Annual Report (10-k)

Date : 09/28/2017 @ 3:49PM
Source : Edgar (US Regulatory)
Stock : Atlas Technology International Inc (GM) (ATLT)
Quote : 0.000001  0.0 (0.00%) @ 12:00AM

Annual Report (10-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the twelve months ended June 30, 2017

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 000-55457

ATLAS TECHNOLOGY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware 47-1391708
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
15260 Ventura Boulevard, Suite 1010 Sherman Oaks, California 91430
(Address of principal executive offices) (Zip Code)

888-999-8527
Registrant’s telephone number, including area code
Securities pursuant to Section 12(b) of the Exchange Act:
None None
Title of each class Name of each exchange on which registered
Common Stock, par value $0.00001 per share
Securities registered pursuant to Section 12(g) of the Exchange Act

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter: $0

As of September 26, 2017, the number of shares of common stock of the registrant issued and outstanding are 56,120,290.

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TABLE OF CONTENTS

Page
PART I
Item 1. Business 4
Item 1A. Risk Factors 4
Item 1B. Unresolved Staff Comments 4
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Mine Safety Disclosures 5
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 5
Item 6. Selected Financial Data 5
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 6
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 8
Item 8. Financial Statements and Supplementary Data F-1
Item 9. Changes in Disagreements With Accountants on Accounting Financial Disclosure 23
Item 9A. Controls and Procedures 23
Item 9B. Other Information 23
PART III
Item 10. Directors, Executive Officers and Corporate Governance 24
Item 11. Executive Compensation 25
Item 12. Security Ownership of Certain Beneficial OWners and Management and Related Stockholder Matters 25
Item 13. Certain Relationships and Related Transactions, and Director Independence 26
Item 14. Principal Accounting Fees and Services 27
PART IV
Item 15. Exhibits, Financial Statement Schedules 28
Signatures 29

2

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all such risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such forward-looking statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Form 10-K and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows and financing plans, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future e vents, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

Except as otherwise indicated by the context, references in this report to “we,” “us,” “our,” “the Registrant,” “our Company,” “the Company” or “Atlas Technology” are to Atlas Technology International, Inc., a Delaware corporation. “Atlas Trading” are to Atlas Tech Trading Limited, a corporation incorporated under the laws of Hong Kong. “Atlas China” are to Atlas Technology Shenzhen Trading Co., Ltd. a wholly owned subsidiary of Atlas Trading in China, “Atlas Cayman Island” are to Atlas Tech Limited, a wholly owned subsidiary of Atlas Technology. Unless the context otherwise requires, all references to (i) “Sweets &Treats” or “the Predecessor” are to Sweets and Treats, Inc.; (ii) “Matthew Tsai,”; “CEO,” “Co-CEO” are to Ming-Shu Tsai; “Chairman” are to Ying-Chien Lin; “The Founder ,”“The Former CEO” and “The shareholder” are to Tiffany Aguayo (iii) “PRC” and “China” are to the People’s Republic of China; (iv) “U.S. dollar,” “$” and “US$” are to United States dollars; (v) “RMB” are to Renminbi Yuan of China; (vi) “HKD” are to Hong Kong dollars; (vii) “Securities Act” are to the Securities Act of 1933, as amended; and (viii) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.

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PART I

Item 1. Business.

Overview

The Company develops, designs and distributes its touchscreen-technology to a blue-chip client base. On July 18, 2014, the Company completed a reverse merger with the Predecessor, in which the Company became the surviving entity. On December 15, 2016, the Company sold, assigned, transferred conveyed and delivered the Predecessor to the Founder. The Founder agreed to forgive all debt owed to her by the Company in consideration for the Predecessor.

Historically, the Company marketed its touchscreen products primarily through a broad distribution network of distributors exclusive to the Company’s senior management team. Our plan for the next twelve months calls for the further development of the Company’s touchscreen business and customer network. We anticipate that the cost for the further development, expansion and launch of our new strategic plan for the touchscreen business will be approximately $1,000,000.

Our Product & Services

We design capacitive touchscreen based on our customer’s requirements for rear view mirrors, watches, printers, coffee machines, GPS and other electronic products. A quality assured manufacturer with the technical know-how is then engaged for the production of these newly designed products for our customers.

Brand

The Company has yet to establish “Atlas” as a renowned brand but intends to develop it so that it too will stand for quality, innovation and service. The Company’s services surround the design and selling of customized touchscreens. We operate in a competitive market but we believe that our designs to customer requirements give us a competitive advantage over some of our competitors.

Marketing and Promotion

Our marketing efforts are comprised primarily of online social media and word of mouth advertising geared toward building brand recognition and brand differentiation. We aim to build ourselves to be a leader in the touchscreen market, and attempt to reinforce on a consistent basis that it should be a destination of choice for especially premium-quality touchscreens.

Competition

The industry in which the Company conducts its touchscreen business is intensely competitive. We expect to compete with well-established national, regional and locally- owned traditional touchscreen companies providing designs and related services. The principal factors on which the Company competes are design, quality, price of products offered, customer service, convenience and overall customer experience. Many competitors or potential competitors have substantially greater financial and other resources, which may allow them to react more quickly to changes in pricing, marketing and other changing tastes of consumers. Because of relative low barriers of entry of the industry, we will continue to encounter additional competitors.

Employees

We presently have five employees apart from our officers.

Seasonality

We do not have a seasonal business cycle.

Environmental Matters

Our business currently does not implicate any environmental regulation.

Intellectual Property

The company has applied two patents, of which are about to complete the registration process and one is expected to be finished deploying soon. We may apply for more patents, trademarks or other registered intellectual property essential to the protection of our brand and success of our business.

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this item.

Item 1B. Unresolved Staff Comments

Smaller reporting companies are not required to provide the information required by this item.

4

Item 2. Properties.

The Company’s principal executive office and mailing address is 15260 Ventura Boulevard, Suite 1010 Sherman Oaks, California. Our telephone number is (888) 992-8527. The Company has been provided the office space based on a lease agreement.

Entities Office Address
Atlas Technology International, Inc. 15260 Ventura Boulevard, Suite 1010 Sherman Oaks, California
Atlas Tech Trading Limited 1/F No.103 Xin Yi Road Lu Zhou District Xin Bei, Taiwan
Atlas Technology Shenzhen Trading Co., Ltd Shanzuitou Building, South Junhua Road, Longhua District, Shenzhen, China

Item 3. Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 4. Mine Safety Disclosures.

Not Applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is currently quoted on OTC Markets under the symbol “ATLT.” There has been no established public trading market for our common stock. The Company’s shares of common stock are now listed with the OTCQB of the OTC Markets under the symbol “ATLT”; however, management does not expect any established trading market to develop in our shares of common stock unless and until we have material operations. In any event, no assurance can be given that any market for our common stock will develop or be maintained. If a public market ever develops in the future, the sale of shares of our common stock that are deemed to be “restricted securities” pursuant to Rule 144 of the SEC by members of management or others may have a substantial adverse impact on any such market. With the exception of the shares outlined below under the heading “Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities,” all current holders of shares of our common stock have satisfied the six-month holding period requirement of Rule 144; these listed persons’ shares are subject to the resale limitations outlined below under the heading “Rule 144.”

Our common stock is quoted on the OTCQB tier of the OTC Markets Group under the symbol “ATLT”. The OTCQB is an inter-dealer quotation and trading system and only market makers can apply to quote securities on the OTCQB. Trading in our common stock on the OTCQB has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions.

Holders of Capital Stock

As of the date of this Annual Report, we had 4 3 holders of our common stock.

