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PART
I
FORWARD-LOOKING
STATEMENTS
Certain
statements made in this Annual Report on Form 10-K are “forward-looking statements” (within the meaning of the Private
Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements
involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of
the Registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking
statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties.
The Registrant’s plans and objectives are based, in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and
market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which
are beyond the control of the Registrant. Although the Registrant believes its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements
included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a representation by the Registrant or any other person
that the objectives and plans of the Registrant will be achieved.
Unless
stated otherwise, the words “we,” “us,” “our,” “the Company” or “Clancy
Corp” in this Annual Report collectively refers to Clancy Corp.
Item
1. Business.
Special
Note Regarding Chinese Companies.
Our
principal executive offices are located in China and a majority of our executive officers and/or directors are located
in or have significant ties to China. To date, our operations in the PRC have been limited. Clancy Corp. a Nevada company, registered
Shanghai Clancy Enterprise Management Co., Ltd. as a wholly foreign-owned entity in Shanghai, China on April 13, 2020 (Shanghai
Clancy). Shanghai Clancy registered Beijing Clancy Information Technology Co., Ltd. (Beijing
Clancy) as a wholly-owned subsidiary in Beijing on April 24, 2020. Unless the context indicates otherwise, all operations are
conducted by Beijing Clancy, however shareholders will own an interest in Clancy Corp, the US domiciled company.
Clancy
Corp
(a
Nevada company)
↓
100%
Shanghai
Clancy Enterprise Management Co., Ltd.
(a
Shanghai company)
↓100%
Beijing
Clancy Information Technology Co., Ltd.
(a
Beijing company)
Nonetheless,
investors should be aware that legal and operational risks due to our operations in the PRC. Depending on the nature of our business
and/or operations, the PRC government may exert a significant amount of control and/or regulation on the PRC operating entity.
This regulation and/or control could result in a material change our company’s post-combination operations and the value
of common stock held by investors. It also could significantly limit or completely hinder our ability to offer or continue to
offer securities to investors. Furthermore, it could cause the value of such securities to significantly decline or be worthless. Recently,
the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of 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 a variable interest entity structure, adopting new measures to extend
the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement.
As
such, with respect to our future business, we will avoid any business restricted by the PRC, that is involving “Important
Industry,” “National Economic Security,” a “well-known trademark,” or a “Chinese traditional
brand.” Foreign ownership of these type of PRC companies require approval by the PRC authorities. Typically, these types
of companies are acquired by foreign entities (without PRC approval) using a variable interest entity (VIE) structure whereby
contractual agreements are entered into between the foreign acquiring company (or its subsidiary) and the PRC operating entity,
however, the PRC operating company never becomes a direct subsidiary of the foreign acquiring company. Notwithstanding the forgoing,
nonetheless the Company will face numerous risks and uncertainties with respect to any operations in the PRC. PRC laws and regulations
are uncertain, as many of these laws and regulations are relatively new and may be subject to change, and their official interpretation
and enforcement by the PRC government may involve substantial uncertainty. Generally, PRC has substantially less experience through
its judiciary or the arbitration process as compared to the United States or the Cayman Islands. In addition, laws in the PRC
are subject to change in the future with little advance notice which could negatively impact our future business and stock price.
As
stated above, we do not believe that we will be directly subject to these regulatory actions or statements, as we do not intend
to have a VIE structure and any such business acquired will not involve the collection of user data, implicate cybersecurity,
or involve any other type of restricted industry. However, because these statements and regulatory actions are new, it is highly
uncertain how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new
laws or regulations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations
will have on our daily business operations or our ability to accept foreign investments and list on an U.S. exchange. See “Risk
Factors – Risks Related to Doing Business in China.”
As
we develop operations in the PRC, our business, financial condition, results of operations, prospects and certain transactions
may be subject to economic, political and legal developments in the PRC. Unlike in the United States, the enforcement of laws
and rules and regulations in the PRC can change quickly with little advance notice; and 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
PRC-based issuers which could result in a material change in our operations and/or the value of our common shares. Recent
statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted
overseas and/or foreign investments in China based issuers. Any future action by the Chinese government expanding the categories
of industries and companies whose foreign securities offerings are subject to government review could significantly limit or completely
hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly
decline or be worthless. See “Risk Factors – Risks Related to Doing Business in China.”
As
of the date of this filing, based upon our understanding, we are not (i) required to obtain permissions from any PRC authorities
to operate or issue our shares to foreign investors and (ii) subject to the permission requirements from the China Securities
Regulatory Commission (CSRC), Cyberspace Administration of China (CAC) nor any other entity that is required to approve of our
PRC subsidiaries’ operations. As of the date of this filing, we have not received, nor were we denied, such permissions
by any PRC authority. If our determination that we are not subject to these regulatory requirements is incorrect or such requirements
adversely change, foreign investors may be required to divest themselves of their investment and we may face sanctions, fines,
or penalties from the PRC government and we may be required to divest our PRC operations, change certain aspects of our business
to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more
licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent
measures are required to be implemented, our business, financial condition and results of operations could be adversely affected
as well as materially decrease the value of our common shares.
Moreover,
as stated above, we will avoid businesses requiring a VIE structure under PRC regulations. As stated above, this type of VIE structure
typically entails contractual agreements between the acquiring company (ie the Company) (or its subsidiary) and the PRC operating
entity, however, at no time is the PRC operating company a subsidiary of the acquiring company.
Since
we intend to use a direct ownership structure rather that a VIE structure, under PRC law, the Company will be able to distribute
dividends, if any, from its operating PRC entity. The operating PRC subsidiary will be able to distribute dividends upstream to
the parent company and the parent company will then be able to distribute the dividends to its shareholders on a proportionate
basis, provided however, that the PRC subsidiary has distributable earnings. Current PRC regulations permit an operating subsidiary
to pay dividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with
PRC accounting standards and regulations. In addition, each PRC subsidiarity will be 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 each of its registered
capital. These reserves are not distributable as cash dividends. However, as of this date, we have not made any upstream transfers,
dividends or distributions.
Pursuant
to the Holding Foreign Companies Accountable Act (“HFCAA”), the Public Company Accounting Oversight Board (the “PCAOB”)
issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered
public accounting firms headquartered in: (1) mainland China of the People’s Republic of China because of a position taken
by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because
of a position taken by one or more authorities in Hong Kong. In addition, the PCAOB’s report identified the specific registered
public accounting firms which are subject to these determinations. Our registered public accounting firm, Jack Sharma CPA, is not headquartered
in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination.
Notwithstanding the foregoing, if the PCAOB is not able to fully conduct inspections of our auditor’s work papers in China,
you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S.
capital markets and trading of our securities may be prohibited under the HFCAA. See “Risk Factors – Risks Related
to Doing Business in China.” Although the audit report included herein was issued by U.S. auditors who are currently inspected
by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would
be deprived of the benefits of such inspection and our common shares may be delisted or prohibited from trading.
Company
Background.
Clancy
Corp. (the “Company”) was incorporated under the laws of the State of Nevada on March 22, 2016.
On
January 15, 2020, the Company filed a Certificate of Amendment to Articles of Incorporation with the Nevada Secretary of State
(the “Amendment”) which effectuated the following corporate actions:
|
● |
the
forward split of our issued and outstanding common stock, $0.001 par value, on thirty (30) post-split shares for a one (1)
pre-split share basis applicable to shareholders of record as of January 2, 2020, and |
|
● |
The
increase of our authorized shares of common stock, $0.001 par value, from 75,000,000 to 345,000,000. |
The
above corporate actions were adopted by written consent of our sole Director, Mr. Gaoyang Liu, on January 2, 2020, and the sole
Director recommended the Corporate Actions be presented to our shareholders for approval. On January 3, 2020, Mr. Liu, our majority
stockholder, holding 64.4% of our outstanding voting securities executed written consent approving the Corporate Actions. For
purposes of the forward stock split described above, the sole Director also set January 2, 2020 as the record date of such action.
On
March 31, 2020, a change of control occurred with respect to the Company. Pursuant to a Stock Purchase Agreement entered into
by and among the Clancy Corp. (“Company”), Gaoyang Liu (“Seller”), and Xiangying Meng (“Buyer”)
(the “Purchase Agreement”), Seller assigned, transferred and conveyed to Buyer 60,000,000 shares of common stock of
Company (“Common Stock”), which represents 64.4% of the total issued and outstanding shares of the Company,
for the sum of $285,000. In addition, Seller assigned his rights and interest to outstanding loans made by Seller to the Company
in the amount of $55,609 for the face value of such loans.
Mr.
Meng now owns 67,500,000 shares of common stock of the Company or 72.5% of the issued and outstanding shares of common stock of
the Company. In connection with the transaction, Mr. Liu, the then sole officer and director of the Company resigned in all officer
and director capacities from the Company and Mr. Meng was appointed Chief Executive Officer and Chief Financial Officer of the
Company. In addition, Mr. Meng was appointed the sole director of the Company.
On
April 13, 2020, Clancy Corp. (“Company”) received notification from the National Enterprise Credit Information Publicity
System that it had approved the Company’s establishment of Shanghai Clancy Enterprise Management Co., Ltd (“Shanghai
Clancy”) as a wholly owned foreign entity in Shanghai, Peoples Republic of China (“WOFE”). The initial application
was filed by the Company with the PRC governmental agency on November 2, 2019. Shanghai
Clancy registered a wholly-owned subsidiary in Beijing on April 24, 2020. Its name is Beijing Clancy Information Technology Co.,
Ltd. The main business scope is technology development, transfer, consultation, service and promotion.
