See accompanying notes to unaudited condensed
consolidated financial statements.
See accompanying notes to unaudited condensed
consolidated financial statements.
See accompanying notes to unaudited condensed
consolidated financial statements.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
1. DESCRIPTION
OF BUSINESS AND ORGANIZATION
DH Enchantment, Inc. (the “Company”)
was incorporated in the State of Nevada on July 9, 2004 under the name Amerivestors, Inc. On March 3, 2009, the Company changed its name
to Gust Engineering & Speed Productions, Inc. and on February 1, 2011, the Company changed its name to Energy Management
International, Inc. On August 11, 2021, we changed our name to DH Enchantment, Inc., our current name.
Currently, the Company through its subsidiaries, mainly engages with
the sale and distribution of COVID-19 rapid antigen tester set.
Description of subsidiaries
Schedule of description of subsidiaries |
|
|
|
|
|
|
|
|
Name |
|
Place of incorporation
and kind of
legal entity |
|
Principal activities
and place of operation |
|
Particulars of registered/ paid up share
capital |
|
Effective
interest held |
|
|
|
|
|
|
|
|
|
DH Investment Group Limited (“DHIG”) |
|
British Virgin Islands |
|
Investment holding |
|
100 ordinary shares at par value of US$1 |
|
100% |
|
|
|
|
|
|
|
|
|
Ho Shun Yi Limited (“HSYL”) |
|
Hong Kong |
|
Sale and distribution of COVID-19 rapid antigen tester set |
|
10,000 ordinary shares for HK$10,000 |
|
100% |
The Company and its subsidiaries are hereinafter
referred to as (the “Company”).
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated
financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the
accompanying unaudited condensed consolidated financial statements and notes.
These accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US
GAAP”).
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
|
· |
Use of estimates and assumptions |
In preparing these unaudited condensed consolidated
financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance
sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.
The unaudited condensed consolidated financial
statements include the accounts of ENMI and its subsidiaries. All significant inter-company balances and transactions within the Company
have been eliminated upon consolidation.
|
· |
Cash and cash equivalents |
Cash and cash equivalents are carried at cost
and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an
original maturity of three months or less as of the purchase date of such investments.
ASC 606, Revenue from Contracts with Customers
(“ASC 606”), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue
and cash flows arising from the entity’s contracts to provide goods or services to customers.
The Company applies the following five steps
in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· |
identify the contract with a customer; |
· |
identify the performance obligations in the contract; |
· |
determine the transaction price; |
· |
allocate the transaction price to performance obligations in the contract; and |
· |
recognize revenue as the performance obligation is satisfied. |
The Company derives its revenue from the sale
of the rapid tester kits. The Company sells its products directly to healthcare providers, retailers and individual consumers through
its retail channels. The Company considers customer order confirmations to be a contract with the customer. Customer confirmations are
executed at the time an order is placed. Revenue is recognized when control of the product is transferred to the customer (i.e., when
the Company’s performance obligation is satisfied), which typically occurs at shipment date. As a result, the Company has a present
and unconditional right to payment and record the amount due from the customer in accounts receivable.
For each contract, the Company considers the
promise to transfer products to be the only identified performance obligation. In determining the transaction price, the Company evaluates
whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.
The Company’s revenues for the three months ended June 30, 2022 and 2021 are recognized at a point in time.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
Cost of revenue consists primarily of the cost
of goods sold, which are directly attributable to the sales of products.
The Company adopted the ASC 740 Income tax
provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a
tax return should be recorded in the unaudited condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company
may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the unaudited
condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than
fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition,
classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company
had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs
and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.
|
· |
Uncertain tax positions |
The Company did not take any uncertain tax positions
and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the three
months ended June 30, 2022 and 2021.
|
· |
Foreign currencies translation |
Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited condensed
consolidated statement of operations.
The reporting currency of the Company is United
States Dollar ("US$") and the accompanying unaudited condensed consolidated financial statements have been expressed in US$.