Stock Option Grants

We do not have a stock option plan in place and have not granted any stock options at this time.

Dividends

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors has the discretion to declare and pay dividends in the future.

Payment of dividends in the future will depend upon our earnings, capital requirements, and any other factors that our Board of Directors deems relevant.

Item 6. Selected Financial Data .

Smaller reporting companies are not required to provide the information required by this item.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation .

The information set forth in this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) changes in our revenues, gross margins, earnings and new contracts, (ii) prospective strategic expansion opportunities for the company touch screen technologies (iii) our ability to create and protect new patents and intellectual property rights around our touch screen technology (iv) our ability to continue to finance our business should we begin to incur losses and (v) our ability to attract top high level talent in the touch screen and/or high technology industry. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to our strategic global expansion plans, strength of our balance sheet, ability to complete financing at favorable terms generate a positive return on our capital expenditures growth of our business including entering into partnerships with strategic players in the industry, and plans to launch a successful marketing, advertising and awareness campaign for our next generation touchscreen technologies. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial requirements.

We assume no obligation to update these forward-looking statements to reflect actual results or changes in the factors or assumptions affecting our forward-looking statements.

Our financial results could differ materially from those projected in any forward-looking statements as a result of numerous factors, including, but not limited to, the following: the risk of other competitors infringing on our patents or proprietary technologies, the inability of our management team to adapt to changes in the industry, inability to maintain and/or capture additional market share of the global touchscreen technology industry, inflationary and deflationary conditions and cycles, currency exchange rates, and changing government regulations domestically and internationally that may impact our business.

Business Overview

The Company develops, designs and distributes its touchscreen-technology to a blue-chip client base. On July 18, 2014, the Company completed a reverse merger with the Predecessor, in which the Company became the surviving entity. On December 15, 2016, the Company sold, assigned, transferred conveyed and delivered the Predecessor to the Founder. The Founder agreed to forgive all debt owed to her by the Company in consideration for the Predecessor.

Historically, the Company marketed its touchscreen products primarily through a broad distribution network of distributors exclusive to the Company’s senior management team. Our plan for the next twelve months calls for the further development of the Company’s touchscreen business and customer network. We anticipate that the cost for the further development, expansion and launch of our new strategic plan for the touchscreen business will be approximately $1,000,000

Recent Development

On July 5, 2016, the Founder, owning approximately 76.9% of the total issued and outstanding shares of the Company, entered into two separate Stock Purchase Agreements for the sale of 13,000,000 and 3,000,000 shares of the Company’s common stock equivalent to her complete ownership of the Company with Ying-Chien Lin and LCG directly, respectively. Pursuant to the execution of the Stock Purchase Agreements, Mr. Ying-Chien Lin and LCG owned approximately 62.5% and 14.4% of the total voting rights of the Company, respectively.

On July 7, 2016, Mr. Ying-Chien Lin was elected as Chairman and director, and Mr. Ming-Shu Tsai was elected as director and Co-CEO, overseeing the Company’s operations with the Founder.

On August 10, 2016, the Company's Board of Directors approved a change in its Fiscal Year from July 31 to June 30 for administrative purposes. The change in fiscal year became effective for the Company's 2016 fiscal year which began July 1, 2015 and ended June 30, 2016.

On August 18, 2016, Atlas Tech Trading Limited (“Atlas Trading”), a wholly-owned subsidiary of the Company, was incorporated under the laws of Hong Kong for the purpose of facilitating the Company’s business growth strategy across Eastern Asia. 10,000,000 shares of capital stock of Atlas Trading were authorized and issued exclusively in exchange for the investment and incorporation of Atlas Trading by the Company.

On August 23, 2016, the Company filed an Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware in which the Company confirmed its name change to Atlas Technology International, Inc. and set forth therein the designations for the Series A, B and C Preferred Stock (the bylaws of the Company were not amended to reflect the Certificate of Designations for the Series A, B and C Preferred Stock).

On September 30, 2016, the Founder resigned from all of her positions with Atlas Technology International, Inc. (the "Company”). The Founder’s resignation is based solely on personal reasons and is not the result of any disagreement with the Company on any matter relating to its operations, policies (including accounting or financial policies) or practices. The Board of Directors is now comprised of the two remaining members. Concurrent with the Founder’s resignation, the Board of Directors appointed Jing Zhou and Yi An Chen as Chief Financial Officer and Chief Technology Officer, respectively.

On December 15, 2016, the Company sold, assigned, transferred, conveyed and delivered the Predecessor to the Founder. The Founder accepted and purchased all of the business and assets outstanding, totaling $265; assumed, and agreed to perform, and otherwise pay, satisfy and discharge all existing and future liabilities and obligations of the Predecessor’s business, totaling $499. The Founder agreed to forgive all debt owned by the Company to the Founder, totaling $15,105. As more particularly set forth in the Divestment Agreement, filed as an Exhibit of the Current Report 8-K filed on December 19, 2016.

6

On March 23, 2017, Atlas Technology Shenzhen Trading Co., Ltd , a wholly-owned subsidiary of Atlas Trading, was incorporated under the laws of China in order to expand direct sales to more clients throughout China, lowering dependency on existing exporters/distributors, improving margins and exploiting the increasing demand for touchscreens in China.

On June 30, 2017, the company’s Board of Directors approved the incorporation of Atlas Tech Limited, a wholly-own subsidiary of Atlas Technology International, Inc. Atlas Tech Limited will be registered in Cayman Island and is expected to start operating in August, 2017.

Plan of Operations

Our goal is to further enhance our proprietary touchscreen technology to a level where we believe, due primarily to its technological advantages, it will be able to rapidly capture and expand its market share of the global touchscreen industry following its official global launch. Following its global launch, the Company will seek to build a global reputation for its touchscreen products while developing a blue-chip, global client base. We anticipate the cost for developing our touchscreen business will be approximately $1,000,000 within the next 12 months. We have no commitments for any financing and cannot provide assurance that we will realize this goal.

We are dependent on the timely receipt of our accounts receivables to fund our ongoing operations and execute our business plan. If we are unable to timely receive our accounts receivable, we will require capital investment or other financing to fund our ongoing operations and to execute our business plan. If we are unable to raise additional cash, we will either have to suspend or cease our expansion plans entirely. If we are not successful in generating sufficient revenue and cannot raise sufficient funds, we may be forced to cease operations. If that is the case, we will look for possible merger candidate or another suitable company to possibly acquire us.

Results of Operations

The Year Ended June 30, 2017 Compared to Eleven Months Ended June 30, 2016

We generated revenue of $4,242,302 and $0 in the year and eleven months ended June 30, 2017 and 2016, respectively. The increase in revenue is mainly attributed to the Company’s entry into the touchscreen industry business in the year ended June 30, 2017. The Company has received orders from four (4) customers for the production of touchscreens per their requirements. The Company designs the touchscreens, source manufacturers for the production of the designed touchscreens, inspects the quality of the products made by the manufacturers, purchases the qualified finished-goods and then sells and delivers the touchscreens to their corporate clients.

We incurred cost of goods sold as $2,851,339 and $0 for the year and eleven months ended June 30, 2017 and 2016, respectively. Cost of goods sold were related mainly to the touchscreen products purchased from sourced manufacturers for sale. 

We incurred gross margin as 33% and 0% for the year and eleven months ended June 30, 2017 and 2016, respectively. Gross margin was higher than the industry average due to company’s premium products based on design and the flexibly as a startup.