On
July 6, 2020, the Nevada Secretary of State approved the Company’s Certificate of Amendment to Articles of Incorporation
which effectuated the following corporate action (“Corporate Action”):
|
● |
the
reverse split of our issued and outstanding common stock, $0.001 par value, on thirty (30) pre-split shares to one (1) post-split
share basis. Fractional shares resulting from the action will be rounded up to the nearest whole share. |
The
above corporate action was adopted by written consent of our sole Director on June 11, 2020, and the sole Director recommended
the corporate action be presented to our shareholders for approval. For purposes of the reverse stock split described above, the
sole Director also set June 12, 2020 as the record date of such action. On June 12, 2020, our majority stockholder, holding 91.885%
of our outstanding voting securities, executed written consent in lieu of a shareholder meeting approving the corporate action.
On
December 23, 2020, the Company closed a private placement of its common stock to five parties pursuant to which five parties subscribed
to 150,000,000 shares of common stock for the sum of $300,000. Of the total offering, Mr. Xiangying Meng, our sole officer and
director, subscribed to 75,550,000 shares and paid the Company the sum of $151,100.
Proposed
Combinations
Presently,
under SEC Rule 405 promulgated under the Act, the Company qualifies as a “shell company,” because it has no or nominal
assets and no or nominal operations. Management does not intend to undertake any efforts to cause a market to develop in our securities,
either debt or equity, until we have successfully concluded a business combination or until it has successfully developed an operating
business. The Company intends to comply with the periodic reporting requirements of the Act for so long as it is subject to those
requirements.
The
Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential
through a combination with a business or through the successful development of its business described below.
As
of the date of this report, the Company has not entered into any definitive agreement with any party, nor have there been any
specific discussions with any potential business combination candidate regarding business opportunities for the Company. The Company
has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities.
Potential
Acquisition Structure
If
we move forward with acquiring another business for which no assurances can be given, it will be impossible to predict the manner
in which the Company may participate in a business opportunity. Specific business opportunities will be reviewed as well as the
respective needs and desires of the Company and the promoters of the opportunity and, upon the basis of that review and the relative
negotiating strength of the Company and such promoters, the legal structure or method deemed by management to be suitable will
be selected. Such structure may include, but is not limited to leases, purchase and sale agreements, licenses, joint ventures
and other contractual arrangements. The Company may act directly or indirectly through an interest in a partnership, corporation
or other form of organization. Implementing such structure may require the merger, consolidation or reorganization of the Company
with other corporations or forms of business organization, and although it is likely, there is no assurance that the Company would
be the surviving entity. In addition, the present management, board of directors and stockholders of the Company most likely will
not have control of a majority of the voting shares of the Company following a reorganization transaction. As part of such a transaction,
the Company’s existing management and directors may resign and new management and directors may be appointed without any
vote by stockholders.
It
is likely that the Company will acquire its participation in a business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain
circumstances the criteria for determining whether or not an acquisition is a so-called “tax free” reorganization
under the Internal Revenue Code of 1986, depends upon the issuance to the stockholders of the acquired company of a controlling
interest (i.e. 80% or more) of the common stock of the combined entities immediately following the reorganization. If a transaction
were structured to take advantage of these provisions rather than other “tax free” provisions provided under the Internal
Revenue Code, the Company’s current stockholders would retain in the aggregate 20% or less of the total issued and outstanding
shares. This could result in substantial additional dilution in the equity of those who were stockholders of the Company prior
to such reorganization. Any such issuance of additional shares might also be done simultaneously with a sale or transfer of shares
representing a controlling interest in the Company by the principal shareholders. The Company does not intend to supply disclosure
to shareholders concerning a target company prior to the consummation of a business combination transaction, unless required by
applicable law or regulation. The Company will file a current report on Form 8-K, as required, within four business days of a
business combination which results in the Company ceasing to be a shell company. This Form 8-K will include complete disclosure
of the target company, including audited financial statements.
It
is anticipated that any new securities issued in any reorganization would be issued in reliance upon exemptions, if any are available,
from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at the time the transaction is consummated, or under
certain conditions or at specified times thereafter. The issuance of substantial additional securities and their potential sale
into any trading market that might develop in the Company’s securities may have a depressive effect upon such market.
The
present majority stockholder of the Company will likely not have control of a majority of the voting securities of the Registrant
following a reorganization transaction. As part of such a transaction, the Registrant’s sole director may resign and one
or more new directors may be appointed by our majority stockholder.
In
the case of an acquisition, the transaction may be accomplished upon the sole determination of management with the consent of
our majority stockholder. In the case of a statutory merger or consolidation directly involving the Company, it will likely be
necessary to call a stockholders’ meeting and obtain the approval of the holders of a majority of the outstanding securities.
The necessity to obtain such stockholder approval may result in delay and additional expense in the consummation of any proposed
transaction and will also give rise to certain appraisal rights to dissenting stockholders. Most likely, management will seek
to structure any such transaction so as not to require stockholder approval.
The
Company will participate in a business opportunity only after the negotiation and execution of a written agreement. Although the
terms of such agreement cannot be predicted, generally such an agreement would require specific representations and warranties
by all of the parties thereto, specify certain events of default, detail the terms of closing and the conditions which must be
satisfied by each of the parties thereto prior to such closing, outline the manner of bearing costs if the transaction is not
closed, set forth remedies upon default, and include miscellaneous other terms normally found in an agreement of that type.
It
is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial costs for accountants, attorneys and others. If
a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation
might not be recoverable. Moreover, because many providers of goods and services require compensation at the time or soon after
the goods and services are provided, the inability of the Company to pay until an indeterminate future time may make it impossible
to procure such goods and services.
The
Company intends to search for a target for a business combination by contacting various sources including, but not limited to,
our affiliates, lenders, investment banking firms, private equity funds, consultants and attorneys. The approximate number of
persons or entities that will be contacted is unknown and dependent on whether any opportunities are presented by the sources
that we contact. It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and
execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention
and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity,
the costs theretofore incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached
for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to
the Registrant of the related costs incurred.
Our
sole officer and director is engaged in outside business activities. Our sole officer and director anticipates that he will devote
very limited time to our business until the acquisition of a successful business opportunity has been identified. The specific
amount of time that management will devote to the Company may vary from week to week or even day to day, and therefore the specific
amount of time that management will devote to the Company on a weekly basis cannot be ascertained with any level of certainty.
In all cases, management intends to spend as much time as is necessary to exercise its fiduciary duties as officer and director
of the Company. We expect no significant changes in the number of our employees other than such changes, if any, incident to a
business combination.
Recent
Business Events.
Since
the creation of its WOFE in April 2020, the Company has attempted to establish a technology driven business in the PRC though
its WOFE. Clancy initially will seek to provide services to small and medium-sized enterprises in and around the Beijing metropolitan
area. In the future, we intend to expand to other geographical areas with China. These services can be segregated into the following
four segments:
(1)
Information technology consulting and training services including enterprise information planning, technology management consulting,
information engineering implementation, testing, evaluation and certification, enterprise staff skills training;
(2)
Information technology operation and maintenance and supporting services: including daily IT system condition monitoring, IT asset
configuration change, system upgrading and optimization, system architecture construction and improvement, disaster recovery system
construction and spare parts, operation and maintenance tool materials, operation and maintenance team call;
(3)
Design, development and testing services: including website server-side development, website client-side development, smart-phone
application development, underlying tool development, multi-functional script program, artificial intelligence, desktop program,
industrial control program development and related testing work.
(4)
Data processing and integration implementation services: including general application layer data exchange, database construction,
data collection and analysis, process improvement, etc.
During
third calendar quarter of 2020, the Company entered into contracts with three clients to provide server maintenance on terms generally
described below:
Client
A.
Term:
July 29, 2020 to July 28, 2023.
Payment
terms: 216,000RMB ($32,400) ratable payments made quarterly during term.
Client
B.
Term:
July 29, 2020 to July 28, 2023.
Payment
terms: 432,000RMB ($64,800) ratable payments made quarterly during term.
Client
C.
Term:
July 29, 2020 to July 28, 2023.
Payment
terms: 540,000RMB ($81,000) ratable payments made quarterly during term.
In
addition, on May 26, 2020, the Company entered into a three year lease agreement for its office premises. The office space is
600 square meters. The annual rent is 480,000RMB ($72,000) which has been paid in advance for the initial year of the lease.
In
May 2021, the Company ceased its IT services and re-focused its operations to provide marketing services to small and median sized
businesses. Clancy is now a product marketing consulting firm that provides product marketing consulting services to clients.
The Company will develop marketing programs and strategies in line with customer needs. Our
marketing programs will help clients with detailed analysis on the market data in their industry, including historical data. We
also will assist clients expand their marketing communication channels including but not limited to advertisements in the business
journals, electronical communication tools such as WeChat marketing programs, etc. We charge an agreed upon fee based on technical
difficulties and the marketing reach of the programs.
The
Company intends to continue with the development of this marketing business in future. As such time as it has reached a meaningful
level of business, the Company intends to change its status from a “shell company,” however, at this time, no assurances
can be given that we will be able to achieve the desired level of business.
Corporate
Information
Office.
Our
current business office is located at: 2nd Floor, BYD, No. 56, Dongsihuan South Road, Chaoyang District, Beijing, China
100023. Our phone number is +86-189-1098-4577. The Company does not have a web-site.
Employees.
As
of the date of this filing, the Company has 11 full time employees.
Item
1A. Risk Factors
Our
plan of operation is to obtain debt or equity finance to meet our ongoing operating expenses and attempt to merge with another
entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our
shareholders. There can be no assurance that any of the events can be successfully completed, that any such business will be identified
or that any stockholder will realize any return on their shares after such a transaction has been completed. In particular, there
is no assurance that any such business will be located or that any stockholder will realize any return on their shares after such
a transaction. Any merger or acquisition completed by us can be expected to have a significant dilutive effect on the percentage
of shares held by our current stockholders. We believe we are an insignificant participant among the firms which engage in the
acquisition of business opportunities. There are many established venture capital and financial concerns that have significantly
greater financial and personnel resources and technical expertise than we have. In view of our limited financial resources and
limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
You
should be aware that there are various risks associated with our business, including the risks discussed below. You should carefully
consider these risk factors, as well as the other information contained herein, in evaluating our business and us.
