NOTES
TO THE FINANCIAL STATEMENTS
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Landbay
Inc is a New York corporation formed on January 28, 2016. Our current principle executive office is located at 36-25 Main Street, Flushing,
New York 11354.
On
July 24, 2019, Larison Inc, 100% controlled by the prior president and the principal stockholder of the Company (“Seller”),
entered into a Stock Purchase Agreement (the “Agreement”) with Northern Ifurniture Inc (the “Buyer”). Pursuant
to the Agreement, Seller agreed to sell to the Buyer and the Buyer agreed to purchase from Seller a total of 9,222,350 shares of Class
A common stock of the Company, which represented approximately 96% of the Company’s issued and outstanding shares of Class A common
stock. As a result, the transaction led to a change of the control and the management team of the Company.
Prior
to the change of control, the Company was engaging in holding or trading securities in the US stock markets, as well as to trade and
hold whisky in the UK market. The Company has changed its focus to operate furniture retail business and furniture design business in
the New York area.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Preparation
The
accompanying financial statements have been prepared in accordance with generally accepted accounting principles used in the United States
of America. The financial statements are presented in US dollar, which is the Company’s functional currency.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported
amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. Significant areas requiring
the use of estimates are assessing the allowance of doubtful account, inventory write-down, impairment of long-lived assets and recoverability
of deferred tax assets. These estimates and assumptions are based on the Company’s historical results as well as management’s
future expectations. The Company’s actual results may vary from those estimates and assumptions.
Fair
Value Hierarchy
The
Company has categorized its financial instruments, based on the priority of inputs to the valuation technique, into a three-level fair
value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3).
Financial
assets and liabilities recorded on the balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level
1 Financial assets and liabilities for which values are based on unadjusted quoted prices for identical assets or liabilities in an active
market that management has the ability to access.
Level
2 Financial assets and liabilities for which values are based on quoted prices in markets that are not active or model inputs that are
observable either directly or indirectly for substantially the full term of the asset or liability (commodity derivatives and interest
rate swaps).
Level
3 Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions
a market participant would use in pricing the asset or liability.
When
the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement
is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. The carrying amounts
of cash, accounts receivable, notes receivable, other tax payable and loans payable approximate fair value because of the short-term
nature of these items.
Cash
Cash
and cash equivalents include cash in banks, bank deposits, and highly liquid investments with maturities of three months or less at the
date of origination.
Inventories,
net
Inventory
is stated at the lower of cost and net realizable value. Cost of inventory is determined using the weighted average cost method. Adjustments
are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving and obsolete inventory, which
is dependent upon factors such as historical and forecasted consumer demand, and promotional environment. The Company takes ownership,
risks and rewards of the products purchased. During the years ended March 31, 2022 and 2021, the Company recorded inventory write-down
in the amounts of $nil and $138,429, respectively, due to the impact of COVID-19 pandemic. As of March 31, 2022 and 2021, the Company
held inventory furniture in the amounts of $nil and $6,160, respectively.
Equipment
Equipment
are carried at cost. Equipment is depreciated on a straight-line basis (after taking into account their respective estimated residual
value) over 3-5 years, the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements
and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the
accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of
decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be
recoverable.
During
the years ended March 31, 2022 and 2021, the depreciation expenses were $984 and $10,205, respectively.
Income
taxes
The
Company accounts for income taxes in accordance with the provisions of the Financial Accounting Standards Board (“FASB”)
codified within Accounting Standards Codification (“ASC”) Topic No. 740-10, Income Taxes. Deferred income taxes are recognized
for the temporary differences between the tax basis of assets and liabilities and their financial reporting amounts. The Company assesses,
on an annual basis, the realizability of its deferred tax assets. A valuation allowance for deferred tax assets is established if, based
upon available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized.
Impairment
of long-lived assets
Long-lived
assets are tested for impairment in accordance with ASC 360-10-45 “Impairment or Disposal of Long-Lived Assets”. The Company
periodically evaluates potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first
compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of
the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent
that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash
flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment of long-lived assets
was recognized for the years ended March 31, 2022 and 2021.
