NAMLIONG SKYCOSMOS, INC. This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiary for the fiscal years endedDecember 31, 2022 , and 2021. The discussion and analysis that follows should be read together with the section entitled "Cautionary Note Concerning Forward-Looking Statements" and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by
us in this report. Background and OverviewNamliong SkyCosmos, Inc. ("we" or the "Company") was incorporated onFebruary 7, 2005 , under the nameGemwood Productions , for the purpose of marketing and selling day spa services to tourists at resort destinations throughoutMexico . OnNovember 2, 2006 , we changed our name toKreido Biofuels, Inc. in connection with the acquisition ofKreido Laboatories, Inc. , aCalifornia corporation ("Kreido Labs "), and the disposition of theGemwood Leasco, Inc. subsidiary, through which entity the tourist business had been carried out.Kreido Labs was founded to develop proprietary technology for building micro-composite materials for electronic applications, and developed technology to improve the speed, completeness and efficiency of certain chemical reactions, including esterifications and transesterifications, in the pharmaceutical and special chemical industries. In the first quarter of 2006,Kreido Labs elected to focus exclusively on the biodiesel industry. This business was not successful, and we sold the technology and related assets to an unrelated party onMarch 5, 2009 . After that disposition, we sought unsuccessfully for another acquisition until the present time. In November of 2019, the Company discontinued operations of its subsidiary,Kreido Labs . OnApril 19, 2022 , the Company changed its name toNamliong SkyCosmos, Inc. Our registration statement on Form SB-2, file number 333-140718, became effective onJune 28, 2007 . Subsequent to the filing of our Annual Report on Form 10-K for the year endedDecember 31, 2008 , we continued to file annual and quarterly reports with theSecurities and Exchange Commission on a voluntary basis through the quarter endedSeptember 30, 2009 . OnFebruary 16, 2009 , we elected to terminate our registration and our election to file periodic reports. OnMarch 2, 2018 , we filed a registration statement on Form 10, and the registration statement became effective onMay 8, 2018 . OnNovember 10, 2017 , the Company issued 142,924,167 shares of common stock toReed Petersen , its then officer and director in consideration of cash of$21,434 paid by him to satisfy accounts payable of the Company, and in conversion of$150,075 in accounts payable which he had acquired from the owners of that debt. This transaction was exempt under section 4(2) of the Securities Act of 1933 as one not involving any public solicitation or public offering, and was also exempt under Section 4(5) as an offering solely to accredited investors not involving any public solicitation or public offering. OnJune 5, 2018 , the Company and its sole officer and director,G. Reed Petersen , entered into that certain Stock Purchase Agreement (the "Stock Purchase Agreement"), pursuant to whichMr. Petersen agreed to sell to certain purchasers an aggregate of 142,924,167 shares of common stock of the Company (the "Control Shares"), representing approximately 73% of the issued and outstanding stock of the Company, for aggregate cash consideration of$420,000 in accordance with the terms and conditions of the Stock Purchase Agreement. The sale of the Control Shares consummated onJune 29, 2018 . In connection with the sale of the Control Shares,G. Reed Petersen resigned from his positions as the sole executive officer and director of the Company, effectiveJune 29, 2018 .Mr. Petersen's departure was not due to any dispute or disagreement with the Company on any matter related to the Company's operations, policies or practices. Concurrently, the Board of Directors appointedWai Lim Wong to fill the vacancies created byMr. Petersen's resignation, and to serve as the Company's sole Director, Chief Executive Officer, Chief Financial Officer and Secretary.