RISKS
RELATED TO OUR OPERATIONS, FINANCIAL CONDITION AND BUSINESS
WE
HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES. As of July 31, 2022, we had an accumulated deficit of $876,571
and no revenues for the current fiscal year. We also expect future losses until we are able to generate revenues through a merger
with an operating company or through our emerging business operations (for which no assurances can be given). As a result of these,
among other, factors we received from our registered independent public accountants in their report for the financial statements
for the years ended July 31, 2022 and 2021, the accompanying financial statements have been prepared in conformity with generally
accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company currently has losses
and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended
period of time, which adds substantial doubt about the Company continuing as a going concern. Management anticipates that
the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends
to position itself so that it will be able to raise additional funds through the capital markets. In light of management’s
efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable
and continue as a going concern.
OUR
EXISTING FINANCIAL RESOURCES ARE INSUFFICIENT TO MEET OUR ONGOING OPERATING EXPENSES. We have limited sources of income at
this time and limited existing cash balances to meet our ongoing operating expenses, including funds to expand our initial business
operations. We have relied upon affiliates of the Company to make advances to the Company to cover our operating expenditures.
There are no assurances that these advances will continue in the future. The failure of these advances to continue in the future
may result in our security holders losing their entire investment.
THE
ADMINISTRATIVE COSTS OF PUBLIC COMPANY REGULATORY COMPLIANCE COULD BECOME BURDENSOME AND CONSUME A SIGNIFICANT AMOUNT OF OUR CASH
RESOURCES WHICH COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS. We will incur significant costs and expenses in
connection with assuring compliance with all laws, rules and regulations applicable to us as a public company. We anticipate that
our ongoing costs and expenses of complying with our public reporting company obligations will be approximately $30,000 to 50,000
annually. Our reporting and compliance costs and expenses may increase substantially if we are able to deploy our business model
on an international basis, which will add significant cross-border jurisdictional complexity to our regulatory compliance and
our accounting controls and procedures. Our compliance costs and expenses could also increase substantially if we apply for trading
of our securities on a national stock exchange which may have listing requirements that engender additional administration and
compliance costs. We have assigned a high priority to establishing and maintaining controls, procedures, corporate compliance
and public company reporting; however, there can be no assurance that we will have sufficient cash resources available to satisfy
our public company reporting and compliance obligations. If we are unable to cover the cost of proper administration of our public
company compliance and reporting obligations, we could become subject to sanctions, fines and penalties, our stock could be barred
from trading in public capital markets and we may have to cease doing business.
IN
THE FUTURE, WE MAY PURSUE THE ACQUISITION OF AN OPERATING BUSINESS. At the present time we expect to continue to develop our
business. However, it is conceivable that we may seek to acquire an operating business in the future. Successful implementation
of this strategy depends on our ability to identify a suitable acquisition candidate, acquire such company on acceptable terms
and integrate its operations. In pursuing acquisition opportunities, we compete with other companies with similar strategies.
Competition for acquisition targets may result in increased prices of acquisition targets and a diminished pool of companies available
for acquisition. Acquisitions involve a number of other risks, including risks of acquiring undisclosed or undesired liabilities,
acquired in-process technology, stock compensation expense, diversion of management attention, potential disputes with the seller
of one or more acquired entities and possible failure to retain key acquired personnel. Any acquired entity or assets may not
perform relative to our expectations. Our ability to meet these challenges has not been established.
OUR
BUSINESS IS HIGHLY COMPETITIVE. COMPETITION PRESENTS AN ONGOING THREAT TO THE SUCCESS OF OUR BUSINESS. We face significant
competition in every aspect of our new business, including from companies that web related products and services. We compete with
companies that offer full-featured products that replicate the range of content and related capabilities we provide. We also compete
with companies that develop applications, particularly mobile applications, that provide social or other communications functionality,
such as messaging, photo- and video-sharing, and micro-blogging, and companies that provide web- and mobile-based information
and entertainment products and services that are designed to engage users and capture time spent online and on mobile devices.
In addition, we face competition from traditional, online, and mobile businesses that provide media for marketers to reach their
audiences and/or develop tools and systems for managing and optimizing advertising campaigns.
Most,
if not all, of our current and potential competitors may have significantly greater resources or better competitive positions
in certain product segments, geographic regions or user demographics than we do. These factors may allow our competitors to respond
more effectively than us to new or emerging technologies and changes in market conditions.
Our
competitors may develop products, features, or services that are like ours or that achieve greater acceptance, may undertake more
far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies.
Certain competitors could use strong or dominant positions in one or more markets to gain competitive advantage against us in
our target market or markets. As a result, our competitors may acquire and engage users or generate revenue at the expense of
our own efforts, which may negatively affect our business and financial results.
SCARCITY
OF, AND COMPETITION FOR, BUSINESS OPPORTUNITIES AND COMBINATIONS. We believe we are an insignificant participant among the
firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns
that have significantly greater financial and personnel resources and technical expertise than we have. Nearly all such entities
have significantly greater financial resources, technical expertise and managerial capabilities than us and, consequently, we
will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination.
Moreover, we will also compete in seeking merger or acquisition candidates with numerous other small public companies. In view
of our limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage
compared to our competitors.
WE
HAVE NOT EXECUTED ANY FORMAL AGREEMENT FOR A BUSINESS COMBINATION OR OTHER TRANSACTION AND HAVE ESTABLISHED NO STANDARDS FOR BUSINESS
COMBINATIONS. We have not executed any formal arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of a private or public entity. There can be no assurance that we will be successful in
identifying and evaluating suitable business opportunities or in concluding a business combination. We have not identified any
particular industry or specific business within an industry for evaluation. There is no assurance we will be able to negotiate
a business combination on terms favorable, if at all. We have not established a specific length of operating history or specified
level of earnings, assets, net worth or other criteria which we will require a target business opportunity to have achieved, and
without which we would not consider a business combination. Accordingly, we may enter into a business combination with a business
opportunity having no significant operating history, losses, limited or no potential for earnings, limited assets, negative net
worth or other negative characteristics.
WE
MAY BE NEGATIVELY AFFECTED BY ADVERSE GENERAL ECONOMIC CONDITIONS INCLUDING THE IMPACT OF COVID 19. Current conditions in
domestic and global economies are extremely uncertain. Adverse changes may occur as a result of softening global economies, wavering
consumer confidence caused by the threat of terrorism and war, and other factors capable of affecting economic conditions. Such
changes could have a material adverse effect on our business, financial condition, and results of operations. In March 2020, the
World Health Organization declared the novel coronavirus (COVID-19) a global pandemic and recommended containment and mitigation
measures worldwide. The spread of COVID-19 has affected segments of the global economy and may affect our operations, including
the potential interruption of our supply chain. We are monitoring this situation closely, and although operations have not been
materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the
economic environment and our business is uncertain.
BECAUSE
OUR PRINCIPAL SHAREHOLDER CONTROLS OUR ACTIVITIES, HE MAY CAUSE US TO ACT IN A MANNER THAT IS MOST BENEFICIAL TO HIMSELF AND NOT
TO OTHER SHAREHOLDERS WHICH COULD CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY. Our principal
shareholder owns approximately 51.2% of our outstanding common stock. As a result, he effectively controls all matters requiring
stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers
and related party transaction. These insiders also have the ability to delay or perhaps even block, by their ownership of our
stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing
a change in control of our company that you might view favorably.
OUR
DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE RESOLVED FAVORABLY TO US. Certain conflicts of interest may exist
between our sole officer and director and us. Our sole officer and director has other business interests to which he also must
devote his time, resources and attention. Thus, a conflict of interest may arise in the future that may cause our business to
fail, including conflicts of interest in allocating his resources, time and attention to our Company and his other business interests.
WE
MAY DEPEND UPON OUTSIDE ADVISORS; WHO MAY NOT BE AVAILABLE ON REASONABLE TERMS AND AS NEEDED. To supplement the business experience
of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants
or advisors. Our Board without any input from stockholders will make the selection of any such advisors. Furthermore, it is anticipated
that such persons may be engaged on an “as needed” basis without a continuing fiduciary or other obligation to us.
In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able
to provide the required services.
RISKS
RELATED TO CHINA
RISK
OF NEW REGULATIONS, SIGNIFICANT NEW GOVERNMENT OVERSIGHT IN CHINA. Investors should be aware that legal and operational risks
exist with respect to our operations in the PRC. The PRC government may exert a significant amount of control and/or regulation
on a PRC operating entity. This regulation and/or control could result in a material change of the company’s operations
and the value of common stock held by investors. It also could significantly limit or completely hinder our ability to offer or
continue to offer securities to investors. Furthermore, it could cause the value of such securities to significantly decline or
be worthless. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on
the regulation of 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 a variable interest entity structure,
adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. We do
not believe that we will be directly subject to these regulatory actions or statements, as we do not expect to have a VIE structure
and our business does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted
industry. Because these statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative
regulation making bodies in China will respond to them, or what existing or new laws or regulations will be modified or promulgated,
if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability
to accept foreign investments and list on an U.S. exchange.
As
stated herein, the Company does not intend to enter into a merger or acquisition involving these restricted industries, such as
“Important Industry”, “National Economic Security”, a “well-known trademark”, or a “Chinese
traditional brand” so as to avoid any regulation and/or approval by the PRC authorities. However, recent statements by the
Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or
foreign investments in China based issuers. Investors should be aware that PRC laws are subject to change without notice and any
future action by the Chinese government expanding the categories of industries and companies whose foreign securities offerings
are subject to government review could negatively impact our future business (including our ability to enter into a merger with
a PRC company) and our stock price could significantly limit or completely hinder our ability to offer or continue to offer securities
to investors.
