DH Enchantment, Inc. (f/k/a Energy Management International Inc.) is a Nevada
holding company with no operations of its own. DH Enchantment, Inc. conducts its
operations through its Hong Kong subsidiary, Ho Shun Yi Limited ("HSY"). HSY was
organized as a private limited liability company on July 9, 2018, in Hong Kong
and is a wholly owned subsidiary of DH Investment Group Limited ("DHIG"). We
acquired DHIG on July 26, 2021. HSY is engaged primarily in the sale and
distribution of COVID-19 rapid antigen tester sets produced by third parties.
HSY commenced operations in Hong Kong in October 2020 and sell its products
primarily in Hong Kong. Our investors will hold equity interests in the Nevada
holding company that has no operations of its own and not in the Hong Kong
operating company.
This holding company structure presents unique risks as our investors may never
directly hold equity interests in our Hong Kong subsidiary and will be dependent
upon contributions from our subsidiaries to finance our cash flow needs. Our
ability to obtain contributions from our subsidiaries are significantly affected
by regulations promulgated by Hong Kong authorities. Any change in the
interpretation of existing rules and regulations or the promulgation of new
rules and regulations may materially affect our operations and or the value of
our securities, including causing the value of our securities to significantly
decline or become worthless. For a detailed description of the risks facing the
Company associated with our structure, please refer to "Risk Factors- Our Hong
Kong subsidiary may be subject to restrictions on paying dividends or making
other payments to us, which may restrict its ability to satisfy liquidity
requirements, conduct business and pay dividends to holders of our common
stock." and more generally, "Risk Factors - Risk Relating to Doing Business in
Hong Kong." disclosed in Amendment No. 4 to the Registration Statement on Form
10 filed with the Securities and Exchange Commission on February 17, 2022.
DH Enchantment, Inc. and our Hong Kong subsidiary are not required to obtain
permission from the Chinese authorities including the China Securities
Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or
CAC, to operate or to issue securities to foreign investors. The business of our
subsidiary until now are not subject to cybersecurity review with the Cyberspace
Administration of China, or CAC, given that: (i) our products and services are
offered not directly to individual users but through our institutional
customers; (ii) we do not possess a large amount of personal information in our
business operations.. In addition, we are not subject to merger control review
by China's anti-monopoly enforcement agency due to the level of our revenues
which provided from us and audited by our auditor and the fact that we currently
do not expect to propose or implement any acquisition of control of, or decisive
influence over, any company with revenues within China of more than RMB400
million. Currently, these statements and regulatory actions have had no impact
on our daily business operation, the ability to accept foreign investments and
list our securities on an U.S. or other foreign exchange. However, in light of
the recent statements and regulatory actions by the PRC government, such as
those related to Hong Kong's national security, the promulgation of regulations
prohibiting foreign ownership of Chinese companies operating in certain
industries, which are constantly evolving, and anti-monopoly concerns, we may be
subject to the risks of uncertainty of any future actions of the PRC government
in this regard including the risk that we inadvertently conclude that such
approvals are not required, that applicable laws, regulations or interpretations
change such that we are required to obtain approvals in the future, or that the
PRC government could disallow our holding company structure, which would likely
result in a material change in our operations, including our ability to continue
our existing holding company structure, carry on our current business, accept
foreign investments, and offer or continue to offer securities to our investors.
These adverse actions could value the value of our common stock to significantly
decline or become worthless. We may also be subject to penalties and sanctions
imposed by the PRC regulatory agencies, including the Chinese Securities
Regulatory Commission, if we fail to comply with such rules and regulations,
which would likely adversely affect the ability of the Company's securities to
continue to trade on the Over-the-Counter Bulletin Board, which would likely
cause the value of our securities to significantly decline or become worthless.
For a detailed description of the risks facing the Company and the offering
associated with our operations in Hong Kong, please refer to "Risk Factors -
Risk Factors Relating to Doing Business in Hong Kong" disclosed in Amendment No.
4 to the Registration Statement on Form 10 filed with the Securities and
Exchange Commission on February 17, 2022.
