UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment No.1
to
FORM
10
GENERAL
FORM FOR REGISTRATION OF SECURITIES
Pursuant
to Section 12(b) or (g) of The Securities Exchange Act of 1934
ZYQC
Group Holding Limited
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(Exact
name of registrant as specified in its charter)
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Nevada
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n/a
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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|
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Zhongminshidai
Square #12 Sungang RD,
Luohu District, Shenzhen China
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518000
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(Address
of principal executive office)
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(Zip
Code)
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Registrant’s
telephone number including area code: 9178338993
Securities
to be registered pursuant to Section 12(b) of the Act:
None
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None
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(Title
of class)
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Name
of each exchange on which each class is to be registered
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Securities
to be registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $0.0001
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None
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(Title
of class)
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Name
of each exchange on which each class is to be registered
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Indicate
by check mark whether the registrant is a large 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
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☐
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Accelerated
filer
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☐
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Non-accelerated
filer
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☐
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Smaller
reporting company
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☒
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Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
TABLE
OF CONTENTS
EXPLANATORY
NOTE
ZYQC
Group Holding Limited is filing this General Form for Registration of Securities on Form 10, or this “registration statement,”
to register its common stock, par value $0.0001 per share (“Common Stock”), pursuant to Section 12(g) of the Securities
Exchange Act of 1934. Unless otherwise mentioned or unless the context requires otherwise, when used in this registration statement,
the terms “Company,” “we,” “us,” “our” and “ZYQG” refer to ZYQC Group
Holding Limited.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
following information specifies certain forward-looking statements of management of our Company. Forward-looking statements are
statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be
identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable,
possible, should, continue, or similar terms, variations of those terms, or the negative of those terms. The forward-looking statements
specified in the following information have been compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation,
guaranty, or warranty is to be inferred from those forward-looking statements.
The
assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of
future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.
As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions
from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability
of those forward-looking statements.
The
market data and other statistical information contained in this registration statement are based on internal Company estimates
of our past experience in the industry, general market data, and public information which was not commissioned by us for this
filing.
ITEM
1. BUSINESS
Corporate
History
ZYQC
Group Holding Limited (the “Company”) was incorporated under the laws of the State of Nevada on September 16, 2010
as Titan Gold Corp. On February 25, 2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp.
On January 30, 2019, the Company changed its name to ZYQC Group Holding Limited. We were previously a mineral exploration
company. There do not appear to have been any active business operations from 2013 until the Share Exchange Agreement described
below, and there is nothing to indicate the nature of the disposal of the assets. There is therefore uncertainty as to how those
assets were disposed of.
On
December 21, 2018, John Ballard was appointed custodian by the Eight Judicial Court of the State of Nevada. On February 11, 2019,
John Ballard sold 52,000,000 shares of common stock of the Company, representing the controlling interest, to Jun Chen for ($20,000),
pursuant to a stock purchase agreement. Mr. Jun Chen was then appointed as the Company CEO, CFO, Secretary, Treasurer and Director.
On
February 11, 2019, the board of directors approved a 1 for 1000 reverse stock split of its common stock, to be effected on a certificate
by certificate basis with all fractional shares being rounded up to the next whole share.
On
March 08, 2019, the company changed its symbol from TNUGD to ZYQG.
On
October 8, 2019, the Company entered into a definitive share exchange agreement (the “Share Exchange Agreement”) with
ZYQC International Holding Group Limited (“ZYQC”), a Seychelles corporation. Under the Share Exchange Agreement, One
Hundred Percent (100%) of the ownership interest of ZYQC was exchanged for 300,000,000 shares of common stock of the Company.
The former stockholders of ZYQC acquired a majority of the issued and outstanding common stock as a result of the share exchange
transaction. The transaction has been accounted for as a recapitalization of the Company, whereby ZYQC is the accounting
acquirer.
Immediately
after such share exchange, the Company had a total of 305,103,100 issued and outstanding shares, with authorized share capital
for common share of 1,000,000,000.
Also,
upon the execution of the Share Exchange Agreement, the Company changed its fiscal year end from April 30 to June 30.
Consequently,
the Company has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as
amended (the “Exchange Act”) and ZYQC is now a wholly owned subsidiary.
However,
there is change of control in terms of directorship within the operations of the Company after the Share Exchange, as Mr. Liu
Yaxuan, Ms. Zhou Aiping, and Mr. Sun Zhenguo are the officers and directors of ZYQC. But Mr. Jun Chen remain as the Company CEO,
CFO, Secretary and Treasurer until the next round of board of directors meeting.
Mr.
Liu Yaxun has dozens of years’ experience in automobile industry and has experience in car sourcing, sales and maintenance.
Mr. Liu Yaxuan has initiated startups in automobile industry over the last ten years, including being the founder of zhongchuang
weive technology co., LTD. in 2000, and remaining with the company until 2008, and being the founder of jin kun automobile trading
co., LTD. in 2009, and remaining with the company until 2018. Currently, Mr. Liu Yaxuan is in charge of the operation, supply
chain management, as well as the distributor system management of ZYQC.
Ms.
Zhou Aiping worked as the senior director of Love sea hotel investment management co., LTD. from March 14, 2014 to March 3, 2018.
Ms. Zhou Aiping has experience in human resource management and developing investors. Ms. Zhou Aiping is in charge of the human
resource management, finance management and investor development for the ZYQC.
Mr.
Sun Zhenguo has worked as the senior cross-department communication director for the past 10 years at Shenzhen zhenxing photoelectric
co., LTD., and has practical experience in cross-department communication and coordination. Mr. Sun Zhenguo is now responsible
for the cross-department coordination and business development management of ZYQC.
The
following is the organization structure of ZYQC along with ownership detail and its subsidiaries:
ZYQC
(the “ZYQC”), was incorporated in Seychelles on April 4, 2019. It was owned by nine individuals and two entities.
Their ownership was as follows:
Shareholder Name
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share percentage
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Zhong yuan Car Club Service Limited
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12.23
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%
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Zhong yuan Automobile Intelligent Service Limited
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11.33
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%
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Wei Jingge
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13.00
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%
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Zhou Aiping
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8.00
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%
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Sun Zhenguo
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8.00
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%
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Liu Yaxuan
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|
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21.11
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%
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Chou Chunlan
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3.11
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%
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Huang Yuanmei
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5.00
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%
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Zhou Minghui
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5.10
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%
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Yang Caiyan
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7.10
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%
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Fu Qiaoyue
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6.02
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%
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The
Company’s subsidiaries are summarized as follows:
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1.
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ZYQC Group Holding
Limited: The Nevada based listed entity.
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2.
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ZYQC International
Holding Group Limited: As the BVI holding company, it has no business for the time being,
and may engage in some automobile sales business in the future.
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3.
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Zhongyuan Chuang
Trading Co., LTD: As the Hong Kong based legal entity, currently no business and may
focus on Automobile trade and international automobile product sales and design.
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4.
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Shandong Zhongyuan
Future Automobile Technology Co., LTD: As the WOFE legal entity, no exact business at
the current and is planning cross-border services for the corporation.
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5.
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Zhongyuan
Automobile Trading Co., LTD: The operating entity in China with exact business described
in the business overview section.
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Business
Overview
General
At present, the majority of Chinese
automobile consumers buy cars through 4S (Sale, Spare Part, Service, Survey) stores. Its disadvantage in China is that consumers
cannot choose auto functional parts according to their own personal needs. Based on the advantages of large-scale centralized
procurement, the company has the ability to select real and high-quality automobile manufacturers and can provide customers with
high-quality, cost-effective, more convenient personalized automobiles and various automobile auxiliary products according to
their needs. For example, according to the requirements of some car buyers, we purchased GPS units, which are usually only installed
in middle and high-end cars in the Chinese automobile market, but with us, even low-end cars can still be installed with this
equipment. The company purchases cars and other car accessories at a lower cost through centralized procurement, which brings
great profit margins to the company.
We
have more than 100 cooperative operation centers in China. These cooperative operation centers are not our own subsidiaries. The
company’s local partners own and actually operate these centers. They become regional partners of the company by paying
brand authorization and service fees to the company. These cooperative operation centers are responsible for collecting various
needs of customers who buy cars, for example, which brand of the car the customers expect to buy, and which function and what
kind of purposes they expect to purchase for. When the company gets the feedback from the cooperative operation centers, the company
will select the most suitable automobile manufacturers and other car accessory suppliers according to the customer’s requirements.
These cooperative operation centers purchase from the company according to the feedback of the company, and the company purchases
from automobile manufacturers and other car accessory suppliers according to the orders of each cooperative operation center.
With this way, the company can effectively satisfy
the customer with more cost-effective products and meet customers’ personalized service needs.
After the cooperative operation centers
pay the service fee to the company, they have the right to get the brand authorization of the company. Based on the brand reputation
of the company in China, this authorization can build the trust of car buyers and increase their customer base. At the same time,
these cooperative operation centers have the right to receive consulting services provided by the company after paying for the
service fees. For example, the company will provide professional answers to various questions raised by car buyers, and provide
professional automobile knowledge training for the salesman of these operation centers.
Another advantage of this model is that the company does not need to bear huge costs to manage these
cooperative operation centers. We only need to select the best seller according to the number and demand of car buyers provided
by the cooperative operation centers, which save the company’s operation cost and labor cost. This helps the company to
achieve significant business scale and growth.
Technology
is at the core of our business. With our centralized technology system, we are able to simplify and standardize our operations,
which allows us to improve operational efficiency and quickly expand and scale up our business. We leverage big data analytics
and AI to analyze our customer behavior and transaction data, which enables us to continuously enhance our products and services,
implement dynamic pricing and improve customer retention. For example, we use big data analytics and AI to collect and sort out
the needs of all the potential car buyers, and use the big database to get what functions customers expect for, and how to make
car buyers get the best shopping experience. In this way, it can help us optimize our service and help us analyze and understand
better the development direction of China’s automobile market in the future. We also leverage our proprietary technologies
in store operations and supply chain to support our business, such as new car model selections. The Company provides customers
with quality cars and other services. We source cars from well-known suppliers and/or their agents and distributors, such as Beijing
Automobile Co., Ltd., BYD Co., Ltd., Hyundai Motor (China) Investment Co., Ltd., SAIC Volkswagen Co., Ltd., and Zhengzhou Yutong
Bus Co., Ltd. We also work with reputable partners, such as Zhongtai Holding Group Co., Ltd., Dongfeng Motor Co., Ltd and Nissan
(China) Investment Co., Ltd., to provide services, such as car repairs and maintenance. Due to our scale, we are able to source
high quality products from our suppliers at competitive prices.
China’s
new energy vehicle market is currently inadequate. Low quality, high prices and inconvenience have hindered the development of
China’s new energy vehicle market. We believe that our model will successfully promote the New Energy automobile consumption
in China. The Company hopes to become China’s top new energy vehicle sales and service provider by the end of 2025.
Our
Strengths
We
believe that the following strengths can contribute to our success:
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1.
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We
have more than 100 cooperative operation centers across China, and the data continues to grow. This helps the Company provide
customers with convenient car sales and high-quality services.
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2.
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The company’s goal is to become
the best auto product and service provider in China.
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3.
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The
Company has strong technology capabilities, quality, high affordability and high convenience.
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4.
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the
Company is connected to large vehicle source channels
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We
believe that it is important to establish and maintain our own channel resource advantages in the automotive trading process,
and we have invested in this aspect. We have a professional car source team, through the operation center to the dealer system
of the third-tier cities, to explore customer preferences and promote sales. So far we have more than 100 cooperative operation
centers, which not only promote the company’s sales, but also use the existing local automotive market resources to provide a
stable and reliable source of the car. In the future, we will look to complement the operations center in terms of inventory management,
customer resource sharing and value discovery.
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5.
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Professional
management team
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Our
team consists of a group of people who have been in the automotive market for many years. Their experience and resources behind
them have become the driving force for the company’s continued development.
Our
Challenges
Our
ability to achieve our mission and execute our strategies is subject to certain challenges, risks and uncertainties, including:
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1.
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Our
ability to sustain our historical growth rates and manage our growth.
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2.
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Our
ability to obtain sufficient funds to expand our business and respond to business opportunities.
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3.
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Our
ability to acquire new customers or retain existing customers in a cost-effective manner.
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4.
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Our
ability to manage our supply chain to continue to satisfy our future operation needs.
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5.
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Our
ability to maintain and update our technology infrastructure.
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6.
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Our
ability to compete efficiently, as our products are not proprietary and we cannot prevent our competitors from selling similar
products.
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7.
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Our
ability to comply with the relevant laws and regulations in the PRC.
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Employees
As
of October 8, 2019, we have 36 employees, including management. We consider our relations with our employees to be good.
Intellectual
Property
The
Company has the intellectual property listed in Exhibit 99.1
Reports
to Security Holders
You
may read and copy any materials the Company files with the Commission in the Commission’s Public Reference Section, Room
1580, 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Section by
calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
ITEM
1A. RISK FACTORS.
RISK
FACTORS
The
statements contained in or incorporated into this Form 10 that are not historic facts are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by
forward-looking statements. If any of the following risks actually occurs, our business, financial condition, or results of operations
could be harmed. In that case, the value of our Common Stock could decline, and an investor in our securities may lose all or
part of their investment.
Risks
Relating to Our Business and Industry.
Our
limited operating history may not be indicative of our future growth or financial results and we may not be able to sustain our
historical growth rates.
Our
limited operating history may not represent our future growth or financial performance. There is no guarantee that we will be
able to maintain historical growth rates in the future. Our growth rate may decline for a variety of possible reasons, some of
which we have no control over, including reducing customer spending, increasing competition, declining growth in China’s auto
industry, the emergence of alternative business models, or government policies or overalls. Changes in economic conditions. We
will continue to expand our product range to bring greater convenience to our customers and increase our customer base and transaction
volume. However, the implementation of our expansion plan will be affected by uncertainty. For the above reasons, the total number
of goods sold and the number of trading customers may not increase at the rate we expect. In addition, because our business model
is innovative in China’s automotive sales industry, it adds to the difficulty of assessing our business and future prospects based
on our past operations or financial performance.
As
we continue to grow rapidly, we will continue to encounter challenges in implementing our managerial, operating and financial
strategies to keep up with our growth.
The
major challenges in managing our business growth include, among other things:
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●
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Controlling
incurred costs in a competitive environment.
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●
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Ensuring
that our third-party suppliers continue to meet our quality and other standards and meet our future operational needs.
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Attracting,
training and retaining a growing workforce to support our operations.
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If
we fail to acquire new customers or retain existing customers in a cost-effective manner, our business, financial condition and
results of operations may be materially and adversely affected.
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●
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Failure
to maintain the quality and safety of our products could have a material and adverse effect on our reputation, financial condition
and results of operations.
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●
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Overall,
we face fierce competition in the Chinese automotive service industry, and our products are not proprietary products. If we fail
to compete effectively, we may lose market share and customers, and our business, financial condition and results of operations
may be materially and adversely affected.
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●
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The
growth of our business will depend to a certain extent on our recognition of the brand, and any failure to maintain, protect and
enhance our brand will limit our ability to expand or retain our customer base, which will be our business, financial situation
And performance has a significant adverse impact on operations.
|
We
believe that recognition of our brand among customers has helped us manage our customer acquisition costs and contributed to the
growth and success of our business. Accordingly, maintaining, protecting and enhancing the recognition of our brand is critical
to our business and market position. Many factors, some of which are beyond our control, are important to maintaining, protecting
and enhancing our brand. These factors include but not limited to our ability to:
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●
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Maintain
the quality and attractiveness of the products we offer.
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Develop
and launch services that meet customer needs.
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Provide
a superior customer experience.
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Increase
brand awareness through marketing and branding campaigns.
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Maintain
good relationships with our suppliers and partners.
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We
may increasingly become the target of public scrutiny, including complaints against regulators, negative media coverage, and malicious
allegations, all of which can seriously damage our reputation and have a significant adverse impact on our business and prospects.
Any
negative publicity or regulations would have a material adverse effect on our ability to generate revenue and to continue to grow.
It could reduce our customer base significantly.
A
major disruption in the operation of third-party vendors and partners could disrupt our operations.
Our
limited operational control of third-party suppliers and other business partners, and any significant disruption to operations
may adversely affect our operations. For example, a severe disruption in the operation of our vehicle suppliers may result in
a shortage of our products, and a major disruption in the operation of the Internet Service Provider may affect the operation
of our applications. If we are unable to resolve the impact of disruptions to the operation of third-party vendors or service
providers, our business operations and financial results may be materially and adversely affected.
Our
business generates and processes a large amount of data, which subjects us to governmental regulations and other legal obligations
related to privacy, information security and data protection. Any improper use or disclosure of such data by us, our employees
or our business partners could subject us to significant reputational, financial, legal and operational consequences.
Data
breaches would cause a significant reduction in our customer confidence and could lead to a reduction in revenue and growth. Additionally,
governmental regulations related to data retention and collection could increase our costs of doing business in a material manner.
We
are subject to regulations, and future regulations may impose additional requirements and obligations on our business or otherwise
materially and adversely affect our business, reputation, financial condition and results of operations.
We
are subject to regulations regarding a variety of aspects of the Company’s business including taxation, environmental and
safety. Changes or additions to such regulations would cause a material increase in the Company’s overhead.
Risks
associated with doing business in China
Changes
in China’s economic, political or social conditions or government policies may have a material adverse effect on our business
and operations.
Substantially
all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and
prospects may be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese
economy differs from the economies of most developed countries in many respects, including the level of government involvement,
level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has
implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets
in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating
industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic
growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy
and providing preferential treatment to particular industries or companies.
While
the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among
various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government
or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments
could adversely affect our business and operating results, lead to a reduction in demand for our products and adversely affect
our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation
of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example,
our financial condition and results of operations may be adversely affected by government control over capital investments or
changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest
rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which
may adversely affect our business and operating results.
The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the
civil law system may be cited for reference but have limited precedential value. Therefore, the Company’s susceptibility
to such laws is unknown.
In
1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters
in general. The overall effect of legislation over the past three decades has significantly enhanced the protections afforded
to various forms of foreign investment in China. However, China has not developed a fully integrated legal system, and recently
enacted laws, rules and regulations may not sufficiently cover all aspects of economic activities in China or may be subject to
significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are
relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because
the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation
and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable. In addition,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis
or at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules
until after the occurrence of the violation.
Any
administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and
management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing
statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and
the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce
the contracts we have entered and could materially and adversely affect our business, financial condition and results of operations.
Chinese law prohibits or restricts
companies belonging to foreign countries from operating some certain businesses.
According to Chinese law, some
businesses are not allowed to be operated by the companies whose ownership is not a Chinese company. We are a US company registered
in Nevada. Each company in our organization chart is a wholly-owned subsidiary. The legality and effectiveness of this control
method are accorded with Chinese laws and regulations. Our business is also in accordance with the provisions of Chinese laws
and is not prohibited or restricted. But we can’t guarantee that China’s laws will not change in the future.
We
may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading under PRC laws.
According
to Chinese law, if any advertisement issued by the company infringes the rights and interests of a third party, the company shall
bear the liability for compensation, which may cause our financial loss. Of course, the company top management team has prepared
knowledge and solution for this.
Any
failure by our subsidiaries or their equity holders to perform their obligations under the contractual arrangements would have
a material adverse effect on our business, financial condition and results of operations.
The
contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration or court proceedings
in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance
with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United
States. As a result, uncertainties in the PRC legal system could limit our ability to enforce the contractual arrangements. Under
PRC law, if the losing parties fail to carry out the arbitration awards or court judgments within a prescribed time limit, the
prevailing parties may only enforce the arbitration awards or court judgments in PRC courts, which would require additional expense
and delay. If we cannot enforce the contractual arrangements, we may not be able to exert effective control over the subsidiaries,
and our ability to conduct our business, as well as our financial condition and results of operations, may be materially and adversely
affected.
We
may be subject to additional contributions of social insurance and housing fund and late payments and fines imposed by relevant
governmental authorities. Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our
financial condition and results of operation.
In
accordance with the PRC Social Insurance Law and the Regulations on the Administration of Housing Fund and other relevant laws
and regulations, China establishes a social insurance system and other employee benefits including basic pension insurance, basic
medical insurance, work-related injury insurance, unemployment insurance, maternity insurance, housing fund, and a handicapped
employment security fund, or collectively the Employee Benefits. An employer shall pay the Employee Benefits for its employees
in accordance with the rates provided under relevant regulations and shall withhold the social insurance and other Employee Benefits
that should be assumed by the employees. For example, an employer that has not made social insurance contributions at a rate and
based on an amount prescribed by the law, or at all, may be ordered to rectify the non-compliance and pay the required contributions
within a stipulated deadline and be subject to a late fee of up to 0.05% or 0.2% per day, as the case may be. If the employer
still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it may be subject to
a fine ranging from one to three times of the amount overdue.
