has since gained a 100% interest
in the issued and outstanding shares of Photozou Koukoku’s common stock and Photozou Koukoku is now a wholly owned subsidiary of
the Company. The Company and Photozou Koukoku were under common control at the time of the acquisition.
Photozou Koukoku was incorporated under the laws of
Japan on March 14, 2017. Currently, Photozou Koukoku is headquartered in Tokyo, Japan. The Company offers advertising services and photo
session services, and sells used cameras.
On June 5, 2018, Photozou Co., Ltd., our controlling
shareholder, entered into stock purchase agreements with 69 Japanese shareholders. Pursuant to these agreements, Photozou Co., Ltd. sold
3,028,900 shares of Photozou Holdings common stock in total to these individuals and received $75,723 as aggregate consideration. Each
shareholder paid $0.025 USD per share.
On July 17, 2018, Photozou Co., Ltd., our controlling
shareholder, entered into a stock purchase agreement with 1 Japanese shareholder. Pursuant to the agreement, Photozou Co., Ltd. sold
a total of 7,000 shares of common stock to this individual and received $175 as aggregate consideration. Each shareholder paid $0.025
USD per share.
On September 21, 2020, Photozou Co., Ltd., our principal controlling shareholder,
entered into a Stock Purchase Agreement with Koichi Ishizuka, our Sole Officer and Director. Pursuant to the closing of the Agreement
on September 21, 2020, Photozou Co., Ltd. transferred to Koichi Ishizuka 4,553,200 shares of our common stock, which represents approximately
56.9% of our issued and outstanding common stock, in consideration of JPY 6,657,917 (approximately $60,500). Following the closing of
the share purchase transaction, Koichi Ishizuka owns approximately 66.7% interest in the issued and outstanding shares of our common stock.
Photozou Co., Ltd. was and remains owned and controlled entirely by Koichi Ishizuka, we do not believe that this transaction is deemed
to be a change in control of the Company.
Our principal executive offices are located at 4-30-4F,
Yotsuya, Shinjuku-ku, Tokyo, 160-0004, Japan.
The Company has elected November 30th as its fiscal
year end.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the
accounts of the Company and of its wholly-owned subsidiary, Photozou Koukoku. Intercompany transactions are eliminated.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial
statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including
the instructions to Form 10-Q and Regulation S-X. In the opinion of the management of the Company, all adjustments, which are of a normal
recurring nature, necessary for a fair statement of the results for the nine months period, have been made. Results for the interim periods
presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the
terms “Company”, “we”, “us” or “our” mean the Company. Certain information and note disclosure
normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of
America has been omitted from these statements pursuant to such accounting principles and, accordingly, they do not include all the information
and notes necessary for comprehensive financial statements and should be read in conjunction with our consolidated financial statements
for the year ended November 30, 2022, included in our Form 10-K.
USE OF ESTIMATES
The presentation of financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. The most significant estimates and assumptions made by management include
going concern, allowance for doubtful accounts, valuation allowance on deferred income tax, inventory obsolescence and sales allowance.
Since early 2020, the global outbreak of the coronavirus disease 2019 (“COVID-19”) has significantly affected economy in Japan,
where the Company mainly operates its business. The extent to which the COVID-19 pandemic may directly or indirectly impact our business,
financial condition, and results of operations is highly uncertain and subject to change. We considered the potential impact of the COVID-19
pandemic on our estimates and assumptions and there was not a material impact to our consolidated financial statements as of February
28, 2023 and for the three months then ended. Actual results in the future could vary from the amounts derived from management's estimates
and assumptions.
RELATED PARTY TRANSACTION
The Company accounts for related party transactions
in accordance with ASC 850 ("Related Party Disclosures"). A related party is generally defined as (i) any person that holds
10% or more of the Company's securities and their immediate families, (ii) the Company's management, (iii) someone that directly or indirectly
controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and
operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources
or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.
Transactions involving related parties cannot be presumed
to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations
about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent
to those that prevail in arm's-length transactions unless such representations can be substantiated.