We incurred operating expenses of $968,996 and $26,404 for the year and eleven months ended June 30, 2017 and 2016, respectively. The increase is mainly due to the cost of research and development, consultants, additional employees, and professional services related to being a publicly-traded company. 

We incurred Gain on disposal of subsidiary of $12,315 and $0 for the year and eleven months ended June 30, 2017 and 2016, respectively. This increase is the result of our disposal of the Predecessor. Such disposal does not constitute a discontinued operation as it does not represent a strategic shift of the Company’s business.

We incurred interest expense of $45,877 and $0, for the year and eleven months ended June 30, 2017 and 2016, respectively. The increase is due to the assignment of non-interest bearing debt from a related party pursuant to which the Company entered into a convertible promissory note bearing an interest rate of 8% per year with the new debt holder which has beneficial conversion feature, as well as a number of non-convertible debt with third parties the Company had entered into and were outstanding as of June 30, 2017 of $135,078 and bear an interest rate of 6% APR compounded monthly that are due between the dates of November 2017 and June 2018.

We had a net income of $263,162 and net loss of $26,404 for the year and eleven months ended June 30, 2017 and 2016, respectively.  

Liquidity and Capital Resources 

As of June 30, 2017, we had total assets of $2,543,267, mainly consist of accounts receivable. Our liabilities as of June 30, 2017 were $2,113,683, which comprised of $990,579 in accounts payable, $414,549 in accrued liabilities and other payables, $135,078 in short term loans, $135,073 income tax liability, $39,667 in convertible debt, $1,594 due to related party, and $397,143 in loans from related party. As of June 30, 2017, we had a working capital of $429,584.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities for the year and eleven months ended June 30, 2017 and 2016:

    For the
year
ended
June 30,
2017
  For the
eleven
months
ended
June 30,
2016
Net Cash Used in Operating Activities   $ (191,217 )   $ (44,951 )
Net Cash Used in Investing Activity     (130 )     —    
Net Cash Provided by Financing Activities     207,321       44,648  
Effect of Exchange Rate Changes on Cash and Cash Equivalents     (1,064 )     —    
Net (Decrease) Increase in Cash and Cash Equivalents   $ 14,910     $ (303 )

7

We are dependent on the timely receipt of our accounts receivables to fund our ongoing operations and execute our business plan. If we are unable to timely receive our accounts receivable, we will require capital investment or other financing to fund our ongoing operations and to execute our business plan. If we are unable to raise additional cash, we will either have to suspend or cease our expansion plans entirely. If we are not successful in generating sufficient revenue and cannot raise sufficient funds, we may be forced to cease operations. If that is the case, we will look for possible merger candidate or another suitable company to possibly acquire us.

Going Concern

The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

The company first generated revenues in the year ended June 30, 2017, and as reflected in the financial statements, our operating activities have resulted a net cash outflow of $191,217 for the year ended June 30, 2017. These factors raise substantial doubt from our auditor about our ability to continue as a going concern.

The Company is attempting to generate sufficient revenue; however, its cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate sufficient revenue and in its ability to raise additional funds.

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Contractual Obligations

We do not have any contractual obligations at this time.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this item.

8

Item 8. Financial Statements and Supplementary Dat a

Atlas Technology International, Inc.

June 30, 2017

Index to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheets as of June 30, 2017 and 2016 F-3
Consolidated Statements of Operations for the Year and Eleven Months Ended June 30, 2017 and 2016 F-4
Consolidated Statement of Stockholders’ Equity (Deficit) for the Year and Eleven Months Ended June 30, 2017 and 2016 F-5
Consolidated Statements of Cash Flows for the Year and Eleven Months ended June 30, 2017 and 2016 F-6
Notes to the Consolidated Financial Statements F-7

F- 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders  
Atlas Technology International, Inc.  

We have audited the accompanying consolidated balance sheets of Atlas Technology International, Inc. and its subsidiaries (collectively, the “Company”) as of June 30, 2017 and 2016, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year ended June 30, 2017 and the eleven months ended June 30, 2016. These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.  

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Atlas Technology International, Inc. and its subsidiaries as of June 30, 2017 and 2016, and the consolidated results of their operations and their cash flows for the year ended June 30, 2017 and the eleven months ended June 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company first generated revenues in the year ended June 30, 2017 and has generated negative cash flow from operating activities that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
September 28, 2017
F- 2

ATLAS TECHNOLOGY INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
         
         
    June 30,   June 30,
    2017   2016
ASSETS
 Cash and cash equivalents   $ 15,138     $ 228  
 Accounts receivable     2,516,755       25  
 Prepaid expenses and other current assets     11,374       29,753  
Total current assets     2,543,267       30,006  
Total assets   $ 2,543,267     $ 30,006  
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
 Accounts payable   $ 990,579     $ 8,610  
 Accrued expenses and other payables     414,549       444  
 Income tax payable     135,073       —    
 Due to related party     1,594       —    
 Short term loans     135,078       —    
 Convertible debt     39,667       —    
 Loans from related parties     397,143       54,800  
Total current liabilities     2,113,683       63,854  
Total liabilities     2,113,683       63,854  
                 
STOCKHOLDERS' EQUITY (DEFICIT):                
Common shares, $0.00001 par value, 100,000,000 shares authorized, 54,645,084 and 20,900,000 shares issued and outstanding as of June 30, 2017 and June 30, 2016, respectively     546       209  
Additional paid-in capital     255,891       55,883  
Retained earnings (accumulated deficit)     173,222       (89,940 )
Accumulated other comprehensive loss     (75 )     —    
Total stockholders' equity (deficit)     429,584       (33,848 )
Total liabilities and stockholders' equity (deficit)   $ 2,543,267     $ 30,006  
                 
The accompanying notes are an integral part of these consolidated financial statements

F- 3

ATLAS TECHNOLOGY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
         
   

For the 

  For the
    Year   Eleven Months
    Ended   Ended
    June 30,   June 30,
     

2017

     

2016

 
Revenue   $ 4,242,302     $ —    
Cost of revenues     2,851,339       —    
Gross profit     1,390,963       —    
                 
Operating expenses:                
Research and development     473,931       —    
Selling, general and administrative expenses     495,065       26,404  
Total operating expenses     968,996       26,404  
Gain on disposal of subsidiary     (12,315 )     —    
Income (loss) from operations     434,282       (26,404 )
                 
Other income (expenses):                
Interest expense     (45,877 )     —    
Other income     9,830       —    
Total other expenses     (36,047 )     —    
                 
Income (loss) before tax     398,235       (26,404 )
Income tax expense     135,073       —    
Net income (loss)   $ 263,162     $ (26,404 )
                 
Comprehensive income (loss):                
Net income (loss)   $ 263,162     $ (26,404 )
Other comprehensive loss                
Foreign currency translation adjustment     (75 )     —    
Total comprehensive income (loss)   $ 263,087     $ (26,404 )
                 
Earnings (loss) per common share:                
Basic   $ 0.00     $ (0.00 )
Diluted   $ 0.00     $ (0.00 )
                 
Weighted average common shares outstanding:                
Basic     53,019,596       169,912,239  
Diluted     72,745,623       169,912,239  
                 
The accompanying notes are an integral part to these consolidated financial statements

F- 4

ATLAS TECHNOLOGY INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
                         
                     
      Number of Shares       Amount       Additional Paid-in Capital       Retained Earnings (Accumulated Deficit)       Accumulated Other Comprehensive Loss       Total Stockholders’ Equity (Deficit)  
Balance, July 31, 2015     244,800,000     $ 2,448     $ 28,644     $ (63,536 )   $ —       $ (32,444 )
                                                 