Under
the Social Insurance Law and the Regulations on the Administration of Housing Fund, PRC subsidiaries shall register with local
social insurance agencies and register with applicable housing fund management centers and establish a special housing fund account
in an entrusted bank. Both PRC subsidiaries and their employees are required to contribute to the Employee Benefits.
As
the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our
employment practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes
or government investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide
additional compensation to our employees and our business, financial condition and results of operations could be materially and
adversely affected.
The
equity holders, directors and executive officers of the subsidiaries, as well as our employees who execute other strategic initiatives
may have potential conflicts of interests with the Company.
If
any of the equity holders, directors and executive officers of the Company’s subsidiaries, as well as our employees who
execute other strategic initiatives, have a conflict of interests with the Company, they may bring an opportunity elsewhere. Thereby,
the Company would lose out on the business.
The
custodians or authorized users of our controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities,
or misappropriate or misuse these assets.
Failure
by the Company’s custodians or authorized users to fulfill their responsibilities, or misappropriate or misuse our non-tangible
assets, such as our intellectual property, could damage our reputation or cause us to undertake expensive civil litigation.
Under
PRC law, legal documents for corporate transactions, including agreements and contracts are executed using the chop or seal of
the signing entity or with the signature of a legal representative whose designation is registered and filed with relevant PRC
industry and commerce authorities.
To
ensure the use of our seals and seals, we have established internal control procedures and rules for the use of these seals and
seals. If a seal and seal are to be used, the responsible person will submit an application through our office automation system,
and the application will be verified and approved by an authorized employee in accordance with our internal control procedures
and rules. In addition, in order to maintain the physical security of the seals, we usually store them in a secure location that
only authorized employees can access. Although we monitor these authorized employees, these procedures may not be sufficient to
prevent all abuse or negligence. Our employees are at risk of abuse of authority. For example, any employee who acquires, abuses
or misappropriates our seals and seals or other controlling intangible assets for any reason, we may suffer from disruption of
normal business operations, and we may have to take a company Or legal action, this can cost a lot of time and money. Resolve
and transfer resources for managing resources.
We
may incur material product liability claims, that could increase our costs and harm our financial condition and operation results.
Product
liability claims from our customers would increase our expenses for the related litigation, any settlements, and required improvements.
This would reduce the Company’s net profit.
Future
inflation in China may inhibit our ability to conduct business in China.
In
recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During
the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the
adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of
credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls
on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market
for our products and our company.
Claims against the Company
or its management may be hard to initiate and to enforce. Even if successful, claims against the Company or its management may
be nearly impossible to collect upon.
While the Company’s service
of process provider, EAD Law Group, is located at 8275 S. Eastern Ave., Suite 200, Las Vegas, NV 89123, there is no guarantee
that service of process can be successfully completed against the Company or its management, as they are based in China. Even
with successful service of process to EAD Law Group, you may be unable to enforce a court judgment against the Company or its
management, as they have no property in the United States, to which such judgment could be attached.
Courts in China may not enforce
a judgment against the Company or its management that was obtained in the United States, nor may such courts hear a claim based
on U.S. federal securities laws.
Even if you are able to obtain a judgement against the Company or its management
in the United States, it may not be enforced by the courts in China based upon the civil liability provisions of the U.S. federal
securities law. Furthermore, you may be unable to bring a claim directly in China, based upon U.S. federal securities, even though
your investment and the public filings of the Company are governed by U.S. federal securities laws.
Risks
Related to the Market for our Stock
The
OTC and share value
Our
Common Stock trades over the counter, which may deprive stockholders of the full value of their shares. Our stock is quoted via
the Over-The-Counter (“OTC”) Pink Sheets. Therefore, our Common Stock is expected to have fewer market makers, lower
trading volumes, and larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock
Exchange or the NASDAQ Stock Market. These factors may result in higher price volatility and less market liquidity for our Common
Stock. Currently, OTC Pink Sheets have placed a “stop warning” of the Company because we are not making material information
public. This may hinder your ability to make an informed investment decision because of the lack of historical information. Furthermore,
you may be unable to deposit or trade your shares in the Company with your broker until such “stop warning” is removed.
Low
market price
A
low market price would severely limit the potential market for our Common Stock. Our Common Stock may trade at a price below $5.00
per share, subjecting trading in the stock to certain Commission rules requiring additional disclosures by broker-dealers. These
rules generally apply to any non-NASDAQ equity security that has a market price share of less than $5.00 per share, subject to
certain exceptions (a “penny stock”). Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated therewith and impose various sales practice requirements
on broker-dealers who sell penny stocks to persons other than established customers and institutional or wealthy investors. For
these types of transactions, the broker-dealer must make a special suitability determination for the purchaser and have received
the purchaser’s written consent to the transaction prior to the sale. The broker-dealer also must disclose the commissions
payable to the broker-dealer, current bid and offer quotations for the penny stock and, if the broker-dealer is the sole market
maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Such information
must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. Monthly
statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited
market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements could discourage broker-dealers
from effecting transactions in our Common Stock.
Lack
of market and state blue sky laws
Investors
may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws. The holders of our shares of Common
Stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there
may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful
in having the shares available for trading on the OTC, investors should consider any secondary market for our securities to be
a limited one. We intend to seek coverage and publication of information regarding our Company in an accepted publication which
permits a “manual exemption.” This manual exemption permits a security to be distributed in a particular state without
being registered if the company issuing the security has a listing for that security in a securities manual recognized by the
state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the
names of issuers, officers, and directors, (2) an issuer’s balance sheet, and (3) a profit and loss statement for either
the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing
containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading
transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published
in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment Service, and Best’s Insurance Reports,
and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals”
but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize
the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin.
Accordingly,
our shares of Common Stock should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
Penny
stock regulations
We
will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our Common Stock. The
Commission has adopted regulations which generally define so-called “penny stocks” to be an equity security that has
a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We
anticipate that our Common Stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange
Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell
such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make
a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction
prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability
of purchasers to sell any of our securities in the secondary market.
For
any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock,
of a disclosure schedule prepared by the Commission relating to the penny stock market. Disclosure is also required to be made
about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities.
Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stock.
We
do not anticipate that our Common Stock will qualify for exemption from the Penny Stock Rule. In any event, even if our Common
Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the
Commission the authority to restrict any person from participating in a distribution of penny stock, if the Commission finds that
such a restriction would be in the public interest.
Rule
144 Risks
Sales
of our Common Stock under Rule 144 could reduce the price of our stock. There are 305,103,100 issued and outstanding shares of
our Common Stock held by affiliates that Rule 144 of the Securities Act defines as restricted securities.
These
shares will be subject to the resale restrictions of Rule 144, should we hereinafter cease being deemed a “shell company”.
In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months,
may not sell more than 1.0% of the total issued and outstanding shares in any 90-day period, and must resell the shares in an
unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of Common Stock under
Rule 144 could reduce prevailing market prices for our securities.
No
audit or compensation committee
Because
we do not have an audit or compensation committee, stockholders will have to rely on our entire Board of Directors, none of which
are independent, to perform these functions. We do not have an audit or compensation committee comprised of independent directors.
Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of Directors as a whole.
No members of our Board of Directors are independent directors. Thus, there is a potential conflict in that Board members who
are also part of management will participate in discussions concerning management compensation and audit issues that may affect
management decisions.
Security
laws exposure
We
are subject to compliance with securities laws, which exposes us to potential liabilities, including potential rescission rights.
We may offer to sell our shares of our Common Stock to investors pursuant to certain exemptions from the registration requirements
of the Securities Act, as well as those of various state securities laws. The basis for relying on such exemptions is factual;
that is, the applicability of such exemptions depends upon our conduct and that of those persons contacting prospective investors
and making the offering. We may not seek any legal opinion to the effect that any such offering would be exempt from registration
under any federal or state law. Instead, we may elect to relay upon the operative facts as the basis for such exemption, including
information provided by investor themselves.
If
any such offering did not qualify for such exemption, an investor would have the right to rescind its purchase of the securities
if it so desired. It is possible that if an investor should seek rescission, such investor would succeed. A similar situation
prevails under state law in those states where the securities may be offered without registration in reliance on the partial preemption
from the registration or qualification provisions of such state statutes under the National Securities Markets Improvement Act
of 1996. If investors were successful in seeking rescission, we would face severe financial demands that could adversely affect
our business and operations. Additionally, if we did not in fact qualify for the exemptions upon which we have relied, we may
become subject to significant fines and penalties imposed by the Commission and state securities agencies.
No
cash dividends
Because
we do not intend to pay any cash dividends on our Common Stock, our stockholders will not be able to receive a return on their
shares unless they sell them. We intend to retain any future earnings to finance the development and expansion of our business.
We do not anticipate paying any cash dividends on shares of our Common Stock in the foreseeable future. Unless we pay dividends,
our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders
will be able to sell shares of our Common Stock when desired.
Delayed
adoption of accounting standards
We
have delayed the adoption of certain accounting standards through an opt-in right for emerging growth companies. We have elected
to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs
Act, which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public
and private companies until those standards apply to private companies. As a result of this election, our financial statements
may not be comparable to companies that comply with public company effective dates.
ITEM
2. FINANCIAL INFORMATION
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The
following discussion should be read in conjunction with the Financial Statements of our Company and notes thereto included elsewhere
in this Form 10.
Forward
Looking Statements
The
following information specifies certain forward-looking statements of the management of our Company. Forward-looking statements
are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may
be identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable,
possible, should, continue, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements
specified in the following information statement have been compiled by our management on the basis of assumptions made by management
and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation,
guaranty, or warranty is to be inferred from those forward-looking statements.
The
assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of
future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.
As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions
from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability
of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Such forward-looking statements include statements regarding our anticipated financial and operating results, our liquidity, goals,
and plans.
All
forward-looking statements in this Form 10 are based on information available to us as of the date of this report, and we assume
no obligation to update any forward-looking statements.
Overview
With
the development of China’s economy, the auto market continues to grow rapidly. In 2000, China’s car sales were only 2.069
million, ranking eighth in the world. In 2009, China’s auto sales reached 13,379,100, making it the world’s largest auto producer
for the first time. In 2012-2018, China’s auto sales volume was 19,306,400, 21,841,100, 23,419,900 and 24,569,600, with a growth
rate of 33%, 13.87%, 6.86% and 4.71%. (The data source and analysis are derived from the “2019-2025 China Automotive
Market Special Research and Investment Direction Research Report”.
Data
shows that from January to August 2019, the production and sales of new energy vehicles in China were 799,000 and 793,000, respectively,
an increase of 31.6% and 32.0% over the same period of the previous year. Among them, the production and sales of pure electric
vehicles completed 643,000 and 629,000 respectively, up 41.4% and 40.8% over the same period of the previous year; the production
and sales of plug-in hybrid vehicles were 155,000 and 163,000, compared with the same period of last year. The growth rate was
1.6% and 5.7%; the production and sales of fuel cell vehicles were 1,194 and 1,125 respectively, an increase of 7.0 times and
7.3 times respectively over the same period of the previous year. (The data source and analysis are derived from the “China’s
New Energy Vehicle Industry Market Prospect and Investment Strategic Planning Analysis Report” issued by Prospective Industry
Research Institute.
According
to the comparison of the number of thousand people and the per capita GDP, China is still at a lower level of automobile consumption.
Compared with emerging economies, the Chinese auto market is gestating huge potential for consumption.
According
to estimates, the second- and third-tier cities that the Company is developing have become an important growth point for China’s
automobile consumption since 2016. Among them, the cities below the third-line have the highest car purchase rate, reaching 36%,
and the replacement rate has reached 39%.
The
Company’s world-leading one-stop car service technology sharing platform & service ecosystem could change the current automotive
market, corporate development and social life by online and offline high-quality service application systems.
Liquidity
and Capital Resources
At
June 30, 2019, we had $5,134,962 in current assets compared to $49,709 at June 30, 2018. Current liabilities at June 30, 2019
totaled $1,354,158 compared to $588,923 at June 30, 2018.
As
of June 30, 2019, the Company had $1,419,254 in cash and cash equivalents. The Company had negative operating cash flow of $3,828,463
for the year ended June 30, 2019.
The
Company intends to meet the cash requirements for the next 12 months from the issuance date of the consolidated financial statements
through cash generated from operations and support by the shareholders and related parties for the Company’s operation needs.
The Company will focus on improving operational efficiency and cost reductions, developing new customers and enhancing marketing
efficiency.
Cash
Generating Ability
Our
cash flows for the years ended June 30, 2019 and 2018 are summarized below:
|
|
Year ended
|
|
|
Year ended
|
|
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(3,828,463
|
)
|
|
$
|
(25,425
|
)
|
Net cash used in investing activities
|
|
|
(2,033,940
|
)
|
|
|
(41,043
|
)
|
Net cash provided by financing activities
|
|
|
7,169,054
|
|
|
|
78,220
|
|
Effect of exchange rate change on cash and cash equivalents
|
|
|
101,001
|
|
|
|
(149
|
)
|
Net increase in cash and cash equivalents
|
|
|
1,407,652
|
|
|
|
11,602
|
|
Cash and cash equivalents at beginning of year
|
|
|
11,602
|
|
|
|
-
|
|
Cash and cash equivalents at ending of year
|
|
$
|
1,419,254
|
|
|
$
|
11,602
|
|
Net
Cash Used in Operating Activities
For
the year ended June 30, 2019, $3,828,463 net cash used in operating activities was primarily attributable to our net loss of $2,844,894,
adjusted by non-cash items of depreciation of $39,261 and provision of bad debt allowance of $111,771. It also attribute to other
receivable increased of $1,888,090 due to advanced payments for customers, offset by advanced from customers increased by $1,005,097.
For
the year ended June 30, 2018, $25,425 net cash used in operating activities was primarily attributable to our net loss of $505,659,
adjusted by non-cash items of depreciation of $579. Offset by accrued expense and other current liabilities increased by $348,261
and advance from customers increased by $162,164.
Net
Cash Used in Investing Activities
For
the year ended June 30, 2019, net cash used in investing activities of $2,033,940 was primarily the result of loan to a third
party of $1,667.563, purchase of property, plant and equipment of $204,492, and loan to a related party of $161,885.
For
the year ended June 30, 2018, net cash used in investing activities of $41,043 was the result of purchase of property, plant and
equipment.
Net
Cash Provided by Financing Activities
For
the year ended June 30, 2019, net cash provided by financing activities was $7,169,054. It was mainly the result of capital injection
by shareholder of $7,244,306, offset by repayment of loans to related parties of $75,252.
For
the year ended June 30, 2018, net cash provided by financing activities was $78,220. It was the result of loans from related parties.
CONTRACTUAL
OBLIGATION
Operating
lease
The
Company leases an office under a non-cancelable operating lease agreement. The rental expense for the years ended June 30, 2019
and 2018 was $426,095 and $73,816, respectively. All leases are on a fixed repayment basis. None of the leases include contingent
rentals.
Minimum
future commitments under these agreements as of June 30, 2019 are as follows:
|
|
Lease Commitment
|
|
Year ending June 30,
|
|
|
|
2020
|
|
$
|
420,878
|
|
2021
|
|
|
350,732
|
|
Total
|
|
$
|
771,610
|
|
We
will now have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company.
Our management will have to spend additional time on policies and procedures to make sure our Company is compliant with various
regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act. This additional corporate governance time required
of management could limit the amount of time management has to implement our business plan and may impede the speed of our operations.
Results
of Operations
We
generated net revenue of $1,850,333 and $9,908, for the years ended June 30, 2019 and 2018, respectively. The increase was due
to the fact that the Company started operation in April 2018 and the revenue generated grew during the year ended June 30, 2019.
For the year ended June 30, 2019, our operating expenses were $4,629,369, compared to $507,773 for the year ended June 30, 2018.
The increase was due to the Company’s operations expanding during the year ended June 30, 2019. As a result, we have reported
net loss of $2,844,894 for the year ended June 30, 2019 and $505,659 for the year ended June 30, 2018.
The
following table shows key components of the results of operations during the years ended June 30, 2019 and 2018 of ZYQC International
Holding Group Limited (the “Company”), in US Dollars (“$”):
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
|
|
|
|
|
|
Trading service facilitation revenue
|
|
$
|
722,986
|
|
|
$
|
-
|
|
Brand service revenue
|
|
|
1,127,347
|
|
|
|
9,908
|
|
Total net revenue
|
|
|
1,850,333
|
|
|
|
9,908
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Cost of brand service
|
|
|
64,575
|
|
|
|
7,519
|
|
Total cost of revenue
|
|
|
64,575
|
|
|
|
7,519
|
|
Gross Profit
|
|
|
1,785,758
|
|
|
|
2,389
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
1,887,712
|
|
|
|
46,481
|
|
General and administrative expenses
|
|
|
2,741,657
|
|
|
|
461,292
|
|
Total operating expenses
|
|
|
4,629,369
|
|
|
|
507,773
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(2,843,611
|
)
|
|
|
(505,384
|
)
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
1,283
|
|
|
|
275
|
|
|
|
|
|
|
|
|
|
|
Loss from operations before income taxes
|
|
|
(2,844,894
|
)
|
|
|
(505,659
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
(2,844,894
|
)
|
|
|
(505,659
|
)
|
Net
revenue
The
net revenue was $1,850,333 for the year ended June 30, 2019, compared to $9,908 for the year ended June 30, 2018. The Company
provided facilitation service to 290 customers during the year ended June 30, 2019 compared to nil during the year ended June
30, 2018. Also, we have provided brand service to 137 customers during the year ended June 30, 2019 compared to only 13 customers
during the year ended June 30, 2018 due to the Company started operation from April 2018.
Cost
of revenue
The
cost of revenue was $64,575 for the year ended June 30, 2019, compared to $7,519 for the year ended June 30, 2018. It mainly consisted
of commission and training cost related to brand service. The increase mainly due to the Company started operation from April
2018.
Operating
Expenses
Total
operating expenses were $4,629,369 for the year ended June 30, 2019, compared to $507,773 for the year ended June 30, 2018. The
increase in operating expenses was $4,121,596, representing 812% increase. This was mainly attributable to increase in selling
and marketing expenses, and general and administrative expenses.
Selling
and Marketing Expenses
Selling
and marketing expenses mainly consist of advertising and promotional expenditures, commission related to revenue, exhibition and
advertising expenses.
Selling
and marketing expenses were $1,887,712 for the year ended June 30, 2019, compared to $46,481 for the year ended June 30, 2018.
The increase in sales and marketing expenses from the year ended June 30, 2018 to the year ended June 30, 2019 was $1,841,231.
The selling and marketing expenses increased in line with the revenue increase.
General
and Administrative Expenses
General
and administrative expenses mainly consist of salary and benefits expenses, consulting fees and office rental expenses.
General
and administrative expenses were $2,741,657 for the year ended June 30, 2019, compared to $461,292 for the year ended June 30,
2018. The increase of general and administrative expenses from the year ended June 30, 2018 to the year ended June 30, 2019 was
$2,280,365, representing a 494% increase. The general and administrative expenses increased mainly due to the Company’s
operation expanded during the year ended June 30, 2019 and more consulting fees, rental expenses and staff cost incurred.
Loss
from Operations
As
a result of the foregoing, we had a net loss from operations for the year ended June 30, 2019 of $2,843,611, compared to $505,384
for the year ended June 30, 2018.
Other
Expenses
Other
expense was $1,283 for the year ended June 30, 2019, compared to $275 for the year ended June 30, 2018.
Income
Tax Expense
The
major operating entities, being incorporated in the PRC, are governed by the income tax law of the PRC and is subject to PRC enterprise
income tax. The EIT rate of PRC is 25%, which applies to both domestic and foreign invested enterprises. Income tax expense was
$nil for the year ended June 30, 2019 and 2018 due to there was operating losses and the Company believed that it is more likely
than not that the losses could be recovered and allowance for the deferred tax has been accrued.
Net
Loss
For
the year ended June 30, 2019, we had net loss of $2,844,894, compared to the net loss of $505,659, for the year ended June 30,
2018. The increase in net loss was due to an increase in loss from operations for the year ended June 30, 2019, as mentioned above.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital
resources that are material to investors.
Critical
Accounting Policies and Estimates
See
Note 3 to the Consolidated Financial Statements included herewith.
The
SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the Company’s
financial condition and results of operations and which require the Company to make its most difficult and subjective judgments,
often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified
the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant
to understanding our results. For additional information, see Note 1 - Summary of Significant Accounting Policies.
The
following are deemed to be the most significant accounting policies affecting the Company.
Basis
of preparation
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) and have been consistently applied.
Principles
of consolidation
The
consolidated financial statements include the accounts of all the subsidiaries of the Company. All transactions and balances between
the Company and its subsidiaries have been eliminated upon consolidation.