There are prominent risks associated with our operations being based in Hong
Kong. For example, as a U.S.-listed Hong Kong public company, we may face
heightened scrutiny, criticism and negative publicity, which could result in a
material change in our operations and the value of our common stock. We are also
subject to risks arising from the legal system in China, where the Chinese
government can change the rules and regulations in China and Hong Kong,
including the enforcement and interpretation thereof, at any time with little to
no advance notice and can intervene at any time with little to no advance
notice. By way of example, the PRC government initiated a series of regulatory
actions and statements to regulate business operations in China with little
advance notice, including cracking down on illegal activities in the securities
market, enhancing supervision over China-based companies listed overseas using
variable interest entity structure, adopting new measures to extend the scope of
cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
While these regulatory actions and statements currently do not impact our
business or our ability to accept foreign investments or list our securities on
a U.S. or foreign exchange, the Chinese government can change its rules and
regulations and the enforcement and interpretation thereof with little to no
advance notice. Such changes in Chinese internal regulatory mandates, such as
the M&A rules, Anti-Monopoly Law, and the Data Security Law, may target the
Company's corporate structure and negatively impact our ability to conduct
business in Hong Kong, accept foreign investments, or list on an U.S. or other
foreign exchange. These risks may significantly limit or completely hinder our
ability to offer or continue to offer securities to investors and cause the
value of such securities to significantly decline or be worthless. Please see
"Risk Factors - Risks Relating to Doing Business in Hong Kong." disclosed in
Amendment No. 4 to the Registration Statement on Form 10 filed with the
Securities and Exchange Commission on February 17, 2022.
18
The recent joint statement by the SEC and PCAOB, and the Holding Foreign
Companies Accountable Act all call for additional and more stringent criteria to
be applied to emerging market companies upon assessing the qualification of
their auditors, especially the non-U.S. auditors who are not inspected by the
PCAOB. Trading in our securities may be prohibited under the Holding Foreign
Companies Accountable Act and the Accelerating the Holding Foreign Companies
Account Act if the PCAOB determines that it cannot inspect or investigate
completely our auditor, and that as a result an exchange may determine to delist
our securities. Our auditor is not subject to the determinations announced by
the PCAOB on December 16, 2021. However, in the event the Malaysian authorities
subsequently take a position disallowing the PCAOB to inspect our auditor, then
we would need to change our auditor to avoid having our securities delisted.
Please see "Risk Factors- The Holding Foreign Companies Accountable Act requires
the Public Company Accounting Oversight Board (PCAOB) to be permitted to inspect
the issuer's public accounting firm within three years. There are uncertainties
under the PRC Securities Law relating to the procedures and requisite timing for
the U.S. securities regulatory agencies to conduct investigations and collect
evidence within the territory of the PRC. If the U.S. securities regulatory
agencies are unable to conduct such investigations, they may suspend or
de-register our registration with the SEC and delist our securities from
applicable trading market within the US." disclosed in Amendment No. 4 to the
Registration Statement on Form 10 filed with the Securities and Exchange
Commission on February 17, 2022.
In addition to the foregoing risks, we face various legal and operational risks
and uncertainties arising from doing business in Hong Kong as summarized below
and in "Risk Factors - Risks Relating to Doing Business in Hong Kong." disclosed
in Amendment No. 4 to the Registration Statement on Form 10 filed with the
Securities and Exchange Commission on February 17, 2022.
Adverse changes in economic and political policies of the PRC government
· could have a material and adverse effect on overall economic growth in China
and Hong Kong, which could materially and adversely affect our business.
· We are a holding company and will rely on dividends paid by our subsidiaries
for our cash needs any limitation on the ability of our subsidiaries to make
payments to us could have a material adverse effect on our ability to
conduct business. We do not anticipate paying dividends in the foreseeable
future; you should not buy our stock if you expect dividends.
· PRC regulation of loans to and direct investments in PRC entities by
offshore holding companies may delay or prevent us from using the proceeds
of this offering to make loans or additional capital contributions to our
operating subsidiaries in Hong Kong.
· Substantial uncertainties exist with respect to the interpretation of the
PRC Foreign Investment Law and how it may impact the viability of our
current corporate structure, corporate governance and business operations.
· We are subject to the risks arising from the legal system in China. The
Chinese government can change the rules and regulations in China and Hong
Kong, including the enforcement and interpretation thereof, at any time with
little to no advance notice and can intervene at any time with little to no
advance notice. We are currently not required to obtain approval from
Chinese authorities to list on U.S. exchanges. However, if our subsidiaries
or the holding company were required to obtain approval in the future, or we
erroneously conclude that approvals were not required, or we were denied
permission from Chinese authorities to operate or to list on U.S. exchanges,
we will not be able to continue listing on a U.S. exchange and the value of
our common stock would likely significantly decline or become worthless,
which would materially affect the interest of the investors. There is a risk
that the Chinese government may intervene or influence our operations at any
time, or may exert more control over offerings conducted overseas and/or
foreign investment in Hong Kong-based issuers, which could result in a
material change in our operations and/or the value of our securities.