Basic
earnings (loss) per share
The
Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, Earnings per Share. Basic earnings
per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares
outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options
and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could
share in the earnings of the Company.
The
Company does not have any potentially dilutive instruments as of March 31, 2022 and 2021, thus, anti-dilution issues are not applicable.
Revenue
Recognition
The
Company accounts for revenue arising from contracts with customers in accordance with Revenue from Contracts with Customers (“ASC
606”) since January 1, 2018. Under the new standard, revenue is recognized upon transfer of control of promised goods and services
to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods and services. This
generally occurs when the products is delivered to or picked up by the customer. Revenue is recognized net of sales discount and any
taxes collected from customers that are subsequently remitted to governmental authorities.
While
customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns
have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right
of return is estimated and recorded as a reduction in revenue at the time of sale, if necessary.
The
Company’s customer contracts identify product quantity, price and payment terms. Payment terms are granted consistent with industry
standards at individual customer level. Although the payment terms of some customers may be extended up to 60 days, he majority of the
Company’s customer has no payment terms, who needs pay when the products are delivered. As a result, revenue is not adjusted for
the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts receivables on the
Balance Sheet.
Cost
of Goods Sold
Cost
of goods sold consists primarily of inventory cost. Write-down of inventories to lower of cost or net realizable value and write-down
of potentially obsolete or slow-moving inventories are also recorded in cost of goods sold, if any.
Recent
Accounting Pronouncements Not Adopted
In
June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The standard, including subsequently
issued amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11), requires a financial asset measured at amortized
cost basis, such as accounts receivable and certain other financial assets, to be presented at the net amount expected to be collected
based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable
forecasts that affect the collectability of the reported amount. In November 2019, the FASB issued ASU No. 2019-10 to postpone the effective
date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC to fiscal years beginning
after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of this guidance on
its financial statements.
The
management does not believe that other than disclosed above, accounting pronouncements the recently issued but not yet adopted will have
a material impact on its financial position, results of operations or cash flows.
NOTE
3 – GOING CONCERN ASSESSMENT
The
Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern.
These adverse conditions are negative financial working capital, operating losses, accumulated deficit and other adverse key financial
ratios.
Management’s
plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern include attempting to improve
its business profitability, its ability to generate sufficient cash flow from its operations to meet its operating needs on a timely
basis, obtain additional working capital funds from the majority shareholder and President of the Company to eliminate inefficiencies
in order to meet its anticipated cash requirements. However, there can be no assurance that these plans and arrangements will be sufficient
to fund the Company’s ongoing capital expenditures and other requirements.
The
financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
NOTE
4 - STOCKHOLDER’S EQUITY
On
April 29, 2021, the Company amended its article with New York State to increase the authorized Class A common shares with a par value
of $0.001
to 100,000,000
shares and added
20,000,000 shares
of preferred stock with a par value of $0.001.
As of March 31, 2022, the Company has a total of 30,000,000
shares of Class A common stocks issued and outstanding
and no preferred
share has been issued.
The
Company did not issue any other stock types other than Class A common stocks. The Company did not have any share-based compensation,
related to employee share-based awards, tax benefit from share-based award activities.
NOTE
5 - RELATED PARTY TRANSACTIONS
The
Company has been provided office space by its president at no cost. The management determined that such cost is nominal and did not recognize
the rent expense in its financial statements.
During
the years ended March 31, 2022, the Company borrowed additional loans in the amounts of $14,470 and $26,630 from the President of the
Company and Northern Ifurniture Inc, an entity under the common control, respectively. As of March 31, 2022 and 2021, the balances of
shareholder loans were $81,100 and $66,630, respectively, bearing no interest, unsecured and due on demand.