UNCERTAINTIES
WITH RESPECT TO THE PRC LEGAL SYSTEM COULD ADVERSELY AFFECT US. 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.
In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally.
The overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms
of foreign investments in the PRC. However, the PRC has not developed a fully integrated legal system, and recently enacted laws
and regulations may not sufficiently cover all aspects of economic activities in the PRC. In particular, the interpretation and
enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant
discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome
of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment
on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, these regulatory
uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits
from us.
Furthermore,
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 may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules
until sometime after the violation. In addition, any administrative and court proceedings in the PRC may be protracted, resulting
in substantial costs and diversion of resources and management attention.
PERMISSIONS
FROM THE PRC AUTHORITIES TO ISSUE OUR COMMON STOCK TO FOREIGN INVESTORS. While we intend to develop a business in one or more
industries that are not highly regulated in the PRC, nonetheless, we may be face governmental regulation and scrutiny in the future
from the PRC government. As of the date of this filing, we (1) are not required to obtain permissions from any PRC authority to
operate or issue our common stock to foreign investors, (2) are not subject to permission requirements from the China Securities
Regulatory Commission (the “CSRC”), the Cyberspace Administration of China (the “CAC”) or any other entity
that is required to approve of our PRC subsidiaries’ operations, and (3) have not received or were denied such permissions
by any PRC authorities. Nevertheless, the General Office of the Central Committee of the Communist Party of China and the General
Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According
to Law,” or the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen
the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese
companies. Given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, if any,
will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission
is obtained, whether it will be denied or rescinded. We have been closely monitoring regulatory developments in China regarding
any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings, including this offering.
As of the date of this prospectus, we have not received any inquiry, notice, warning, sanctions or regulatory objection to this
offering from the CSRC or other PRC governmental authorities. However, there remains significant uncertainty as to the enactment,
interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets
activities.
RISKS
RELATED TO A FUTURE DETERMINATION THAT THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (THE “PCAOB”) IS UNABLE TO INSPECT
OR INVESTIGATE OUR AUDITOR COMPLETELY. The audit report included herein was issued by Jack Sharma, CPA (“Auditor”)
a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing
the Auditor in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB.
There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during
the entire term of our engagement. The PCAOB is currently unable to conduct inspections in China without the approval of Chinese
government authorities. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors
may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by
the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating
our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements
and disclosures are adequate and accurate. In addition, under the HFCAA, our securities may be prohibited from trading on the
Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately
could result in our Common Stock being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding
Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit
an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two
consecutive years instead of three.
Pursuant
to the HFCAA, the PCOAB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or
investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic
of China, because a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region
and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition, the PCOAB’s
report identified the specific registered public accounting firms which are subject to these determinations. Our Auditor is not headquartered
in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination.
RISKS
RELATED TO OUR SECURITIES
WE
WILL NEED TO RAISE ADDITIONAL CAPITAL. IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL, OUR BUSINESS MAY FAIL. We will need to
raise additional capital to fund our ongoing operations. We have no cash on hand nor any working capital. To secure additional
financing, we may need to borrow money or sell more securities. Under the current circumstances, we may be unable to secure additional
financing on favorable terms, if available at all.
OUR
NEED FOR CAPITAL WILL CREATE ADDITIONAL RISKS AND CREATE POTENTIAL SUBSTANTIAL DILUTION TO EXISTING SHAREHOLDERS. As mentioned
above, we will need to raise additional capital in the future or rely upon borrowing from the Company’s sole officer and
director. Any equity raise will result in additional dilution to existing shareholders, and to the extent that any debt incurred
is converted to common stock, the conversion of this debt will cause additional dilution to existing shareholders. This dilution
may be substantial. Moreover, there can be no assurance that such additional financing, whether debt or equity, will be available
to the Company or that it will be available on acceptable commercial terms. Any inability to secure such additional financing
on appropriate terms could have a materially adverse impact on the business, financial condition and operating results of the
Company.
REDUCTION
OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION AND SUBSTANTIAL DILUTION TO STOCKHOLDERS. We may effect a business
combination with a private concern which, in all likelihood, would result in us issuing securities to stockholders of such private
company. The issuance of previously authorized and unissued shares of our common stock would result in reduction in percentage
of shares owned by present and prospective stockholders. In addition, any merger or acquisition can be expected to have a significant
dilutive effect on the percentage of the shares held our stockholders.
THE
REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY HAVE AN EFFECT ON THE TRADABILITY OF OUR SECURITIES. Our shares are subject
to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase “accredited
investors” means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth
in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income,
exceeds $300,000).
For
transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive
the purchaser’s written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of
broker-dealers to sell our securities and also may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In
addition, the Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks.” Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as
amended (“Exchange Act”). Because our securities constitute “penny stocks” within the meaning of the rules,
the rules would apply to us and to our securities. The rules may further affect the ability of owners of Shares to sell our securities
in any market that might develop for them.
Shareholders
should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated
to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock
market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate
in the market, management will strive within the confines of practical limitations to prevent the described patterns from being
established with respect to our securities.
The
shares of our common stock may be thinly-traded on OTC-Pink, meaning that the number of persons interested in purchasing our shares
of common stock at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable
to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or influence sales volume, and that even if we came
to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company
such as ours or purchase or recommend the purchase of our shares of common stock until such time as we became more seasoned and
viable. As a consequence, there may be periods of several days or more when trading activity in our shares of common stock is
minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally
support continuous sales without an adverse effect on Securities price.
OUR
STOCK WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU
NEED TO LIQUIDATE YOUR SHARES. We cannot give you any assurance that a broader or more active public trading market for our
shares of Common Stock will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we
can give investors no assurance that they will be able to sell their shares of common stock at or near ask prices or at all if
you need money or otherwise desire to liquidate your shares of common stock of our Company.
OUR
SOLE OFFICER AND DIRECTOR MAY HAVE A CONFLICT OF INTEREST WITH THE MINORITY SHAREHOLDERS AT SOME TIME IN THE FUTURE. SINCE THE
MAJORITY OF OUR SHARES OF COMMON STOCK ARE DEEMED TO BE OWNED BY OUR PRESIDENT/CHIEF EXECUTIVE OFFICER AND DIRECTOR, OUR OTHER
STOCKHOLDERS MAY NOT BE ABLE TO INFLUENCE CONTROL OF THE COMPANY OR DECISION MAKING BY MANAGEMENT OF THE COMPANY. An affiliate
of our sole officer and director beneficially owns approximately 51.2% of our outstanding common stock. The interests of our officer
and director may not be, at all times, the same as that of our other shareholders, he will have the ability to exert complete
control over the affairs of the Company. Also, he will have the ability to control the outcome of most corporate actions requiring
shareholder approval, including the sale of all or substantially all of our assets and amendments to our articles of incorporation.
This concentration of ownership may also have the effect of delaying, deferring or preventing a change of control of us, which
may be disadvantageous to minority shareholders.
RULE
144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE. All of the outstanding shares of common stock held
by our present officers, directors, and affiliate stockholders are “restricted securities” within the meaning of Rule
144 under the Act. As restricted Shares, these Shares may be resold only pursuant to an effective registration statement or under
the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state
securities laws. We are registering all of our outstanding Shares so officers, directors and affiliates will be able to sell their
Shares if this Registration Statement becomes effective. Rule 144 provides in essence that a person who has held restricted securities
for one year may, under certain conditions, sell every three months, in brokerage transactions, a number of Shares that does not
exceed the greater of 1.0% of a company’s outstanding common stock or the average weekly trading volume during the four
calendar weeks prior to the sale. There is no limit on the amount of restricted securities that may be sold by a nonaffiliate
after the owner has held the restricted securities for a period of two years. A sale under Rule 144 or under any other exemption
from the Act, may have a depressive effect upon the price of the common stock in any market that may develop.
THE
PRICE OF OUR COMMON STOCK COULD BE HIGHLY VOLATILE. Our common stock will be subject to price volatility, low volumes of trades
and large spreads in bid and ask prices quoted by market makers. Due to the low volume of shares traded on any trading day, persons
buying or selling in relatively small quantities may easily influence prices of our common stock. This low volume of trades could
also cause the price of our stock to fluctuate greatly, with large percentage changes in price occurring in any trading day session.
Holders of our common stock may also not be able to readily liquidate their investment or may be forced to sell at depressed prices
due to low volume trading. If high spreads between the bid and ask prices of our common stock exist at the time of a purchase,
the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad
market fluctuations and general economic and political conditions may also adversely affect the market price of our common stock.
No assurance can be given that an active market in our common stock will develop or be sustained. If an active market does not
develop, holders of our common stock may be unable to readily sell the shares they hold or may not be able to sell their shares
at all.
YOU
MAY EXPERIENCE DILUTION OF YOUR OWNERSHIP INTERESTS DUE TO THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK WHICH
COULD BE MATERIALLY ADVERSE TO THE VALUE OF OUR COMMON STOCK. As of July 31, 2022, we had 153,105,464 shares of our
common stock issued and outstanding. We are authorized to issue up to 345,000,000 shares of common stock. Our Board of Directors
may authorize the issuance of additional common or preferred shares under applicable state law without shareholder approval. We
may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock
in connection with the hiring of personnel, future acquisitions, future private placements of our securities for capital raising
purposes or for other business purposes, including the satisfaction of outstanding debt to affiliates and others. Future sales
of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on
the price of our common stock. If we need to raise additional capital, it may be necessary for us to issue additional equity or
convertible debt securities. If we issue equity or convertible debt securities, the net tangible book value per share may decrease,
the percentage ownership of our current stockholders may be diluted and such equity securities may have rights, preferences or
privileges senior or more advantageous to our common stockholders.
WE
DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK. We do not anticipate paying any cash dividends on our common
stock in the foreseeable future.