FOREIGN CURRENCY TRANSLATION
The Company maintains its books and record in its
local currency, Japanese YEN (“JPY”), which is a functional currency as being the primary currency of the economic environment
in which its operation is conducted. Transactions denominated in currencies other than the functional currency are translated into the
functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies
other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet
dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is the United
States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In accordance with
ASC Topic 830-30, “Translation of Financial Statement”, assets and liabilities of the Company whose functional currency is
not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates
prevailing during the period. Shareholders’ equity is translated at historical exchange rate at the time of transaction. The
gains and losses resulting from translation of financial statements are recorded as a separate component of accumulated other comprehensive
income within the statements of shareholders’ deficit.
Translation of amounts from the local currency of
the Company into US$1 has been made at the following exchange rates:
| |
February 28, 2023 |
|
February 28, 2022 |
| Current JPY: US$1 exchange rate |
136.33 |
|
115.55 |
| Average JPY: US$1 exchange rate |
132.85 |
|
114.60 |
COMPREHENSIVE INCOME OR LOSS
ASC Topic 220, “Comprehensive Income”,
establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive
income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as
presented in the accompanying consolidated statements of shareholders’ deficit consists of changes in unrealized gains and losses
on foreign currency translation.
REVENUE RECOGNITION AND
DEFERRED REVENUE
The Company recognizes its revenue in accordance
with ASC 606 - Revenue from contracts with Customers. To
determine revenue recognition for agreements within the scope of ASC 606, the Company performs the following five steps: (1)
identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction
price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each
performance obligation is satisfied.
Revenue for used cameras sold is recognized at a point
in time when the cameras are delivered to the customer. There are two types of service revenue. Revenue for advertising service is recognized
over time when the services are provided to the customers. Revenue for photo session service is recognized at a point of time when service
is provided to the customers at the photo session.
Deferred revenue is recorded when consideration is
received from a customer prior to the goods or services were delivered. There was no deferred revenue as of February 28, 2023 or November
30, 2022.
Disaggregated revenue by nature of the Company is
as follows:
| |
|
For the three months |
Percentage of |
For the three months |
Percentage of |
| |
|
ended |
total revenues |
ended |
total revenues |
| |
|
February 28, 2023 |
|
February 28, 2022 |
|
| Revenue from cameras sold |
$ |
16,254 |
71.5% |
44,742 |
70.8% |
| Service revenue |
|
6,478 |
28.5% |
18,492 |
29.2% |
| Total |
|
22,732 |
100% |
63,234 |
100% |
Disaggregated revenue by geographic of the Company
is as follows:
| |
|
For the three months |
Percentage |
For the three months |
Percentage of |
| |
|
ended |
of total revenues |
ended |
total revenues |
| |
|
February 28, 2023 |
|
February 28, 2022 |
|
| Revenue from US |
$ |
15,351 |
67.5% |
44,742 |
70.8% |
| Revenue from Japan |
|
7,381 |
32.5% |
18,492 |
29.2% |
| Total |
|
22,732 |
100% |
63,234 |
100% |
-F6-
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NOTE 3
- GOING CONCERN
The accompanying consolidated financial statements
are prepared on a basis of accounting assuming that the Company is a going concern that contemplates realization of assets and satisfaction
of liabilities in the normal course of business. The Company is in the early stage of operations and has recurring net losses and working
capital deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company will
offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue-producing
contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may
substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other
arrangements that may dilute the interests of existing stockholders. However, management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans. The accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 4
- RELATED-PARTY TRANSACTIONS
For the three months ended February 28, 2023, Photozou
Co., Ltd., a company controlled by Koichi Ishizuka, CEO, paid expense on behalf of the Company in an amount of $30,128. For the three
months ended February 28, 2022, Photozou Co., Ltd., a company controlled by Koichi Ishizuka, CEO, paid expense on behalf of the Company
in an amount of $33,265. The total due to related party as of February 28, 2023 and November 30, 2022 were $689,885 and $651,999, respectively,
and are unsecured, due on demand and non-interest bearing.
