*Share and per share
amounts have been retroactively adjusted to reflect the decreased number of shares resulting from a 10:1 reverse stock split.
The accompanying notes are an integral part
of these unaudited financial statements.
*Share and per share
amounts have been retroactively adjusted to reflect the decreased number of shares resulting from a 10:1 reverse stock split.
The accompanying notes
are an integral part of these unaudited financial statements.
*Share and per share
amounts have been retroactively adjusted to reflect the decreased number of shares resulting from a 10:1 reverse stock split.
The accompanying notes
are an integral part of these unaudited financial statements.
The accompanying notes
are an integral part of these unaudited financial statements.
NOTES TO THE FINANCIAL STATEMENTS
AS OF MARCH 31, 2020 and DECEMBER 31,
2019
(Unaudited)
Note 1 –
Organization and basis of accounting
Basis of Presentation
and Organization
This summary of significant accounting
policies of Guozi Zhongyu Capital Holdings Company is presented to assist in understanding the Company’s 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 accounting principles generally accepted in the United States of America
and have been consistently applied in the preparation of the financial statements.
Guozi Zhongyu Capital Holdings Company.
(The “Company” or “GZCC”), formerly known as Melt Inc., was organized on July 18, 2003, under the laws
of the State of Nevada. The Company operates as a holding company for operating subsidiaries.
Melt (California), Inc. is a wholly owned
subsidiary (hereinafter referred to as Melt (CA)) of Melt Inc. and was organized on August 6, 2003, under the laws of the State
of California. Melt (CA) was in the business of owning and operating corporate owned stores of which none were in existence during
the year ended December 31, 2009, managing the construction process for both corporate and franchisee owned stores, securing retail
space for either corporate or franchise stores to operate from, as well as the sale and distribution of product to franchise owned
stores until October 2007. Melt (CA) ceased managing the construction of stores during September 2007. All assets, liabilities
and operating results related to store construction and retail leases are therefore included in discontinued operations as of December
31, 2009 and 2008 (see note 6).
Melt Franchising LLC (hereinafter referred
to as Melt (FA)) a wholly owned subsidiary was organized on February 2, 2005 under the laws of the State of Nevada. Melt (FA) is
responsible for selling franchises to allow franchisee’s to own and operate stores trading under the name of Melt –
gelato italiano, Melt – café & gelato bar and Melt – gelato & crepe café as well as the sale
and distribution of product to franchisees, marketing and the collection of royalties. To date, Melt (FA) has sold forty-nine franchises
of which nineteen are operating, seventeen agreements have been terminated by the Company as a result of the franchisee’s
not securing retail space or other reasons, and thirteen have closed their operations.
On June 27, 2018, the eight judicial District
Court of Nevada appointed Custodian Ventures, LLC as custodian for Melt Inc., proper notice having been given to the officers and
directors of Melt, Inc. There was no opposition.
On June 28, 2018, the Company filed a certificate
of revival with the state of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director.
On February 27, 2019, Custodian Ventures
LLC (the “Seller”) entered into a Stock Purchase Agreement (the “Agreement”) with Zhicheng
RAO (the “Buyer” or “Purchaser”). Pursuant to the Agreement, the Seller sold to the Buyer,
and the Buyer agreed to purchase from the Seller, 2,185,710,000 shares of common stock, par value $0.00001 per share (the “Common
Stock”) of Melt, Inc. (the “Company”), constituting approximately 99% of the issued and outstanding
Common Stock, for an aggregate purchase price of $325,000. The closing of the transactions (the “Closing”) contemplated
by the Agreement occurred and consummated on March 7, 2019. The foregoing description of the Agreement does not purport to describe
all of the terms and provisions thereof and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit
10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Company filed Amended and Restated
Articles of Incorporation with Nevada Secretary of State on February 26, 2019 to increase the company’s authorized shares
of common stock from 100,000,000 to 10,000,000,000 with a par value of $0.00001 per share. The amended and restated Articles also
authorized 10,000,000 shares of Preferred Stock with a par value of $0.001 per share. The Company issued 2,107,710,000 shares of
restricted common stock to the Seller in a private sale exempt from registration pursuant to Section 4(2) of 1933 Act on February
28, 2019, and thus increased Seller’s shareholding interest in the Company from 78,000,000 shares of common stock to 2,185,710,000
shares of common stock prior to Closing.