WE
MAY BE UNSUCCESSFUL IN FINDING A MERGER THAT CAN BE ACCOMPLISHED WITH POSITIVE LONG-TERM RESULTS. The business of selecting
and entering into a merger is fraught with all kinds of issues. For instance, the business may need capital that is never achieved,
the management is not capable of carrying the business forward successfully, the business plan is ill conceived, and not executed,
or competitive factors cause business failure. There are many other factors in addition to these, as may have been discussed above
in “Risk Factors” which could cause our company to fail and the investors capital will be at risk.
FAILURE
TO ACHIEVE AND MAINTAIN INTERNAL CONTROLS IN ACCORDANCE WITH SECTIONS 302 AND 404(A) OF THE SARBANES-OXLEY ACT OF 2000 COULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND STOCK PRICE. If we fail to maintain adequate internal controls or fail
to implement required new or improved controls, as such control standards are modified, supplemented or amended from time to time,
we may not be able to assert that we can conclude on an ongoing basis that we have effective internal controls over financial
reporting. Effective internal controls are necessary for us to produce reliable financial reports and are important in the prevention
of financial fraud. If we cannot produce reliable financial reports or prevent fraud, our business and operating results could
be harmed, investors could lose confidence in our reported financial information, and there could be a material adverse effect
on our stock price.
Item
1B. Unresolved Staff Comments.
None.
Item
2. Properties.
On
May 26, 2020, the Company has entered into a three year lease agreement for its office premises which terminates on May 25, 2023.
The office space is 600 square meters. The annual rent is 480,000RMB ($72,000) which has been paid in advance for the initial
year of the lease.
Item
3. Legal Proceedings.
There
are presently no pending legal proceedings to which the Company or any of its property is subject, or any material proceedings
to which any director, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any
class of voting securities is a party or has a material interest adverse to the Company, and no such proceedings are known to
the Company to be threatened or contemplated against it.
Item
4. Mine Safety Disclosures.
None.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market
Information
Our
common stock currently trades on the OTC-Pink Market under the symbol “CCYC.” We began trading on OTC Markets in December
2018. The table below sets forth, for the fiscal quarters indicated, the high and low bid prices per share of our common stock
as reflected on the OTC-Pink Market. The quotations represent inter-dealer prices without adjustment for retail markups, markdowns
or commissions, and may not necessarily represent actual transactions.
Quarterly
Period | |
High | | |
Low | |
Fiscal
year ended July 31, 2022: | |
| | | |
| | |
First
Quarter | |
| 9.21 | | |
| 9.21 | |
| |
| | | |
| | |
Fiscal
year ended July 31, 2021: | |
| | | |
| | |
First
Quarter | |
| 11.00 | | |
| 4.00 | |
Second
Quarter | |
| 3.50 | | |
| 2.50 | |
Third
Quarter | |
| 6.60 | | |
| 2.75 | |
Fourth
Quarter | |
| 9.21 | | |
| 3.85 | |
The
OTC-Pink is a quotation system and not a national securities exchange, and many companies have experienced limited liquidity when
traded through this quotation system. Any trading has been sporadic and there has been no meaningful trading volume. Any investment
in our Company should be considered extremely risky as we are a “shell company,” as defined under the Act, with no
business operations and no revenues.
Common
Stock:
The
Company is authorized by its Articles of Incorporation, as amended, to issue 345,000,000 shares of Common Stock and 153,105,464
shares of Common Stock issued and outstanding. As of July 31, 2022, there were 7 holders of record of the Common Stock.
Preferred
Stock:
Our
Articles of Incorporation do not allow for the issuance of preferred stock.
Dividend
Policy
The
Company has not declared or paid any cash dividends on its Common Stock and does not intend to declare or pay any cash dividend
in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend
on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board
of Directors may consider.
Securities
Authorized for Issuance under Equity Compensation Plans
The
Company does not have any equity compensation plans or any individual compensation arrangements with respect to its Common Stock
or Preferred Stock. The issuance of any of our Common Stock or Preferred Stock is within the discretion of our Board of Directors,
which has the power to issue any or all of our authorized but unissued shares without stockholder approval.
Recent
Sales of Unregistered Securities
None.
Issuer
Purchases of Equity Securities
None.
Item
6. Selected Financial Data.
As
a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, the Company is not required to provide
this information.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You
should read the following discussion together with our financial statements and the related notes included elsewhere in this Annual
Report. This discussion contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ
materially from those we currently anticipate as a result of many factors.
Forward
Looking Statements
Some
of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can
identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,”
“believe,” “estimate” and “continue,” or similar words. You should read statements that contain
these words carefully because they:
|
● |
discuss
our future expectations; |
|
● |
contain
projections of our future results of operations or of our financial condition; and |
|
● |
state
other “forward-looking” information. |
We
believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately
predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those
anticipated in these forward-looking statements as a result of certain factors.
Plan
of Operations
While
we commenced limited operations, at the present time, the Company is considered a shell company as defined in Rule 504 of the
Act. One of our principal business objective for the next 12 months and beyond such time will be to achieve meaningful business
operations. Alternatively, if we are unable to successfully develop our business, we may seek a combination with a business rather
than immediate, short-term earnings. The Company will not restrict our potential candidate target companies to any specific business,
industry or geographical location and, thus, may acquire any type of business.
Results
of Operations
Revenues.
During fiscal years ended July 31, 2022 and 2021, the Company had revenues of $0 and $45,248, respectively. From August 1, 2020
to April 30, 2021, the Company business centered on providing IT services to a small number of clients. Beginning in May 2021,
the Company terminated its IT services and has re-focused its operations to provide marketing services to small and median sized
businesses. We did not receive any revenues from our new business model during the current
fiscal year end.
Costs
of Goods Sold. During fiscal years ended July 31, 2022 and 2021, the Company had costs of goods sold of $0 and $17,368, respectively.
Costs of goods sold for the year ended July 31, 2021 consists of payroll expenses of $17,368 assigned to costs of goods sold.
There was no cost of goods sold for the year ended July 31, 2022 due to the lack of revenues.
Operating
Expenses. For the fiscal year ended July 31, 2022, the Company had total operating expenses of $380,723, consisting of $258,764
in research and development (R&D) and $121,959 in general and administrative expenses, respectively. For the fiscal year ended
July 31, 2021, the Company had total operating expenses of $377,143, consisting of $213,535 in R&D and $163,608 in general
and administrative expenses. The R&D expenses were software development costs and general and administrative expenses include
legal, accounting, audit, and other professional service fees incurred in relation to the Company’s reporting obligations
under the federal securities laws. There was slight increase in operating expenses for the current fiscal year. There was $45,229
increase in R&D cost but $41,649 decrease in general and administrative expenses in current year due to the larger portion
of payroll expenses allocated to R&D and smaller portion to G&A.
Net
Loss. For the fiscal year ended July 31, 2022 and 2021, the Company had net losses of $380,650 and $348,895, respectively,
for the reasons discussed above.
Liquidity
and Capital Resources
As
of July 31, 2022, the Company had working capital deficit of $561,224 compared with a working capital deficit of $256,136 for
the prior fiscal year end. The increase in working capital deficit is primarily due to losses incurred by the Company during the
current fiscal year.
The
Company can provide no assurances that it can continue to satisfy its cash requirements for at least the next twelve months.
The
following is a summary of the Company’s cash flows from operating and financing activities for the years ended July 31,
2022 and 2021:
| |
Fiscal
Year Ended
July 31, 2022 | | |
Fiscal
Year Ended
July 31, 2021 | |
Total
Net Cash Used by Operating Activities | |
$ | (370,350 | ) | |
$ | (299,631 | ) |
Total
Net Cash Provided by Financing Activities | |
$ | 336,327 | | |
$ | 331,270 | |
Effect
of exchange rate change on cash | |
$ | (841 | ) | |
$ | 914 | |
Net
Change in Cash | |
$ | (34,864 | ) | |
$ | 32,535 | |
Operating
Activities
During
the year ended July 31, 2022, the Company had a net loss of $380,650 and after adjusting for lease expenses, increases in prepaid
expenses, and accounts payable, resulted in net cash of $370,350 being used in operating activities during the year. By comparison,
during the year ended July 31, 2021, the Company had used $299,631 in operating activities.
Financing
Activities
During
the year ended July 31, 2022, the Company received $336,327 from the advances from the related party, resulting in total net cash
of $336,327 provided by financing activities for the period. By comparison, during the year ended July 31, 2021, the Company received
$300,000 of proceeds from the issuance of stock, repayment of $86,728 in loans from two non-affiliates, offset by $55,458 payment
on a related loan, which resulted in $331,270 in total net cash provided by financing activities.
Our
financial statements reflect the fact that we do not have any sufficient revenue to cover expenses. We are at present under-capitalized.
The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute
its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain
related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable
at reasonable terms, the Company may not be able to implement its plan of operations.
Our
auditors have issued a going concern opinion on our financial statements.
Basis
of presentation
The
accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United
States of America. The Company’s yearend is July 31.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The
Company had $19,511 in cash and equivalents as of July 31, 2022 and $54,375 as of July 31, 2021.
Prepaid
Expenses
Prepaid
Expenses are recorded at fair market value. The Company had $212 in prepaid expenses as of July 31, 2022 and $15,260 as of July
31, 2021.
Depreciation,
Amortization, and Capitalization
The
Company records depreciation and amortization when appropriate using straight-line balance method over the estimated useful life
of the assets. The Company establishes capitalization policy of its assets based on dollar amount that are more than $1,000 in
value or if it’s estimated useful life exceeds one year. We estimate that the useful life of our equipment is 3 years. Expenditures
for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s
useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the
appropriated accounts and the resultant gain or loss is included in net income.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
Fair
Value of Financial Instruments
ASC
topic 820 “Fair Value Measurements and Disclosures” establishes a three-tier fair value hierarchy, which prioritizes
the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs
used in measuring fair value are observable in the market.