Cancellation of shares     (224,000,000 )     (2,240 )     2,240                       —    
                                                 
Common stock issue for services     100,000       1       24,999                       25,000  
                                                 
Net loss                             (26,404 )             (26,404 )
                                                 
Balance, June 30, 2016     20,900,000     $ 209     $ 55,883     $ (89,940 )   $ —       $ (33,848 )
                                                 
Common stock issued to directors     25,000,000       250       48,436                       48,686  
                                                 
Common stock issued for services     8,745,084       87       108,542                       108,629  
                                                 
Increase in additional paid-in capital due to beneficial conversion feature                     40,000                       40,000  
                                                 
Cancellation of debt recognized as capital contribution                     3,030                       3,030  
                                                 
Foreign currency translation Adjustments                                     (75 )     (75 )
                                                 
Net income                             263,162               263,162  
                                                 
Balance, June 30, 2017     54,645,084     $ 546     $ 255,891     $ 173,222     $ (75 )   $ 429,584  
                                                 
The accompanying notes are an integral part of these consolidated financial statements

F- 5

ATLAS TECHNOLOGY INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
         
    For the   For the
    Year   Eleven Months
    Ended   Ended
    June 30,   June 30,
     

2017

     

2016

 
Cash flows from operating activities:                
Net income (loss)   $ 263,162     $ (26,404 )
Adjustments to reconcile net income (loss) to net cash used in operating activities                
Amortization of debt discount     39,667       —    
Gain on disposal of subsidiary     (12,315 )     —    
Gain on forgiveness of interest     (2 )     —    
Stock issued for service     108,629       414  
Stock issued to directors     48,686       —    
Changes in operating assets and liabilities:                
Accounts receivable     (2,516,755 )     48  
Prepaid expenses and other current assets     114,517       (5,167 )
Accounts payable     1,195,646       (13,915 )
Income Tax Payable     135,073       —    
Accrued expenses and other payables     432,475       73  
Net cash used in operating activities     (191,217 )     (44,951 )
                 
Cash flows from investing activities:                
Cash paid related to disposal of subsidiary     (130 )     —    
Net cash used in investing activity     (130 )     —    
                 
Cash flows from financing activities:                
Repayments to related party     (35,897 )     (91 )
Borrowings from related parties     243,896       44,739  
Repayments to third parties     (678 )     —    
Net cash provided by financing activities     207,321       44,648  
                 
Effect of exchange rate changes on cash and cash equivalents     (1,064 )     —    
Net change in cash and cash equivalents     14,910       (303 )
Cash and cash equivalents, beginning of the period     228       531  
Cash and cash equivalents, end of the period   $ 15,138     $ 228  
                 
Supplemental cash flow information                
Interest paid   $ —       $ —    
Income tax paid   $ —       $ —    
                 
Non-cash investing and financing activities:                
Cancellation of debt recognized as capital contribution   $ 3,030     $ —    
Expenses paid by third parties   $ 135,756     $ —    
Expenses paid by related party   $ 192,083     $ —    
Related party debt transferred to convertible debt   $ 40,000     $ —    
Debt discount raised due to convertible debt   $ 40,000     $ —    
Shares issued for consulting services not provided yet   $ —       $ 25,000  
                 
The accompanying notes are an integral part to these consolidated financial statements.

F- 6

Atlas Technology International, Inc.

Notes to the Consolidated Financial Statements 

Note 1 - Organization and Operations

Sweets & Treats, Inc. (the “Predecessor”)

Sweets & Treats, Inc. (the “Predecessor”), a bakery out of Sylmar, California was incorporated on April 13, 2011 under the laws of the State of California. The Predecessor is a bakery shop specializing in freshly-made cakes, cupcakes, desserts and special events catering and was traded as a public company under the ticker symbol “SWTS” on the OTCQB markets.

Atlas Technology International, Inc. (the “Company”)

Atlas Technology International, Inc. (the “Company”),  was incorporated on July 7, 2014 under the laws of the State of Delaware. Upon formation, the Company issued 10,000,000 shares of its common stock to Ms. Aguayo (the “Founder”) of the Company as Founder’s shares valued at par value of $0.00001 and recorded as compensation of $100.

On July 18, 2014, the Company acquired the Predecessor through the issuance of 5,000,000 shares of the Company’s common stock to the Founder of the Predecessor for all of the Predecessor’s issued and outstanding capital stock. No value was given to the common stock issued by the newly formed corporation. Therefore, the shares were recorded to reflect the $0.00001 par value and paid in capital was recorded as a negative amount of ($50). The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Predecessor, which were recorded at historical cost.

The Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (“SAB”) (“SAB Topic 4B”) issued by the United States Securities and Exchange Commission (the “SEC”), by reclassifying the Predecessor’s undistributed retained earnings of $942 at July 17, 2014 to additional paid-in capital. 

On March 11, 2016, the Company entered into certain Spin-Off Agreement with the Founder, pursuant to which Tiffany Aguayo (“the Shareholder”)  agreed to cancel 14,000,000 pre-split shares of Company's common stock in exchange for the consummation and execution of the Spin Off agreement and sale of the Predecessor to the Founder. The Spin-Off agreement was not consummated and was replaced by a divestment agreement executed on December 15, 2016. Ms. Aguayo still agreed to cancellation of her shares.

On July 5, 2016, the Founder entered into two separate Stock Purchase Agreements for the sale of 13,000,000 and 3,000,000 shares of the Company’s common stock equivalent to her complete ownership of the Company with Ying-Chien Lin and Lynx Consulting Group Ltd (“LCG”), respectively. Pursuant to the execution of the Stock Purchase Agreements, Mr. Lin and LCG owned approximately 62.5% and 14.4% of the total voting rights of the Company, respectively.

On July 19, 2016, the Company filed with the Secretary of State of Delaware, amending its Articles of Incorporation by changing the name of the Company to “Atlas Technology International, Inc.” 

On August 23, 2016, the Company filed with the Secretary of State of Delaware an Amended and Restated Certificate of Incorporation in which the Company confirmed its name change to Atlas Technology International, Inc. The Company started its business in touchscreen industry and became a high-tech touchscreen company based out of Sherman Oaks, California, and set forth therein the designations for the Series A, B and C Preferred Stock. The Company is a rapidly growing provider of touchscreen technologies to a vertically and geographically diversified blue-chip client base.

Atlas Tech Trading Limited (“Atlas Trading”)

 

Atlas Tech Trading Limited (“Atlas Trading”), a wholly-owned subsidiary of the Company, was incorporated on August 18, 2016 under the laws of Hong Kong for the purpose of facilitating the Company’s business growth strategy across Eastern Asia. Atlas Trading uses the Company’s proprietary touchscreen technologies to design touchscreen solutions for its growing global client base. The Company’s primary business activities are to design touchscreens, source manufacturers for the production of the designed touchscreens, inspects and ensures the quality of the products made by the manufacturers, purchases the qualified finished-goods and then sells and delivers the touchscreens to their corporate clients.

Atlas Technology Shenzhen Trading Co., Ltd. (“Atlas China”)

 

Atlas Technology Shenzhen Trading Co., Ltd. (“Atlas China”), a wholly-owned subsidiary of Atlas Trading, was incorporated on March 23, 2017 under the laws of China for the purposes of facilitating the Company’s expansion into China’s untapped market, decreasing the Company’s dependency on existing exporters/distributors and improving margins.

Atlas Tech Limited. (“Atlas Cayman Islands”)

 

Atlas Tech Limited. (“Atlas Cayman Island”), a wholly-owned subsidiary of Atlas Trading, was incorporated on July 7, 2017 under the laws of the Cayman Islands for the purposes of tax planning and optimizing business capacity in terms of deal follows.