Further, any actions by the Chinese government to exert more oversight and
control over offerings that are conducted overseas and/or foreign investment
in China-based issuers would likely significantly limit or completely hinder
our ability to offer or continue to offer securities to investors and cause
the value of such securities to significantly decline or be worthless.
Please see "Risk Factors-We face the risk that changes in the policies of
the PRC government could have a significant impact upon the business we may
be able to conduct in the Hong Kong and the profitability of such business."
and "Substantial uncertainties and restrictions with respect to the
political and economic policies of the PRC government and PRC laws and
regulations could have a significant impact upon the business that we may be
able to conduct in Hong Kong and accordingly on the results of our
operations and financial condition."
· Governmental control of currency conversion may limit our ability to utilize
our revenues effectively and affect the value of your investment.
· We may become subject to a variety of laws and regulations in the PRC
regarding privacy, data security, cybersecurity, and data protection. We may
be liable for improper use or appropriation of personal information provided
by our customers.
· Under the Enterprise Income Tax Law, we may be classified as a "Resident
Enterprise" of China. Such classification will likely result in unfavorable
tax consequences to us and our non-PRC shareholders.
19
· PRC regulation of loans to, and direct investments in, Hong Kong entities by
offshore holding companies may delay or prevent us from using proceeds from
this offering and/or future financing activities to make loans or additional
capital contributions to our Hong Kong operating subsidiaries.
· Failure to comply with PRC regulations relating to the establishment of
offshore special purpose companies by PRC residents may subject our PRC
resident Shareholders to personal liability, may limit our ability to
acquire Hong Kong and PRC companies or to inject capital into our Hong Kong
subsidiary, may limit the ability of our Hong Kong subsidiaries to
distribute profits to us or may otherwise materially and adversely affect
us.
· The recent joint statement by the SEC and PCAOB, and the Holding Foreign
Companies Accountable Act all call for additional and more stringent
criteria to be applied to emerging market companies upon assessing the
qualification of their auditors, especially the non-U.S. auditors who are
not inspected by the PCAOB. Trading in our securities may be prohibited
under the Holding Foreign Companies Accountable Act if the PCAOB determines
that it cannot inspect or investigate completely our auditor, and that as a
result an exchange may determine to delist our securities. Our auditor is
not subject to the determinations announced by the PCAOB on December 16,
2021. However, in the event the Malaysian authorities subsequently take a
position disallowing the PCAOB to inspect our auditor, then we would need to
change our auditor to avoid having our securities delisted. Please see "Risk
Factors- The Holding Foreign Companies Accountable Act requires the Public
Company Accounting Oversight Board (PCAOB) to be permitted to inspect the
issuer's public accounting firm within three years. There are uncertainties
under the PRC Securities Law relating to the procedures and requisite timing
for the U.S. securities regulatory agencies to conduct investigations and
collect evidence within the territory of the PRC. If the U.S. securities
regulatory agencies are unable to conduct such investigations, they may
suspend or de-register our registration with the SEC and delist our
securities from applicable trading market within the US." disclosed in
Amendment No. 4 to the Registration Statement on Form 10 filed with the
Securities and Exchange Commission on February 17, 2022.
· You may be subject to PRC income tax on dividends from us or on any gain
realized on the transfer of shares of our common stock.
· We face uncertainties with respect to indirect transfers of equity interests
in PRC resident enterprises by their non-PRC holding companies.
· We are organized under the laws of the State of Nevada as a holding company
that conducts its business through a number of subsidiaries organized under
the laws of foreign jurisdictions such as Hong Kong and the British Virgin
Islands. This may have an adverse impact on the ability of U.S. investors to
enforce a judgment obtained in U.S. Courts against these entities, bring
actions in Hong Kong against us or our management or to effect service of
process on the officers and directors managing the foreign subsidiaries.
· U.S. regulatory bodies may be limited in their ability to conduct
investigations or inspections of our operations in China.
· There are significant uncertainties under the EIT Law relating to the
withholding tax liabilities of our PRC subsidiary, and dividends payable by
our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy
certain treaty benefits
Transfers of Cash to and from Our Subsidiaries
DH Enchantment, Inc. is a Nevada holding company with no operations of its own.