The Company filed a Certificate of Amendment
on April 15, 2019 with Nevada Secretary of State to (i) change the Company name from Melt Inc. to Guozi Zhongyu Capital Holdings
Company; (ii) to effectuate a reverse stock split of the Company’s authorized, issued and outstanding shares of Common Stock,
at a ratio of 10-for-1; and (iii) to increase par value of its authorized shares of Common Stock to $0.0001 per share.
The accompanying financial statements are
prepared on the basis of accounting principles generally accepted in the United States of America (“GAAP”). The Company
is a development stage enterprise devoting substantial efforts to establishing a new business, financial planning, raising capital,
and research into products which may become part of the Company’s product portfolio. The Company has not realized significant
sales through since inception. A development stage company is defined as one in which all efforts are devoted substantially to
establishing a new business and, even if planned principal operations have commenced, revenues are insignificant.
The unaudited financial
statements were prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are,
in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information
and footnote disclosures normally present in annual financial statements prepared in accordance with US GAAP was omitted pursuant
to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial
statements and footnotes for the year ended December 31, 2019 included in our Annual Report on Form 10-K. The results of the three
months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year ending December 31,
2020.
Note 2 –
Going Concern
The accompanying financial statements have
been prepared assuming the continuation of the Company as a going concern. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. Management
of the Company is making efforts to raise additional funding until a registration statement relating to an equity funding facility
is in effect. While management of the Company believes that it will be successful in its capital formation and planned operating
activities, there can be no assurance that the Company will be able to raise additional equity capital or be successful in the
development and commercialization of the products it develops or initiates collaboration agreements thereon. The accompanying financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going
concern.
Note 3 – Summary of significant
accounting policies
Cash and Cash Equivalents
For purposes of reporting within the statements
of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all
highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
Use of Estimate
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses
during the reporting periods. Actual results could differ from those estimates.
Income Tax
The Company accounts for income taxes pursuant
to FASB ASC Topic 740, Income Taxes. Under FASB ASC Topic 740, deferred tax assets and liabilities are determined based
on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.
The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities
generating the differences.
The Company maintains a valuation allowance
with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations
for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income
within the carry-forward period under the Federal tax laws.
Changes in circumstances, such as the Company
generating taxable income, could cause a change in judgment about the reliability of the related deferred tax asset. Any change
in the valuation allowance will be included in income in the year of the change in estimate.
Fair Value Measurement
The Company values its convertible notes
and amounts due to related parties and short term loans payable under FASB ASC 820 which defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value measurements.
Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date
(exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable,
market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those
inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and
the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1 – Quoted prices are available
in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions
for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1
primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
Level 2 - Valuations for assets and liabilities
that can be obtained from readily available pricing sources via independent providers for market transactions involving similar
assets or liabilities. The Company’s principal markets for these securities are the secondary institutional markets, and
valuations are based on observable market data in those markets.
Level 3 – Pricing inputs include
significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed
methodologies that result in management’s best estimate of fair value. The Company uses Level 3 to value its derivative instruments.
Loss Per Share
Basic loss per common share excludes dilution
and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss
per common share reflect 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 then shared in the loss of the entity. As of March
31, 2020, there are no outstanding dilutive securities.
Note
4 – Related party transactions
On July 03, 2018, the Company issued 78,000,000
shares of common stock to its custodian, Custodian Ventures, LLC at par for shares valued at $78,000 in exchange for settlement
of a portion of a related party loan advanced to the Company in the amount of $9,695, and the Company obtained a promissory note
in amount of $68,305 from Custodian Ventures, LLC. The note bears an interest of 3% and matures in 180 days from the date of issuance.
As of June 30, 2019, a total of $70,995 which consists of principle of $68,305 and accrued interest of $2,690, is due to the Company.