Fiscal Year

 

On July 7, 2016,  the Company changed its fiscal year end from July 31 to June 30. As a result of this change, we reported our fiscal 2016 as the 11-month transition period from August 1, 2015 to June 30, 2016. Accordingly, our consolidated balance sheets are presented as of June 30, 2017 and 2016. The accompanying consolidated financial statements, and the notes thereto, include our results of operations and cash flows for the fiscal year ended June 30, 2017 and the 11-month transition period of fiscal 2016.

F- 7

Disposal of Predecessor

On December 15, 2016, the Company entered into a Divestment Agreement with the Founder, who was then the Company’s Chief Executive Officer, pursuant to which the Founder agreed to cancel all amounts due to her by the Predecessor in exchange for the acquisition and purchase of all of the Predecessor’s business. The transaction was closed on December 15, 2016. The Company determined that disposal of the Predecessor did not constitute a discontinued operation as it did not represent a strategic shift of the Company’s business.

Note 2 - Significant and Critical Accounting Policies and Practices

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States ("US GAAP") and have been consistently applied in the preparation of the consolidated financial statements.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company believes the estimates and assumptions utilized are reasonable; however actual results could differ from those estimates.

Stock-based Compensation

We account for the grant of stock options, warrants and restricted stock awards in accordance with ASC 718, "Compensation-Stock Compensation". ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the "measurement date". The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company records compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated, based on the then current fair value, at each subsequent reporting date.

Research and development

Research and development costs are charged to expense as incurred. Research and development costs for the year ended June 30, 2017 and the eleven months ended June 30, 2016 were $473,931 and $0, respectively.

Accounts Receivable

Accounts receivable are customer obligations due under normal trade terms. In the ordinary course of business, the Company extends unsecured credit to its customers based on their credit-worthiness and history with the Company. The Company performs continuing credit evaluations of its customers’ financial condition and generally does not require collateral.

The Company carries its accounts receivable at cost and uses the allowance method to estimate uncollectible accounts receivable when necessary. Management reviews accounts receivable on a regular basis to determine if any receivables will be uncollectible.

Principles of Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification ("ASC") to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

The Company consolidates the following subsidiaries as of June 30, 2017:

Name of consolidated subsidiary State or other jurisdiction of incorporation or organization formation (date of acquisition if applicable) Attributable interest
Atlas Tech Trading Limited Hong Kong August 18, 2016 100 %
Atlas Technology Shenzhen Trading Co., Ltd. Shenzhen, China March 23, 2017 100 %

The consolidated financial statements include all accounts of the Company and its subsidiaries as of reporting period dates and for the reporting periods then ended. All inter-company balances and transactions have been eliminated.

F- 8

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of our financial assets and liabilities, such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other payables, income tax payable, short term loans, and convertible debt, approximate their fair values because of the short maturity of these instruments.

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.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits, and all highly liquid instruments with original maturities of three months or less.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk include cash, cash equivalents and accounts receivable. The Company places all cash and cash equivalents with high-credit quality financial institutions.

The Company performs ongoing credit valuations of its customers’ financial condition whenever deemed necessary and generally does not require deposits or collateral to support customer receivables. The company have not recognized any issues on uncollectible accounts and generated much of its revenue from a limited number of customers.

Lease Commitments

The Company has adopted FASB ASC 840. If the lease terms meet one or all of the following four criteria, it will be classified as a capital lease, otherwise, it is an operating lease: (1) The lease transfers the title to the lessee at the end of the term; (2) the lease contains a bargain purchase option; (3) the lease term is equal to 75% of the estimated economic life of the leased property or more; (4) the present value of the minimum lease payment in the term equals or exceeds 90% of the fair value of the leased property.

Payments made under operating leases are charged to the consolidated statements of operations and comprehensive income (loss) on a straight-line basis over the lease period.

Related Parties

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 indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decision of the Company. A transaction is considered to be a related party transaction where there is a transfer of resources or obligations between related parties.

F- 9

Revenue Recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company’s business is mainly operated through Atlas Trading, and operates on a FOB destination model, where sale is recognized once the products have been delivered to the customer.

The Company also follows Section 606-10-55 of the FASB Accounting Standards Codification relating to revenue from contracts with customers for revenue recognition. The Company recognizes gross revenue when the Company: (i) is the primary obligor, (ii) have general inventory risk, (iii) has discretion in establishing the price for the specified products, (iv) changes the product or performs part of the service, (iv) has discretion in supplier selection, (v) is involved in the determination of product specifications, (vi) bears physical loss inventory risk, and (vii) has credit risk. The number of the above criteria met and to which extent shall determine whether the Company considers the revenue to be reported as gross or net.

Foreign Currency and Other Comprehensive Loss

 

The accompanying consolidated financial statements are presented in United States dollars (“US$”), which is the reporting currency of the Company. The functional currency of the Company and Atlas Trading are United States dollars. Foreign currency transactions are those that required settlement in a currency other than United States dollars. Gain or loss from foreign currency transactions, are recognized in income in the period they occur. For the year ended June 30, 2017, the Company had gain of $4,828 resulted from foreign currency transactions, which was included in other income.

The functional currency of Atlas China is Renminbi (“RMB”). The financial statements of Atlas China are translated to United States dollars in accordance with FASB Accounting Standards Codification (ASC) No. 830, “Foreign Currency Matters”, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for equity. Translation adjustments resulting from the process of translating the local currency financial statements into United States dollars are included in determining other comprehensive loss.

Translation of amounts from the functional currency of Atlas China into US$1 has been made at the following exchange rates:

         

Average

Exchange Rate

As of

June 30, 2017

Atlas China Currency RMB US$1 exchange rate     6.8626 6.7769

 

Income taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

Earnings per Share

Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share.

F- 10

Under the provisions of ASC 260, “Earnings Per Share,” basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock and the dividends accumulated for the period on cumulative preferred stock from income from continuing operations.

Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the company, subject to anti-dilution limitations.

Recently Issued Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") No. 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments”. The main objective of this update is to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The eight cash flow updates relate to the following issues: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investees; 7) beneficial interest in securitization transactions; and 8) separately identifiable cash flows and application of the predominance principle. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s consolidated financial statements.

In November, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”. It is intended to reduce diversity in the presentation of restricted cash and restricted cash equivalents in the statement. The statement requires that restricted cash and restricted cash equivalents be included as components of total cash and cash equivalents as presented on the statement of cash flows. This pronouncement goes into effect for periods beginning after December 15, 2017. The adoption of ASU 2016-18 is not expected to have a material impact on the Company’s consolidated financial statements.

In December, 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The effective date of these amendments is at the same date that Topic 606 is effective. Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments - Equity Method and Joint Ventures (Topic 323)”. This pronouncement amends the SEC’s reporting requirements for public filers in regard to new accounting pronouncements or existing pronouncements that have not yet been adopted. Companies are to provide qualitative disclosures if they have not yet implemented an accounting standards update. Companies should disclose if they are unable to estimate the impact of a specific pronouncement, and provide disclosures including a description of the effect on accounting policies that the registrant expects to apply. These provisions apply to all pronouncements that have not yet been implemented by registrants. There are additional provisions that relate to corrections to several other prior FASB pronouncements. The Company has incorporated language into other recently issued accounting pronouncement notes, where relevant for the corrections in FASB ASU 2017-03. The Company is implementing the updated SEC requirements on not yet adopted accounting pronouncements with these consolidated financial statements.