Use
of estimates
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these
estimates using the best information available at the time the estimates are made; however actual results could differ from those
estimates. Significant items subject to such estimates and assumptions include allowance of doubtful accounts and the estimated
useful lives of long-lived assets.
Cash
and cash equivalents
Cash
and cash equivalents consist of cash on hand, cash in bank with no restrictions, as well as highly liquid investments which are
unrestricted as to withdrawal or use, and which have remaining maturities of three months or less when initially purchased.
Accounts
receivable
Accounts
receivables are stated at the amount the Company expect to collect. An allowance for doubtful accounts is recorded based on a
combination of historical experience and information on customer accounts. Account balances are written off against the allowance
after all means of collection have been exhausted and the potential for recovery is considered remote. The Company have historically
experienced little, if any, uncollectible receivables to date.
Inventory
The
Company values its inventories at the lower of cost or net realizable value.
Inventories
consist of mainly uniform and navigation GPS.
Where
there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost,
whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down
to net realizable value. Any idle facility costs or excessive spoilage are recorded as current period charges.
The
Company had no impairment charges for the years ended June 30, 2019 and 2018.
Property,
plant and equipment, net
Zhongyuan
Automobile’s property and equipment are recorded at cost less accumulated depreciation with no residual value.
Zhongyuan
Automobile’s property and equipment are recorded at cost less accumulated depreciation with 5% residual value. Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
Furniture
|
|
|
3-5
years
|
|
Office equipment and others
|
|
|
3-5
years
|
|
Motor vehicles
|
|
|
4
years
|
|
When
property and equipment are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year
of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not
improve or extend the expected useful lives of the assets are charged to expenses as incurred.
Revenue
recognition
The
Company adopted ASC Topic 606, “Revenue from Contracts with Customers”, applying the modified retrospective method.
In
accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Company’s
customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step
analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine
the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue
when (or as) the entity satisfies a performance obligation.
The
Company did not control the specified goods before that is transferred to the customers and the Company is an agent. The trading
service facilitation revenue should be recognized on a net basis.
The
Company does not believe that significant management judgements are involved in revenue recognition, but the amount and timing
of the Company’s revenues could be different for any period if management made different judgments or utilized different
estimates. Generally, the Company recognizes revenue under ASC Topic 606 for its performance obligation.
The
trading service facilitation revenue are derived principally from providing facilitation service to customers, the Company recognizes
revenue upon the end customers obtained the vehicle certificates, when the Company fulfill the obligation. The Company
earned facilitation fee from helping end customers to obtain the vehicle certificates. The promise of providing this service is
distinct and is defined as a performance obligation. Customers consent the fulfillment of this obligation once the end customers
obtained the vehicle certificates. In addition, the Company does not provide other maintenance services. The contracts have not
created an implicit promise to provide other goods or services to its customers. The performance obligation under this type of
business is to provide specific facilitation service to the customers, a single distinct performance obligation. Specifically,
other than providing these services to the customers, there are no other commitments, quantitatively or qualitatively, in this
contract.
For the brand services, customers pay to the Company and has the right to use
the patent, brand, logo for one year. Thus, the only performance obligation under the contract is brand name provide to the customers.
The
brand service revenue is recognized ratably over the period the brand is provided and, as such, the Company considers the services
to have been delivered (“over time”).
Advertising,
Sales and Marketing Costs
Advertising,
sales and marketing costs consist primarily of costs for the promotion of corporate image and service marketing. The Company expensed
all marketing and advertising costs as incurred.
Income
taxes
The
provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach,
the provision for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the
change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported
amounts of assets and liabilities are recovered or paid, and result from differences between the financial and tax bases of the
Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.
Valuation
allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income
available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from
tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a
history of profitable operations, projections of future profitability within the carryforward period, including from tax planning
strategies, and the Company’s experience with similar operations. Existing favorable contracts and the ability to sell products
into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections
of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based
on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes
in facts and circumstances, resulting in a future charge to establish a valuation allowance.
Tax
benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet
a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled,
which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even
though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part
of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable
under relevant tax law until such time that the related tax benefits are recognized.
Value
added taxes (“VAT”)
For
the year ended June 30, 2019 and 2018, the Company’s revenues are subject to VAT rates of 3%. The Company is also subject
to surcharges, which includes urban maintenance and construction taxes and additional education fees on VAT payable in accordance
with PRC law. The surcharges are at the rate of 12% of the VAT payable, depending on which tax jurisdiction the Company’s
PRC operating entities operate in.
Related
parties
A
party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its
management, members of the immediate families of principal owners of the Company and its management and 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. A party which
can significantly influence the management or operating policies of the transacting parties or if it has 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 is also a related party.
Foreign
currency transactions and translations
An
entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is
the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential
to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing
and inter-company transactions and arrangements. The functional currency of the Company is the Renminbi (“RMB’), and
PRC is the primary economic environment in which the Company operates. The reporting currency of these consolidated financial
statements is the United States dollar (“US Dollars” or “$”).
For
financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the
Company’s reporting currency, the United States Dollar. Assets and liabilities are translated using the exchange rate at
each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period,
and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are
recorded as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity.
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 transactions. The resulting exchange differences are included in the determination of net loss
of the consolidated financial statements for the respective periods.
The
exchange rates used for foreign currency translation were as follows (US Dollars $1 = RMB):
|
|
Year End
|
|
|
Average
|
|
06/30/2019
|
|
|
6.8747
|
|
|
|
6.7905
|
|
06/30/2018
|
|
|
6.6166
|
|
|
|
6.5329
|
|
No
representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
Comprehensive
Income
Comprehensive
income is defined as the change in equity of the Company during a period from transactions and other events and circumstances
excluding those resulting from investments by and distributions to shareholders. Accumulated other comprehensive income (loss),
as presented on the accompanying consolidated balance sheets, only consists of cumulative foreign currency translation adjustment.
Fair
Value Measurements
The
Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels of the fair value hierarchy are described below:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
●
|
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations
in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
There
were no transfers between level 1, level 2 or level 3 measurements for the years ended June 30, 2019 and 2018.
As
of June 30, 2019 and 2018, none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring
basis.
The
carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivables,
other receivables, prepayment, accrued expenses and other liabilities, are a reasonable estimate of fair value because of the
short period of time between the origination of such instruments and their expected realization and if applicable, their stated
interest rate approximates current rates available.
Earnings (loss) per share
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
CRITICAL ACCOUNTING POLICIES AND
MANAGEMENT ESTIMATES
See Note 3 to the Consolidated Financial
Statements included herewith.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER
30, 2019 AND 2018
The following table shows key components
of the results of operations during the three months ended September 30, 2019 and 2018 of ZYQC International Holding Group Limited
(the “Company”), in US Dollars (“$”):
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Net revenue
|
|
|
|
|
|
|
Trading service facilitation revenue
|
|
$
|
205,276
|
|
|
$
|
68,232
|
|
Brand service revenue
|
|
|
359,060
|
|
|
|
108,065
|
|
Total net revenue
|
|
|
564,336
|
|
|
|
176,297
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Cost of brand service
|
|
|
12,428
|
|
|
|
55,996
|
|
Total cost of revenue
|
|
|
12,428
|
|
|
|
55,996
|
|
Gross Profit
|
|
|
551,908
|
|
|
|
120,301
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
226,843
|
|
|
|
146,092
|
|
General and administrative expenses
|
|
|
805,426
|
|
|
|
1,129,252
|
|
Total operating expenses
|
|
|
1,032,269
|
|
|
|
1,275,344
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(480,361
|
)
|
|
|
(1,155,043
|
)
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
1,327
|
|
|
|
2,026
|
|
|
|
|
|
|
|
|
|
|
Loss from operations before income taxes
|
|
|
(479,034
|
)
|
|
|
(1,153,017
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
(479,034
|
)
|
|
|
(1,153,017
|
)
|
Net revenue
The net revenue was $564,336 for the
three months ended September 30, 2019, compared to $176,297 for the three months ended September 30, 2018. The Company provided
facilitation service to 80 customers during the three months ended September 30, 2019 compared to 22 customers during the three
months ended September 30, 2018. Also, we have provided brand service to 98 customers during the three months ended September
30, 2019 compared to 72 customers during the three months ended September 30, 2018. Furthermore, the unit price of the brand service
increased when comparing with the three months ended September 30, 2018.
Cost of revenue
The cost of revenue was $12,428 for
the three months ended September 30, 2019, compared to $55,996 for the three months ended September 30, 2018. It mainly consisted
of commission and training cost related to brand service. The decrease mainly caused by no commission incurred during the three
months ended September 30, 2019 due to the Company’s policy changed.
Operating Expenses
Total operating expenses were $1,032,269
for the three months ended September 30, 2019, compared to $1,275,344 for the three months ended September 30, 2018. The decrease
in operating expenses was $243,075, representing 19% decrease. This was mainly attributable to decrease of general and administrative
expenses offset by increase in selling and marketing expenses.
Selling and Marketing Expenses
Selling and marketing expenses mainly
consist of advertising and promotional expenditures, commission related to revenue, exhibition and advertising expenses.
Selling and marketing expenses were
$226,843 for the three months ended September 30, 2019, compared to $146,092 for the three months ended September 30, 2018. The
increase in sales and marketing expenses from the three months ended September 30, 2018 to the three months ended September 30,
2019 was $80,751. The selling and marketing expenses increased in line with the revenue increase.
General and Administrative Expenses
General and administrative expenses
mainly consist of salary and benefits expenses, consulting fees and office rental expenses.
General and administrative expenses
were $805,426 for the three months ended September 30, 2019, compared to $1,129,252 for the three months ended September 30, 2018.
The decrease of general and administrative expenses from the three months ended September 30, 2018 to the three months ended September
30, 2019 was $323,826, representing a 29% decrease. The general and administrative expenses increased mainly due to the Company’s
more consulting fees incurred during the three months ended September 30, 2018.
Loss from Operations
As a result of the foregoing, we had
a net loss from operations for the three months ended September 30, 2019 of $480,361, compared to $1,155,043 for the three months
ended September 30, 2018.
Other Income
Other income was $1,327 for the three
months ended September 30, 2019, compared to $2,026 for the three months ended September 30, 2018.
Income Tax Expense
The major operating entities, being
incorporated in the PRC, are governed by the income tax law of the PRC and is subject to PRC enterprise income tax. The EIT rate
of PRC is 25%, which applies to both domestic and foreign invested enterprises. Income tax expense was $nil for the three months
ended September 30, 2019 and 2018 due to there was operating losses and the Company believed that it is more likely than not that
the losses could be recovered and allowance for the deferred tax has been accrued.
Net Loss
For the three months ended September
30, 2019, we had net loss of $479,034, compared to the net loss of $1,153,017, for the three months ended September 30, 2018.
The decrease in net loss was due to the company’s operations expanded during the three months ended September 30, 2019,
as mentioned above.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2019, the Company
had $534,539 in cash and cash equivalents. The Company had negative operating cash flow of $855,302 for the three months ended
September 30, 2019.
The Company intends to meet the cash
requirements for the next 12 months from the issuance date of the consolidated financial statements through cash generated from
operations and support by the shareholders and related parties for the Company’s operation needs. The Company will focus
on improving operational efficiency and cost reductions, developing new customers and enhancing marketing efficiency.
Cash Generating Ability
Our cash flows for the three months
ended September 30, 2019 and 2018 are summarized below:
|
|
Three months ended
|
|
|
Three months ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(855,302
|
)
|
|
$
|
(134,669
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(143,277
|
)
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
654,859
|
|
Effect of exchange rate change on cash and cash equivalents
|
|
|
(29,413
|
)
|
|
|
622
|
|
Net increase in cash and cash equivalents
|
|
|
(884,715
|
)
|
|
|
377,536
|
|
Cash and cash equivalents at beginning of period
|
|
|
1,419,254
|
|
|
|
11,602
|
|
Cash and cash equivalents at ending of period
|
|
$
|
534,539
|
|
|
$
|
389,138
|
|
Net Cash Used in Operating Activities
For the three months ended September
30, 2019, $855,302 net cash used in operating activities was primarily attributable to our net loss of $479,034, adjusted by non-cash
items of depreciation of $14,885 and provision of bad debt allowance of $2,165. It also attributes to prepayments increased of
$486,519 due to advanced payments for vehicle purchase, offset b advanced from customers decreased by $457,912, offset by accrued
expenses and other liabilities increased by $330,244.
For the three months ended September
30, 2018, $134,669 net cash used in operating activities was primarily attributable to our net loss of $1,153,017, adjusted by
non-cash items of depreciation of $4,557 and provision of bad debt allowance of $18,421. It also attributes to other receivables
increased by $502,970 and offset by accrued expense and other current liabilities increased by $1,057,811.
Net Cash Used in Investing Activities
For the three months ended September
30, 2019, net cash used in investing activities was $nil.
For the three months ended September
30, 2018, net cash used in investing activities of $143,277 was the result of purchase of property, plant and equipment of $85,720
and loan to a related party of 57,557.
Net Cash Provided by Financing
Activities
For the three months ended September
30, 2019, net cash provided by financing activities was $nil.
For the three months ended September
30, 2018, net cash provided by financing activities was $654,859. It was mainly the result of capital injection by shareholder
of $730,055, offset by repayment of loans to related parties of $75,196
CONTRACTUAL OBLIGATION
Operating lease
The Company leases an office under
a non-cancelable operating lease agreement. The rental expense for the three months ended September 30, 2019 and 2018 was $103,525
and $106,444, respectively. All leases are on a fixed repayment basis. None of the leases include contingent rentals.
Minimum future commitments under these
agreements as of September 30, 2019 are as follows:
|
|
Lease
Commitment
|
|
Nine months ending June
30,
|
|
|
|
|
2020
|
|
$
|
306,813
|
|
Year ending June 30,
|
|
|
|
|
2021
|
|
$
|
340,904
|
|
Total
|
|
$
|
647,717
|
|
Employees
We
currently have 36 employees, one of whom is officers and directors. We anticipate hiring additional employees in the next twelve
months. We anticipate hiring necessary personnel based on an as needed basis only on a per contract basis to be compensated directly
from revenues.
Off-Balance
Sheet Arrangements
During
the years ended June 30, 2019 and June 30, 2018 we did not engage in any off-balance sheet arrangements as defined in item 303(a)(4)
of the Commission’s Regulation S-K.
ITEM
3. PROPERTIES.
Our
mailing address is Floor 4, Block C, Huabaoyihao Building, Futian Free Trade Zone, Futian District, Shenzhen China.
ITEM
4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The
following table sets forth, as of November 19, 2019, certain information concerning the beneficial ownership of our Common Stock
by: (i) each stockholder known by us to own beneficially 10.0% or more of our outstanding Common Stock; (ii) each director; (iii)
each named executive officer; and (iv) all of our executive officers and directors as a group, and their percentage ownership:
Name
|
|
Number
of
Shares of
Common Stock
|
|
|
Percentage
|
|
Jun Chen*, sole officer and director
|
|
|
5,052,000
|
|
|
|
1.67
|
%
|
Zhong yuan Car Club Service Limited (Yang Guangyan, control person)
|
|
|
36,690,000
|
|
|
|
12.0
|
%
|
Zhong yuan Automobile Intelligent Service Limited (Liu Shuai control person)
|
|
|
33,990,000
|
|
|
|
11.1
|
%
|
Wei Jingge
|
|
|
39,000,000
|
|
|
|
12.8
|
%
|
Liu Yaxuan
|
|
|
63,330,000
|
|
|
|
20.8
|
%
|
Zhou Aiping
|
|
|
24,000,000
|
|
|
|
7.9
|
%
|
Sun Zhenguo
|
|
|
24,000,000
|
|
|
|
7.9
|
%
|
Zhou Minghui
|
|
|
15,300,000
|
|
|
|
5.1
|
%
|
Yang Caiyan
|
|
|
21,300,000
|
|
|
|
6.7
|
%
|
Fu Qiaoyue
|
|
|
18,060,000
|
|
|
|
5.9
|
%
|
Total
|
|
|
259,422,000
|
|
|
|
85
|
%
|
All executive officers, directors, and beneficial ownership thereof as a group [one person*]
|
|
|
5,052,000
|
|
|
|
1.67
|
%
|
There
are no other officer or director, or 5% shareholders.
Unless
otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the stockholders
named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned.
Except as set forth above, applicable percentages are based upon 305,103,100 shares of common stock outstanding as of November
19, 2019.
The
mailing address of the stockholders referenced in the chart above is Floor 4, Block C, Huabaoyihao Building, Futian Free Trade
Zone, Futian District, Shenzhen, China.
ITEM
5. DIRECTORS AND EXECUTIVE OFFICERS.
Mr.
Jun Chen was appointed Chairman of the Board and the sole officer and director.
Name
|
|
Age
|
|
Position(s)
|
Jun
Chen
|
|
41
|
|
CEO,
CFO, Secretary, Treasurer, Director
|
Jun
Chen - Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, Director
Mr.
Jun Chen, age 41, Jun Chen has worked as the General manager of Shenzhen JunJiaCheng Enterprises Management Co., Ltd. He is responsible
for the company’s business management, trade as well as management solutions for customers and has been highly appreciated by
the customers.
Jun
Chen has also offered legal services for international companies like ATMD Ltd, “K” Line (Hong Kong) Ltd, IMEDCO Technology
Co. Ltd, TOYOFLEX (H.K) CO.LTD, SHARP ELECTRONICS(MALAYSIA) SDN. BHD, SMK, STAR MICRONICS CO LTD, Wah Shing (BVI)
Ltd and IMEDCO Technology Co. Ltd.
From
2015, he has been the Senior Partner and Executive Director of Management Committee of Guangdong LianRui Law firm/ Xin Rui Service
Group and Senior Consultant of Taiwan Production Industrial Association. From 2016, he has been the Senior Consultant of Hong
Kong Council for the Promotion Trade. From 2017, he has been the Standing Director of Shenzhen Municipal Purchase Association.
ITEM
6. EXECUTIVE COMPENSATION.
The
following table sets forth certain information concerning the annual and long-term compensation of our Chief Executive Officer
and our other executive officers for the last two fiscal years.
|
|
|
|
|
|
|
|
|
(b)
|
|
(c)
|
|
|
|
|
|
|
Salary
|
|
|
(a)
|
|
Option
|
|
All
Other
|
|
Total
|
Name
and Principal Position
|
|
Year
|
|
Before tax
|
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Compensation
|
Jun Chen,
chairman of the board
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
None
|
We
do not have an audit or compensation committee comprised of independent directors as our Company qualifies for an exemption from
these requirements. Indeed, we do not have any audit or compensation committee. These functions are performed by our Board of
Directors as a whole.
All
directors serve 1 yr. terms.
Amount
due from related parties:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Zhou Aiping (i)
|
|
$
|
155,106
|
|
|
$
|
-
|
|
Amount due from related parties
|
|
$
|
155,106
|
|
|
$
|
-
|
|
Amount
due to related parties:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Zhou Aiping (i)
|
|
$
|
-
|
|
|
$
|
55,920
|
|
Liu Yaxuan (ii)
|
|
|
-
|
|
|
|
21,310
|
|
Amount due to related parties
|
|
$
|
-
|
|
|
$
|
77,230
|
|
|
(i)
|
Zhou
Aiping is the supervisor of Zhongyuan Automobile and one of the shareholder (8%) of the Company.
|
|
(ii)
|
Liu
Yaxuan is the general manager of Zhongyuan Automobile and one of the shareholder (21.11%) of the Company.
|
ITEM
7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related
Party Transactions
|
|
Years
ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Loans from related parties (1)
|
|
$
|
-
|
|
|
$
|
78,220
|
|
Repayment of loans to related parties (2)
|
|
$
|
75,252
|
|
|
$
|
-
|
|
Loan to a related party (3)
|
|
$
|
161,885
|
|
|
$
|
-
|
|
1.
Loans from related parties
During
years ended June 30, 2019 and 2018, Zhongyuan Automobile Trading Co., Ltd received loans from Zhou Aiping and Liu Yaxuan in the
amount of $nil and $78,220, respectively.
2.
Repayment of loans to related parties
During
years ended June 30, 2019 and 2018, repayment of loans to Zhou Aiping and Liu Yaxuan from Zhongyuan Automobile Trading Co., Ltd
in the amount of $75,252 and $nil, respectively.
3.
Loan to a related party
During
years ended June 30, 2019 and 2018, Zhongyuan Automobile Trading Co., Ltd provided loans to Zhou Aiping in the amount of $161,885
and $nil, respectively.
Director
Independence
We
are not currently listed on any national securities exchange that has a requirement that our Board of Directors be independent.
At this time, we do not have an “independent director” as that term is defined under the rules of the NASDAQ Capital
Market.
ITEM
8. LEGAL PROCEEDINGS.
None.
ITEM
9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
a.
Market information.