On March 07, 2019, there was a change
of control and Mr. Zhicheng Rao became the majority shareholder and Co Chairman of the Board of Directors. During the nine
months ended September 30, 2019, Custodian Ventures, LLC advanced a total of $1,000 to the Company and Mr. Zhicheng Rao
advanced a total of $25,700 to the company for payment of accounting, registration and legal fees. As of September 30, 2019,
Notes payable has a balance of 1,000 to Custodian Ventures, LLC. and $25,700 to Mr. ZhiCheng Rao.
The
management considers there is no collectability of the promissory notes from related party- Custodian Ventures, LLC., On June 30,
2019, the Notes receivable of $70,995 from Custodian Ventures, LLC. was written off.
The company has a $0 balance of Notes receivable
as of December 31, 2019 and March 31, 2020 respectively.
Per Stock Purchase Agreement, dated on
February 12, 2019, term #3.3 Additional Consideration, at closing, the seller, Custodian Ventures, LLC. shall waive collection
on the promissory note issued by the company in its favor, which is in the total principal amount of Thirty One Thousand Three
Hundred Ninety Three Dollars ($31,393), accordingly, on June 30, 2019, Notes payable of $31,393 to Custodian Ventures, LLC. was
cancelled.
The Company has the following notes payables to related parties:
|
|
December 31,
2019
|
|
|
Addition
|
|
|
Forgiven
|
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Custodian Ventures, LLC
|
|
$
|
1,000
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
1,000
|
|
Rao ZhiCheng (Board chairman)
|
|
|
10,750
|
|
|
|
–
|
|
|
|
–
|
|
|
|
10,750
|
|
|
|
$
|
11,750
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
11,750
|
|
The Company has the following advanced from related party for
operations:
|
|
December 31,
2019
|
|
|
Addition
|
|
|
Forgiven
|
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rao ZhiCheng (Board chairman)
|
|
|
17,548
|
|
|
|
–
|
|
|
|
–
|
|
|
|
17,548
|
|
|
|
$
|
17,548
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
17,548
|
|
Note 5 –
Common Stock
On July 03, 2018, the Company issued 78,000,000
shares of common stock to Custodian Ventures, LLC at par for shares valued at $78,000 in exchange for settlement of a portion of
the related party loan in the amount of $9,695 and a promissory note issued to the Company in the amount $68,305.
On February 27, 2019, Custodian Ventures
LLC (the “Seller”) entered into a Stock Purchase Agreement (the “Agreement”) with Zhicheng
RAO (the “Buyer” or “Purchaser”). Pursuant to the Agreement, the Seller sold to the Buyer,
and the Buyer agreed to purchase from the Seller, 2,185,710,000 shares of common stock, par value $0.00001 per share (the “Common
Stock”) of Melt, Inc. (the “Company”), constituting approximately 99% of the issued and outstanding
Common Stock, for an aggregate purchase price of $325,000. The closing of the transactions (the “Closing”) contemplated
by the Agreement occurred and consummated on March 7, 2019. The foregoing description of the Agreement does not purport to describe
all of the terms and provisions thereof and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit
10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Company filed Amended and Restated
Articles of Incorporation with Nevada Secretary of State on February 26, 2019 to increase the company’s authorized shares
of common stock from 100,000,000 to 10,000,000,000 with a par value of $0.00001 per share. The amended and restated Articles also
authorized 10,000,000 shares of Preferred Stock with a par value of $0.001 per share. The Company issued 2,107,710,000 shares of
restricted common stock to the Seller in a private sale exempt from registration pursuant to Section 4(2) of 1933 Act on February
28, 2019, and thus increased Seller’s shareholding interest in the Company from 78,000,000 shares of common stock to 2,185,710,000
shares of common stock prior to Closing.
On April 15, 2019, the Company filed a
Certificate of Amendment with Nevada Secretary of State to (i) change the Company name from Melt Inc. to Guozi Zhongyu Capital
Holdings Company; and (ii) to effectuate a reverse stock split of the Company’s authorized, issued and outstanding shares
of Common Stock, at a ratio of 10-for-1, increased the par value of the Corporation’s authorized common shares to $0.0001
per share.
A
total of 220,700,012 shares of common stock are outstanding as of December 31, 2019 and March 31, 2020 respectively.
Note 6 –
Subsequent Events
Recent epidemic Covid-19 has caused delay
of this report, but has no impact on the company’s operation.