Note 3 – Going Concern

 

The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

We first generated revenues in the year ended June 30, 2017, and as reflected in the consolidated financial statements, our operating activities have resulted a net cash outflow of $191,217 for the year ended June 30, 2017. These factors raise substantial doubt from our auditor about our ability to continue as a going concern.

 

The Company is attempting to generate sufficient revenue; however, its cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate sufficient revenue and in its ability to raise additional funds.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 4 – Accounts Receivable

As of
June 30,
2017
June 30,
2016
Trade receivable $ 2,516,755 $ 25
Allowance for doubtful accounts
Accounts receivable $ 2,516,755 $ 25

The Company analyzed the collectability of accounts receivable based on historical collection and the customers’ intention of payment, as a result of such analysis, the Company recognized $0 allowance for doubtful accounts for the year ended June 30, 2017 and the eleven months ended June 30, 2016.

F- 11

Note 5 – Earnings (Loss) Per Share

The following table presents the computation of basic and diluted earnings (loss) per share for the year ended June 30, 2017 and the eleven months ended June 30, 2016:

  For the Year Ended
June 30, 2017
  For the Eleven Months Ended
June 30,
2016
Numerator:              
Numerator for basic EPS - net income (loss) allocable to common stockholders $ 263,162     $ (26,404 )
Effect of dilutive security:              
Interest expense of convertible debt   42,237       —    
Numerator for diluted EPS - net income (loss) allocable to stockholders $ 305,399     $ (26,404 )
               
Denominator:              
Denominator for basic EPS – weighted-average shares   53,019,596       169,912,239  
Effect of dilutive security:              
Convertible debt   19,726,027       —    
Denominator for diluted EPS – adjusted weighted-average shares and assumed conversions   72,745,623       169,912,239  
               
Earnings (loss) per share – basic: $ 0.00     $ (0.00 )
               
Earnings (loss) per share – diluted: $ 0.00     $ (0.00 )

Diluted earnings (loss) per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the respective periods.

Note 6 – Income Taxes

For the year ended June 30, 2017, The Company conducts businesses in Hong Kong through Atlas Trading, and is subject to tax under the jurisdiction of Hong Kong. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. The statutory tax rate for corporate income tax in Hong Kong is 16.5%

For the year ended June 30, 2017 and the eleven months ended June 30, 2016, the Company has recognized $135,073 and $0 income tax expenses, respectively. The effective tax rate for the respective periods then ended is 52% and 0%.

Atlas Technology, which acts as a holding company on a non-consolidated basis, does not plan to engage any business activities and current or future loss will be fully allowed.

Atlas China was not engaged in any business activities for the year ended June 30, 2017, and current loss was fully allowed.

Note 7 – Stockholders' Equity (Deficit)

Common Stock

On June 24, 2016, the Company entered into a consulting agreement with Bright Light Marketing for various public relations and business development services in exchange for 100,000 shares of its common stock valued at $25,000. The total value of shares issued will be recognized over a period of one year. As of June 30, 2017, $24,586 stock based compensation expense had been recognized.

On July 10, 2016, the Company issued 15,000,000 shares of its common stock to Mr. Ying-Chien Lin for his services as the Company’s Chairman of the Board valued at $150,000. The total value of the shares issued will be recognized over a period of five years. As of June 30, 2017, $29,244 stock based compensation expense had been recognized.

On July 10, 2016, the Company issued 10,000,000 shares of its common stock to Mr. Ming-Shu Tsai for his services as the Company’s Chief Executive Officer and as a Board Member valued at $100,000. The total value of the shares issued will be recognized over a period of five years. As of June 30, 2017, $19,442 stock based compensation expense has been recognized.

On July 14, 2016, the Company entered into a consulting agreement with Chronos Investments Ltd. for various services including, but not limited to, strategic mergers and decisions related to the Company’s corporate performance, strategies related to macro and micro economical forces, development of new revenue channels, and the overall creation of shareholder value. Under the terms of this agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000, which was recognized as stock based compensation upon its issuance.

On July 14, 2016, the Company entered into a consulting agreement with Cygnus Management Ltd. for various services including, but not limited to, the pursuit of strategic mergers and acquisitions and/or partnerships, and improvement of financial efficiencies. Under the terms of this agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000, which was recognized as stock based compensation upon its issuance.

On July 15, 2016, the Company entered into a consulting agreement with Silverciti Group Ltd. for various asset management services. Under the terms of this agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000, which was recognized as stock based compensation upon its issuance.

F- 12

On November 28, 2016, the Company entered into consulting agreements with two individual consultants for a new strategic marketing development. On December 29, 2016, the Company issued 1,016,000 shares of its common stock in exchange for services valued at $10,160 in strategic marketing development. On, March 17, 2017, the Company further issued 92,084 shares of its common stock in exchange for services valued at $22,099 in strategic marketing development. The aggregate amount of $32,259 shares issued was recognized as stock based compensation upon its issuance.

On December 28, 2016, the Company entered into a consulting agreement with an individual consultant for analytic services in exchange for 37,000 shares of its common stock valued at $370, which was recognized as stock based compensation upon its issuance on January 12, 2017.

On January 3, 2017, the Company entered into a consulting agreement with an individual consultant for financial analysis services in exchange for 100,000 shares of its common stock valued at $1,000 in financial analysis, which was recognized as stock based compensation upon its issuance on January 13, 2017.

Note 8 – Related Party Transactions

Related Parties

Related parties with whom the Company had transactions are:

Related Parties Relationship Related Party Transactions Business Purpose of Transactions
Tiffany Aguayo Founder, Former President and Former CEO Advances to the Company Divestiture of Predecessor

Working capital funding

Disposal of the Predecessor

Matthew Tsai Chief Executive Officer, Board Member, and significant shareholder Advances to the Company Working capital funding
Jin-Xia Wu Family member of Matthew Tsai Office space at approximately $1,300 per month Providing Office space in Taiwan

Sale of Shares and Change of Ownership

 

On July 5, 2016, Ms. Aguayo entered  into two separate Stock Purchase Agreements for the sale of 13,000,000 and 3,000,000 shares of the Company’s common stock equivalent to her complete ownership of the Company with Ying-Chien Lin and LCG, respectively. Pursuant to the execution of the Stock Purchase Agreements, Mr. Lin and LCG owned approximately 62.5% and 14.4% of the total voting rights of the Company, respectively.

 

On December 15, 2016, the Company entered into a Divestment Agreement with Ms. Aguayo, pursuant to which Ms. Aguayo agreed to cancel all amounts due to her by the Company in exchange for the acquisition and purchase of all of the Predecessor’s business. The transaction was closed on December 15, 2016. The Company recorded a gain on disposal of subsidiary of $12,315, and a capital contribution of $3,030, for the year ended June 30, 2017. Such divestment and disposal of the Predecessor does not constitute a discontinued operation as it does not represent a strategic shift of the Company’s business.

During the year and the eleven months ended June 30, 2017 and 2016, Ms. Aguayo advanced to the Company $305 and $44,739 to the Company, and the Company repaid $0 and $91, respectively. The advances was non-interest bearing and due on demand. As of June 30, 2017 and 2016, the balance of debt payable to Ms. Aguayo was $0 and $54,800, respectively.

Advances from Related-Parties

From time to time, certain officers of the Company advances funds to the Company for working capital purpose.