On
9 OnDecember 14, 2021 , the Company, nine stockholders (the "Selling Stockholders") and six purchasers (the "Purchasers") entered into a Stock Purchase Agreement (the "SPA"), pursuant to which the Purchasers agreed to purchase from the Selling Stockholders 13,099,243 shares of common stock of the Company, par value$0.001 (collectively, the "Shares"), constituting approximately 89% of the issued and outstanding shares of common stock of the Company, for aggregate consideration ofFour Hundred Twenty Thousand Dollars ($420,000 ) in accordance with the terms and conditions of the SPA. The acquisition of the Shares consummated onDecember 20, 2021 , and the Shares were ultimately purchased by the following individuals: Selling Shareholder No. of Common Stock Purchaser DOU Chu Ju 554,856 PG MAX & CO, LLC ZHANG Chao 214,387 CHEN,HSUEH-NI HEUNG Kin Leung Kenny 55,000 HSIAO, CHUNG-PIN HEUNG Pak Kuen 55,000 HSIAO, CHUNG-PIN HEUNG Teui Yee 55,000 HSIAO, YU-CHIAO KWAN Chin Man 55,000 HSIAO, YU-CHIAO LEUNG Wong Hung 55,000 HSU, CHENG-HSING MAK Chit Ming Brian 55,000 HSU, CHENG-HSING
Pang King
Total 13,099,243
Orient Express & Co., Ltd. holds a controlling interest in the Company, and may unilaterally determine the election of the Board and other substantive matters requiring approval of the Company's stockholders.Cheng Hsing Hsu , our new Chief Financial Officer and Director, is the director and controlling shareholder ofOrient Express & Co., Ltd. OnSeptember 13, 2022 ,Orient Express & Co., Ltd. , a Samoan limited liability company ("OEC"), transferred to UGI all twelve million (12,000,000) shares of common stock of the Company held by OEC in consideration of technical support, customer service and advisory services. Both OEC and UGI are wholly owned and controlled by Cheng Hsing HSU.
Upon the consummation of the sale,
Concurrently with such resignation, the following individuals were appointed to serve in the positions set forth next to their names, until the next annual meeting of stockholders of the Company and until such director's successor is elected and qualified or until such director's earlier death, resignation or removal:Name Position
HSIAO,
Chung Pin HSIAO and Yu Chiao HSIAO are siblings.
10
EffectiveMay 31, 2022 , Chung Pin HSIAO resigned from his positions as the Chief Executive Officer and Director ofNamliong SkyCosmos, Inc. (the "Company"), and Yu Chiao HSIAO resigned from her positions as the Secretary and Director of the Company. The departures of Mr. HSIAO and Ms. HSIAO were for personal reasons and not due to any disagreement with the Company on any matter related to the Company's operations, policies or practices.
In connection with the foregoing resignations, the Board of Directors of the
Company appointed Cheng Hsing HSU, our current Chief Financial Officer and
Director, to serve as the Company's Chief Executive Officer and Secretary,
effective
Except as set forth in the foregoing, none of the directors or executive officers has a direct family relationship with any of the Company's directors or executive officers, or any person nominated or chosen by the Company to become a director or executive officer. All officers and directors will serve in his or her positions without compensation. The Company hopes to enter into a compensatory arrangement with each officer in the future. Our current business is to seek to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Our acquisition strategy is to assess a broad range of potential business combination targets and complete a business combination. In doing so, we will evaluate the historical financial statements of the target, its management, and projected future results. In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiary for the fiscal years endedDecember 31, 2021 , and 2020. The discussion and analysis that follows should be read together with the section entitled "Cautionary Note Concerning Forward-Looking Statements" and our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this annual report on Form 10-K. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by
us in this report. Results of Operations
Following is management's discussion of the relevant items affecting results of operations for the years ended 2022 and 2021.
Revenues. The Company generated no revenues during the years endedDecember 31,2022 and 2021. Operating Expenses. Operating expenses for the year endedDecember 31, 2022 were$69,066 , consisting primarily of professional fees, compared to$437,966 for the year endedDecember 31, 2021 . The decrease was mainly due to the no stock-based compensation was incurred for the current year.
We expect operating expenses to increase as we continue our process of identifying prospective acquisition targets and hopefully successfully consummate such an acquisition.
11
Other Income (Expense). The Company had net other income of$0 for the year endedDecember 31, 2022 compared to$43,149 during the year endedDecember 31, 2021 . The decrease is mainly due to gain from forgiveness of related party debts incurred during the year endedDecember 31, 2021 .
Net Loss. For the year ended
Liquidity and Capital Resources
As ofDecember 31, 2022 , our primary source of liquidity consisted of$0 in cash and cash equivalents. Since inception, we have financed our operations through a combination of short and long-term loans, and through the private placement
of our common stock.
Going Concern Uncertainties.
We have sustained significant net losses which have resulted in a total stockholders' deficit as atDecember 31, 2022 of$69,821 and are currently experiencing a substantial shortfall in operating capital which raises doubt about our ability to continue as a going concern. Until we successfully consummate an acquisition with an operating company, we expect to continue to incur net losses. Depending upon the financial profile of our acquired company, we may continue in our net loss position even after the acquisition of an operating company. With the expected cash requirements for the coming months, without additional cash inflows from an increase in revenues combined with continued cost-cutting or a receipt of cash from capital investment, there is substantial doubt as to the Company's ability to continue operations. There is presently no agreement in place with any source of financing for the Company, and we cannot be assured that the Company will be able to raise any additional funds, or that such funds will be available on acceptable terms. Funds raised through future equity financing will likely be substantially dilutive to current shareholders. Lack of additional funds will materially affect the Company and its business and may cause us to cease operations. Consequently, shareholders could incur a loss of their entire investment in
the Company.