These
tiers include:
Level
1: |
defined
as observable inputs such as quoted prices in active markets; |
|
|
Level
2: |
defined
as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
|
|
Level
3: |
defined
as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The
carrying value of cash and the Company’s loan from shareholder approximates its fair value due to their short-term maturity.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts. The core principle of ASC 606 is that an entity
recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance
with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the
performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the
performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
Specifically, Section 606-10-50 requires an entity to provide information about: a. Revenue recognized from contracts with customers,
including the disaggregation of revenue into appropriate categories; b. Contract balances, including the opening and closing balances
of receivables, contract assets, and contract liabilities; c. Performance obligations, including when the entity typically satisfies
its performance obligations and the transaction price that is allocated to the remaining performance obligations in a contract;
d. Significant judgments, and changes in judgments, made in applying the requirements to those contracts.
Basic
Income (Loss) Per Share
The
Company computes income (loss) per share in accordance with FASB ASC 260 “Earnings per Share”. Basic loss per share
is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common
shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of July 31, 2022,
there were no potentially dilutive debt or equity instruments issued or outstanding.
Comprehensive
Income
Comprehensive
income is defined as all changes in stockholders’ equity (deficit), exclusive of transactions with owners, such as capital
investments. Comprehensive income includes net income or loss, changes in certain assets and liabilities that are reported directly
in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale
securities. For the year ended July 31, 2022, the comprehensive loss was $366,104 which contains the foreign currency translation
gain of $14,547.
Stock-Based
Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option
plan and has not granted any stock options.
Recent
Accounting Pronouncements
We
have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements
will have a material impact on the Company.
Off-Balance
Sheet Arrangements
The
Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect
on the Company’s 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 Rule 12b-2 of the Exchange Act, the Company is not required to provide
this information.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk.
As
a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, the Company is not required to provide
this information.
Item
8. Financial Statements and Supplementary Data.
Audited
financial statements begin on the following page of this report.
CLANCY
CORP.
INDEX
TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
JACK SHAMA, CPA, MA
1498 East 32nd Street
Brooklyn, NY 11234
631-318-0351
To the shareholders and the board of directors of Clancy Corp.
Report of Independent Registered Public Accounting Firm.
Opinion
on the financial statements.
I have audited the accompanying balance sheet of Clancy Corp and the related statements of income, stockholders equity, cash flows, including the related notes and any related schedules for the years ended July 31, 2022, and July 31, 2021. In my opinion the financial statements present fairly in all material respects the financial position of the company as of July 31, 2022, and July 31, 2021 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Going
concern matters.
The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As discussed in Note 2 to the financial statements, the company has incurred losses, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are 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. My responsibility is to express an opinion on the financial statements based on my audit. I am 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 US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. I conducted my audit in accordance with the standards of the PCAOB. Those standards require that I 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, 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. My audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe my audit provides a reasonable basis for my 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 my especially challenging, subjective, or complex judgments. I have determined that there are no critical audit matters to report.
The company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. As part of my audit, I am 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, I express no such opinion.
Jack Shama, CPA
October 12, 2022
6579
I
have served as the company’s auditor since October 2021.
CLANCY
CORP.
CONSOLIDATED
BALANCE SHEETS
| |
| | | |
| | |
| |
July 31,
2022 | | |
July 31,
2021 | |
ASSETS | |
| | |
| |
CURRENT
ASSETS: | |
| | | |
| | |
Cash
and cash equivalents | |
$ | 19,511 | | |
$ | 54,375 | |
Prepaid
expenses | |
| 212 | | |
| 15,260 | |
Total
current assets | |
| 19,723 | | |
| 69,635 | |
| |
| | | |
| | |
OTHER
ASSETS | |
| | | |
| | |
Deposit | |
| 14,236 | | |
| 14,860 | |
Operating
lease right of use – building | |
| 48,831 | | |
| 112,515 | |
TOTAL
ASSETS | |
$ | 82,790 | | |
$ | 197,010 | |
| |
| | | |
| | |
LIABILITIES
AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
CURRENT
LIABILITIES: | |
| | | |
| | |
Accounts
payable | |
$ | 18,377 | | |
$ | 30,385 | |
Advances
- related party | |
| 541,750 | | |
| 222,738 | |
Operating
lease liability – current | |
| 20,820 | | |
| 72,648 | |
TOTAL
CURRENT LIABILITIES | |
| 580,947 | | |
| 325,771 | |
| |
| | | |
| | |
Operating
lease liability – non-current | |
| — | | |
| 3,292 | |
TOTAL
LIABILITIES | |
| 580,947 | | |
| 329,063 | |
| |
| | | |
| | |
Commitments
and Contingencies | |
| — | | |
| — | |
| |
| | | |
| | |
STOCKHOLDERS’
DEFICIT | |
| | | |
| | |
Common
Stock, 0.001 par value, authorized 345,000,000 shares, 153,105,464 shares issued and outstanding as of July 31, 2022 and July
31, 2021 | |
| 153,105 | | |
| 153,105 | |
Additional
paid in capital | |
| 213,251 | | |
| 213,251 | |
Accumulated
other comprehensive income (loss) | |
| 12,058 | | |
| (2,489 | ) |
Accumulated
deficit | |
| (876,571 | ) | |
| (495,920 | ) |
TOTAL
STOCKHOLDERS’ DEFICIT | |
| (498,157 | ) | |
| (132,053 | ) |
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
$ | 82,790 | | |
$ | 197,010 | |
See
accompanying notes to the consolidated financial statements.
CLANCY
CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
| |
| | | |
| | |
| |
For
the
years ended
July 31, | |
| |
2022 | | |
2021 | |
Revenues | |
$ | — | | |
$ | 24,681 | |
Revenues
– related party | |
| — | | |
| 20,567 | |
| |
| | | |
| | |
Total
revenues | |
| — | | |
| 45,248 | |
| |
| | | |
| | |
Cost
of goods sold | |
| — | | |
| 17,368 | |
Gross
profit (loss) | |
| — | | |
| 27,880 | |
| |
| | | |
| | |
EXPENSES | |
| | | |
| | |
Research
and development expenses | |
| 258,764 | | |
| 213,535 | |
General
and administrative Expenses | |
| 121,959 | | |
| 163,608 | |
TOTAL
OPERATING EXPENSES | |
| 380,723 | | |
| 377,143 | |
| |
| | | |
| | |
NET
LOSS FROM OPERATIONS | |
| (380,723 | ) | |
| (349,263 | ) |
| |
| | | |
| | |
OTHER
INCOME (EXPENSES) | |
| | | |
| | |
Interest
income | |
| 73 | | |
| 368 | |
Provision
for income taxes | |
| — | | |
| — | |
NET
LOSS | |
$ | (380,650 | ) | |
$ | (348,895 | ) |
| |
| | | |
| | |
OTHER
COMPREHENSIVE ITEM | |
| | | |
| | |
Foreign
currency translation gain (loss) | |
| 14,547 | | |
| (2,489 | ) |
COMPREHENSIVE
LOSS | |
$ | (366,104 | ) | |
$ | (351,384 | ) |
| |
| | | |
| | |
NET
LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS - BASIC & DILUTED | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | |
NET
LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - BASIC & DILUTED | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED | |
| 153,105,464 | | |
| 93,516,423 | |
See
accompanying notes to the consolidated financial statements.
CLANCY
CORP.
CONSOLIDATED
STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
For
the years ended July 31, 2022 and 2021
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | |
| | |
Accumulated | | |
| | |
| |
| |
| | |
Additional | | |
Other | | |
| | |
| |
| |
Common
Stock | | |
Paid
in | | |
Comprehensive | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
Capital | | |
Income
(Loss) | | |
Deficit | | |
TOTAL | |
Balance,
July 31, 2020 | |
| 3,105,250 | | |
$ | 3,105 | | |
$ | 63,251 | | |
$ | — | | |
$ | (147,025 | ) | |
$ | (80,669 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Rounding
shares due to stock split | |
| 214 | | |
| | | |
| | | |
| | | |
| | | |
| | |
Shares
issued | |
| 150,000,000 | | |
| 150,000 | | |
| 150,000 | | |
| | | |
| | | |
| 300,000 | |
Currency
translation | |
| | | |
| | | |
| | | |
| (2,489 | ) | |
| | | |
| (2,489 | ) |
Net
Loss | |
| — | | |
| — | | |
| — | | |
| | | |
| (348,895 | ) | |
| (348,895 | ) |
Balance,
July 31, 2021 | |
| 153,105,464 | | |
$ | 153,105 | | |
$ | 213,251 | | |
$ | (2,489 | ) | |
$ | (495,920 | ) | |
$ | (132,053 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Currency
translation | |
| | | |
| | | |
| | | |
| 14,547 | | |
| | | |
| 14,720 | |
Net
loss | |
| | | |
| - | | |
| - | | |
| | | |
| (380,650 | ) | |
| (380,650 | ) |
Balance,
July 31, 2022 | |
| 153,105,464 | | |
$ | 153,105 | | |
$ | 213,251 | | |
$ | 12,058 | | |
$ | (876,571 | ) | |
$ | (498,157 | ) |
See
accompanying notes to the consolidated financial statements.