We conduct our operations in Hong Kong primarily through HSY, our subsidiary in
Hong Kong. We may rely on dividends to be paid by our Hong Kong subsidiary to
fund our cash and financing requirements, including the funds necessary to pay
dividends and other cash distributions to our shareholders, to service any debt
we may incur and to pay our operating expenses. In order for us to pay dividends
to our shareholders, we will rely on payments made from our Hong Kong subsidiary
to DH Enchantment, Inc. As of the date of this prospectus, there has been no
dividends or distributions made among the holding company or the subsidiaries
and no dividends or distributions made to U.S. investors.
We do not intend to make dividends or distributions to investors of DH
Enchantment, Inc. in the foreseeable future.
We currently intend to retain all available funds and future earnings, if any,
for the operation and expansion of our business and do not anticipate declaring
or paying any dividends in the foreseeable future. Any future determination
related to our dividend policy will be made at the discretion of our board of
directors after considering our financial condition, results of operations,
capital requirements, contractual requirements, business prospects and other
factors the board of directors deems relevant, and subject to the restrictions
contained in any future financing instruments.
20
EH Enchantment, Inc. (Nevada corporation)
Subject to the Nevada Revised Statutes and our bylaws, the board of directors of
DH Enchantment, Inc. may authorize and declare a dividend to shareholders at
such time and of such an amount as they think fit if they are satisfied, on
reasonable grounds, that immediately following the dividend the value of our
assets will exceed our liabilities and we will be able to pay our debts as they
become due. There is no further Nevada statutory restriction on the amount of
funds which may be distributed by us by dividend. Accordingly, DH Enchantment,
Inc. is permitted under the Nevada laws to provide funding to our subsidiaries
in Hong Kong through loans or capital contributions without restrictions on the
amount of the funds, subject to satisfaction of applicable government
registration, approval and filing requirements.
Ho Shun Yi Limited (Hong Kong)
Ho Shun Yi Limited is permitted under the laws of Hong Kong to provide funding
to DH Enchantment, Inc. through dividend distributions without restrictions on
the amount of the funds. If our Hong Kong subsidiary incurs debt on its own
behalf in the future, the instruments governing the debt may restrict its
ability to pay dividends or make other distributions to us.
Under the current practice of the Inland Revenue Department of Hong Kong, no tax
is payable in Hong Kong in respect of dividends paid by us. The laws and
regulations of the PRC do not currently have any material impact on transfer of
cash from DH Enchantment, Inc. to Ho Shun Yi Limited or from Ho Shun Yi Limited
to DH Enchantment, Inc. There are no restrictions or limitation under the laws
of Hong Kong imposed on the conversion of HK dollar into foreign currencies and
the remittance of currencies out of Hong Kong or across borders and to U.S
investors.
PRC Laws
Current PRC regulations permit PRC subsidiaries to pay dividends to Hong Kong
subsidiaries only out of their accumulated profits, if any, determined in
accordance with Chinese accounting standards and regulations. In addition, each
of our subsidiaries in China is required to set aside at least 10% of its
after-tax profits each year, if any, to fund a statutory reserve until such
reserve reaches 50% of its registered capital. Each of such entity in China is
also required to further set aside a portion of its after-tax profits to fund
the employee welfare fund, although the amount to be set aside, if any, is
determined at the discretion of its board of directors. Although the statutory
reserves can be used, among other ways, to increase the registered capital and
eliminate future losses in excess of retained earnings of the respective
companies, the reserve funds are not distributable as cash dividends except in
the event of liquidation. As of the date of this prospectus, we do not have any
PRC subsidiaries.
The PRC government also imposes controls on the conversion of RMB into foreign
currencies and the remittance of currencies out of the PRC. Therefore, we may
experience difficulties in completing the administrative procedures necessary to
obtain and remit foreign currency for the payment of dividends from our profits,
if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in
the future, the instruments governing the debt may restrict their ability to pay
dividends or make other payments. If we or our subsidiaries are unable to
receive all of the revenues from our operations, we may be unable to pay
dividends on our common stock.
Cash dividends, if any, on our common stock will be paid in U.S. dollars. If we
are considered a PRC tax resident enterprise for tax purposes, any dividends we
pay to our overseas shareholders may be regarded as China-sourced income and as
a result may be subject to PRC withholding tax at a rate of up to 10.0%.
If in the future we have PRC subsidiaries, certain payments from such PRC
subsidiaries to Hong Kong subsidiaries will be subject to PRC taxes, including
business taxes and VAT. As of the date of this prospectus, we do not have any
PRC subsidiaries, and our Hong Kong subsidiary has not made any transfers,
dividends or distributions to date. We do not expect our Hong Kong subsidiaries
to make any such transfers, dividends or distributions in the foreseeable
future.