For the year endedDecember 31, 2022 , net cash used in operating activities was$53,821 , which consisted primarily of a net loss of$69,066 , and increase in accrued liabilities of$15,245 . For the year endedDecember 31, 2021 , net cash used in operating activities was$51,000 , which consisted primarily of a net loss of$394,817 ,$42,174 gain from the forgiveness of debts and a decrease in account payable of$26,509 , offsetting by stock based compensation expense of$412,500 .
There was no net cash used in or provided by investing activities during the
year ended
Net Cash Provided By Financing Activities.
For the year ended
For the year ended
12
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 is material to investors. Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Critical accounting policies The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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 period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in Note 2 to our financial statements contained herein.
Recent accounting pronouncements
The recent accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on our unaudited condensed
consolidated financial statements upon adoption.
13
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of
Opinion on the Financial Statements
We have audited the accompanying balance sheets ofNamliong Skycosmos, Inc. (the "Company") as ofDecember 31, 2022 , and 2021 the related statements of operations, changes in shareholders' equity and cash flows for the year endedDecember 31, 2022 and 2021, and the related notes collectively referred to as the "financial statements". In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2022 , and 2021, and the results of its operations and its cash flows for the year endedDecember 31, 2022 and 2021, in conformity withU.S. generally accepted accounting principles.
Substantial Doubt about the Company's Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company incurred a net loss of$(69,066) and suffered from an accumulated deficit of$(49,520,154) as ofDecember 31, 2022 . These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with regards to these matters are also described in Note 3 to the financial statements. These 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 thePublic Company Accounting Oversight Board (United States ) ("PCAOB") and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit 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 its internal control over financial reporting. As part of our audit, 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 audit 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 audit provides a reasonable basis for our opinion. Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are
no critical audit matters.OLAYINKA OYEBOLA & CO. (Chartered Accountants)
We have served as the Company's auditor since 2021.
Nigeria March 15, 2023 Firm ID: 5968 F-1 NAMLIONG SKYCOSMOS, INC. (Formerly Kreido Biofuels, Inc.) BALANCE SHEETS (Currency expressed inUnited States Dollars ("US$"), except for number of shares) December 31, 2022 December 31, 2021 ASSETS Current asset: Cash $ - $ - TOTAL ASSETS $ - $ - LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued liabilities $ 16,000
$ 755 Amount due to a director 53,821 - Total current liabilities 69,821 755 TOTAL LIABILITIES 69,821 755 Commitments and contingencies - - STOCKHOLDERS' DEFICIT Preferred Stock, 10,000,000 shares authorized,$0.001 par value, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 - - Common stock, 300,000,000 shares authorized,$0.001 par value, 14,706,513 and 14,706,513 shares issued and outstanding atDecember 31, 2022 and December 31, 2021, respectively 14,706 14,706 Additional paid-in capital 49,435,627 49,435,627 Accumulated deficit (49,520,154 ) (49,451,088 ) Stockholders' deficit (69,821 ) (755 )
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ -
$ -
The accompanying notes are an integral part of these financial statements.
F-2
NAMLIONG SKYCOSMOS, INC.
(Formerly Kreido Biofuels, Inc.)