CLANCY
CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
| |
| | | |
| | |
| |
For
the
years ended
July 31, | |
| |
2022 | | |
2021 | |
OPERATING
ACTIVITIES | |
| | | |
| | |
Net
Loss | |
$ | (380,650 | ) | |
$ | (348,895 | ) |
Adjustments
to reconcile net cash used in operating activities: | |
| | | |
| | |
Amortization | |
| 6,480 | | |
| 10,581 | |
Decrease
in assets: | |
| | | |
| | |
Change
in prepaid expenses | |
| 14,980 | | |
| 24,454 | |
Changes
in deposit | |
| — | | |
| — | |
Increase
in liabilities: | |
| | | |
| | |
Accounts
payable | |
| (11,160 | ) | |
| 29,312 | |
Increase
in contract liabilities | |
| | | |
| (15,083 | ) |
| |
| | | |
| | |
Total
Net Cash Used by Operating Activities | |
| (370,350 | ) | |
| (299,631 | ) |
| |
| | | |
| | |
FINANCING
ACTIVITIES: | |
| | | |
| | |
Business
advances | |
| — | | |
| 86,728 | |
Proceeds
from shares issued | |
| — | | |
| 300,000 | |
Proceeds
from Advances Related Party | |
| 336,327 | | |
| (55,458 | ) |
| |
| | | |
| | |
Total
Net Cash Provided by Financing Activities | |
| 336,327 | | |
| 331,270 | |
| |
| | | |
| | |
EFFECT
OF EXCHANGE RATE CHANGE ON CASH | |
| (841 | ) | |
| 914 | |
| |
| | | |
| | |
NET
INCREASE (DECREASE) IN CASH | |
| (34,864 | ) | |
| 32,554 | |
| |
| | | |
| | |
CASH
AT BEGINNING OF YEAR | |
| 54,375 | | |
| 21,821 | |
| |
| | | |
| | |
CASH
AT END OF YEAR | |
$ | 19,511 | | |
$ | 54,375 | |
| |
| | | |
| | |
Supplemental
Cash flow Information: | |
| | | |
| | |
Interest
Paid | |
$ | — | | |
$ | — | |
Taxes
Paid | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
Supplemental
Disclosure of Non Cash Lease Activity: | |
| | | |
| | |
Recognition
of Right of use asset | |
$ | — | | |
$ | — | |
Recognition
of Lease liability | |
$ | — | | |
$ | — | |
See
accompanying notes to the consolidated financial statements.
CLANCY
CORP.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
JULY
31, 2022
NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
Clancy
Corp. was incorporated on March 22, 2016 under the laws of the State of Nevada, USA. Clancy Corp. initially was formed for the
purpose of producing and selling handcrafted soaps. Clancy Corp. and its wholly owned subsidiary are collectively, except where
content requires, referred to as the “Company”
On
January 15, 2020, the Company filed a Certificate of Amendment to Articles of Incorporation with the Nevada Secretary of State
which effectuated the following corporate actions:
|
● |
the
forward split of the Company’s issued and outstanding common stock, $0.001 par value, on thirty (30) post-split shares
for a one (1) pre-split share basis applicable to stockholders of record as of January 2, 2020, and |
|
● |
The
increase of the Company’s authorized shares of common stock, $0.001 par value, from 75,000,000 to 345,000,000. |
The
above corporate actions were adopted by written consent of our sole Director on January 2, 2020, and the sole Director recommended
the Corporate Actions be presented to our shareholders for approval. On January 3, 2020, our majority stockholder, holding 64.4%
of our outstanding voting securities executed written consent approving the stated corporate actions. For purposes of the forward
stock split described above, the sole Director also set January 2, 2020 as the record date of such action.
On
March 31, 2020, a change of control occurred with respect to the Company. Pursuant to a Stock Purchase Agreement entered into
by and among the Clancy Corp., Gaoyang Liu (“Seller”), and Xiangying Meng (“Buyer”), Seller assigned,
transferred and conveyed to Buyer 60,000,000 shares of common stock of Company (“Common Stock”),
which represents 64.4% of the total issued and outstanding shares of the Company, for the sum of $285,000. In addition, Seller
assigned his rights and interest to outstanding loans made by Seller to the Company in the amount of $55,609 for the face value
of such loans. Mr. Meng owned 67,500,000 shares of common stock of the Company. In connection with the transaction, Mr. Liu, the
then sole officer and director of the Company resigned in all officer and director capacities from the Company and Mr. Meng was
appointed Chief Executive Officer and Chief Financial Officer of the Company. In addition, Mr. Meng was appointed the sole director
of the Company.
Clancy
Corp. has registered a wholly foreign-owned entity in Shanghai, China on April 13, 2020. Its name is Shanghai Clancy Enterprise
Management Co., Ltd. (Shanghai Clancy). Shanghai Clancy had no business activity from inception through July 31, 2020. The main
business scope is business management consulting, business information consulting, marketing planning, cultural and art exchange
planning consulting (except performance brokers, business performances), corporate image planning, conference services and exhibition
and display services.
Shanghai
Clancy registered a wholly-owned subsidiary in Beijing on April 24, 2020. Its name is Beijing Clancy Information Technology Co.,
Ltd. (Beijing Clancy). The main business scope
is technology development, transfer, consultation, services and promotion.
On
July 6, 2020, the Nevada Secretary of State approved the Company’s Certificate of Amendment to Articles of Incorporation
with which effectuated the following corporate action:
|
● |
the
reverse split of the Company’s issued and outstanding common stock, $0.001 par value, on thirty (30) pre-split shares
to one (1) post-split share basis. Fractional shares resulting from the action will be rounded up to the nearest whole share. |
The
above corporate action was adopted by written consent of our sole Director on June 11, 2020, and the sole Director recommended
the corporate action be presented to our shareholders for approval. For purposes of the reverse stock split described above, the
sole Director also set June 12, 2020 as the record date of such action. On June 12, 2020, our majority stockholder, holding 91.88%
of our outstanding voting securities, executed written consent in lieu of a shareholder meeting approving the corporate action.
All
shares disclosed in the financial statements and notes to the financial statements have been retroactively adjusted for the 30
for 1 reverse split.
From
August 1, 2020 to April 30, 2021, the Company business centered on providing IT services to a small number of clients. Beginning
in May 2021, the Company terminated its IT services and re-focused its business operations to providing business consulting services
to small and median sized businesses. Management believes their prior business experience will enable them to assist small and
medium sized companies improve their operating efficiencies. The Company will charge its clients based on their performance. Management
believes the new business model will reduce internal overhead costs and potentially provide a larger market for its services.
NOTE
2 – GOING CONCERN
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
Although Beijing Clancy started business operation and had generated revenue for the year ended July 31, 2021, the Company incurred
loss, an accumulated deficit and experienced negative cash flow from operations. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Mr.
Meng, the major stockholder, Chief Executive Officer and sole director of Company, verbally has agreed to provide continued financial
support to the Company.
The
Company’s business objective for the next twelve month and beyond such time will be to expand business operations and increase
revenue. The Company will focus on product management, digital marketing, refined user operations, performance optimization, after-sales
service, etc. to provide customers with more convenient and high- quality service experience.
The
Covid-19 pandemic presents novel challenges and a chaotic business environment globally. The duration and intensity of the impact
of the Covid-19 to business entities differ geographically. Covid-19 has a limited impact on the Company’s activities since
Shanghai Clancy has no activities and Beijing Clancy operations are limited to Beijing, PRC. The impact on the Company’s
result of operation and the financial statements was immaterial as of July 31, 2022.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS
OF PRESENTATION.
The
consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”) and include the accounts of Clancy Corp. and its wholly owned subsidiaries.
All material intercompany balances and transactions have been eliminated in consolidation.
Fiscal
year end
The
Company’s year end is July 31st.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 606, Revenue from Contracts. The core principle of ASC 606 is that an entity
recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance
with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the
performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the
performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
Cash
and Cash Equivalents
Cash
and cash equivalents consist of all cash balances and highly liquid investments with original maturities of three months or less.
Because of short maturity of these investments, the carrying amounts approximate their fair values.
Concentration
of Credit Risk
The
Company is exposed to credit risk in the normal course of business, primarily related to cash and cash equivalents. A portion
of the Company’s cash and cash equivalents are deposited with Industrial and Commercial Bank of China Limited and Pingan
Bank in the PRC, which is not insured or otherwise protected. The Company had deposits of $18,076 as of July 31, 2022. The Company
has not experienced any losses in such accounts in the PRC.
Leases
The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets and operating lease liabilities in the consolidated balance sheets. Finance leases are included in finance lease ROU assets
and finance lease liabilities in the consolidated balance sheets.
ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities recognized
at July 31, 2022 and 2021 based on the present value of lease payments over the lease term discounted using the rate implicit
in the lease. In cases where the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based
on the information available at commencement date in determining the present value of lease payments. Lease expense for lease
payments is recognized on a straight-line basis over the lease term.
The
Company has elected not to recognize operating lease ROU assets and liabilities arising from short-term leases.
Reporting
Currency and Translation
The
financial statements of the Company’s foreign subsidiaries are measured using the local currency, Renminbi (“RMB”),
as the functional currency; whereas the functional currency of Clancy Corp. and reporting currency of the Company is the United
States dollar (“USD” or “$”).
The
Company has operations in China where the local currency of RMB is used to prepare the financial statements which are translated
into the Company’s reporting currency, U.S. dollars. The local currency of RMB is the functional currency for the operations
outside the United States. Changes in the exchange rates between this currency and the Company’s reporting currency, are
partially responsible for some of the periodic changes in the consolidated financial statements. Assets and liabilities of the
Company’s foreign operations are translated into U.S. dollars at the spot rate in effect at the applicable reporting date.
Revenues and expenses of the Company’s foreign operations are translated at the average exchange rate during the applicable
period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive
income (loss) in stockholders’ deficit. Realized and unrealized transaction gains and losses generated by transactions denominated
in a currency different from the functional currency of the applicable entity are recorded in general and administrative expense
in the period in which they occur. For the years ended July 31, July 31, 2022 and 2021 there were no realized or unrealized transaction
gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable
entities.
The
exchange rates used to translate amounts in RMB to USD for the purposes of preparing the consolidated financial statements were
as follows:
Schedule of exchange rates | |
| | | |
| | |
| |
July 31,
2022 | | |
July 31,
2021 | |
Period
end USD: RMB exchange rate | |
| 6.74 | | |
| 6.46 | |
Average
USD: RMB exchange rate | |
| 6.50 | | |
| 6.56 | |
Foreign
Operations
All
of the Company’s operations and assets are located in Beijing China. The Company may be adversely affected by possible political
or economic events in this country. The effect of these factors cannot be accurately predicted.