In addition, the Company is operating in Hong Kong and maintain its books and record in its local currency, Hong Kong Dollars (“HKD”),
which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general,
for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in
accordance with ASC 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date.
Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of
financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements
of changes in stockholder’s equity.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
Translation of amounts from HKD into US$ has been
made at the following exchange rates for the three months ended June 30, 2022 and 2021:
Schedule of translation rates | |
| | |
| |
| |
June 30, 2022 | | |
June 30, 2021 | |
Period-end HKD:US$ exchange rate | |
| 0.1274 | | |
| 0.1288 | |
Average HKD:US$ exchange rate | |
| 0.1274 | | |
| 0.1288 | |
ASC Topic 220, Comprehensive Income, establishes
standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined
includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying
unaudited condensed consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses
on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
The Company calculates net loss per share in accordance
with ASC 260, Earnings per Share. Basic income per share is computed by dividing the net income by the weighted-average number
of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the
denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock
equivalents had been issued and if the additional common shares were dilutive.
|
· |
Stock based compensation |
Pursuant to ASU 2018-07, the Company follows ASC
718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation
expense for all share-based payment awards (employee or non-employee), are measured at grant-date fair value of the equity instruments
that an entity is obligated to issue. Restricted stock units are valued using the market price of the Company’s common shares on
the date of grant. The Company uses a Black-Scholes option model to estimate the fair value of employee stock options at the date of grant.
As of June 30, 2022, those shares issued and stock options granted for service compensations were immediately vested, and therefore these
amounts are thus recognized as expense in the operation.
The Company follows the ASC 850-10, Related
Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties
include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the
election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the
equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed
by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which
the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent
that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that
can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one
of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be
prevented from fully pursuing its own separate interests.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
The unaudited condensed consolidated financial
statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances,
and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation
of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature
of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were
ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding
of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for
which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding
period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent,
the terms and manner of settlement.
|
· |
Commitments and contingencies |
The Company follows the ASC 450-20, Commitments
to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result
in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such
contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the
perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought therein.
If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potentially
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time that these matters will have a material adverse effect on the Company’s financial position, results
of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
|
· |
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 has adopted 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 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted
accounting principles (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 of the FASB Accounting Standards Codification 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 of the FASB Accounting
Standards Codification 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 the Company’s financial
assets and liabilities, such as cash and cash equivalents, approximate their fair values because of the short maturity of these instruments.
|
· |
Recent accounting pronouncements |
From time to time, new accounting pronouncements
are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company has assessed and concluded that the impact of recently issued
standards that became effective for the period did not have a material impact on its financial position or results of operations upon
adoption.
The Company has reviewed all recently
issued, but not yet effective, accounting pronouncements and believe that the future adoption of any such pronouncements is
not expected to cause a material impact on its financial condition or the results of its operations.
3. GOING
CONCERN UNCERTAINTIES
The accompanying unaudited condensed consolidated
financial statements have been prepared using going concern basis of accounting, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
For the three months ended June 30, 2022, the
Company incurred a net loss of $264,983 and suffered a working capital deficit of $699,259 as of June 30, 2022. The Company has not yet
established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. The continuation
of the Company as a going concern is dependent upon the continued financial support from its stockholders. Management believes the existing
stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However, there is no assurance
that the Company will be successful in securing sufficient funds to sustain the operations.
These and other factors raise substantial doubt
about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result
in the Company not being able to continue as a going concern.
4. ACCRUED
MARKETING FEE
On January 3, 2022, the Company entered into
marketing consulting agreements with two consultants for expanding sale channels and developing marketing strategies, analyzing and evaluating
consumer data services for a term of six months. The Company agreed to grant the consultants an aggregate 19,684,019
shares of the Company’s common stock, which will be issued upon the completion of the agreements. The fair value of 19,684,019
shares was $452,732,
which was measured based on the stock price of $0.023
per share on January 3, 2022 and is being amortized over the service terms. The shares were issued pursuant to S-8 registration
statement. During the three months ended June 30, 2022 and 2021, the Company charged $226,366 and $0 to operations as marketing expenses
respectively.