We
trade on the Over the Counter Market (“OTC Market”) under the symbol “ZYQG”. To have our securities quoted
on the over-the-counter venture market (“OTCQB”) we must: (1) be a company that reports its current financial information
to the Commission, banking regulators, or insurance regulators; and (2) have at least one market maker who completes and files
a Form 211 with FINRA. The OTC Market differs substantially from national and regional stock exchanges because it: (a) operates
through communication of bids, offers, and confirmations between broker-dealers, rather than one centralized market or exchange;
and (b) securities admitted to quotation are offered by one or more broker-dealers rather than “specialists” which
operate in stock exchanges.
b.
Dividends.
We
have not issued any dividends, and have no plans of paying cash dividends in the future.
c.
Holders
As
of November 19, 2019, we had 41 shareholders of our common shares, including the shares held in street name by brokerage firm.
The holders of common share are entitled to one vote for each share held for record on all matters submitted to a vote of shareholders.
Holders of the common share have no pre-emptive rights and no right to convert their common share into any other securities. There
are no redemption or sinking fund provisions applicable to the common share.
Only
common shares were issued and outstanding at the time of reverse merger activity. The effect of the transaction is indicated under
share issuance column.
Shareholder Name
|
|
Stock Amount (300 million)
|
|
Zhong yuan Car Club Service Limited
|
|
|
36,690,000
|
|
Zhong yuan Automobile Intelligent Service Limited
|
|
|
33,990,000
|
|
Wei Jingge
|
|
|
39,000,000
|
|
Zhou Aiping
|
|
|
24,000,000
|
|
Sun Zhenguo
|
|
|
24,000,000
|
|
Liu Yaxuan
|
|
|
63,330,000
|
|
Chou Chunlan
|
|
|
9,330,000
|
|
Huang Yuanmei
|
|
|
15,000,000
|
|
Zhou Minghui
|
|
|
15,300,000
|
|
Yang Caiyan
|
|
|
21,300,000
|
|
Fu Qiaoyue
|
|
|
18,060,000
|
|
ITEM
10. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM
11. DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED.
Common
Stock
We
are authorized to issue 1,000,000,000 million common shares at a par value of $.0001. As of October 16, 2019 there are 305,103,100
common shares outstanding and no preferred shares outstanding. Each holder of Common Stock shall be entitled to one vote per share.
ITEM
12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our
Certificate of Incorporation and Bylaws provide for the indemnification of present or former directors or officers to the fullest
extent permitted by Nevada law, against all expense, liability, and loss reasonably incurred or suffered by such officers or directors
in connection with any action against such officers or directors. Currently we do not maintain director and officer liability
insurance.
ITEM
13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Shareholders and Board of Directors of
ZYQC International Holding Group Limited
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of ZYQC International Holding Group Limited (the “Company”)
as of June 30, 2019 and 2018, and the related consolidated statements of operations and comprehensive loss, statements of changes
in stockholders’ equity and consolidated statements of cash flows for the years then ended, and the related notes (collectively
referred to as the financial statements). In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial positions of ZYQC International Holding Group Limited as of June 30, 2019 and 2018, and the results of
their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in
the United States of America.
Emphasis
of Matter - Going Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note
4 to the financial statements, although the Company has limited operations, it has not yet to attain profitability. This raises
substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also
described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting.
As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
/s/
Yu Certified Public Accountant PC
We
have served as the Company’s auditor since 2019.
New
York, New York
November
21, 2019
ZYQC
International Holding Group Limited
Consolidated
Balance Sheets
(Amounts
in US$)
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,419,254
|
|
|
$
|
11,602
|
|
Accounts receivable, net
|
|
|
7,789
|
|
|
|
4,408
|
|
Other receivables, net
|
|
|
1,759,610
|
|
|
|
-
|
|
Prepayments
|
|
|
132,276
|
|
|
|
-
|
|
Due from a related party
|
|
|
155,106
|
|
|
|
33,699
|
|
Inventories
|
|
|
13,781
|
|
|
|
-
|
|
Total current assets
|
|
|
3,487,816
|
|
|
|
49,709
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
201,660
|
|
|
|
39,952
|
|
Loan to a third party
|
|
|
1,647,146
|
|
|
|
-
|
|
Total non-current assets
|
|
|
1,848,806
|
|
|
|
39,952
|
|
Total assets
|
|
$
|
5,336,622
|
|
|
$
|
89,661
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Advanced from customers
|
|
|
1,146,893
|
|
|
|
160,112
|
|
Amount due to related parties
|
|
|
-
|
|
|
|
77,230
|
|
Accrued expenses and other liabilities
|
|
|
207,265
|
|
|
|
351,581
|
|
Total current liabilities
|
|
|
1,354,158
|
|
|
|
588,923
|
|
Total liabilities
|
|
|
1,354,158
|
|
|
|
588,923
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
7,244,306
|
|
|
|
-
|
|
Retained deficit
|
|
|
(3,350,553
|
)
|
|
|
(505,659
|
)
|
Accumulated other comprehensive income
|
|
|
88,711
|
|
|
|
6,397
|
|
Total Shareholders’
Equity (Deficit)
|
|
|
3,982,464
|
|
|
|
(499,262
|
)
|
Total liabilities and shareholders’ equity
(deficit)
|
|
$
|
5,336,622
|
|
|
$
|
89,661
|
|
See
accompanying notes to the consolidated financial statements.
ZYQC
International Holding Group Limited
Statements
of Operation and Comprehensive Loss
(Amounts
in US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net revenue
|
|
|
|
|
|
|
|
|
Trading service facilitation revenue
|
|
$
|
722,986
|
|
|
$
|
-
|
|
Brand service revenue
|
|
|
1,127,347
|
|
|
|
9,908
|
|
Total net revenue
|
|
|
1,850,333
|
|
|
|
9,908
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Cost of brand service
|
|
|
64,575
|
|
|
|
7,519
|
|
Total cost of revenue
|
|
|
64,575
|
|
|
|
7,519
|
|
Gross profit
|
|
|
1,785,758
|
|
|
|
2,389
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
1,887,712
|
|
|
|
46,481
|
|
General and administrative expenses
|
|
|
2,741,657
|
|
|
|
461,292
|
|
Total operating expenses
|
|
|
4,629,369
|
|
|
|
507,773
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(2,843,611
|
)
|
|
|
(505,384
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
1,283
|
|
|
|
275
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(2,844,894
|
)
|
|
|
(505,659
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(2,844,894
|
)
|
|
$
|
(505,659
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income taxes
|
|
|
82,314
|
|
|
|
6,397
|
|
Comprehensive loss
|
|
$
|
(2,762,580
|
)
|
|
$
|
(499,262
|
)
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
-
|
|
|
|
-
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
-
|
|
|
|
-
|
|
See
accompanying notes to the consolidated financial statements.
ZYQC
International Holding Group Limited
Statements
of Changes in Shareholders’ Equity
(Amounts
in US$)
|
|
Additional paid in capital
|
|
|
Statutory reserves
|
|
|
Retained deficit
|
|
|
Accumulated other comprehensive
income (loss)
|
|
|
Total Equity (deficit)
|
|
Inception
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(505,659
|
)
|
|
|
-
|
|
|
|
(505,659
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,397
|
|
|
|
6,397
|
|
Balance, June 30, 2018
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(505,659
|
)
|
|
$
|
6,397
|
|
|
$
|
(499,262
|
)
|
Capital contribution from ordinary shareholders
|
|
|
7,244,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,244,306
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,844,894
|
)
|
|
|
-
|
|
|
|
(2,844,894
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
82,314
|
|
|
|
82,314
|
|
Balance, June 30, 2019
|
|
$
|
7,244,306
|
|
|
$
|
-
|
|
|
$
|
(3,350,553
|
)
|
|
$
|
88,711
|
|
|
$
|
3,982,464
|
|
See
accompanying notes to the consolidated financial statements.
ZYQC
International Holding Group Limited
Statements
of Cash Flows
(Amounts
in US$)
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,844,894
|
)
|
|
$
|
(505,659
|
)
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
39,261
|
|
|
|
579
|
|
Provision for allowance for doubtful accounts
|
|
|
111,771
|
|
|
|
-
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(3,834
|
)
|
|
|
(4,465
|
)
|
Other receivables
|
|
|
(1,888,090
|
)
|
|
|
-
|
|
Prepayments
|
|
|
(105,937
|
)
|
|
|
(34,130
|
)
|
Amount due from related parties
|
|
|
4,857
|
|
|
|
-
|
|
Inventories
|
|
|
(13,952
|
)
|
|
|
-
|
|
Advanced from customers
|
|
|
1,005,097
|
|
|
|
162,164
|
|
Other taxes payable
|
|
|
21,057
|
|
|
|
7,825
|
|
Accrued expenses and other current liabilities
|
|
|
(153,799
|
)
|
|
|
348,261
|
|
Net cash used in operating activities
|
|
|
(3,828,463
|
)
|
|
|
(25,425
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(204,492
|
)
|
|
|
(41,043
|
)
|
Loans to a third party
|
|
|
(1,667,563
|
)
|
|
|
-
|
|
Loans to a related party
|
|
|
(161,885
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(2,033,940
|
)
|
|
|
(41,043
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Capital contribution from ordinary shareholders
|
|
|
7,244,306
|
|
|
|
-
|
|
Loans from related parties
|
|
|
-
|
|
|
|
78,220
|
|
Repayment of loan to related parties
|
|
|
(75,252
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
7,169,054
|
|
|
|
78,220
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash
and cash equivalents
|
|
|
101,001
|
|
|
|
(149
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
1,407,652
|
|
|
|
11,602
|
|
Cash and cash equivalents, beginning of year
|
|
|
11,602
|
|
|
|
-
|
|
Cash and cash equivalents, end of year
|
|
$
|
1,419,254
|
|
|
$
|
11,602
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See
accompanying notes to the consolidated financial statements.
ZYQC
International Holding Group Limited
Notes
to Consolidated Financial Statements
(Amounts
in US$ unless otherwise noted)
NOTE
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
ZYQC
International Holding Group Limited (“ZYQC International”), was incorporated on April 4, 2019 in Seychelles.
The
Company’s wholly owned subsidiary, Zhongyuan Chuang Trading Co., Ltd. (“Zhongyuan Chuang”) was incorporated
in the Hong Kong. On June 21, 2019, ZYQC International became the parent holding company of a group of companies comprised of
Zhongyuan Chuang, which is the parent company of Shandong Zhongyuan Future Automotive Technology Co., Ltd., a wholly foreign-owned
enterprise (“WFOE”) established in the PRC (“Shandong Zhongyuan Future”, “WFOE”).
Zhongyuan
Automobile Trading Co., Ltd. (“Zhongyuan Automobile”), was incorporated on April 17, 2018 registered in Shenzhen City,
Guangdong province, under the laws of the PRC. The Company is wholly-owned by Shandong Zhongyuan Future.
The Company engaged in vehicle related
services in Mainland China. The Company provides facilitation service among the vehicle companies and the end customers. Also,
the Company provide brand service to enterprise customers by using its brand in vehicle market.
NOTE
2. GOING CONCERN
As
of June 30, 2019, the Company had $1,419,254 in cash and cash equivalents. The Company has net loss and negative operating cash
flow for the year ended June 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as
a going concern. The Company’s principal sources of liquidity have been support from shareholders and related parties. The
Company’s operating results for future periods are subject to numerous uncertainties and it is uncertain if the Company
will be able to maintain profitability and continue growth for the foreseeable future. If management is not able to increase revenue
and/or manage operating expenses in line with revenue forecasts, the company may not be able to maintain profitability.
The
Company will focus on improving operation efficiency and cost reduction, developing new business and enhancing marketing function.
Actions include developing more customers, as well as cost reduction.
The
Company believes that available cash and cash equivalents, the cash provided by operating activities, together with actions as
developing more customers and create synergy of the Company’s resources, should enable the Company to meet presently anticipated
cash needs for at least the next 12 months after the date that the financial statements are issued and the Company has prepared
the consolidated financial statements on a going concern basis. If the Company encounters unforeseen circumstances that place
constraints on its capital resources, management will be required to take various measures to conserve liquidity, which could
include, but not necessarily be limited to, obtaining financial support from related parties and controlling overhead expenses.
Management cannot provide any assurance that the Company will raise additional capital if needed.
NOTE
3. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) and have been consistently applied.
|
b.
|
Principles of
consolidation
|
The
consolidated financial statements include the accounts of all the subsidiaries of the Company. All transactions and balances between
the Company and its subsidiaries have been eliminated upon consolidation.
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these
estimates using the best information available at the time the estimates are made; however actual results could differ from those
estimates. Significant items subject to such estimates and assumptions include allowance of doubtful accounts and the estimated
useful lives of long-lived assets.
|
d.
|
Cash and cash
equivalents
|
Cash
and cash equivalents consist of cash on hand, cash in bank with no restrictions, as well as highly liquid investments which are
unrestricted as to withdrawal or use, and which have remaining maturities of three months or less when initially purchased.
Accounts
receivables are stated at the amount the Company expect to collect. An allowance for doubtful accounts is recorded based on a
combination of historical experience and information on customer accounts. Account balances are written off against the allowance
after all means of collection have been exhausted and the potential for recovery is considered remote. The Company have historically
experienced little, if any, uncollectible receivables to date.
The
Company values its inventories at the lower of cost or net realizable value.
Inventories
consist of mainly uniform and navigation GPS.
Where
there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost,
whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down
to net realizable value. Any idle facility costs or excessive spoilage are recorded as current period charges.
The
Company had no impairment charges for the years ended June 30, 2019 and 2018.
|
g.
|
Property, plant
and equipment, net
|
Zhongyuan
Automobile’s property and equipment are recorded at cost less accumulated depreciation with no residual value.
Zhongyuan
Automobile’s property and equipment are recorded at cost less accumulated depreciation with 5% residual value. Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
Furniture
|
|
|
3-5 years
|
|
Office equipment and others
|
|
|
3-5 years
|
|
Motor vehicles
|
|
|
4 years
|
|
When
property and equipment are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year
of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not
improve or extend the expected useful lives of the assets are charged to expenses as incurred.
The
Company adopted ASC Topic 606, “Revenue from Contracts with Customers”, applying the modified retrospective method.
In
accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Company’s
customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step
analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine
the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue
when (or as) the entity satisfies a performance obligation.
The
Company did not control the specified goods before that is transferred to the customers and the Company is an agent. The trading
service facilitation revenue should be recognized on a net basis.
The
Company does not believe that significant management judgements are involved in revenue recognition, but the amount and timing
of the Company’s revenues could be different for any period if management made different judgments or utilized different
estimates. Generally, the Company recognizes revenue under ASC Topic 606 for its performance obligation.
The
trading service facilitation revenue are derived principally from providing facilitation service to customers, the Company recognizes
revenue upon the end customers obtained the vehicle certificates, when the Company fulfill the obligation. The Company
earned facilitation fee from helping end customers to obtain the vehicle certificates. The promise of providing this service is
distinct and is defined as a performance obligation. Customers consent the fulfillment of this obligation once the end customers
obtained the vehicle certificates. In addition, the Company does not provide other maintenance services. The contracts have not
created an implicit promise to provide other goods or services to its customers. The performance obligation under this type of
business is to provide specific facilitation service to the customers, a single distinct performance obligation. Specifically,
other than providing these services to the customers, there are no other commitments, quantitatively or qualitatively, in this
contract.
For the brand services, customers pay to the Company and has the right to use the patent, brand, logo
for one year. Thus, the only performance obligation under the contract is brand name provide to the customers.
The
brand service revenue is recognized ratably over the period the brand is provided and, as such, the Company considers the services
to have been delivered (“over time”).
|
i.
|
Advertising,
Sales and Marketing Costs
|
Advertising,
sales and marketing costs consist primarily of costs for the promotion of corporate image and service marketing. The Company expensed
all marketing and advertising costs as incurred.
The
provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach,
the provision for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the
change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported
amounts of assets and liabilities are recovered or paid, and result from differences between the financial and tax bases of the
Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.
Valuation
allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income
available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from
tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a
history of profitable operations, projections of future profitability within the carryforward period, including from tax planning
strategies, and the Company’s experience with similar operations. Existing favorable contracts and the ability to sell products
into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections
of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based
on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes
in facts and circumstances, resulting in a future charge to establish a valuation allowance.
Tax
benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet
a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled,
which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even
though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part
of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable
under relevant tax law until such time that the related tax benefits are recognized.
|
k.
|
Value added taxes
(“VAT”)
|
.
For
the year ended June 30, 2019 and 2018, the Company’s revenues are subject to VAT rates of 3%. The Company is also subject
to surcharges, which includes urban maintenance and construction taxes and additional education fees on VAT payable in accordance
with PRC law. The surcharges are at the rate of 12% of the VAT payable, depending on which tax jurisdiction the Company’s
PRC operating entities operate in.
A
party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its
management, members of the immediate families of principal owners of the Company and its management and 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. A party which
can significantly influence the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
m.
|
Foreign currency
transactions and translations
|
An
entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is
the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential
to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing
and inter-company transactions and arrangements. The functional currency of the Company is the Renminbi (“RMB’), and
PRC is the primary economic environment in which the Company operates. The reporting currency of these consolidated financial
statements is the United States dollar (“US Dollars” or “$”).
For
financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the
Company’s reporting currency, the United States Dollar. Assets and liabilities are translated using the exchange rate at
each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period,
and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are
recorded as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity.
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 transactions. The resulting exchange differences are included in the determination of net loss
of the consolidated financial statements for the respective periods.
The
exchange rates used for foreign currency translation were as follows (US Dollars $1 = RMB):
|
|
Year End
|
|
|
Average
|
|
06/30/2019
|
|
|
6.8747
|
|
|
|
6.7905
|
|
06/30/2018
|
|
|
6.6166
|
|
|
|
6.5329
|
|
No
representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
Comprehensive
income is defined as the change in equity of the Company during a period from transactions and other events and circumstances
excluding those resulting from investments by and distributions to shareholders. Accumulated other comprehensive income (loss),
as presented on the accompanying consolidated balance sheets, only consists of cumulative foreign currency translation adjustment.
|
o.
|
Fair Value Measurements
|
The
Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels of the fair value hierarchy are described below:
|
●
|
Level 1 inputs to
the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
●
|
Level 2 applies
to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for
the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived
valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market
data.
|
|
●
|
Level 3 inputs to
the valuation methodology are unobservable and significant to the fair value.
|
There
were no transfers between level 1, level 2 or level 3 measurements for the years ended June 30, 2019 and 2018.
As
of June 30, 2019 and 2018, none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring
basis.
The
carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivables,
other receivables, prepayment, accrued expenses and other liabilities, are a reasonable estimate of fair value because of the
short period of time between the origination of such instruments and their expected realization and if applicable, their stated
interest rate approximates current rates available.
|
p.
|
Earnings
(loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
NOTE
4. SIGNIFICANT RISKS
Foreign
currency risk
The
Company’s operation is located in the PRC. Accordingly, the Company’s business, financial condition, and results of
operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of
the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically
associated with companies in North America and Western Europe. These include risks associated with, among others, the political,
economic and legal environment, and foreign currency exchange. The Company’s results may be adversely affected by changes
in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with
respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of
taxation, among other things.
Credit
risk
Credit
risk is one of the most significant risks for the Company’s business. Credit risk exposures arise principally in lending
activities which is an off-balance sheet financial instrument.
Financial
instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents
and accounts receivables. The Company places its cash and cash equivalents with financial institutions, which management believes
are of high-credit ratings and quality.
The
Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers.
Concentration
risk
For
the years ended June 30, 2019 and 2018, all of the Company’s assets were located in the PRC and all of the Company’s revenues
were derived from the PRC.
As
of June 30, 2019 and 2018, no customer accounted for over 10% of the Company’s accounts receivable.
For
the year ended June 30, 2019, no customer accounted for over 10% of the Company’s revenue. For the year ended June 30, 2018,
one customer accounted for 19% of the Company’s revenue.
NOTE
5. ACCOUNTS RECEIVABLE, NET
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
8,030
|
|
|
$
|
-
|
|
Allowance
|
|
|
(241
|
)
|
|
|
-
|
|
Accounts receivable, net
|
|
$
|
7,789
|
|
|
$
|
-
|
|
All
of the accounts receivable are non-interest bearing. Based on the assessment of the collectability of the accounts receivable
as of June 30, 2019 and 2018, the Company provided $241 and $nil allowance, respectively.
NOTE 6.
OTHER RECEIVABLES
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Staff advance
|
|
$
|
10,183
|
|
|
$
|
-
|
|
Deposits and others
|
|
|
81,472
|
|
|
|
-
|
|
Advanced for cooperation partners
|
|
|
1,773,319
|
|
|
|
-
|
|
Allowance
|
|
|
(105,364
|
)
|
|
|
-
|
|
Other receivables, net
|
|
$
|
1,759,610
|
|
|
$
|
-
|
|
Deposits
and others mainly consisted of deposits made to service providers.