STATEMENTS OF OPERATIONS
(Currency expressed in United States Dollars ("US$"), except for number of
shares)
For the Years Ended
December 31,
2022 2021
Revenue $ - $ -
Operating expenses:
Professional fees - 424,816
General and administrative expenses 69,066 13,150
Total operating expenses 69,066 437,966
LOSS FROM OPERATION (69,066 ) (437,966 )
Other income
Gain on settlement of debt - 43,149
LOSS BEFORE INCOME TAX (69,066 ) (394,817 )
Income tax expense - -
NET LOSS $ (69,066 ) $ (394,817 ) Net loss per share - Basic and Diluted$ (0.00 ) $ (0.13 ) Weighted average common shares outstanding - Basic and Diluted 14,706,513 2,966,930 The accompanying notes are an integral part of these financial statements. F-3 NAMLIONG SKYCOSMOS, INC. (Formerly Kreido Biofuels, Inc.) STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Currency expressed inUnited States Dollars ("US$"), except for number of shares) Additional Total Common Stock Paid-In Accumulated Stockholders' Shares Amount Capital Deficit Deficit
Balance as of January 1, 2021 1,956,452$ 1,956 $ 48,984,877 $ (49,057,571 ) $ (69,438 ) Fractional shares from reverse split 61 - - - - Shares issued for services rendered 750,000 750 411,750 - 412,500 Shares issued for the conversion of promissory note 12,000,000 12,000 39,000 - 51,000 Net loss for the year - - - (394,817 ) (394,817 ) Balance as of December 31, 2021 14,706,513$ 14,706 $ 49,435,627 $ (49,451,088 ) $ (755 ) Balance as of January 1, 2022 14,706,513$ 14,706 $ 49,435,627 $ (49,451,088 ) $ (755 ) Net loss for the year - - - (69,066 ) (69,066 ) Balance as of December 31, 2022 14,706,513$ 14,706 $ 49,435,627 $ (49,520,154 ) $ (69,821 ) The accompanying notes are an integral part of these financial statements. F-4 NAMLIONG SKYCOSMOS, INC. (Formerly Kreido Biofuels, Inc.) STATEMENTS OF CASH FLOWS (Currency expressed in United States Dollars ("US$")) For the Year Ended December 31, 2022 2021 Cash flows from operating activities: Net loss$ (69,066 ) $ (394,817 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation - 412,500 Gain from the forgiveness of debt - (42,174 ) Change in operating assets and liabilities: Accounts payable and accrued liabilities 15,245 (26,509 ) Net cash used in operating activities (53,821 ) (51,000 ) Cash flows from financing activities: Advance from a related party 53,821 51,000 Net cash provided by financing activities 53,821 51,000 Net change in cash and cash equivalents -
-
BEGINNING OF YEAR - -
END OF YEAR $ - $ -
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ - $ -
Cash paid for interest $ - $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock issued for debt $ - $ 51,000
The accompanying notes are an integral part of these financial statements.
F-5
NAMLIONG SKYCOSMOS, INC.
(Formerly Kreido Biofuels, Inc.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2022 AND 2021
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
Namliong Skycosmos, Inc. (formerlyKreido Biofuels, Inc. ) (the "Company" or "KRBF") was incorporated asGemwood Productions, Inc. under the laws of theState of Nevada onFebruary 7, 2005 .Gemwood Productions, Inc. changed its name toKreido Biofuels, Inc. onNovember 2, 2006 . The Company took its current form onJanuary 12, 2007 whenKreido Laboratories, Inc. ("Kreido Labs "), completed a reverse triangular merger withKreido Biofuels, Inc. OnApril 19, 2022 , the Company changed its current name toNamliong SkyCosmos, Inc. Kreido Labs , formerly known asHoll Technologies Company , was incorporated onJanuary 13, 1995 under the laws of theState of California . Since incorporation,Kreido Labs has been engaged in activities required to develop, patent and commercialize its products.Kreido Labs was the creator of reactor technology that was designed to enhance the manufacturing of a broad range of chemical products. The cornerstone ofKreido Labs' technology was its patented STT® (Spinning Tube in Tube) diffusional chemical reacting system, which were both a licensable process and a licensable system. In 2005, the Company demonstrated how the STT® could make biodiesel from vegetable oil rapidly with almost complete conversion and less undesirable by-products. The Company had continued to pursue this activity, built and tested a pilot biodiesel production unit and, prior toJune 20, 2008 , was in the process of developing the first of its commercial biodiesel production plants inthe United States that, if constructed and put into operation, was expected to produce approximately 33 million to 50 million gallons per year. OnJune 20, 2008 , the Company announced that due to the weakening of the economy, the continued financial market turmoil and the inability to raise needed capital to finance site construction and plant start-up costs, the Company was suspending work regarding its flagship biodiesel production plant at thePort of Wilmington, North Carolina . In November of 2018, the Company discontinued operations of its subsidiary,Kreido Labs . Our current business will be to seek to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target. Our acquisition strategy will be to assess a broad range of potential business combination targets and complete a business combination. In doing so, we will evaluate the historical financial statements of the target, its management, and projected future results. In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us. We are not prohibited from pursuing a business combination with a company that is affiliated with our management, but we have no plans to do so. We do not plan to retain a significant equity position after closing of any acquisition and management does not plan to continue as part of the new management team. F-6 We have not selected any specific business combination target. Our sole officer and director presently has, and in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if our officer and director becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity. We do not believe, however, that the fiduciary duties or contractual obligations of our officer/director will materially affect our ability to complete our business combination. Our executive officer is not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combination targets and monitoring the related due diligence.