For the three months ended February 28, 2023 and February
28, 2022, the Company utilized office space and storage space of the Company’s sole officer, Koichi Ishizuka, free of charge.
NOTE 5
- SHAREHOLDERs’ DEFICIT
Preferred Stock
The authorized preferred stock of the Company consists
of 20,000,000 shares with a par value of $0.0001. The Company has not issued any shares for the three months ended February 28, 2023 and
February 28, 2022.
Common Stock
The authorized common stock of the Company consists
of 500,000,000 shares with a par value of $0.0001. There were 8,000,000 shares of common stock issued and outstanding as of February 28,
2023 and November 30, 2022.
Pertinent Rights and Privileges
Holders of shares of common stock are entitled to
one vote for each share held to be used at all stockholders’ meetings and for all purposes including the election of directors.
Common stock does not have cumulative voting rights. Nor does it have preemptive or preferential rights to acquire or subscribe for any
unissued shares of any class of stock.
NOTE 6 - CONCENTRATION
Concentration of Purchases
Net purchases from suppliers accounting for 10% or
more of total purchases are as follows:
For the three months ended February 28, 2023, 100%
of inventories of cameras were purchased from two suppliers. For the three months ended February 28, 2022, 100% of the inventories of
cameras were purchased from two suppliers. For the three months ended February 28, 2023 and February 28, 2022, 100% of the purchase of
inventory was handled by Mr. Takaharu Ogami whom the Company has a service agreement with to sell and buy used cameras on behalf of the
Company.
Concentration of Revenues
Revenues from customers accounting for 10% or
more of total revenues are as follows:
For the three months ended February 28, 2023, 94%
of the revenue from the sale of cameras was generated through Amazon USA. For the three months ended February 28, 2022, 100% of the revenue
from the sale of cameras was generated through Amazon USA. For the three months ended February 28, 2023 and February 28, 2022, 100% of
the revenue from the sale of cameras was handled by Takaharu Ogami whom the Company has a service agreement with to sell and buy used
cameras on behalf of the Company.
For the three months ended February 28, 2023, no customer
accounted for 10% or more of service revenue.
For the three months ended February 28, 2022, 12%
and 11% of the service revenue was generated from Geniee, Inc., and KONICA MINOLTA, respectively.
NOTE 7 - COMMITMENTS
On May 1, 2017, the Company entered into an agreement
with Mr. Takahara Ogami, whereas he is to act as an independent contractor to Photozou Koukoku. The services he is to provide include,
but are not limited to, handling the operations of Photozou Koukoku's used camera retail business through purchasing, selling and delivery
of cameras by Mr. Ogami. He is compensated JPY 450,000 (approximately $3,387) a month. Unless either party expresses, in writing, their
intention to terminate the agreement then it shall run another three months automatically.
Mr. Ogami is responsible for the sale and shipping
of the cameras at the expense of Photozou Koukoku. Photozou Koukoku is the legal owner of the camera(s) until the point of sale to the
purchaser(s).
NOTE 8 - LONG-TERM LOAN
On July 2, 2020, the Company borrowed JPY7,000,000
($65,286) from Japan Finance Corporation ("JFC"), a wholly owned public entity by the Japanese government as the COVID-19 subsidy.
The loan is unsecured, repaid monthly, due in five years, and with an annual interest rate of 0.46% within three years and 1.36% thereafter.
Ishizuka Koichi is the guarantor of the loan.
For the three months ended February 28, 2023, the
Company repaid $2,665 to JFC. As of February 28, 2023, the Company had the current portion of $10,387 and non-current portion of $14,714.
NOTE 9 - SUBSEQUENT EVENTS
From March 1, 2023 through the current date, Photozou
Co., Ltd., a Company controlled by Koichi Ishizuka, CEO, paid expenses on behalf of the Company in amount of $31,807.
This debt is non-interest bearing, unsecured, and due on demand.
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