Advanced
for cooperation partners represented advanced payment for the third-party cooperative operation centers who are responsible for
introducing end customers to the Company.
The
Company accrued allowance for the balance of other receivables according to the customer specific facts and economic conditions.
Based on the assessment of the collectability of the deposit and others as of June 30, 2019 and 2018, the Company provided $105,364
and $nil allowance, respectively.
NOTE
7. PREPAYMENTS
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Advances to service providers
|
|
$
|
132,276
|
|
|
$
|
33,699
|
|
Prepayment
|
|
$
|
132,276
|
|
|
$
|
33,699
|
|
Prepayments
consisted of advances to service providers.
NOTE
8. PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment consists of the following:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Furniture
|
|
$
|
3,074
|
|
|
$
|
2,740
|
|
Office Equipment and others
|
|
|
63,248
|
|
|
|
37,784
|
|
Motor vehicles
|
|
|
174,669
|
|
|
|
-
|
|
Total
|
|
|
240,991
|
|
|
|
40,524
|
|
Less: accumulated depreciation
|
|
|
(39,331
|
)
|
|
|
(572
|
)
|
Property, plant and equipment, net
|
|
$
|
201,660
|
|
|
$
|
39,952
|
|
Depreciation
expense for the years ended June 30, 2019 and 2018 was $39,261 and $579, respectively.
NOTE 9. LOANS TO A THIRD-PARTY
Loans to a third party represented
operating loans to a third-party cooperation partner, who introduce customers for the Company. One of the loans was from October
2018 to October 2020 with an annual interest rate of 12%. The other loan was from January 2019 to January 2021 with an annual
interest rate of 12%. The Company has waived the interests from the third party for early collection of the loans.
NOTE
10. ADVANCED FROM CUSTOMERS
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
Advanced payments from customers
|
|
$
|
278,007
|
|
|
$
|
74,645
|
|
Deferred brand service fees
|
|
|
868,886
|
|
|
|
85,467
|
|
Advanced payments from customers
|
|
$
|
1,146,893
|
|
|
$
|
160,112
|
|
Advanced
payments from customers were payments received from customers for automobile trading.
Deferred
brand service fees represented payment received for brand service.
NOTE
11. ACCURED EXPENSE AND OTHER CURRENT LIABILITIES
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Staff cost related payable
|
|
$
|
43,682
|
|
|
$
|
333
|
|
Other taxes payables
|
|
|
28,235
|
|
|
|
7,726
|
|
Loan from a third party
|
|
|
-
|
|
|
|
35,503
|
|
Consulting fee payable
|
|
|
91,377
|
|
|
|
305,498
|
|
Others
|
|
$
|
43,970
|
|
|
$
|
2,521
|
|
Accrued expenses and other current liabilities
|
|
|
207,264
|
|
|
|
351,581
|
|
Staff
cost related payables are mainly consisted of employee salaries accrued.
Consulting
fee payable represented amount due to a consulting company for the listing services.
NOTE
12. RELATED PARTY BALANCE AND TRANSACTIONS
a.
Balances
Amount
due from related parties:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Zhou Aiping (i)
|
|
$
|
155,106
|
|
|
$
|
-
|
|
Amount due from related parties
|
|
$
|
155,106
|
|
|
$
|
-
|
|
Amount
due to related parties:
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Zhou Aiping (i)
|
|
$
|
-
|
|
|
$
|
55,920
|
|
Liu Yaxuan (ii)
|
|
|
-
|
|
|
|
21,310
|
|
Amount due to related parties
|
|
$
|
-
|
|
|
$
|
77,230
|
|
|
(i)
|
Zhou
Aiping is the supervisor of Zhongyuan Automobile and one of the shareholders (8%) of the Company.
|
|
(ii)
|
Liu
Yaxuan is the general manager of Zhongyuan Automobile and one of the shareholders (21.11%) of the Company.
|
b.
Transactions
|
|
Years ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Loans from related parties (1)
|
|
$
|
-
|
|
|
$
|
78,220
|
|
Repayment of loans to related parties (2)
|
|
$
|
75,252
|
|
|
$
|
-
|
|
Loan to a related party (3)
|
|
$
|
161,885
|
|
|
$
|
-
|
|
1.
Loans from related parties
During
years ended June 30, 2019 and 2018, loans from Zhou Aiping and Liu Yaxuan in the amount of $nil and $78,220, respectively.
2.
Repayment of loans to related parties
During
years ended June 30, 2019 and 2018, repayment of loans to Zhou Aiping and Liu Yaxuan in the amount of $75,252 and $nil, respectively.
3.
Loan to a related party
During
years ended June 30, 2019 and 2018, loan to Zhou Aiping in the amount of $161,885 and $nil, respectively.
NOTE
13. TAXATION
Income
Tax
The
Company’s operating entity incorporated in the PRC, is governed by the income tax law of the PRC and is subject to PRC enterprise
income tax (“EIT”). The EIT rate of PRC is 25%, which applied to both domestic and foreign invested enterprises. During
years ended June 30, 2019 and 2018, the Company have incurred a net operating loss of $2,844,894 and $505,659, respectively. As
a result, the Company did not incur any EIT during the two reported tax years.
Deferred
Tax
Realization
of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and
adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards.
The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of June 30, 2019 and 2018,
valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not
that the benefits of the deferred tax assets will not be realized. The Company had deferred tax assets as of June 30, 2019 and
2018, which can be carried forward to offset future taxable income. The management determines it is more likely than not that
these deferred tax assets could not be recognized, so full allowances were provided as of June 30, 2019 and 2018. The operating
loss generated from tax year ending June 30, 2019 and 2018 carry forward incurred by the Company that will expire in year 2024
and 2023, respectively. The Company maintains a full valuation allowance against its deferred tax assets, since due to uncertainties
surrounding future utilization, the Company estimates there will not be sufficient future earnings to utilize its deferred tax
assets.
The
Company’s deferred tax assets were as follows:
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses carried forward
|
|
$
|
2,844,894
|
|
|
$
|
505,659
|
|
Valuation allowance
|
|
|
(2,844,894
|
)
|
|
|
(505,659
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
There
were no uncertain tax positions as of June 30, 2019 and 2018 and the Company does not believe that this will change over the next
twelve months.
NOTE
14. COMMITMENT
Operating
lease
The
Company leases an office under a non-cancelable operating lease agreement. The rental expense for the years ended June 30, 2019
and 2018 was $409,411 and $70,926, respectively. All leases are on a fixed repayment basis. None of the leases include contingent
rentals.
Minimum
future commitments under these agreements as of June 30, 2019 are as follows:
|
|
Lease Commitment
|
|
Year ending June 30,
|
|
|
|
2020
|
|
$
|
420,878
|
|
2021
|
|
|
350,732
|
|
Total
|
|
$
|
771,610
|
|
The
Company has no pending litigation as of June 30, 2019.
NOTE
15. SUBSEQUENT EVENTS
The
Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated
financial statements were issued. The Company has determined that, except for the below, there are no events that would have required
adjustment or disclosure in the consolidated financial statements.
On October 08, 2019, ZYQC
Group Holding Limited entered into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group
Limited and Mr. Jun Chen. As the result of the Share Exchange, ZYQC Group Holding Limited owned 300,000,000 common shares of ZYQC
International Holding Group Limited, representing 100% of its issued and outstanding shares.
ZYQC
International Holding Group Limited
Condensed
Consolidated Balance Sheets
(Amounts
in US$)
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June
30,
2019
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
534,539
|
|
|
$
|
1,419,254
|
|
Accounts receivable, net
|
|
|
1,920
|
|
|
|
7,789
|
|
Other receivables, net
|
|
|
1,634,344
|
|
|
|
1,759,610
|
|
Prepayments
|
|
|
604,533
|
|
|
|
132,276
|
|
Due from a related party
|
|
|
149,114
|
|
|
|
155,106
|
|
Inventories
|
|
|
952
|
|
|
|
13,781
|
|
Total current assets
|
|
|
2,925,402
|
|
|
|
3,487,816
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
181,304
|
|
|
|
201,660
|
|
Loan to a third party
|
|
|
1,600,989
|
|
|
|
1,647,146
|
|
Total non-current assets
|
|
|
1,782,293
|
|
|
|
1,848,806
|
|
Total assets
|
|
$
|
4,707,695
|
|
|
$
|
5,336,622
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Advanced from customers
|
|
|
662,387
|
|
|
|
1,146,893
|
|
Amount due to a related party
|
|
|
141,385
|
|
|
|
-
|
|
Accrued expenses and other liabilities
|
|
|
506,290
|
|
|
|
207,265
|
|
Total current liabilities
|
|
|
1,310,062
|
|
|
|
1,354,158
|
|
Total liabilities
|
|
|
1,310,062
|
|
|
|
1,354,158
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
7,244,306
|
|
|
|
7,244,306
|
|
Accumulated deficits
|
|
|
(3,829,587
|
)
|
|
|
(3,350,553
|
)
|
Accumulated other comprehensive (loss) income
|
|
|
(17,086
|
)
|
|
|
88,711
|
|
Total Shareholders’ Equity (Deficit)
|
|
|
3,397,633
|
|
|
|
3,982,464
|
|
Total liabilities and shareholders’ equity (deficit)
|
|
$
|
4,707,695
|
|
|
$
|
5,336,622
|
|
See
accompanying notes to the condensed consolidated financial statements.
ZYQC
International Holding Group Limited
Condensed
Consolidated Statements of Operation and Comprehensive Loss
(Unaudited)
(Amounts
in US$)
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net revenue
|
|
|
|
|
|
|
|
|
Trading service facilitation revenue
|
|
$
|
205,276
|
|
|
$
|
68,232
|
|
Brand service revenue
|
|
|
359,060
|
|
|
|
108,065
|
|
Total net revenue
|
|
|
564,336
|
|
|
|
176,297
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Cost of brand service
|
|
|
12,428
|
|
|
|
55,996
|
|
Total cost of revenue
|
|
|
12,428
|
|
|
|
55,996
|
|
Gross profit
|
|
|
551,908
|
|
|
|
120,301
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling and marketing expenses
|
|
|
226,843
|
|
|
|
146,092
|
|
General and administrative expenses
|
|
|
805,426
|
|
|
|
1,129,252
|
|
Total operating expenses
|
|
|
1,032,269
|
|
|
|
1,275,344
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(480,361
|
)
|
|
|
(1,155,043
|
)
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
1,327
|
|
|
|
2,026
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(479,034
|
)
|
|
|
(1,153,017
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(479,034
|
)
|
|
$
|
(1,153,017
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income taxes
|
|
|
(105,797
|
)
|
|
|
29,845
|
|
Comprehensive loss
|
|
$
|
(584,831
|
)
|
|
$
|
(1,123,172
|
)
|
Loss
per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
-
|
|
|
|
-
|
|
See
accompanying notes to the condensed consolidated financial statements.
ZYQC
International Holding Group Limited
Condensed
Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
(Amounts
in US$)
Three
months ended September 30, 2019
|
|
Additional
paid
in
capital
|
|
|
Statutory
reserves
|
|
|
Accumulated
deficits
|
|
|
Accumulated
other
comprehensive
income
(loss)
|
|
|
Total Equity (deficit)
|
|
Balance, June 30, 2019
|
|
$
|
7,244,306
|
|
|
$
|
-
|
|
|
$
|
(3,350,553
|
)
|
|
$
|
88,711
|
|
|
$
|
3,982,464
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(479,034
|
)
|
|
|
-
|
|
|
|
(479,034
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(105,797
|
)
|
|
|
(105,797
|
)
|
Balance, September 30, 2019
|
|
$
|
7,244,306
|
|
|
$
|
-
|
|
|
$
|
(3,829,587
|
)
|
|
$
|
(17,086
|
)
|
|
$
|
3,397,633
|
|
Three
months ended September 30, 2018
|
|
Additional
paid
in
capital
|
|
|
Statutory
reserves
|
|
|
Retained
deficit
|
|
|
Accumulated
other
comprehensive
income
(loss)
|
|
|
Total Equity (deficit)
|
|
Balance, June 30, 2018
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(505,659
|
)
|
|
$
|
6,397
|
|
|
$
|
(499,262
|
)
|
Capital contribution from ordinary shareholders
|
|
|
730,055
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
730,055
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,153,017
|
)
|
|
|
-
|
|
|
|
(1,153,017
|
)
|
Foreign currency translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
29,845
|
|
|
|
29,845
|
|
Balance, September 30, 2018
|
|
$
|
730,055
|
|
|
$
|
-
|
|
|
$
|
(1,658,676
|
)
|
|
$
|
36,242
|
|
|
$
|
(892,379
|
)
|
See
accompanying notes to the condensed consolidated financial statements.
ZYQC
International Holding Group Limited
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(Amounts
in US$)
|
|
Three
Months
Ended
|
|
|
Three
Months
Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(479,034
|
)
|
|
$
|
(1,153,017
|
)
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
14,885
|
|
|
|
4,557
|
|
Provision for allowance for doubtful accounts
|
|
|
2,165
|
|
|
|
18,421
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
5,896
|
|
|
|
(54,069
|
)
|
Other receivables
|
|
|
79,267
|
|
|
|
(502,970
|
)
|
Prepayments
|
|
|
(486,519
|
)
|
|
|
(295,388
|
)
|
Amount due from related parties
|
|
|
1,666
|
|
|
|
-
|
|
Inventories
|
|
|
12,596
|
|
|
|
-
|
|
Advanced from customers
|
|
|
(457,912
|
)
|
|
|
791,900
|
|
Amount due to a related party
|
|
|
143,118
|
|
|
|
-
|
|
Other taxes payable
|
|
|
(21,674
|
)
|
|
|
(3,495
|
)
|
Accrued expenses and other current liabilities
|
|
|
330,244
|
|
|
|
1,057,811
|
|
Net cash used in operating activities
|
|
|
(855,302
|
)
|
|
|
(134,669
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
-
|
|
|
|
(85,720
|
)
|
Loans to a related party
|
|
|
-
|
|
|
|
(57,557
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(143,277
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Capital contribution from ordinary shareholders
|
|
|
-
|
|
|
|
730,055
|
|
Repayment of loan to related parties
|
|
|
-
|
|
|
|
(75,196
|
)
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
654,859
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash
and cash equivalents
|
|
|
(29,413
|
)
|
|
|
622
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
(884,715
|
)
|
|
|
377,536
|
|
Cash and cash equivalents, beginning of period
|
|
|
1,419,254
|
|
|
|
11,602
|
|
Cash and cash equivalents, end of period
|
|
$
|
534,539
|
|
|
$
|
389,138
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See
accompanying notes to the condensed consolidated financial statements.
ZYQC
International Holding Group Limited
Notes
to Condensed Consolidated Financial Statements
(Amounts
in US$ unless otherwise noted)
NOTE
1. DESCRIPTION OF BUSINESS AND ORGANIZATION
ZYQC
International Holding Group Limited (“ZYQC International”), was incorporated on April 4, 2019 in Seychelles.
The
Company’s wholly owned subsidiary, Zhongyuan Chuang Trading Co., Ltd. (“Zhongyuan Chuang”) was incorporated
in the Hong Kong. On June 21, 2019, ZYQC International became the parent holding company of a group of companies comprised of
Zhongyuan Chuang, which is the parent company of Shandong Zhongyuan Future Automotive Techonology Co., Ltd., a wholly foreign-owned
enterprise (“WFOE”) established in the PRC (“Shandong Zhongyuan Future”, “WFOE”).
Zhongyuan
Automobile Trading Co., Ltd. (“Zhongyuan Automobile”), was incorporated on April 17, 2018 registered in Shenzhen City,
Guangdong province, under the laws of the PRC. The Company was established by Shandong Zhongyuan Future.
The
Company engaged in vehicle related services in Mainland China. The Company provides facilitation service among the vehicle companies
and the end customers. Also, the Company provide brand service to enterprise customers by using its brand in vehicle market.
NOTE
2. GOING CONCERN
As
of September 30, 2019, the Company had $534,539 in cash and cash equivalents. The Company has net loss and negative operating
cash flow for the three months ended September 30, 2019. These factors raise substantial doubt about the Company's ability to
continue as a going concern. The Company’s principal sources of liquidity have been support from shareholders and related
parties. The Company’s operating results for future periods are subject to numerous uncertainties and it is uncertain if
the Company will be able to maintain profitability and continue growth for the foreseeable future. If management is not able to
increase revenue and/or manage operating expenses in line with revenue forecasts, the company may not be able to maintain profitability.
The
Company will focus on improving operation efficiency and cost reduction, developing new business and enhancing marketing function.
Actions include developing more customers, as well as cost reduction.
The
Company believes that available cash and cash equivalents, the cash provided by operating activities, together with actions as
developing more customers and create synergy of the Company’s resources, should enable the Company to meet presently anticipated
cash needs for at least the next 12 months after the date that the financial statements are issued and the Company has prepared
the consolidated financial statements on a going concern basis. If the Company encounters unforeseen circumstances that place
constraints on its capital resources, management will be required to take various measures to conserve liquidity, which could
include, but not necessarily be limited to, obtaining financial support from related parties and controlling overhead expenses.
Management cannot provide any assurance that the Company will raise additional capital if needed.
NOTE
3. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) and have been consistently applied.
|
b.
|
Principles
of consolidation
|
The
consolidated financial statements include the accounts of all the subsidiaries of the Company. All transactions and balances between
the Company and its subsidiaries have been eliminated upon consolidation.
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management makes these
estimates using the best information available at the time the estimates are made; however actual results could differ from those
estimates. Significant items subject to such estimates and assumptions include allowance of doubtful accounts and the estimated
useful lives of long-lived assets.
|
d.
|
Cash
and cash equivalents
|
Cash
and cash equivalents consist of cash on hand, cash in bank with no restrictions, as well as highly liquid investments which are
unrestricted as to withdrawal or use, and which have remaining maturities of three months or less when initially purchased.
Accounts
receivables are stated at the amount the Company expect to collect. An allowance for doubtful accounts is recorded based on
a combination of historical experience and information on customer accounts. Account balances are written off against the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company
have historically experienced little, if any, uncollectible receivables to date.
The
Company values its inventories at the lower of cost or net realizable value.
Inventories
consist of mainly uniform and navigation GPS.
Where
there is evidence that the utility of inventories, in their disposal in the ordinary course of business, will be less than cost,
whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the inventories are written down
to net realizable value. Any idle facility costs or excessive spoilage are recorded as current period charges.
The
Company had no impairment charges for the three months ended September 30, 2019 and 2018.
|
g.
|
Property,
plant and equipment, net
|
Zhongyuan
Automobile’s property and equipment are recorded at cost less accumulated depreciation with no residual value.
Zhongyuan
Automobile’s property and equipment are recorded at cost less accumulated depreciation with 5% residual value. Depreciation
for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:
Furniture
|
|
3-5
years
|
Office
equipment and others
|
|
3-5
years
|
Motor
vehicles
|
|
4 years
|
When
property and equipment are retired or otherwise disposed of, resulting gain or loss is included in net income or loss in the year
of disposition for the difference between the net book value and proceeds received thereon. Maintenance and repairs which do not
improve or extend the expected useful lives of the assets are charged to expenses as incurred.
The
Company adopted ASC Topic 606, “Revenue from Contracts with Customers”, applying the modified retrospective method.
In
accordance with ASC Topic 606, revenues are recognized when control of the promised goods or services is transferred to the Company’s
customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
In determining when and how much revenue is recognized from contracts with customers, the Company performs the following five-step
analysis: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine
the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue
when (or as) the entity satisfies a performance obligation.
The
Company did not control the specified goods before that is transferred to the customers and the Company is an agent. The trading
service facilitation revenue should be recognized on a net basis.
The
Company does not believe that significant management judgements are involved in revenue recognition, but the amount and timing
of the Company’s revenues could be different for any period if management made different judgments or utilized different
estimates. Generally, the Company recognizes revenue under ASC Topic 606 for its performance obligation.
The
trading service facilitation revenue are derived principally from providing facilitation service to customers, the Company recognizes
revenue upon the end customers obtained the vehicle certificates, when the Company fulfill the obligation. The Company earned
facilitation fee from helping end customers to obtain the vehicle certificates. The promise of providing this service is distinct
and is defined as a performance obligation. Customers consent the fulfillment of this obligation once the end customers obtained
the vehicle certificates. In addition, the Company does not provide other maintenance services. The contracts have not created
an implicit promise to provide other goods or services to its customers. The performance obligation under this type of business
is to provide specific facilitation service to the customers, a single distinct performance obligation.
For
the brand services, customers pay to the Company and has the right to use the patent, brand, logo for one year. Thus, the only
performance obligation under the contract is brand name provide to the customers. The brand service revenue is recognized ratably
over the period the brand is provided and, as such, the Company considers the services to have been delivered (“over time”).
|
i.
|
Advertising,
Sales and Marketing Costs
|
Advertising,
sales and marketing costs consist primarily of costs for the promotion of corporate image and service marketing. The Company expensed
all marketing and advertising costs as incurred.