On
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in
Accounting Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles inthe United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Financial instruments, including cash and accrued expenses and other liabilities are carried at amounts, which reasonably approximate their fair value due to the short-term nature of these amounts or due to variable rates of interest, which are consistent with market rates.
Loss per Common Share
Basic loss per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year.
Stock-based compensation
The Company recognizes compensation expense for all stock-based compensation awards based on the grant-date fair value estimated in accordance with the provisions of ASC 718.
Income Taxes Under ASC 740, "Income Taxes," deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary 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 expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As ofDecember 31, 2022 and 2021, there were no deferred taxes as there was a full valuation allowance due to the uncertainty of the realization of net operating loss carry forward prior to expiration. F-7
Fair Value of Financial Instruments
The Company follows guidance for accounting for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability. The carrying amounts of financial assets such as cash approximate their fair values because of the short maturity of these instruments.
Recent Accounting Pronouncements
The FASB established the Accounting Standards Codification
("Codification" or "ASC") as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in accordance with generally accepted
accounting principles in
Rules and interpretative releases of the
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE 3 - GOING CONCERN
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, Management cannot provide any assurances that the Company will be successful in accomplishing any of its plans, which raises substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. F-8
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock The Company's Articles of Incorporation authorize the issuance of up to 300,000,000 common shares, par value$0.001 per share, and 10,000,000 preferred shares, also$0.001 par value. There were 14,706,513 shares of common stock outstanding atDecember 31, 2022 and 2021, respectively. There were no preferred shares outstanding during any periods presented. During the year endedDecember 31, 2021 , a related party forgave an outstanding balance of$33,621 and the forgiveness of related party debt was recorded in additional paid-in capital.
OnOctober 15, 2021 , the Company issued 750,000 shares of its common stock to a third party for services rendered, at the current market value of$0.55 per share, totaling$412,500 as stock-based compensation recorded for the year
endedDecember 31, 2021 . InSeptember 2021 , the Company received a promissory note of$51,000 in a term of 3 months with interest charge at 12% per annum. InDecember 2021 , upon the maturity, the Company converted the promissory note of$12,000 into 12,000,000 shares of its common stock and the corresponding outstanding balance and interest charge was waived by the note holder. NOTE 5 - INCOME TAXES OnDecember 22, 2017 , the 2019 Tax Cuts and Jobs Act (the "Tax Act") was enacted into law including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effectiveJanuary 1, 2018 , among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring ourU.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. The Company does not have any foreign earnings and therefore, we do not anticipate the impact of a transition tax. We have remeasured ourU.S. deferred tax assets at a statutory income tax rate of 21%. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of any transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions.
The cumulative tax effect at the expected rate of 21% as of
Schedule of deferred tax asset 2022 2021 Net operating loss carryover$ 49,520,154 $ 49,451,088 Deferred tax asset 10,399,232 10,384,728 Less: valuation allowance (10,399,232 ) (10,384,728 ) Net deferred tax asset $ - $ -
AtDecember 31, 2022 , the Company had net operating loss carry forwards of approximately$49,520,154 that may be offset against future taxable income. The Tax Act also changed the rules on net operating loss carry forwards. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, NOL carry forward arising afterJanuary 1, 2020 , will now be limited to 80 percent of taxable income. F-9 No tax benefit has been reported in theDecember 31, 2022 , the Company's financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. A change in ownership may limit net operating loss carry forwards in future years. The benefits of our deferred tax assets, including our NOLs, built-in losses and tax credits would be reduced or potentially eliminated if we experienced an "ownership change" under Section 382.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the year endedDecember 31, 2021 , a related party forgave an outstanding balance of$33,621 and the forgiveness of related party debt was recorded in additional paid-in capital. As ofDecember 31, 2020 , the Company had a zero balance of related party payable. During the year endedDecember 31, 2022 and 2021, the Company has been provided with free office space by its shareholders. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Apart from the transactions and balances detailed elsewhere in these accompanying financial statements, the Company has no other significant or material related party transactions during the years presented.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
As of
NOTE 8 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events from
F-10
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