5. AMOUNTS
DUE TO A DIRECTOR
As of June 30, 2022, the amount due to a director
represented temporary advances made by the Company’s director, Ms LO Kin Yi Sally, which was unsecured, interest-free with no fixed
repayment term. Imputed interest on this amount is considered insignificant.
6. NOTE
PAYABLE, RELATED PARTY
The
Company had a loan agreement (the “Agreement”) with Daily Success Development Limited, the Company’s shareholder.
Pursuant to the Agreement, the shareholder loaned the Company a principal amount of $133,557, which bears interest at an annual rate of 5% and is repayable on demand.
7. PROMISSORY
NOTES, RELATED PARTY
The Company had promissory notes ( the “Notes”)
with Daily Success Development Limited and Miss Sally Kin Yi LO, the Company’s shareholder and director. Pursuant to the Notes,
the noteholders loaned the Company an aggregate principal amount of $76,584, which bear interest at an annual rate of 5% and become payable
upon maturity on May 3, 2023 and May 4, 2023.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
8. STOCKHOLDERS’ EQUITY (DEFICIT)
Authorized shares
As of June 30, 2022 and March 31, 2022, the Company’s
authorized shares were 50,000,000 shares of preferred
stock, with a par value of $0.002, of which
35,000,000 shares of preferred stock remains undesignated.
As of June 30, 2022 and March 31, 2022, the Company’s
authorized shares were 4,400,000,000 shares of common stock, with a par value of $0.001.
Issued and outstanding shares
As of June 30, 2022 and March 31, 2022, the Company
had 3,120,001 shares of Series A preferred stock issued and outstanding.
As of June 30, 2022 and March 31, 2022, the Company
had 100,000 shares of Series B preferred stock issued and outstanding.
As of June 30, 2022 and March 31, 2022, the Company
had 831,310,013 shares of common stock issued and outstanding.
9. INCOME TAX
The provision for income taxes consisted of the
following:
Schedule of provision for income taxes | |
| | | |
| | |
| |
| Three months ended June 30, | |
| |
| 2022 | | |
| 2021 | |
| |
| | | |
| | |
Current tax | |
$ | – | | |
$ | – | |
Deferred tax | |
| – | | |
| – | |
| |
| | | |
| | |
Income tax expense | |
$ | – | | |
$ | – | |
The effective tax rate in the periods presented
is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly
operates in Hong Kong and is subject to taxes in the jurisdictions in which they operate, as follows:
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
United States of America
ENMI is registered in the State of Nevada and
is subject to the tax laws of United States of America. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into
law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate
tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related
to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material
to its results of operations for the periods presented. At June 30, 2022, the Company has U.S. federal operating loss carryforwards
of $2,708.
For the three months ended June 30, 2022 and 2021,
there was no operating income.
BVI
DHIG is considered to be an exempted British Virgin
Islands company and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United
States.
The Company’s tax provision is $0 for the
three months ended June 30, 2022 and 2021.
Hong Kong
HSYL operates in Hong Kong and is subject to the
Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable profits arising in Hong Kong
during the current period, after deducting a tax concession for the tax year. The reconciliation of income tax rate to the effective income
tax rate for the three months ended June 30, 2022 and 2021 is as follows:
Schedule of reconciliation of income tax rate | |
| | |
| |
| |
Three months ended June 30, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Loss before income taxes | |
$ | (19,322 | ) | |
$ | (90,708 | ) |
Statutory income tax rate | |
| 16.5% | | |
| 16.5% | |
Income tax expense at statutory rate | |
| (3,188 | ) | |
| (14,067 | ) |
Tax effect of non-deductible items | |
| 157 | | |
| 102 | |
Net operating loss | |
| 3,031 | | |
| 14,865 | |
Income tax expense | |
$ | – | | |
$ | – | |
As of June 30, 2022, the operations in Hong Kong
incurred $105,553 of cumulative net operating losses which can be carried forward to offset future taxable income. The net
operating loss carryforwards has no expiry under Hong Kong tax regime. The Company has provided for a full valuation allowance against
the deferred tax assets of $17,416 on the expected future tax benefits from the net operating loss carryforwards as the management
believes it is more likely than not that these assets will not be realized in the future.