The
provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach,
the provision for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the
change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported
amounts of assets and liabilities are recovered or paid, and result from differences between the financial and tax bases of the
Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.
Valuation
allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
In evaluating the need for a valuation allowance, management considers all potential sources of taxable income, including income
available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from
tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a
history of profitable operations, projections of future profitability within the carryforward period, including from tax planning
strategies, and the Company’s experience with similar operations. Existing favorable contracts and the ability to sell products
into established markets are additional positive evidence. Negative evidence includes items such as cumulative losses, projections
of future losses, or carryforward periods that are not long enough to allow for the utilization of a deferred tax asset based
on existing projections of income. Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes
in facts and circumstances, resulting in a future charge to establish a valuation allowance.
Tax
benefits related to uncertain tax positions taken or expected to be taken on a tax return are recorded when such benefits meet
a more likely than not threshold. Otherwise, these tax benefits are recorded when a tax position has been effectively settled,
which means that the statute of limitation has expired or the appropriate taxing authority has completed their examination even
though the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part
of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable
under relevant tax law until such time that the related tax benefits are recognized.
|
k.
|
Value
added taxes (“VAT”)
|
For
the three months ended September 30, 2019 and 2018, the Company’s revenues are subject to VAT rates of 3%. From September
2019, the Company’s revenue are subject to VAT rates of 6%. The Company is also subject to surcharges, which includes urban
maintenance and construction taxes and additional education fees on VAT payable in accordance with PRC law. The surcharges are
at the rate of 12% of the VAT payable, depending on which tax jurisdiction the Company’s PRC operating entities operate
in.
A
party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its
management, members of the immediate families of principal owners of the Company and its management and 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. A party which
can significantly influence the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
m.
|
Foreign
currency transactions and translations
|
An
entity’s functional currency is the currency of the primary economic environment in which it operates, normally that is
the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential
to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing
and inter-company transactions and arrangements. The functional currency of the Company is the Renminbi (“RMB’), and
PRC is the primary economic environment in which the Company operates. The reporting currency of these consolidated financial
statements is the United States dollar (“US Dollars” or “$”).
For
financial reporting purposes, the financial statements of the Company, which are prepared using the RMB, are translated into the
Company’s reporting currency, the United States Dollar. Assets and liabilities are translated using the exchange rate at
each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period,
and shareholders’ equity is translated at historical exchange rates. Adjustments resulting from the translation are
recorded as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity.
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 transactions. The resulting exchange differences are included in the determination of net loss
of the consolidated financial statements for the respective periods.
The
exchange rates used for foreign currency translation were as follows (US Dollars $1 = RMB):
|
|
Period End
|
|
|
Average
|
|
09/30/2019
|
|
|
7.0729
|
|
|
|
6.9872
|
|
06/30/2019
|
|
|
6.8747
|
|
|
|
6.7905
|
|
06/30/2018
|
|
|
6.6166
|
|
|
|
6.5329
|
|
No
representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
Comprehensive
income is defined as the change in equity of the Company during a period from transactions and other events and circumstances
excluding those resulting from investments by and distributions to shareholders. Accumulated other comprehensive income (loss),
as presented on the accompanying consolidated balance sheets, only consists of cumulative foreign currency translation adjustment.
|
o.
|
Fair
Value Measurements
|
The
Company’s financial instruments are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels of the fair value hierarchy are described below:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
|
|
●
|
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived
valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market
data.
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
There
were no transfers between level 1, level 2 or level 3 measurements for the three months ended September 30, 2019 and 2018.
As
of September 30, 2019 and June 30, 2019, none of the Company’s nonfinancial assets or liabilities was measured at fair value
on a nonrecurring basis.
The
carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, accounts receivables,
other receivables, prepayment, accrued expenses and other liabilities, are a reasonable estimate of fair value because of the
short period of time between the origination of such instruments and their expected realization and if applicable, their stated
interest rate approximates current rates available.
|
p.
|
Earnings
(loss) per share
|
Earnings
(loss) per share are calculated in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per
share is computed by dividing income (loss) attributable to common stockholders by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common stock. Common shares issuable upon the conversion
of the convertible preferred shares are included in the computation of diluted earnings per share on an “if-converted”
basis when the impact is dilutive. The dilutive effect of outstanding common stock warrants and options are reflected in the diluted
earnings per share by application of the treasury stock method when the impact is dilutive.
|
q.
|
Recently
issued accounting standards
|
In
February 25, 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (ASU) 2016-02,
Leases (Topic 842). It requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee
should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use
asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee
is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities.
In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented
using a modified retrospective approach. Public business entities should apply the amendments in ASU 2016-02 for fiscal years
beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar
year entity). Early application is permitted for all public business entities and all nonpublic business entities upon issuance.
The Company (as an EGC) that is taking advantage of the extended transition period offered to private entities would apply this
for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adopting ASU 2016-02 on
its consolidated financial statements.
In
July 2018, the FSAB issued ASU 2018-10 ASC Topic 842: “Codification Improvements to Leases” The amendments are to
address stakeholders’ questions about how to apply certain aspects of the new guidance in Accounting Standards Codification
(ASC) 842, Leases. The clarifications address the rate implicit in the lease, impairment of the net investment in the lease, lessee
reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on
an index or rate and certain transition adjustments. The amendments in ASC Topic 842 are effective for EGC for fiscal years beginning
after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. While early application is
permitted, including adoption in an interim period, the Company has not elected to early adopt. The Company is currently evaluating
the impact of this accounting standard update on its consolidated financial statements.
In
July 2018, the FASB issued ASU 2018-11, Leases (Topic 842). This update provides entities with an additional (and optional) transition
method to adopt the new leases standard. Under this method, an entity initially applies the new leases standard at the adoption
date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently,
the prior comparative period’s financials will remain the same as those previously presented. Entities that elect this optional
transition method must provide the disclosures that were previously required. The Company is evaluating the effect this new guidance
will have on our consolidated financial statements and related disclosures.
In
March 2019, the FASB issued ASU 2019-01: “Leases (Topic 842)-Codification Improvements”. The amendments in this ASU
(1) reinstate the exception in Topic 842 for lessors that are not manufacturers or dealers, specifically, those lessors will use
their cost, reflecting any volume or trade discounts that may apply, as the fair value of the underlying asset. However, if significant
time lapses between the acquisition of the underlying asset and lease commencement, those lessors will be required to apply the
definition of fair value (exit price) in Topic 820; (2) address the concerns of lessors within the scope of Topic 942 about where
“principal payments received under leases” should be presented, specifically, lessors that are depository and lending
institutions within the scope of Topic 942 will present all “principal payments received under leases” within investing
activities; and (3) clarify the Board’s original intent by explicitly providing an exception to the paragraph 250-10-50-3
interim disclosure requirements in the Topic 842 transition disclosure requirements. The effective date of the amendments in this
ASU is for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years for any of the following:
1. A public business entity; 2. A not-for-profit entity that has issued, or is a conduit bond obligor for, securities that are
traded, listed, or quoted on an exchange or an over-the-counter market; and 3. An employee benefit plan that files financial statements
with the U.S. Securities and Exchange Commission (SEC). For all other entities, the effective date is for fiscal years beginning
after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted.
An entity should early apply the amendments as of the date that it first applied Topic 842, using the same transition methodology
in accordance with paragraph 842-10-65-1(c). The Company is evaluating the effect this new guidance will have on its consolidated
financial statements and related disclosures.
No
other recently issued accounting standards are expected to have a material effect on the financial position, results of operations
or cash flows of the Company.
NOTE
4. SIGNIFICANT RISKS
Foreign
currency risk
The
Company’s operation is located in the PRC. Accordingly, the Company’s business, financial condition, and results of
operations may be influenced by the political, economic, and legal environments in the PRC, as well as by the general state of
the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically
associated with companies in North America and Western Europe. These include risks associated with, among others, the political,
economic and legal environment, and foreign currency exchange. The Company’s results may be adversely affected by changes
in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with
respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of
taxation, among other things.
Credit
risk
Credit
risk is one of the most significant risks for the Company’s business. Credit risk exposures arise principally in lending
activities which is an off-balance sheet financial instrument.
Financial
instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents
and accounts receivables. The Company places its cash and cash equivalents with financial institutions, which management believes
are of high-credit ratings and quality.
The
Company conducts credit evaluations of customers and generally does not require collateral or other security from its customers.
Concentration
risk
For
the three months ended September 30, 2019 and 2018, all of the Company's assets were located in the PRC and all of the Company's
revenues were derived from the PRC.
For
the three months ended September 30, 2019 and 2018, no customer accounted for over 10% of the Company’s revenue.
NOTE
5. ACCOUNTS RECEIVABLE, NET
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
1,979
|
|
|
$
|
8,030
|
|
Allowance
|
|
|
(59
|
)
|
|
|
(241
|
)
|
Accounts receivable, net
|
|
$
|
1,920
|
|
|
$
|
7,789
|
|
All
of the accounts receivable are non-interest bearing. Based on the assessment of the collectability of the accounts receivable
as of September 30, 2019 and June 30, 2019, the Company provided $59 and $241 allowance, respectively.
NOTE 6.
OTHER RECEIVABLES
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Staff advance
|
|
$
|
4,525
|
|
|
$
|
10,183
|
|
Deposits and others
|
|
|
87,394
|
|
|
|
81,472
|
|
Advanced for cooperation partners
|
|
|
1,642,487
|
|
|
|
1,773,319
|
|
Allowance
|
|
|
(100,062
|
)
|
|
|
(105,364
|
)
|
Other receivables, net
|
|
$
|
1,634,344
|
|
|
$
|
1,759,610
|
|
Deposits
and others mainly consisted of deposits made to service providers.
Advanced
for cooperation partners represented advanced payment for the third-party cooperative operation centers who responsible for introducing
end customers to the Company.
The
Company accrued allowance for the balance of other receivables according to the customer specific facts and economic conditions.
Based on the assessment of the collectability of the deposit and others as of September 30, 2019 and June 30, 2019, the Company
provided $100,062 and $105,364 allowance, respectively.
NOTE
7. PREPAYMENTS
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Advances to suppliers
|
|
$
|
545,232
|
|
|
$
|
100,798
|
|
Prepaid service fees
|
|
|
59,301
|
|
|
|
31,478
|
|
Prepayment
|
|
$
|
604,533
|
|
|
$
|
132,276
|
|
As
of September 30, 2019, advances to supplier manly consisted of advanced payments to a supplier for vehicle purchase.
NOTE
8. PROPERTY, PLANT AND EQUIPMENT, NET
Property,
plant and equipment consists of the following:
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Furniture
|
|
$
|
2,987
|
|
|
$
|
3,074
|
|
Office Equipment and others
|
|
|
61,475
|
|
|
|
63,248
|
|
Motor vehicles
|
|
|
169,775
|
|
|
|
174,669
|
|
Total
|
|
|
234,237
|
|
|
|
240,991
|
|
Less: accumulated depreciation
|
|
|
(52,933
|
)
|
|
|
(39,331
|
)
|
Property, plant and equipment, net
|
|
$
|
181,304
|
|
|
$
|
201,660
|
|
Depreciation
expense for the three months ended September 30, 2019 and 2018 was $14,885 and $4,557, respectively.
NOTE
9. LOANS TO A THIRD PARTY
Loans
to a third party represented operating loans to a third-party cooperation partner, who introduce customers for the Company. One
of the loans was from October 2018 to October 2020 with an annual interest rate of 12%. The other loan was from January 2019 to
January 2021 with an annual interest rate of 12%. The Company has waived the interests from the third party for early collection
of the loans. Amount of $238,040 has been subsequently collected by the Company.
NOTE
10. ADVANCED FROM CUSTOMERS
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Advanced payments from customers
|
|
$
|
119,837
|
|
|
$
|
278,007
|
|
Deferred brand service fees
|
|
|
542,550
|
|
|
|
868,886
|
|
Advanced payments from customers
|
|
$
|
662,387
|
|
|
$
|
1,146,893
|
|
Advanced
payments from customers were payments received from customers for automobile trading.
Deferred
brand service fees represented payment received for brand service.
NOTE
11. ACCURED EXPENSE AND OTHER CURRENT LIABILITIES
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Staff cost related payable
|
|
$
|
34,078
|
|
|
$
|
43,682
|
|
Other taxes payables
|
|
|
6,032
|
|
|
|
28,235
|
|
Loan from a third party
|
|
|
-
|
|
|
|
-
|
|
Consulting fee payable
|
|
|
400,753
|
|
|
|
91,377
|
|
Others
|
|
$
|
65,427
|
|
|
$
|
43,970
|
|
Accrued expenses and other current liabilities
|
|
|
506,290
|
|
|
|
207,264
|
|
Staff
cost related payables are mainly consisted of employee salaries accrued.
Consulting
fee payable represented amount due to a consulting company for the listing services.
NOTE
12. RELATED PARTY BALANCE AND TRANSACTIONS
a.
Balances
Amount
due from related parties:
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Zhou Aiping (i)
|
|
$
|
149,114
|
|
|
$
|
155,106
|
|
Amount due from related parties
|
|
$
|
149,114
|
|
|
$
|
155,106
|
|
Amount
due to related parties:
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
A Company controlled by the general manager
|
|
$
|
141,385
|
|
|
$
|
-
|
|
Amount due to related parties
|
|
$
|
141,385
|
|
|
$
|
-
|
|
(i)
Zhou Aiping is the supervisor of Zhongyuan Automobile and one of the shareholder of the Company.
b.
Transactions
|
|
Three
months ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Payment on behalf of the Company by a related party (1)
|
|
$
|
143,118
|
|
|
$
|
-
|
|
Repayment of loans to related parties (2)
|
|
$
|
-
|
|
|
$
|
75,196
|
|
Loan to a related party (3)
|
|
$
|
-
|
|
|
$
|
57,557
|
|
1.
Payment on behalf of the Company by a related party
During
three months ended September 30, 2019 and 2018, payment on behalf of the Company by a related party in the amount of $143,118
and $nil, respectively.
2.
Repayment of loans to related parties
During
three months ended September 30, 2019 and 2018, repayment of loans to related parties in the amount of $nil and $75,196, respectively.
3.
Loan to a related party
During
three months ended September 30, 2019 and 2018, loan to Zhou Aiping in the amount of $nil and $57,557, respectively.
NOTE
13. TAXATION
Income
Tax
The
Company’s operating entity incorporated in the PRC, is governed by the income tax law of the PRC and is subject to PRC enterprise
income tax (“EIT”). The EIT rate of PRC is 25%, which applied to both domestic and foreign invested enterprises. During
the three months ended September 30, 2019 and 2018, the Company have incurred a net operating loss of $479,034 and $1,153,017,
respectively. As a result, the Company did not incur any EIT during the three months ended September 30, 2019 and 2018.
Deferred
Tax
Realization
of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and
adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards.
The Company evaluates the potential realization of deferred tax assets on an entity-by-entity basis. As of September 30, 2019
and June 30, 2019, valuation allowances were provided against deferred tax assets in entities where it was determined it was more
likely than not that the benefits of the deferred tax assets will not be realized. The Company had deferred tax assets as of September
30, 2019 and June 30, 2019, which can be carried forward to offset future taxable income. The management determines it is more
likely than not that these deferred tax assets could not be recognized, so full allowances were provided as of September 30, 2019
and June 30, 2019. The Company maintains a full valuation allowance against its deferred tax assets, since due to uncertainties
surrounding future utilization, the Company estimates there will not be sufficient future earnings to utilize its deferred tax
assets.
The
Company’s deferred tax assets were as follows:
|
|
September 30,
|
|
|
|
|
|
|
2019
(Unaudited)
|
|
|
June 30,
2019
|
|
Tax effect of net operating losses carried forward
|
|
$
|
917,901
|
|
|
$
|
822,645
|
|
Valuation allowance
|
|
|
(917,901
|
)
|
|
|
(822,645
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
There
were no uncertain tax positions as of September 30, 2019 and June 30, 2019 and the Company does not believe that this will change
over the next twelve months.
NOTE
14. COMMITMENT
Operating
lease
The
Company leases an office under a non-cancelable operating lease agreement. The rental expense for the three months ended September
30, 2019 and 2018 was $103,525 and $106,444, respectively. All leases are on a fixed repayment basis. None of the leases include
contingent rentals.
Minimum
future commitments under these agreements as of September 30, 2019 are as follows:
|
|
Lease Commitment
|
|
Nine months ending June 30,
|
|
|
|
2020
|
|
$
|
306,813
|
|
Year ending June 30,
|
|
|
|
|
2021
|
|
$
|
340,904
|
|
Total
|
|
$
|
647,717
|
|
The
Company has no pending litigation as of September 30, 2019.
NOTE
15. SUBSEQUENT EVENTS
The
Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated
financial statements were issued. The Company has determined that except the event below, there are no events that would have
required adjustment or disclosure in the consolidated financial statements.
On
October 08, 2019, ZYQC Group Holding Limited entered into a Share Exchange Agreement (“Share Exchange”) with ZYQC
International Holding Group Limited and Mr. Jun Chen. As the result of the Share Exchange, ZYQC Group Holding Limited owned 300,000,000
common shares of ZYQC International Holding Group Limited, representing 100% of its issued and outstanding shares.
ZYQC Group Holding Limited
Balance Sheets
(Unaudited)
(Amounts in US$)
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Total
current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Total
non-current assets
|
|
|
-
|
|
|
|
-
|
|
Total
assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
10,666
|
|
|
|
5,333
|
|
Total
current liabilities
|
|
|
10,666
|
|
|
|
5,333
|
|
Total liabilities
|
|
$
|
10,666
|
|
|
$
|
5,333
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Deficit
|
|
|
|
|
|
|
|
|
Common stock (US$0.0001 par value;
authorized 100,000,000 shares; issued and outstanding 47,820,000 shares at April 30, 2015 and 2014, respectively)
|
|
|
4,782
|
|
|
|
4,782
|
|
Additional paid in capital
|
|
|
394,218
|
|
|
|
394,218
|
|
Accumulated deficits
|
|
|
(409,666
|
)
|
|
|
(404,333
|
)
|
Total
Shareholders’ Deficit
|
|
|
(10,666
|
)
|
|
|
(5,333
|
)
|
Total
liabilities and shareholders’ deficit
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Operation and Comprehensive
Loss
(Unaudited)
(Amounts in US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2015
|
|
|
2014
|
|
Net revenue
|
|
|
|
|
|
|
Total
net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Total cost of
revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Total
operating expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
|
|
|
|
|
|
|
|
|
Loss
from Operations
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Other
expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Income
tax expense
|
|
|
-
|
|
|
|
-
|
|
Net
loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
Foreign
currency translation gain, net of nil income taxes
|
|
|
-
|
|
|
|
-
|
|
Comprehensive
loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
47,820,000
|
|
|
|
47,820,000
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Changes in Shareholders’
Equity
(Unaudited)
(Amounts in US$)
|
|
Common
Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number
of shares
|
|
|
Amount
|
|
|
paid in
capital
|
|
|
Accumulated
deficits
|
|
|
Total
Equity
|
|
Balance, May 1, 2014
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(404,333
|
)
|
|
$
|
(5,333
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, April 30, 2015
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(409,666
|
)
|
|
$
|
(10,666
|
)
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Cash Flows
(Unaudited)
(Amounts in US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2015
|
|
|
2014
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Adjustments
to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accrued
expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Net cash used
in operating activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activities
|
|
|
|
|
|
|
|
|
Net
cash provided by investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
Cash
and cash equivalents, beginning of year
|
|
|
-
|
|
|
|
-
|
|
Cash
and cash equivalents, end of year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Notes to Unaudited Financial Statements
(Amounts in US$ unless otherwise
noted)
NOTE 1. DESCRIPTION OF BUSINESS
AND ORGANIZATION
ZYQC Group Holdings Limited (“the
Company”) was incorporated under the name Titan Gold Corp. on September 16, 2009 under the laws of the State of Nevada.
On February 25, 2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp. The company ceased
operations in 2014.
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.
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.
Management anticipates that the Company
will be dependent, on borrowings from related party to fund operating expenses. In light of management’s efforts, there
are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going
concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3. SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and have been consistently applied.
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available
at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such
estimates and assumptions include allowance of doubtful accounts and the estimated useful lives of long-lived assets.
The provision for income taxes is determined
using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year.
Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for
a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods,
future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as
well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations,
projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s
experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are
additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward
periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income.
Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances,
resulting in a future charge to establish a valuation allowance.
Tax benefits related to uncertain tax
positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold.
Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation
has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains
open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are
accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that
the related tax benefits are recognized.