21
Pursuant to the Arrangement between Mainland China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and Tax Evasion on
Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate
may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of
a PRC entity. However, the 5% withholding tax rate does not automatically apply
and certain requirements must be satisfied, including, without limitation, that
(a) the Hong Kong entity must be the beneficial owner of the relevant dividends;
and (b) the Hong Kong entity must directly hold no less than 25% share ownership
in the PRC entity during the 12 consecutive months preceding its receipt of the
dividends. In current practice, a Hong Kong entity must obtain a tax resident
certificate from the Hong Kong tax authority to apply for the 5% lower PRC
withholding tax rate. As the Hong Kong tax authority will issue such a tax
resident certificate on a case-by-case basis, we cannot assure you that we will
be able to obtain the tax resident certificate from the relevant Hong Kong tax
authority and enjoy the preferential withholding tax rate of 5% under the Double
Taxation Arrangement with respect to dividends to be paid by a PRC subsidiary to
its immediate holding company. As of the date of this prospectus, we do not have
a PRC subsidiary. In the event that we acquire or form a PRC subsidiary in the
future and such PRC subsidiary desires to declare and pay dividends to our Hong
Kong subsidiary, our Hong Kong subsidiary will be required to apply for the tax
resident certificate from the relevant Hong Kong tax authority. In such event,
we plan to inform the investors through SEC filings, such as a current report on
Form 8-K, prior to such actions. See "Risk Factors - Risk Factors Relating to
Doing Business in Hong Kong."
We reported a net income of $8,700 and $0 for the years ended March 31, 2021 and
2020, respectively. We had current assets of $74,360 and current liabilities of
$65,670 as of March 31, 2021. As of March 31, 2020, our current assets and
current liabilities were $0. We have prepared our financial statements for the
years ended March 31, 2021 and 2020 assuming that we will continue as a going
concern. Our continuation as a going concern is dependent upon improving our
profitability and the continuing financial support from our stockholders. Our
sources of capital in the past have included the sale of equity securities,
which include common stock sold in private transactions and short-term and
long-term debts.
We are at a development stage company and reported a net loss of $256,718 and a
net income of $13,118 for the nine months ended December 31, 2021 and 2020,
respectively. We had current assets of $40,367 and current liabilities of
$288,145 as of December 31, 2021. As of March 31, 2021, our current assets and
current liabilities were $74,360 and $65,670.
Results of Operations.
Three and Nine Months Ended December 31, 2021 Compared to the Three and Nine
Months Ended December 31, 2020
The following table sets forth selected financial information from our
statements of comprehensive loss for the three months ended December 31, 2021
and 2020:
For the Three Months Ended
December 31,
2021 2020
Revenue $ 30,777 $ 162,628
Cost of Revenue (9,860 ) (136,346 )
Total Operating Expenses (16,020 ) (4,554 )
Other Expenses (914 ) -
Net Income $ 3,983 $ 21,728
22
The following table sets forth selected financial information from our
statements of comprehensive loss for the nine months ended December 31, 2021 and
2020:
For the Nine Months Ended
December 31,
2021 2020
Revenue $ 176,662 $ 162,628
Cost of Revenue (170,797 ) (136,346 )
Total Operating Expenses (259,078 ) (13,164 )
Other Expenses (3,505 ) -
Net (Loss) Income $ (256,718 ) $ 13,118
Revenues
The Company generates revenues of $30,777 and $162,628 for the three months
ended December 31, 2021 and 2020, respectively.
The Company generates revenues of $176,662 and $162,628 for the nine months
ended December 31, 2021 and 2020, respectively.
Cost of Revenues
Cost of revenues for the three months ended December 31, 2021 and 2020 was
$9,860 and $136,346, respectively.
Cost of revenues for the nine months ended December 31, 2021 and 2020 was
$170,797 and $136,346, respectively.
Operating Expenses
Operating expenses for the three months ended December 31, 2021 and 2020, were
$16,020 and $4,554, respectively. Operating expenses for the three months ended
December 31, 2021 and 2020 consisted primarily of general and administrative
expenses of $801 and $4,554 and professional fee of $15,219 and $0,
respectively.
Operating expenses for the nine months ended December 31, 2021 and 2020, were
$170,797 and $13,164, respectively. Operating expenses for the nine months ended
December 31, 2021 and 2020, consisted primarily of general and administrative
expenses of $42,971 and $13,164 and professional fee of $216,107 and $0,
respectively.