NOTE
6 - NOTES RECEIVABLE
On
December 14, 2019, the Company entered a promissory note (the “Note”) in the amount of $70,000 with Dazhong 368 Inc with
one year term and 7% annual interest rate. The Note was extended its due date to June 30, and again to September 30, 2021.
As
of March 31, 2022 and 2021, the outstanding balances of the Note were $nil
and $50,863
(including $863
outstanding interests accrued) with $50,000
and $20,000
principal paid during the years ended March 31, 2022 and 2021, respectively. For the years ended March 31, 2022 and 2021, $1,538
and $5,280
interest income were realized and recorded, respectively.
NOTE
7 – RISKS AND UNCERTAINTIES
Concentration
of Credit Risks
Financial
instruments that potentially subject the Company to significant concentration of credit risk primarily consist of notes receivable and
accounts receivable. As of March 31, 2022 and 2021, the Company’s balance of notes receivable was $nil and $50,863 from Dazhong
368 Inc, respectively. As of March 31, 2022, the Company had accounts receivable in the amount of $9,115.
NOTE
8 – INCOME TAXES
The
Company is subject to the United States federal and New York State income tax at a tax rate of 21% and 6.5%, respectively.
Income
tax expense for the years ended March 31, 2022 and 2021 were $nil.
The Company had net operating loss carryovers for federal income tax purposes totaling $286,028
and $241,432
for the years ended March 31, 2022 and 2021,
respectively. The ultimate realization of such loss carryovers will be dependent on the Company attaining future taxable earnings. Based
on the projections of future taxable earnings, management believes that it is more likely than not that the Company will not be able
to utilize the benefits of these carryovers. As of March 31, 2022 and 2021, the Company had deferred tax assets in the amounts
of $78,658 and
$66,394,
respectively, which were fully reserved for valuation allowance.
NOTE
9 – RESTATEMENT OF PRIOR ISSUED FINANCIAL STATEMENTS
The
consolidated financial statements for the year ended March 31, 2021 have been restated due to understatement of the impairment loss on
inventory in the amount of $5,200. The Company did not properly evaluate the accounting treatments for above amounts in the previous
filed annual report, and we have corrected the errors in this restated annual report for the year ended March 31, 2021.
Restated
financial statement line items:
SCHEDULE
OF RESTATED FINANCIAL STATEMENT
| | |
March 31, 2021 | | |
June 30, 2021 | | |
September 30, 2021 | | |
December 31, 2021 | |
| |
| | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| As previously reported | |
| | | |
| | | |
| | | |
| | |
| Inventory | |
$ | 11,360 | | |
$ | 11,360 | | |
$ | 10,660 | | |
$ | 10,660 | |
| Accumulated deficit | |
| (352,451 | ) | |
| (371,207 | ) | |
| (379,510 | ) | |
| (389,805 | ) |
| Inventory write-down | |
$ | (133,229 | ) | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| As restated | |
| | | |
| | | |
| | | |
| | |
| Inventory | |
$ | 6,160 | | |
$ | 6,160 | | |
$ | 5,460 | | |
$ | 5,460 | |
| Accumulated deficit | |
| (357,651 | ) | |
| (376,407 | ) | |
| (384,710 | ) | |
| (395,005 | ) |
| Inventory write-down | |
$ | (138,429 | ) | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Change | |
| | | |
| | | |
| | | |
| | |
| Inventory | |
$ | (5,200 | ) | |
$ | (5,200 | ) | |
$ | (5,200 | ) | |
$ | (5,200 | ) |
| Accumulated deficit | |
| (5,200 | ) | |
| (5,200 | ) | |
| (5,200 | ) | |
| (5,200 | ) |
| Inventory write-down | |
$ | (5,200 | ) | |
$ | - | | |
$ | - | | |
$ | - | |
NOTE
10 – SUBSEQUENT EVENTS
The
Company evaluated all events or transactions that occurred after March 31, 2022 through the date the financial statements were available
to be issued. During the period, the Company did not have any material recognizable subsequent events required to be disclosed or adjusted
as of and for the year ended March 31, 2022.