A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and 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. A party which can significantly influence
the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
e.
|
Fair Value Measurements
|
The Company’s financial instruments
are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels
of the fair value hierarchy are described below:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
|
|
●
|
Level 2 applies to assets or liabilities for which there
are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs
are observable or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level 3 inputs to the valuation methodology are unobservable
and significant to the fair value.
|
There were no transfers between level
1, level 2 or level 3 measurements for the years ended April 30, 2015 and 2014.
As of April 30, 2015 and 2014, none
of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s
financial assets and liabilities, including cash and cash equivalents, accounts receivables, other receivables, prepayment, accrued
expenses and other liabilities, are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
|
f.
|
Share-based Compensation
|
The Company accounts for share-based
compensation to employees in accordance with ASC Topic 718 “Compensation-Stock Compensation” which requires that share-based
payment transactions be measured based on the grant-date fair value of the equity instrument issued, net of an estimated forfeiture
rate, if applicable, and therefore only recognizes compensation expenses for those equity instruments expected to vest over the
requisite service period, or vesting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods
if actual forfeitures differ from those estimates.
|
g.
|
Earnings (loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
NOTE 4. COMMON STOCK
The Company had 100,000,000 shares
authorized with par value of $0.0001, and 47,820,000 shares issued and outstanding.
NOTE 5. RELATED PARTIES
The Company had no material related party transactions.
NOTE 6. INCOME TAXES
The Company did not provide any current or deferred U.S.
federal income tax provision or benefit for any of the periods presented because it has experienced operating losses. When it
is more likely than not that a tax asset cannot be realized through future income, the Company must take a full valuation allowance
for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net
operating loss carryforwards, because management has determined that it is more likely than not that the Company will not earn
income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position that, if challenged,
would have a material effect on the financial statements for the year ended April 30, 2015, or during the prior three years applicable
under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position and therefore did
not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns have been appropriately
filed by the Company.
Income tax provision at the federal
statutory rate
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
-
|
|
The Company’s deferred tax assets
were as follows:
|
|
April
30,
2015
|
|
|
April
30,
2014
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses
carried forward
|
|
$
|
86,030
|
|
|
$
|
84,910
|
|
Valuation allowance
|
|
|
(86,030
|
)
|
|
|
(84,910
|
)
|
Deferred tax assets,
net
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory
rate is as follows:
|
|
Years
ended
April
30,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Tax at statutory rate (21%)
|
|
$
|
1,120
|
|
|
$
|
1,120
|
|
Increase in valuation allowance
|
|
|
(1,120
|
)
|
|
|
(1,120
|
)
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not pay any income taxes during the year
ended April 30, 2015 or 2014.
NOTE 7. SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The
Company has determined that except the events below, there are no events that would have required adjustment or disclosure in
the consolidated financial statements.
On December 18, 2018, the
Eight Judicial District Court of Nevada appointed John Ballard as custodian for Tundra Gold Corp., proper notice having been given
to the officers and directors of Tundra Gold Corp. There was no opposition.
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation.
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen with the consideration of $500.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC Group Holding Limited
Balance Sheets
(Unaudited)
(Amounts in US$)
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Total
current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Total
non-current assets
|
|
|
-
|
|
|
|
-
|
|
Total
assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
15,999
|
|
|
|
10,666
|
|
Total
current liabilities
|
|
|
15,999
|
|
|
|
10,666
|
|
Total liabilities
|
|
$
|
15,999
|
|
|
$
|
10,666
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Deficit
|
|
|
|
|
|
|
|
|
Common stock (US$0.0001 par value;
authorized 100,000,000 shares; issued and outstanding 47,820,000 shares at April 30, 2016 and 2015, respectively)
|
|
|
4,782
|
|
|
|
4,782
|
|
Additional paid in capital
|
|
|
394,218
|
|
|
|
394,218
|
|
Accumulated deficits
|
|
|
(414,999
|
)
|
|
|
(409,666
|
)
|
Total
Shareholders’ Deficit
|
|
|
(15,999
|
)
|
|
|
(10,666
|
)
|
Total
liabilities and shareholders’ deficit
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Operation and Comprehensive
Loss
(Unaudited)
(Amounts in US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2016
|
|
|
2015
|
|
Net revenue
|
|
|
|
|
|
|
Total net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Total operating expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income
taxes
|
|
|
-
|
|
|
|
-
|
|
Comprehensive loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
47,820,000
|
|
|
|
47,820,000
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Changes in Shareholders’
Equity
(Unaudited)
(Amounts in US$)
|
|
Common
Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number
of shares
|
|
|
Amount
|
|
|
paid in
capital
|
|
|
Accumulated
deficits
|
|
|
Total
Equity
|
|
Balance, May 1, 2014
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(404,333
|
)
|
|
$
|
(5,333
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, April 30, 2015
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(409,666
|
)
|
|
$
|
(10,666
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, April 30, 2016
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(414,999
|
)
|
|
$
|
(15,999
|
)
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Cash Flows
(Unaudited)
(Amounts in US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
2016
|
|
|
2015
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Adjustments to reconcile net income to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Net cash used in operating activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by investing
activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, beginning
of year
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, end
of year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Notes to Unaudited Financial Statements
(Amounts in US$ unless otherwise
noted)
NOTE 1. DESCRIPTION OF BUSINESS
AND ORGANIZATION
ZYQC Group Holdings Limited (“the Company”)
was incorporated under the name Titan Gold Corp. on September 16, 2009 under the laws of the State of Nevada. On February 25,
2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp. The company ceased operations in
2014.
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.
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.
Management anticipates that the Company
will be dependent, on borrowings from related party to fund operating expenses. In light of management’s efforts, there
are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going
concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3. SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and have been consistently applied.
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available
at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such
estimates and assumptions include allowance of doubtful accounts and the estimated useful lives of long-lived assets.
The provision for income taxes is determined
using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year.
Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for
a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods,
future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as
well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations,
projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s
experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are
additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward
periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income.
Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances,
resulting in a future charge to establish a valuation allowance.
Tax benefits related to uncertain tax
positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold.
Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation
has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains
open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are
accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that
the related tax benefits are recognized.
A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and 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. A party which can significantly influence
the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
e.
|
Fair Value Measurements
|
The Company’s financial instruments
are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels
of the fair value hierarchy are described below:
|
●
|
Level 1 inputs to the valuation methodology are quoted prices
(unadjusted) for identical assets or liabilities in active markets.
|
|
●
|
Level 2 applies to assets or liabilities for which there
are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs
are observable or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level 3 inputs to the valuation methodology are unobservable
and significant to the fair value.
|
There were no transfers between level
1, level 2 or level 3 measurements for the years ended April 30, 2016 and 2015.
As of April 30, 2016 and 2015, none
of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s
financial assets and liabilities, including cash and cash equivalents, accounts receivables, other receivables, prepayment, accrued
expenses and other liabilities, are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
|
f.
|
Share-based Compensation
|
The Company accounts for share-based
compensation to employees in accordance with ASC Topic 718 “Compensation-Stock Compensation” which requires that share-based
payment transactions be measured based on the grant-date fair value of the equity instrument issued, net of an estimated forfeiture
rate, if applicable, and therefore only recognizes compensation expenses for those equity instruments expected to vest over the
requisite service period, or vesting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods
if actual forfeitures differ from those estimates.
|
g.
|
Earnings (loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
NOTE 4. COMMON STOCK
The Company had 100,000,000 shares
authorized with par value of $0.0001, and 47,820,000 shares issued and outstanding.
NOTE 5. RELATED PARTIES
The Company had no material related party transactions.
NOTE 6. INCOME TAXES
The Company did not provide any current or deferred U.S.
federal income tax provision or benefit for any of the periods presented because it has experienced operating losses. When it
is more likely than not that a tax asset cannot be realized through future income, the Company must take a full valuation allowance
for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net
operating loss carryforwards, because management has determined that it is more likely than not that the Company will not earn
income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position that, if challenged,
would have a material effect on the financial statements for the year ended April 30, 2016, or during the prior three years applicable
under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position and therefore did
not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns have been appropriately
filed by the Company.
Income tax provision at
the federal statutory rate
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
-
|
|
The Company’s deferred tax assets
were as follows:
|
|
April
30,
2016
|
|
|
April
30,
2015
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses carried forward
|
|
$
|
87,150
|
|
|
$
|
86,030
|
|
Valuation allowance
|
|
|
(87,150
|
)
|
|
|
(86,030
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory
rate is as follows:
|
|
Years
ended
April
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Tax at statutory rate (21%)
|
|
$
|
1,120
|
|
|
$
|
1,120
|
|
Increase in valuation allowance
|
|
|
(1,120
|
)
|
|
|
(1,120
|
)
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not pay any income taxes during the year
ended April 30, 2016 or 2015.
NOTE 7. SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The
Company has determined that except the events below, there are no events that would have required adjustment or disclosure in
the consolidated financial statements.
On December 18, 2018, the
Eight Judicial District Court of Nevada appointed John Ballard as custodian for Tundra Gold Corp., proper notice having been given
to the officers and directors of Tundra Gold Corp. There was no opposition.
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation.
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen with the consideration of $500.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC Group
Holding Limited
Balance Sheets
(Unaudited)
(Amounts in
US$)
|
|
June 30,
|
|
|
April 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Total
current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Total
non-current assets
|
|
|
-
|
|
|
|
-
|
|
Total assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
21,332
|
|
|
|
15,999
|
|
Total
current liabilities
|
|
|
21,332
|
|
|
|
15,999
|
|
Total liabilities
|
|
$
|
21,332
|
|
|
$
|
15,999
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock (US$0.0001 par value; authorized
100,000,000 shares; issued and outstanding 47,820,000 shares at June 30, 2017 and April 30, 2016, respectively)
|
|
|
4,782
|
|
|
|
4,782
|
|
Additional paid in capital
|
|
|
394,218
|
|
|
|
394,218
|
|
Accumulated deficits
|
|
|
(420,332
|
)
|
|
|
(414,999
|
)
|
Total
Shareholders’ Deficit
|
|
|
(21,332
|
)
|
|
|
(15,999
|
)
|
Total liabilities
and shareholders’ deficit
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Operation and Comprehensive
Loss
(Unaudited)
(Amounts in US$)
|
|
Fourteen Months Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
April 30,
|
|
|
|
2017
|
|
|
2016
|
|
Net revenue
|
|
|
|
|
|
|
Total net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Total operating expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income taxes
|
|
|
-
|
|
|
|
-
|
|
Comprehensive loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
47,820,000
|
|
|
|
47,820,000
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Changes in Shareholders’
Equity
(Unaudited)
(Amounts in US$)
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number of
shares
|
|
|
Amount
|
|
|
paid
in
capital
|
|
|
Accumulated
deficits
|
|
|
Total
Equity
|
|
Balance, May 1, 2015
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(409,666
|
)
|
|
$
|
(10,666
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, April 30, 2016
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(414,999
|
)
|
|
$
|
(15,999
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, June 30, 2017
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(420,332
|
)
|
|
$
|
(21,332
|
)
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Statements of Cash Flows
(Unaudited)
(Amounts in US$)
|
|
Fourteen Months Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
April 30,
|
|
|
|
2017
|
|
|
2016
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Net cash used in operating activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate fluctuation on cash
and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, beginning of year
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, end of year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group Holding Limited
Notes to Unaudited Financial Statements
(Amounts in US$ unless otherwise
noted)
NOTE 1. DESCRIPTION OF BUSINESS
AND ORGANIZATION
ZYQC Group Holdings Limited (“the Company”)
was incorporated under the name Titan Gold Corp. on September 16, 2009 under the laws of the State of Nevada. On February 25,
2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp. The company ceased operations in
2014.
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.
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.
Management anticipates that the Company
will be dependent, on borrowings from related party to fund operating expenses. In light of management’s efforts, there
are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going
concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3. SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and have been consistently applied.
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available
at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such
estimates and assumptions include allowance of doubtful accounts and the estimated useful lives of long-lived assets.
The provision for income taxes is determined
using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year.
Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for
a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods,
future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as
well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations,
projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s
experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are
additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward
periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income.
Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances,
resulting in a future charge to establish a valuation allowance.
Tax benefits related to uncertain tax
positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold.
Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation
has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains
open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are
accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that
the related tax benefits are recognized.
A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and 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. A party which can significantly influence
the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
e.
|
Fair Value Measurements
|
The Company’s financial instruments
are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels
of the fair value hierarchy are described below:
|
●
|
Level 1 inputs to the valuation methodology are quoted prices
(unadjusted) for identical assets or liabilities in active markets.
|
|
●
|
Level 2 applies to assets or liabilities for which there
are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs
are observable or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level 3 inputs to the valuation methodology are unobservable
and significant to the fair value.
|
There were no transfers between level
1, level 2 or level 3 measurements for the fourteen months ended June 30, 2017 and year ended April 30, 2016.
As of June 30, 2017 and April 30, 2016,
none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s
financial assets and liabilities, including cash and cash equivalents, accounts receivables, other receivables, prepayment, accrued
expenses and other liabilities, are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
|
f.
|
Share-based Compensation
|
The Company accounts for share-based
compensation to employees in accordance with ASC Topic 718 “Compensation-Stock Compensation” which requires that share-based
payment transactions be measured based on the grant-date fair value of the equity instrument issued, net of an estimated forfeiture
rate, if applicable, and therefore only recognizes compensation expenses for those equity instruments expected to vest over the
requisite service period, or vesting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods
if actual forfeitures differ from those estimates.
|
g.
|
Earnings (loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
|
h.
|
Change of ending date of fiscal year
|
The Company decided to change the fiscal year end to June
30, 2017 during the fourteen month ended June 30, 2017.
NOTE 4. COMMON STOCK
The Company had 100,000,000 shares
authorized with par value of $0.0001, and 47,820,000 shares issued and outstanding.
NOTE 5. RELATED PARTIES
The Company had no material related party transactions.
NOTE 6. INCOME TAXES
The Company did not provide any current or deferred U.S.
federal income tax provision or benefit for any of the periods presented because it has experienced operating losses. When it
is more likely than not that a tax asset cannot be realized through future income, the Company must take a full valuation allowance
for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net
operating loss carryforwards, because management has determined that it is more likely than not that the Company will not earn
income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position that, if challenged,
would have a material effect on the financial statements for the fourteen months ended June 30, 2017, or during the prior three
years applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position
and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns
have been appropriately filed by the Company.
Income tax provision at the federal statutory rate
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
-
|
|
The Company’s deferred tax assets
were as follows:
|
|
June
30,
2017
|
|
|
April
30,
2016
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses carried forward
|
|
$
|
88,270
|
|
|
$
|
87,150
|
|
Valuation allowance
|
|
|
(88,270
|
)
|
|
|
(87,150
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory
rate is as follows:
|
|
Fourteen months ended
June 30,
|
|
|
Year ended
April 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Tax at statutory rate (21%)
|
|
$
|
1,120
|
|
|
$
|
1,120
|
|
Increase in valuation allowance
|
|
|
(1,120
|
)
|
|
|
(1,120
|
)
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not pay any income taxes during the fourteen
months ended June 30, 2017 or the year ended April 30, 2016.
NOTE 7. SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The
Company has determined that except the events below, there are no events that would have required adjustment or disclosure in
the consolidated financial statements.
On December 18, 2018, the
Eight Judicial District Court of Nevada appointed John Ballard as custodian for Tundra Gold Corp., proper notice having been given
to the officers and directors of Tundra Gold Corp. There was no opposition.
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen with the consideration of $500.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC Group
Holding Limited
Balance Sheets
(Unaudited)
(Amounts in
US$)
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Total non-current assets
|
|
|
-
|
|
|
|
-
|
|
Total assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
26,665
|
|
|
|
21,332
|
|
Total current liabilities
|
|
|
26,665
|
|
|
|
21,332
|
|
Total liabilities
|
|
$
|
26,665
|
|
|
$
|
21,332
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock (US$0.0001 par value; authorized
100,000,000 shares; issued and outstanding 47,820,000 shares at June 30, 2018 and 2017, respectively)
|
|
|
4,782
|
|
|
|
4,782
|
|
Additional paid in capital
|
|
|
394,218
|
|
|
|
394,218
|
|
Accumulated deficits
|
|
|
(425,665
|
)
|
|
|
(420,332
|
)
|
Total Shareholders’
Deficit
|
|
|
(26,665
|
)
|
|
|
(21,332
|
)
|
Total liabilities and shareholders’ deficit
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Operation and Comprehensive Loss
(Unaudited)
(Amounts in
US$)
|
|
Year Ended
|
|
|
Fourteen Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Net revenue
|
|
|
|
|
|
|
Total net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Total operating expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income taxes
|
|
|
-
|
|
|
|
-
|
|
Comprehensive loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
47,820,000
|
|
|
|
47,820,000
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Changes in Shareholders’ Equity
(Unaudited)
(Amounts in
US$)
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number of
shares
|
|
|
Amount
|
|
|
paid in
capital
|
|
|
Accumulated
deficits
|
|
|
Total
Equity
|
|
Balance, May 1, 2016
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(414,999
|
)
|
|
$
|
(15,999
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, June 30, 2017
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(420,332
|
)
|
|
$
|
(21,332
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, June 30, 2018
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(425,665
|
)
|
|
$
|
(26,665
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Cash Flows
(Unaudited)
(Amounts in
US$)
|
|
Year Ended
|
|
|
Fourteen Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,333
|
)
|
|
$
|
(5,333
|
)
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
5,333
|
|
|
|
5,333
|
|
Net cash used in operating activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, beginning of year
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, end of year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Notes to Unaudited
Financial Statements
(Amounts in
US$ unless otherwise noted)
NOTE 1. DESCRIPTION OF BUSINESS
AND ORGANIZATION
ZYQC Group Holdings Limited (“the
Company”) was incorporated under the name Titan Gold Corp. on September 16, 2009 under the laws of the State of Nevada.
On February 25, 2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp. The company ceased
operations in 2014.
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.
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.
Management anticipates that the Company
will be dependent, on borrowings from related party to fund operating expenses. In light of management’s efforts, there
are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going
concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3. SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and have been consistently applied.
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available
at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such
estimates and assumptions include allowance of doubtful accounts and the estimated useful lives of long-lived assets.
The provision for income taxes is determined
using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year.
Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for
a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods,
future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as
well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations,
projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s
experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are
additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward
periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income.
Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances,
resulting in a future charge to establish a valuation allowance.
Tax benefits related to uncertain tax
positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold.
Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation
has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains
open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are
accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that
the related tax benefits are recognized.
A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and 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. A party which can significantly influence
the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
e.
|
Fair
Value Measurements
|
The Company’s financial instruments
are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels
of the fair value hierarchy are described below:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
|
|
●
|
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices
included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which significant inputs are observable
or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
There were no transfers between level
1, level 2 or level 3 measurements for the year ended June 30, 2018 and 2017.
As of June 30, 2018 and 2017, none
of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s
financial assets and liabilities, including cash and cash equivalents, accounts receivables, other receivables, prepayment, accrued
expenses and other liabilities, are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
|
f.
|
Share-based
Compensation
|
The Company accounts for share-based
compensation to employees in accordance with ASC Topic 718 “Compensation-Stock Compensation” which requires that share-based
payment transactions be measured based on the grant-date fair value of the equity instrument issued, net of an estimated forfeiture
rate, if applicable, and therefore only recognizes compensation expenses for those equity instruments expected to vest over the
requisite service period, or vesting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods
if actual forfeitures differ from those estimates.
|
g.
|
Earnings
(loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
|
h.
|
Change
of ending date of fiscal year
|
The Company decided to change the fiscal
year end to June 30, 2017 during the fourteen month ended June 30, 2017.
NOTE 4. COMMON STOCK
The Company had 100,000,000 shares
authorized with par value of $0.0001, and 47,820,000 shares issued and outstanding.
NOTE 5. RELATED PARTIES
The Company had no material related
party transactions.
NOTE 6. INCOME TAXES
The Company did not provide any current
or deferred U.S. federal income tax provision or benefit for any of the periods presented because it has experienced operating
losses. When it is more likely than not that a tax asset cannot be realized through future income, the Company must take a full
valuation allowance for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset,
consisting of net operating loss carryforwards, because management has determined that it is more likely than not that the Company
will not earn income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position
that, if challenged, would have a material effect on the financial statements for the year ended June 30, 2018, or during the
prior three years applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax
position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All
tax returns have been appropriately filed by the Company.