The following table sets forth the significant
components of the deferred tax assets of the Company as of June 30, 2022 and March 31, 2022:
Schedule of deferred tax assets and liabilities | |
| | |
| |
| |
June 30, 2022 | | |
March 31, 2022 | |
| |
| | |
| |
Deferred tax assets: | |
| | | |
| | |
Net operating loss carryforwards | |
| | | |
| | |
- United States | |
$ | 568 | | |
$ | – | |
- Hong Kong | |
| 17,416 | | |
| 14,865 | |
Total | |
| 17,894 | | |
| 14,865 | |
Less: valuation allowance | |
| (17,984 | ) | |
| (14,865 | ) |
Deferred tax assets, net | |
$ | – | | |
$ | – | |
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
10. RELATED
PARTY TRANSACTIONS
During the three months ended June 30, 2022, the
Company accrued interest expense of $622 in connection with note payable of $133,557 from its shareholder, which bears interest at a rate
of 5% per annum and has no fixed terms of repayment.
During the three months ended June 30, 2022, the
Company accrued interest expense of $953 in connection with promissory notes of $76,584 from its shareholder and director, which bear
interest at a rate of 5% per annum and become payable at maturity on May 3, 2023 and May 4, 2023.
During the three months ended June 30, 2021, the Company accrued interest
expense of $621 in connection with promissory notes of $77,266 from its shareholder and director, which bear interest at a rate of 5%
per annum and become payable at maturity on May 3, 2023 and May 4, 2023.
Also, the Company was provided an office space
by its director at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its unaudited
condensed consolidated financial statements.
Apart from the transactions and balances detailed
elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant or material
related party transactions during the three months presented.
11. CONCENTRATIONS
OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major
customers
For the three months ended June 30, 2022, two
customers contributed in excess of 10% of the Company’s revenue. These customers accounted for revenue totaling $1,549, representing
57% of the Company’s revenue with no accounts receivable at June 30, 2022.
For the three months ended June 30, 2021, three
customers contributed in excess of 10% of the Company’s revenue. These customers accounted for revenue totaling $85,149, representing
86% of the Company’s revenue with $2,561 accounts receivable at June 30, 2021.
All of the Company’s customers are located
in Hong Kong.
(b) Major
vendors
For the three months ended June 30, 2022, two
vendors represented more than 10% of the Company’s cost of revenue. These vendors accounted for 100% of the Company’s cost
of revenue amounting to $1,229, with $3,778 accounts payable at June 30, 2022.
For the three months ended June 30, 2021, one
vendor represented more than 10% of the Company’s cost of revenue. This vendor accounted for 100% of the Company’s cost of
revenue amounting to $88,229, with $5,602 of accounts payable at June 30, 2021.
DH ENCHANTMENT, INC.
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND
2021
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
The Company’s vendors are located in Hong
Kong.
|
(c) |
Economic and political risk |
The Company’s major operations are conducted
in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s
economy may influence the Company’s business, financial condition, and results of operations.
The Company cannot guarantee that the current
exchange rate will remain steady; therefore there is a possibility that the Company could post the same amount of profit for two comparable
periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted
to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
12. COMMITMENTS
AND CONTINGENCIES
As of June 30, 2022, the Company has no material
commitments or contingencies.
13. SUBSEQUENT
EVENTS
In accordance with ASC Topic 855,
“Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur
after the balance sheet date but before unaudited condensed consolidated financial statements are issued, the Company has evaluated
all events or transactions that occurred after June 30, 2022, up through the date the Company issued the unaudited condensed
consolidated financial statements.