Matthew Tsai, Chief Executive Officer and significant shareholder, advanced the Company a total of $243,591 and paid $192,083 on behalf of the Company for the year ended June 30, 2017. The amounts are non-interest bearing and due on demand. $35,897 of the advance was repaid during the same period. As of June 30, 2017, the balance of loans from related parties and due to related party was $397,143 and $1,594, respectively. Matthew Tsai did not made any advance to the Company for the eleven months ended June 30, 2016.

Office Space

 

One of the Company’s offices is located at 1/F No. 103 Xin Yi Road, Lu Zhou District, Xin Bei, Taiwan. The office is rented from Jin-Xia Wu, a family member of Ming-Shu Tsai, for a monthly rent of HKD10,000 (approximately $1,300). The space of the office is 90 square meters, and the purpose of this office is to continue to focus on the Company’s research and development efforts. The Company was provided office space by Ms. Aguayo free of charge for the eleven months ended June 30, 2016.

Note 9 – Concentration

During the year ended June 30, 2017, the Company purchased its inventories solely from a long-standing relationship with a preferred vendor.

During the year ended June 30, 2017, the Company diversified its customer base while simultaneously growing its total revenues. Sales were made to two significant distributors in Hong Kong that accounts for 66.81% and 28.42% individually and an aggregate of 95.23% of the total sales of the Company.

The Company continually evaluates the credit worthiness of its vendor and customers’ financial condition and has policies to minimize any potential risk.

F- 13

Note 10 – Commitments

The Company leases facilities with expiration dates between October 2017 and January 2020. Rental expense for the year ended June 30, 2017 and the eleven months ended June 30, 2016 was $35,757 and $0, respectively. The Company has future minimum lease obligations as of June 30, 2017 as follows:

2018 $ 64,609
2019 63,385
2020 25,282
2021
2022
Thereafter
Total $ 153,276

Note 11 – Debt

Convertible Debt

On July 5, 2016, Ms. Aguayo entered into a Debt Assignment Agreement and sold $40,000 debt that was non-interest bearing and due on demand to Growth Point Advisors Ltd. Pursuant to this Agreement, the Company entered into a Convertible Promissory Note (the “Note”) with Growth Point Advisors Ltd. to replace the Debt Assignment Agreement. The Note bears an interest rate of 8% per annum, becomes due on July 4, 2017, and has a conversion feature allowing conversion by giving five days’ notice to the Company to convert the debt into the Company’s common shares at a rate of $0.002 per share. The assignment qualified for a debt extinguishment under ASC 470-50, no gain or loss was recorded due to this extinguishment based on the term of debt. As part of the modification, a Beneficial Conversion Feature value of $40,000 was calculated and included in additional paid-in capital. As of June 30, 2017 and 2016, the carrying amount of the Note was $39,667 and $0, net of $333 and $0 unamortized discount, respectively. Interest expense incurred on the principal amount was $3,156 and $0 for the year ended June 30, 2017 and the eleven months ended June 30, 2016, respectively. The potential conversion effect is included in the diluted EPS calculation for the year ended June 30, 2017. The Company is in the process of negotiating to extend the maturity of this debt. The two parties have not reached to a consent as of the date of this filing.

Short Term Loans

For the year ended June 30, 2017, The Company entered into short-term loan agreements with seven creditors for total amount of $135,756, of which the proceeds were all paid directly to vendors. The loans bear interest rate of 6% APR compounded monthly. A summary of balance of loans as of June 30, 2017, is presented below:

Creditors Due Dates Balance
Arc Capital Ltd. From November 1, 2017 to June 30, 2018 $ 81,023
Growth Point Advisors Ltd. November 1, 2017 6,530
Chronos Investments Limited November 1, 2017 575
Cygnus Management Limited From April 30, 2018 to May 31, 2018 11,950
Lynx Consulting Group Ltd. From January 31, 2018 to February 28, 2018 35,000
$ 135,078

F or the year ended June 30, 2017 and the eleven months ended June 30, 2016   , the Company repaid $678 and $0, and recognized interest expense incurred from these loans for the amount of $6,211 and $0, respectively. As a result of loan repayments, the Company also recognized a gain on forgiveness of interest of $2, which was included in other income. As of June 30, 2017 and 2016, interest payable of $6,209 and $0, respectively, was included in accrued expenses and other payables.

Note 12 – Subsequent Events

On July 10, 2017, Matthew Tsai, Chief Executive Officer and significant shareholder, advanced Atlas Technology a total of $7,692 for paying for office rent and salaries. The advance was non-interest bearing and due on July 9, 2018.

On July 7, 2017 , Atlas Tech Limited, a wholly-owned subsidiary of Atlas Technology International, Inc. was incorporated in the Cayman Islands for the purposes of tax planning and optimizing business capacity in terms of deal follows.

On July 11, 2017. the Company entered in to a Convertible Promissory Note (the “Note”) with Lynx Consulting Group ("Lynx"), pursuant to which the Company will receive $40,000 loan proceeds from Lynx. The Note bears an interest rate of 6% per annum, due on July 11, 2018, and has a conversion feature allowing conversion by giving five days’ notice to the Company to convert the debt into the Company’s common shares at a price of 50% discount of the lowest closing price during the fifteen (15) day period ending the latest complete trading day prior to the conversion date.

On July 21, 2017, the Company issued 924,495 shares pursuant to consulting agreements signed on November 18, 2016, November 28, 2016, March 3, 2017 and June 10, 2017 with consultants for a strategic marketing development, corporate strategy development, analytic services, intellectual property and patent consulting, respectively for the service valued at $206,781.

On July 27, 2017, the Company issued 50,711 shares pursuant to a consulting agreement signed on March 1, 2017 with one consultant for analytic services for the services valued at $20,165.

On July 31, 2017, the Company entered into a consulting agreement with one individual consultant for analytic services in exchange for 500,000 shares of its common stock valued at $120,000, which was recognized as stock based compensation upon its issuance on August 25, 2017.

F- 14

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company's management, including the Company's Co- Chief Executive Officers (the Company's principal executive officer and interim principal accounting officer), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company's Co- Chief Executive Officers concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including Co- Chief Executive Officers, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company's management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2017. The framework used by management in making that assessment was the criteria set forth in the document entitled Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management concluded that our internal control over financial reporting was not effective as of June 30, 2017.

The matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

Lack of well-established procedures to identify, approve, and report related party transactions
Lack of segregation of duties relative to key financial reporting functions
Lack of sufficient and adequately trained accounting and finance personnel with appropriate understanding of U.S. GAAP and SEC reporting requirement

Management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Management's Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate, the following series of measures:

We plan to increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. First, we plan to create a position to segregate duties consistent with control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions and (iii) the custody of assets. Second, we will create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. We did not implement the said remedial measures in the year and eleven months ended June 30, 2017. We anticipate that these remedial measures will be implemented when our financial conditions permit.

Changes in Internal Controls over financial reporting  

No change in our internal control over financial reporting occurred during the year ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

23

 

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The following table sets forth the names and ages of officers and directors as of June 3 0, 2017.

Name   Age   Position
Matthew Tsai   44   Co-Chief Executive Officer and Director
Ying-Chien Lin   43   President and Director
Jing Zhou   36   Chief Financial Officer and Director
Frank Chen   37   Chief Technology Officer and Director

Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years.

Matthew Tsai, Chief Executive Officer Director

Mr. Tsai has more than 20 years’ experience in touch screen industry. As the CEO of the company, he is responsible for maintaining good relationship with clients and other stakeholders. Before joining Atlas, Mr. Tsai served Dongguan Yunyong Machinery Co., Ltd as the Vice General Manager. Prior to that, Mr. Tsai was the R&D assistant manager in Young Fast Optoelectronics Co., Ltd. 