Income tax provision at the federal statutory rate
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
-
|
|
The Company’s deferred tax assets
were as follows:
|
|
June 30,
2018
|
|
|
June 30,
2017
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses carried forward
|
|
$
|
89,390
|
|
|
$
|
88,270
|
|
Valuation allowance
|
|
|
(89,390
|
)
|
|
|
(88,270
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory
rate is as follows:
|
|
Year ended
June 30,
|
|
|
Fourteen months ended
June 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Tax at statutory rate (21%)
|
|
$
|
1,120
|
|
|
$
|
1,120
|
|
Increase in valuation allowance
|
|
|
(1,120
|
)
|
|
|
(1,120
|
)
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not pay any income taxes during the year
ended June 30, 2018 or the fourteen months ended June 30, 2017.
NOTE 7. SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The
Company has determined that except the events below, there are no events that would have required adjustment or disclosure in
the consolidated financial statements.
On December 18, 2018, the
Eight Judicial District Court of Nevada appointed John Ballard as custodian for Tundra Gold Corp., proper notice having been given
to the officers and directors of Tundra Gold Corp. There was no opposition.
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen with the consideration of $500.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC Group
Holding Limited
Balance Sheets
(Unaudited)
(Amounts in
US$)
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Total current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Total
non-current assets
|
|
|
-
|
|
|
|
-
|
|
Total assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
-
|
|
|
|
26,665
|
|
Amount due to a related party
|
|
|
83,535
|
|
|
|
-
|
|
Total
current liabilities
|
|
|
83,535
|
|
|
|
26,665
|
|
Total liabilities
|
|
$
|
83,535
|
|
|
$
|
26,665
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock (US$0.0001 par value; authorized
100,000,000 shares; issued and outstanding 5,103,100 shares and 47,820,000 shares at June 30, 2019 and 2018, respectively)
|
|
|
510
|
|
|
|
4,782
|
|
Additional paid in capital
|
|
|
446,260
|
|
|
|
394,218
|
|
Accumulated deficit
|
|
|
(530,305
|
)
|
|
|
(425,665
|
)
|
Total
Shareholders’ Deficit
|
|
|
(83,535
|
)
|
|
|
(26,665
|
)
|
Total liabilities and shareholders’ deficit
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Operation and Comprehensive Loss
(Unaudited)
(Amounts in
US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net revenue
|
|
|
|
|
|
|
Total net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
104,640
|
|
|
|
5,333
|
|
Total operating expenses
|
|
|
104,640
|
|
|
|
5,333
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(104,640
|
)
|
|
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(104,640
|
)
|
|
|
(5,333
|
)
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(104,640
|
)
|
|
$
|
(5,333
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income taxes
|
|
|
-
|
|
|
|
-
|
|
Comprehensive loss
|
|
$
|
(104,640
|
)
|
|
$
|
(5,333
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
1,740,708
|
|
|
|
47,820
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Changes in Shareholders’ Equity
(Unaudited)
(Amounts in
US$)
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number of
shares
|
|
|
Amount
|
|
|
paid in
capital
|
|
|
Accumulated
deficit
|
|
|
Total
Equity
|
|
Balance, July 1, 2017
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(420,332
|
)
|
|
$
|
(21,332
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,333
|
)
|
|
|
(5,333
|
)
|
Balance, June 30, 2018
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(425,665
|
)
|
|
$
|
(26,665
|
)
|
Issuance of common stock exchange for service from the custodian
|
|
|
52,000,000
|
|
|
|
5,200
|
|
|
|
42,070
|
|
|
|
|
|
|
|
47,270
|
|
Reverse split, January 30, 2019
|
|
|
(99,716,900
|
)
|
|
|
(9,972
|
)
|
|
|
9,972
|
|
|
|
|
|
|
|
-
|
|
Issuance of common stock to the shareholder
|
|
|
5,000,000
|
|
|
|
500
|
|
|
|
-
|
|
|
|
|
|
|
|
500
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(104,640
|
)
|
|
|
(104,640
|
)
|
Balance, June 30, 2019
|
|
|
5,103,100
|
|
|
$
|
510
|
|
|
$
|
446,260
|
|
|
$
|
(530,305
|
)
|
|
$
|
(83,535
|
)
|
See accompanying notes to the financial
statements.
ZYQC Group
Holding Limited
Statements
of Cash Flows
(Unaudited)
(Amounts in
US$)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(104,640
|
)
|
|
$
|
(5,333
|
)
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
-
|
|
|
|
5,333
|
|
Net cash used in operating activities
|
|
|
(104,640
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Borrowing from a related party
|
|
|
104,140
|
|
|
|
-
|
|
Consideration of shares issuance to the shareholder
|
|
|
500
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
104,640
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, beginning of year
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, end of year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Shares issuance to the custodian
|
|
$
|
47,270
|
|
|
$
|
-
|
|
See accompanying notes to the financial
statements.
ZYQC Group
Holding Limited
Notes to Unaudited
Financial Statements
(Amounts in
US$ unless otherwise noted)
NOTE 1. DESCRIPTION OF BUSINESS
AND ORGANIZATION
ZYQC Group Holdings Limited (“the Company”)
was incorporated under the name Titan Gold Corp. on September 16, 2009 under the laws of the State of Nevada. On February 25,
2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp. The company ceased operations in
2014.
On December 18, 2018, the
Eight Judicial District Court of Nevada appointed John Ballard as custodian for Tundra Gold Corp., proper notice having been given
to the officers and directors of Tundra Gold Corp. There was no opposition.
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation.
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC International Holding Group Limited
(“ZYQC International”), was incorporated on April 4, 2019 in Seychelles.
ZYQC International engaged in vehicle
related services in Mainland China. It provides facilitation service among the vehicle companies and the end customers. Also,
ZYQC International provides brand service to enterprise customers by using its brand in vehicle market.
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.
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.
Management anticipates that the Company
will be dependent, on borrowings from related party to fund operating expenses. In light of management’s efforts, there
are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going
concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3. SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and have been consistently applied.
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available
at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such
estimates and assumptions include allowance of doubtful accounts and the estimated useful lives of long-lived assets.
The provision for income taxes is determined
using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year.
Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for
a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods,
future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as
well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations,
projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s
experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are
additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward
periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income.
Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances,
resulting in a future charge to establish a valuation allowance.
Tax benefits related to uncertain tax
positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold.
Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation
has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains
open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are
accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that
the related tax benefits are recognized.
A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and 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. A party which can significantly influence
the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
e.
|
Fair
Value Measurements
|
The Company’s financial instruments
are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels
of the fair value hierarchy are described below:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
|
|
●
|
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices
included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which significant inputs are observable
or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
There were no transfers between level
1, level 2 or level 3 measurements for the year ended June 30, 2019 and 2018.
As of June 30, 2019 and 2018, none
of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s
financial assets and liabilities, including cash and cash equivalents, accounts receivables, other receivables, prepayment, accrued
expenses and other liabilities, are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
|
f.
|
Share-based
Compensation
|
The Company accounts for share-based
compensation to employees in accordance with ASC Topic 718 “Compensation-Stock Compensation” which requires that share-based
payment transactions be measured based on the grant-date fair value of the equity instrument issued, net of an estimated forfeiture
rate, if applicable, and therefore only recognizes compensation expenses for those equity instruments expected to vest over the
requisite service period, or vesting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods
if actual forfeitures differ from those estimates.
|
g.
|
Earnings
(loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
NOTE 4. COMMON STOCK
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation.
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen with the consideration of $500.
NOTE 5. INCOME TAXES
The Company did not provide any current
or deferred U.S. federal income tax provision or benefit for any of the periods presented because it has experienced operating
losses. When it is more likely than not that a tax asset cannot be realized through future income, the Company must take a full
valuation allowance for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset,
consisting of net operating loss carryforwards, because management has determined that it is more likely than not that the Company
will not earn income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position
that, if challenged, would have a material effect on the financial statements for the year ended June 30, 2019, or during the
prior three years applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax
position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All
tax returns have been appropriately filed by the Company.
Income tax provision at the federal statutory rate
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
-
|
|
The Company’s deferred tax assets
were as follows:
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses carried forward
|
|
$
|
111,364
|
|
|
$
|
89,390
|
|
Valuation allowance
|
|
|
(111,364
|
)
|
|
|
(89,390
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory
rate is as follows:
|
|
Years ended
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Tax at statutory rate (21%)
|
|
$
|
21,974
|
|
|
$
|
1,120
|
|
Increase in valuation allowance
|
|
|
(21,974
|
)
|
|
|
(1,120
|
)
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not pay any income taxes during the year
ended June 30, 2019 or 2018.
NOTE 6. RELATED PARTIES
The financial statements include disclosures
of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the
ordinary course of business. The disclosures include: a. the nature of the relationship(s) involved b. 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. amounts 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.
Mr. Jun Chen, the owner of the Company, financed to the
Company for the operation of $83,535 as of June 30, 2019.
NOTE 7. SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The
Company has determined that except the events below, there are no events that would have required adjustment or disclosure in
the consolidated financial statements.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, the Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC Group
Holding Limited
Balance Sheets
(Unaudited)
(Amounts in
US$)
|
|
September 30,
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2019
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
-
|
|
|
|
-
|
|
Total current assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Total
non-current assets
|
|
|
-
|
|
|
|
-
|
|
Total assets
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Amount due to a related party
|
|
|
85,485
|
|
|
|
83,535
|
|
Total
current liabilities
|
|
|
85,485
|
|
|
|
83,535
|
|
Total liabilities
|
|
$
|
85,485
|
|
|
$
|
83,535
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock (US$0.0001 par value; authorized
100,000,000 shares; issued and outstanding 5,103,100 shares at September 30, 2019 and June 30, 2019, respectively)
|
|
|
510
|
|
|
|
510
|
|
Additional paid in capital
|
|
|
446,260
|
|
|
|
446,260
|
|
Accumulated deficits
|
|
|
(532,255
|
)
|
|
|
(530,305
|
)
|
Total
Shareholders’ Deficit
|
|
|
(85,485
|
)
|
|
|
(83,535
|
)
|
Total liabilities and shareholders’ deficit
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Operation and Comprehensive Loss
(Unaudited)
(Amounts in
US$)
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Net revenue
|
|
|
|
|
|
|
Total net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
-
|
|
|
|
-
|
|
Gross profit
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
1,950
|
|
|
|
-
|
|
Total operating expenses
|
|
|
1,950
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations
|
|
|
(1,950
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(1,950
|
)
|
|
|
-
|
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(1,950
|
)
|
|
$
|
-
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
Foreign currency translation gain, net of nil income taxes
|
|
|
-
|
|
|
|
-
|
|
Comprehensive loss
|
|
$
|
(1,950
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
5,103,100
|
|
|
|
47,820
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Changes in Shareholders’ Equity
(Unaudited)
(Amounts in
US$)
Three months ended September 30, 2019:
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number of
shares
|
|
|
Amount
|
|
|
paid
in
capital
|
|
|
Accumulated
deficits
|
|
|
Total
Equity
|
|
Balance, July 1, 2019
|
|
|
5,103,100
|
|
|
$
|
510
|
|
|
$
|
446,260
|
|
|
$
|
(530,305
|
)
|
|
$
|
(83,535
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,950
|
)
|
|
|
(1,950
|
)
|
Balance, September 30, 2019
|
|
|
5,103,100
|
|
|
$
|
510
|
|
|
$
|
446,260
|
|
|
$
|
(532,255
|
)
|
|
$
|
(85,485
|
)
|
Three months ended September 30, 2018:
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Number of
shares
|
|
|
Amount
|
|
|
paid
in
capital
|
|
|
Accumulated
deficits
|
|
|
Total
Equity
|
|
Balance, July 1, 2018
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(425,665
|
)
|
|
$
|
(26,665
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance, September 30, 2018
|
|
|
47,820,000
|
|
|
$
|
4,782
|
|
|
$
|
394,218
|
|
|
$
|
(425,665
|
)
|
|
$
|
(26,665
|
)
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Statements
of Cash Flows
(Unaudited)
(Amounts in
US$)
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash Flows From Operating Activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,950
|
)
|
|
$
|
-
|
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(1,950
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Borrowing from a related party
|
|
|
1,950
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
1,950
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
fluctuation on cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, beginning of year
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents, end of year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure information:
|
|
|
|
|
|
|
|
|
Cash paid for income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying
notes to the financial statements.
ZYQC Group
Holding Limited
Notes to Unaudited
Financial Statements
(Amounts in
US$ unless otherwise noted)
NOTE 1. DESCRIPTION OF BUSINESS
AND ORGANIZATION
ZYQC Group Holdings Limited (“the
Company”) was incorporated under the name Titan Gold Corp. on September 16, 2009 under the laws of the State of Nevada.
On February 25, 2010 the Company amended its articles of incorporation to change its name to Tundra Gold Corp. The company ceased
operations in 2014.
On December 18, 2018, the
Eight Judicial District Court of Nevada appointed John Ballard as custodian for Tundra Gold Corp., proper notice having been given
to the officers and directors of Tundra Gold Corp. There was no opposition.
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation.
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ZYQC International Holding Group Limited
(“ZYQC International”), was incorporated on April 4, 2019 in Seychelles.
ZYQC International engaged in vehicle
related services in Mainland China. It provides facilitation service among the vehicle companies and the end customers. Also,
ZYQC International provides brand service to enterprise customers by using its brand in vehicle market.
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.
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.
Management anticipates that the Company
will be dependent, on borrowings from related party to fund operating expenses. In light of management’s efforts, there
are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going
concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3. SUMMARIES OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and have been consistently applied.
The preparation of financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Management makes these estimates using the best information available
at the time the estimates are made; however actual results could differ from those estimates. Significant items subject to such
estimates and assumptions include allowance of doubtful accounts and the estimated useful lives of long-lived assets.
The provision for income taxes is determined
using the asset and liability approach of accounting for income taxes. Under this approach, the provision for income taxes represents
income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year.
Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are
recovered or paid, and result from differences between the financial and tax bases of the Company’s assets and liabilities
and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are recorded to
reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In evaluating the need for
a valuation allowance, management considers all potential sources of taxable income, including income available in carryback periods,
future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as
well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations,
projections of future profitability within the carryforward period, including from tax planning strategies, and the Company’s
experience with similar operations. Existing favorable contracts and the ability to sell products into established markets are
additional positive evidence. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward
periods that are not long enough to allow for the utilization of a deferred tax asset based on existing projections of income.
Deferred tax assets for which no valuation allowance is recorded may not be realized upon changes in facts and circumstances,
resulting in a future charge to establish a valuation allowance.
Tax benefits related to uncertain tax
positions taken or expected to be taken on a tax return are recorded when such benefits meet a more likely than not threshold.
Otherwise, these tax benefits are recorded when a tax position has been effectively settled, which means that the statute of limitation
has expired or the appropriate taxing authority has completed their examination even though the statute of limitations remains
open. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are
accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that
the related tax benefits are recognized.
A party is considered to be related
to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners of the Company, its management, members of the
immediate families of principal owners of the Company and its management and 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. A party which can significantly influence
the management or operating policies of the transacting parties or if it has 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 is also a related party.
|
e.
|
Fair
Value Measurements
|
The Company’s financial instruments
are accounted for at fair value on a recurring basis. Fair value is defined as 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. The three levels
of the fair value hierarchy are described below:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
|
|
●
|
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices
included within Level 1 that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which significant inputs are observable
or can be derived principally from, or corroborated by, observable market data.
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value.
|
There were no transfers between level
1, level 2 or level 3 measurements for the three months ended September 30, 2019 and 2018.
As of September 30, 2019 and June 30,
2019, none of the Company’s nonfinancial assets or liabilities was measured at fair value on a nonrecurring basis.
The carrying values of the Company’s
financial assets and liabilities, including cash and cash equivalents, accounts receivables, other receivables, prepayment, accrued
expenses and other liabilities, are a reasonable estimate of fair value because of the short period of time between the origination
of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available.
|
f.
|
Share-based
Compensation
|
The Company accounts for share-based
compensation to employees in accordance with ASC Topic 718 “Compensation-Stock Compensation” which requires that share-based
payment transactions be measured based on the grant-date fair value of the equity instrument issued, net of an estimated forfeiture
rate, if applicable, and therefore only recognizes compensation expenses for those equity instruments expected to vest over the
requisite service period, or vesting period. Forfeitures are estimated at the time of grant and revised in the subsequent periods
if actual forfeitures differ from those estimates.
|
g.
|
Earnings
(loss) per share
|
Earnings (loss) per share are calculated
in accordance with ASC Topic 260, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing income
(loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Common shares issuable upon the conversion of the convertible preferred shares
are included in the computation of diluted earnings per share on an “if-converted” basis when the impact is dilutive.
The dilutive effect of outstanding common stock warrants and options are reflected in the diluted earnings per share by application
of the treasury stock method when the impact is dilutive.
NOTE 4. COMMON STOCK
On January 30, 2019, the Company resolved
to issue 52,000,000 shares of common stock to Mr. John Ballard, in exchange for Mr. Ballard’s contribution as custodian.
The shares issued to Mr. John Ballard recorded as share based compensation
On January 30, 2019, the Company amended
the Article of Incorporation, to effect a 1-for-1,000 reverse stock split, with fractional shares otherwise issuable to be rounded
up to the nearest whole share, and with no stockholder to received less than 100 whole shares, and to change the name of corporation
to “ZYQC Group holding limited”. After the reverse stock split, the Company had 100,000,000 shares authorized with
par value of $0.0001, and 103,100 shares issued and outstanding.
On February 11, 2019, Mr. John Ballard
entered into a stock purchase agreement whereby he transferred 52,000,000 shares of pre reverse stock split shares of common stock
to Mr. Jun Chen Limited in exchange for $40,000 in cash. As a result of the sale, John Ballard resigned as sole officer and director
of the Company. This resulted in a change of control of the Company. There is no family relationship or other relationship between
the Seller and the Purchaser.
On March 01, 2019, the Company issued
5,000,000 shares of common stock to Mr. Jun Chen with the consideration of $500.
NOTE 5. INCOME TAXES
The Company did not provide any current or deferred U.S.
federal income tax provision or benefit for any of the periods presented because it has experienced operating losses. When it
is more likely than not that a tax asset cannot be realized through future income, the Company must take a full valuation allowance
for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net
operating loss carryforwards, because management has determined that it is more likely than not that the Company will not earn
income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position that, if challenged,
would have a material effect on the financial statements for the three months ended September 30, 2019, or during the prior three
years applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position
and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns
have been appropriately filed by the Company.
Income tax provision at the federal statutory rate
|
|
|
21
|
%
|
Effect of operating losses
|
|
|
(21
|
)%
|
|
|
|
-
|
|
The Company’s deferred tax assets
were as follows:
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
Tax effect of net operating losses carried forward
|
|
$
|
111,774
|
|
|
$
|
111,364
|
|
Valuation allowance
|
|
|
(111,774
|
)
|
|
|
(111,364
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
A reconciliation of income taxes computed at the statutory
rate is as follows:
|
|
Three months ended
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Tax at statutory rate (21%)
|
|
$
|
410
|
|
|
$
|
-
|
|
Increase in valuation allowance
|
|
|
(410
|
)
|
|
|
(-
|
)
|
Income tax expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company did not pay any income taxes during the three
months ended September 30, 2019 or 2018.
NOTE 6. RELATED PARTIES
The financial statements include disclosures
of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the
ordinary course of business. The disclosures include: a. the nature of the relationship(s) involved b. 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. amounts 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.
Mr. Jun Chen, the owner of the Company, financed to the
Company for the operation of $85,485 as of September 30, 2019.
NOTE 7. SUBSEQUENT EVENTS
The Company evaluates subsequent
events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. The
Company has determined that except the events below, there are no events that would have required adjustment or disclosure in
the consolidated financial statements.
On October 08, 2019, the Company entered
into a Share Exchange Agreement (“Share Exchange”) with ZYQC International Holding Group Limited, a Seychelles corporation
and Mr. Jun Chen. As the result of the Share Exchange, The Company owned 300,000,000 common shares of ZYQC International Holding
Group Limited, representing 100% of its issued and outstanding shares.
ITEM
14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
We
have not had a change in our independent registered public accounting firm during the last two fiscal years or through the date
of this filing. We note that we have not had any disagreements with our current public accounting firm during the last two fiscal
years or through the date of this filing on any matter of accounting principles or practices, financial statement disclosure,
or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of the public accounting firm, would have
caused our Company to make reference to the subject matter of the disagreement in connection with its report on the Company’s
financial statements.
ITEM
15. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibits
Schedule
The
following exhibits are filed with this Form 10:
|
*
|
Filed
as Exhibits to the Form 10-12g, dated October 16, 2019.
|
SIGNATURES
Pursuant
to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, hereunto duly authorized.
|
ZYQC
GROUP HOLDING LIMITED
|
|
|
Date:
November 22, 2019
|
By:
|
/s/
Jun Chen
|
|
Name:
|
Jun Chen
|
|
Title:
|
Chief
Executive Officer and
Chief Financial Officer
|
113
ZYQC (CE) (USOTC:ZYQG)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024
ZYQC (CE) (USOTC:ZYQG)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024