Other Expenses
Other expenses for the three months ended December 31, 2021 and 2020, were $914
and $0, respectively. Other expenses for the three months ended December 31,
2021 consisted primarily of interest expenses of $961, net off by an interest
income of $1 and other income of $46.
Other expenses for the nine months ended December 31, 2021 and 2020, were $3,505
and $0, respectively. Other expenses for the nine months ended December 31, 2021
consisted primarily of interest expenses of $3,597, net off by an interest
income of $1 and other income of $91.
Net Income (Loss)
As a result of the above factors, the Company incurred a net income of $3,983
and $21,728 for the three months ended December 31, 2021 and 2020, respectively.
The Company incurred a net loss of $256,718 and a net income $13,118 for the
nine months ended December 31, 2021 and 2020, respectively.
23
Foreign Currency Translation Gain (Loss)
The Company had $11 in foreign currency translation loss during the three months
ended December 31, 2021 as compared to $0 in foreign currency translation gain
during the three months ended December 31, 2020, reflecting a change of $11.
Such increase in foreign currency translation gain was primarily caused by the
currency exchange rate fluctuation.
The Company had $250 in foreign currency translation gain during the nine months
ended December 31, 2021 as compared to $12 in foreign currency translation gain
during the nine months ended December 31, 2020, reflecting a change of $238.
Such increase in foreign currency translation gain was primarily caused by the
currency exchange rate fluctuation.
Liquidity and Capital Resources
The following summarizes the key component of our cash flows for the nine months
ended December 31, 2021 and 2020.
For the Nine Months Ended
December 31,
2021 2020
Net cash (used in) provided by operating activities $ (240,850 ) $ 8,956
Net cash used in investing activities
- -
Net cash provided by financing activities 207,525 49,129
Net (decrease) increase in cash and cash equivalents $ (33,181 ) $ 58,097
Net cash used in operating activities was $240,850 for the nine months ended
December 31, 2021, compared to the net cash provided by operating activities of
$8,956 for the nine months ended December 31, 2020. The increase of $231,894 or
2589% of net cash used in operating activities was primarily due to the increase
in net loss and increased accrual and other payables during the nine months
ended December 31, 2021.
Net cash provided by financing activities was $207,525 and $49,129 for the nine
months ended December 31, 2021 and 2020, respectively, representing an increase
of $158,396 or 322%. The increase in net cash provided by financing activities
was primarily attributable to the cash proceeds from issuing promissory notes in
the nine months ended December 31, 2021.
Working Capital:
As of December 31, 2021 and March 31, 2021, we had cash and cash equivalent of
$39,587 and $72,768, respectively. As of December 31, 2021, we have incurred
accumulated operating losses of $1,085,668 since inception. As of December 31,
2021 and March 31, 2021, we had working capital deficit of $247,778 and working
capital surplus of $8,690, respectively.
Going Concern
We require additional funding to meet its ongoing obligations and to fund
anticipated operating losses. Our auditor has expressed substantial doubt about
our ability to continue as a going concern. Our ability to continue as a going
concern is dependent on raising capital to fund its initial business plan and
ultimately to attain profitable operations. These consolidated 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.
We expect to incur marketing and professional and administrative expenses as
well expenses associated with maintaining our filings with the Commission. We
will require additional funds during this time and will seek to raise the
necessary additional capital. If we are unable to obtain additional financing,
we may be required to reduce the scope of our business development activities,
which could harm our business plans, financial condition and operating results.
Additional funding may not be available on favorable terms, if at all. We intend
to continue to fund its business by way of equity or debt financing and advances
from related parties. Any inability to raise capital as needed would have a
material adverse effect on our business, financial condition and results of
operations.
24
If we cannot raise additional funds, we will have to cease business operations.
As a result, our common stock investors would lose all of their investment.
Basis of preparation
Our financial statements and accompanying notes have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis. The preparation of financial statements in conformity with
United States generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods.
Use of estimates
The preparation of the financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, as well as the reported
amounts of revenues and expenses during the reporting periods. Management makes
these estimates using the best information available at the time the estimates
are made; however actual results could differ materially from those estimates.
Income Taxes
We account for income taxes as outlined in ASC 740, "Income Taxes". Under the
asset and liability method of ASC 740, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled.
Off-balance Sheet Arrangements
As of December 31, 2021, there were no off-balance sheet arrangements.
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DH ENCH 