Ying-Chien Lin, Chairman, President and Director

Mr. Lin was born in Taiwan and finished his education and got a master degree in NATIONAL CHENG KUNG UNIVERSITY. He got his first job as an engineer in Unimicron, the largest printed circuit board factory in the world, where he was in charge of developing the new products and quality assurance. Mr. Lin cultivated excessive ability in manufacturing, R&D, quality assurance, and engineering. Later, He worked in JoinWell and began to know the touch screens industry. Since then Mr. Lin has been engaged in touch screens industry. Now Mr. Lin is the Chairman of Atlas and focus more on improving competitive advantages as well as future development.

Jing Zhou, Chief Financial Officer

Ms. Zhou serves Atlas as the Chief Financial Officer, she was born in Hunan province and finished her college degree in Central South University. Ms. Zhou has more than 10 years’ experience in finance. Before joining Atlas, she was the financial manage and financial director for Ziyu Technology Co., Limited and Shenzhen Chenhe Technology Co., Ltd respectively. She is in charge of summarizing financial reports, manage the funds, manage the investments of the company, and work on the tax planning for Atlas.

Frank Chen, Chief Technology Officer

Mr. Chen has more than 10 years’ experience in touch screen industry. He got him master degree in civil engineering in Taiwan and worked in Quality Assurance department as a QA manager in Dongguan Yunyong Machinery Co., Ltd. After that, Mr. Chen served Young Fast Optoelectronics Co., Ltd. as the assistant R&D manager, developing products and assessing materials and feasibility. Currently, Mr. Chen is the Chief Technology Officer for Atlas.

Term of Office

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Family Relationships

There are no family relationships between any of our directors or executive officers.

Certain Legal Proceedings

To our knowledge, no director, nominee for director, or executive officer of the Company has been a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years.

Code of Ethics

The company has not adopted a Code of Ethics because we presently only have two directors and two officers. We plan to adopt a Code of Ethics when the size of the Board and management increases.

24

 

Item 11. Executive Compensation

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us:

SUMMARY COMPENSATION TABLE

Name and Principal Position   Year   Salary ($)  

Bonus ($)

  Stock Awards ($)   Option Awards ($)   Non-Equity Incentive Plan Compensation ($)  

Non-Qualified Deferred Compensation Earnings

($)

  All Other Compensation ($)   Total ($)
Richard Lin, Chairman and Director     2017       0       0       29,244       0       0       0       0       29,244  
      2016       0       0       0       0       0       0       0       0  
Matthew Tsai, Chief Executive Officer and Director     2017       13,205       0       19,442       0       0       0       0       32,647  
      2016       700       0       0       0       0       0       0       700  
Frank Chen, Chief Technology Officer     2017       11,346       0       0       0       0       0       0       11,346  
      2016       0       0       0       0       0       0       0       0  
Jing Zhou, Chief Financial Officer     2017       4,102       0       0       0       0       0       0       4,102  
      2016       0       0       0       0       0       0       0       0  

Option Grants

There are no stock option plans or common shares set aside for any stock option plan.

Long-Term Incentive Plan (“LTIP”) Awards Table

There were no awards made to a named executive officers in the last completed fiscal year under any LTIP

Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

Employment Agreements

Currently, we do not have an employment agreement in place with our officers and directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our shares of common stock , the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. 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 subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on shares issued and outstanding as of June 30 , 2017.

Name   Amount and Nature of Voting Beneficial Ownership   % of Class
Ying-Chien Lin (1)     28,000,000       51.23 %
Matthew Tsai (1)(2)     10,000,000       18.30 %
All officers and directors as a group (2 person)     38,000,000       69.53 %

(1) Member of our board of directors.
(2) Chief Executive Officers

25

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Certain Related Party Transactions

Advances from related parties

From time to time, certain officers of the Company advances funds to the Company for working capital purpose.

During the year and the eleven months ended June 30, 2017 and 2016, Tiffany Aguayo advanced to the Company $305 and $44,739 to the Company, and the Company repaid $0 and $91, respectively. The advances was non-interest bearing and due on demand. As of June 30, 2017 and 2016, the balance of debt payable to Ms. Aguayo was $0 and $54,800, respectively.

Matthew Tsai, Chief Executive Officer and significant shareholder, advanced the Company a total of $243,591 and paid $192,083 on behalf of the Company for the year ended June 30, 2017. The amounts are non-interest bearing and due on demand. $35,897 of the advance was repaid during the same period. As of June 30, 2017, the balance of $397,143 and $1,594 were included in loans from related parties, and due to related party, respectively. Matthew Tsai did not made any advance to the Company for the eleven months ended June 30, 2016 .

Office Space

One of the Company’s offices is located at 1/F No. 103 Xin Yi Road, Lu Zhou District, Xin Bei, Taiwan. The office is rented from Jin-Xia Wu, a family member of Ming-Shu Tsai, for a monthly rent of HKD10,000 (approximately $1,300). The space of the office is 90 square meters, and the purpose of this office is to continue to focus on the Company’s research and development efforts. The Company was provided office space by Tiffany Aguayo free of charge for the eleven months ended June 30, 2016.

Indebtedness of Management

No officer, director or security holder known to us to own of record or beneficially more than 5% of our common stock or any member of the immediate family or sharing the household (other than a tenant or employee) of any of the foregoing persons is indebted to us.

Independence of the Board of Directors

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation or has been, at any time during the past three years, employed by the company. Accordingly, we do not have any independent director as of the date of this registration statement.

26

 

Item 14. Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K or 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings was $23,300   and $ 15,000 for the year ended June 30, 2017 and eleven months ended June 30, 2016 , respectively.

Audit Related Fees

Audit related services fees was $23,300 and $1,000 for the year ended June 30, 2017 and eleven months ended June 30, 2016 .

Tax Fees

For the Company’s year ended June 30, 2017 and eleven months ended June 30, 2016 , we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.

All Other Fees

The Company did not incur any other fees related to services rendered by our principal accountant for the year ended June 30, 2017 and eleven months ended June 30, 2016 .

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

- approved by our audit committee; or
- entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors.

The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

27

PART IV

Item 15. Exhibits, Financial Statement Schedules.

A copy of our initial Certificate of Incorporation, as amended, was filed and incorporated by reference, as Exhibit 3.1, and copies of our Amended and Restated Certificate of Incorporation and our current Bylaws were also filed and incorporated by reference, as Exhibits 3.2 and 3.3, to our originally filed Form S-1 Registration Statement that is referenced here in Part IV, Item 15.

a) Documents filed as part of this Annual Report

1. Consolidated Financial Statements

2. Financial Statement Schedules

3. Exhibits

Exhibit Number   Description
3.1   Certificate of Incorporation (Incorporated by reference from our Registration Statement on Form S-1, filed on December 11, 2014).
3.2   Amended and Restated Certificate of Incorporation (Incorporated by reference from our Schedule 14C, filed on August 16, 2016).
3.3   Bylaws (Incorporated by reference from our Registration Statement on Form S-1, filed on December 11, 2014).
31.1   Certifications of the Co-Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+   Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+   Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB   XBRL Taxonomy Extension Label Linkbase Document.
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document.

+In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

28  
 

 

SIGNATURES

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    Atlas Technology International, Inc.
     
September 28, 2017 By: /s/ Matthew Tsai
    Matthew Tsai
    Chief Executive Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date
     
/s/ Matthew Tsai Chief Executive Officer and Director September 28, 2017
Matthew Tsai    
     
/s/ Ying-Chien Lin Chairman and Director September 28, 2017
YingpChien Lin    

29

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