Basic
Income (Loss) Per Share
The
Company computes income (loss) per share in accordance with FASB ASC 260 “Earnings per Share”. Basic (loss) per share
is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common
shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of July 31, 2022,
and 2021, there were no potentially dilutive equity instruments issued or outstanding.
Comprehensive
Income
The
Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220, “Comprehensive
Income,” in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that
includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.
The Company has one item of other comprehensive income, consisting of a foreign translation adjustment; however, the translation
adjustment was immaterial for the years ending July 31, 2022 and 2021.
Financial
Instruments
The
carrying value of the Company’s short-term financial instruments, such as accounts payable and advances, approximates their
fair values because of their short maturities.
Stock-Based
Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option
plan and has not granted any stock options.
Recently
Adopted Accounting Pronouncements
In
February 2016, the FASB issued ASU NO. 2016-02 “Leases (Topic 842)” and subsequent related updates. The core
principle of Topic 842 is that the lessee should recognize the assets and liabilities that arise from the leases. The company
adopted the standard effective August 1, 2019 under the optional transition method which allows the entity to apply the new lease
standard at the adoption date and recognize a cumulative effect adjustment, if any, to the opening balance of retained earnings
in the period of adoption. The standard had a material impact on the balance sheet (see Note 4)
As
of July 31, 2022, there are no recently issued accounting standards not yet adopted which would have a material effect on the
Company’s consolidated financial statements.
NOTE
4 – COMMITMENTS AND CONTINGENCIES
On
October 19, 2017 the Company entered into a five-year rental agreement for a $540 monthly fee, starting on November 1, 2017. Leased
Premise with the area of 74 square meters is located at 8 Stasinou Ave, Lefkosia 1060, Nicosia, Cyprus. The Company paid $0 for
rent for the year ended July 31, 2022 and 2021.
Due
to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease
standard at the adoption date, the Company has capitalized the present value of the minimum lease payments commencing August 1,
2019, using an estimated incremental borrowing rate of 6%. The minimum lease payments do not include common area annual expenses
which are considered to be non-lease components.
As
of August 1, 2019, the operating lease right-of-use asset and operating lease liability amounted to $17,951 with no cumulative-effect
adjustment to the opening balance of accumulated deficit.
On
May 26, 2020, the Company entered into a three-year rental agreement for a 32,000 RMB per month. The office is located on the
second floor of BYD 4S shop, No 56, Dongsihuan South Road, Chaoyang District, Beijing. In May 2020, the Company paid 480,000RMB
($67,306) including the first year rent of 384,000 RMB ($53,845) and three month rent of 96,000 RMB ($13,461) as the security
deposit. In May 2021, the Company paid 384,000 RMB ($60,300) for the second year. In June 2022, the Company paid 384,000 RMB ($59,170)
for the third and final year. Due to the adoption of the new lease standard under the optional transition method which allows
the entity to apply the new lease standard at the adoption date, the Company has capitalized the present value of the minimum
lease payments commencing August 1, 2019, using an estimated incremental borrowing rate of 6%. The minimum lease payments do not
include common area annual expenses which are considered to be non-lease components.
There
are no other material operating leases. The Company has elected not to recognize right-of-use assets and lease liabilities arising
from short-term leases.
Future
minimum lease payments under the operating leases as of July 31, 2021 are:
Schedule of Future Minimum Lease Payment | |
| | |
2022
- 2023 | |
$ | 21,060 | |
2023
- 2024 | |
| - | |
2024
- 2025 | |
| - | |
Total
Lease payments | |
| 21,060 | |
Less
Imputed Interest | |
| (239 | ) |
Net
Lease liability | |
$ | 20,821 | |
Total
lease expense under operating leases for the year ended July 31, 2022 and 2021 were 64,506 and $65,921, respectively.
As
of July 31, 2022 and 2021, the total operating lease Right of Use assets were $48,831 and $112,515, respectively.
NOTE
5 – BUSINESS ADVANCES
During
the year ended July 31, 2020, the Company made business advances totaling $81,324 to two unaffiliated parties. All advances were
repaid in the first quarter of fiscal year 2021.
NOTE
6 – RELATED PARTY TRANSACTIONS
The
Company’s major shareholder has orally agreed to loan funds to the Company for its operations on an as needed basis. For
the year ended July 2021, the Company paid back $55,458. For the year ended July 31, 2022, the major shareholder loaned the Company
$336,327. As of July 31, 2022 and 2021, the Company
owed the major shareholder Mr. Meng $541,750 and $222,738, respectively. This loan is unsecured, non-interest bearing and due
on demand.
NOTE
7 – RESEARCH AND DEVELOPMENT EXPENSE
The
Company incurred significant expenses in research and development (R&D). For the years ended July 31, 2022 and 2021, the R&D
expenses were $258,764 and $213,535, respectively.
NOTE
8 – GENERAL AND ADMINISTRATIVE EXPENSES (G&A)
The
general and administrative expenses contain the following:
Schedule of General and Administrative Expenses | |
| | | |
| | |
| |
For
the
year ended
July 31, | |
Description | |
2022 | | |
2021 | |
Payroll
and payroll tax expenses | |
$ | 19,763 | | |
| 54,278 | |
Professional
fees | |
| 26,750 | | |
| 32,859 | |
Lease
expenses | |
| 64,506 | | |
| 65,921 | |
Other
G&A | |
| 10,940 | | |
| 10,551 | |
Total | |
$ | 121,959 | | |
$ | 163,608 | |
NOTE
9 – INCOME TAXES
The
Company utilizes the asset and liability method of accounting for income taxes in accordance with FASB ASC 740, “Income
Taxes”. Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current
period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an
entity’s financial statements or tax returns. Deferred tax assets also include the prior years’ net operating losses
(“NOL”) carried forward. 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. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the
enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available
positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
The
Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is
domiciled. The Company’s PRC subsidiaries file their income tax returns online with PRC tax authorities. The Company
conducts all of its businesses through its subsidiaries and affiliated entities, principally in the PRC.
The
Company’s US parent company was incorporated in the US and is subject to U.S. income tax rate of 21% and files U.S. federal
income tax return. As of July 31, 2021, the US entity had net operating loss carry forwards for income tax purpose of $106,708.
The NOL arising in tax years beginning after 2017 may reduce 80% of a taxpayer’s taxable income, and be carried forward
indefinitely (under the Tax Cuts and Jobs Act, effective for tax years beginning on or after January 1, 2018). However, the coronavirus
Aid, Relief and Economic Security Act (“the CARES Act”) issued in March 2020, provides tax relief to both corporate
and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising
in 2018, 2019 and 2020. The timing and manner in which the Company can utilize operating loss carryforwards in any year may be
limited by provisions of the Internal Revenue Code Section 382 regarding changes in ownership of corporations. Such limitation
may have an impact on the ultimate realization of its carryforwards and future tax deductions. The ultimate realization of
deferred tax assets is dependent upon the Company’s future generation of taxable income during the periods in which temporary
differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of
all the information available, management believes that significant uncertainty exists with respect to future realization of the
deferred tax assets due to the Company’s US parent company’s limited operating history and continuous loss, and has
therefore established a full valuation allowance as of July 31, 2022.
The
Company’s wholly owned Chinese subsidiary Shanghai Clancy is a wholly foreign-owned entity (“WFOE”). Shanghai
Clancy had no business activity from inception through July 31, 2022. The Company’s second tier WOFE subsidiary, Beijing
Clancy, is subject to the reduced PRC income tax rate as follows as per Caishui (2019) No. 13 issued by General Administration
of Taxation, Ministry of Finance of PRC in January 2019: if the annual taxable income of small enterprises does not exceed RMB
1 million ($152,000), only 25% of such taxable income is required for paying the income tax at an income tax rate of 20% (equivalent
to 5% of the total taxable income); if the annual taxable income of small enterprises is between RMB 1 million ($152,000) and
RMB 3 million ($456,000), only 50% of such taxable income is required for paying the income tax at an income tax rate of 20% (equivalent
to 10% of the total taxable income). This tax-reduced policy is effective for the period from January 1, 2019 through December
31, 2022. Beijing Clancy did not have taxable income for year ending July 31, 2022. Tax losses of the operating subsidiaries of
the Company may be carried forward for five years in China.
As
of July 31, 2022, Beijing Clancy has $317,158 and $660,627 of NOL that expire in five years through 2026 and 2027, respectively.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the
Company’s future generation of taxable income during the periods in which temporary differences representing net future
deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management
believes that significant uncertainty exists with respect to future realization of the deferred tax assets due to Beijing Clancy’s
limited operating history and has therefore established a full valuation allowance as of July 31, 2022.
The
following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended July 31, 2022
and 2021:
Schedule of Effective Income Tax Rates | |
| | | |
| | |
| |
Fiscal
Years Ended
July 31, | |
| |
2022 | | |
2021 | |
US
federal statutory rates | |
| (21.0 | )% | |
| (21.0 | )% |
Tax
rate difference – current provision | |
| (0.6 | )% | |
| (0.6 | )% |
Effect
of PRC tax holiday | |
| 3.2 | % | |
| 3.2 | % |
Valuation
allowance | |
| 18.4 | % | |
| 18.4 | % |
Effective
tax rate | |
| — | % | |
| — | % |
Income
tax expense was $0 for the years ended July 31, 2022 and 2021. The provision for income tax expense (benefit) for the years ended
July 31, 2022 and 2021 consisted of the following:
Schedule of Components of Income tax expense | |
| | | |
| | |
| |
2022 | | |
2021 | |
Income
tax expense – current | |
$ | — | | |
$ | — | |
Income
tax expense (benefit) – deferred | |
| (25,710 | ) | |
| (24,567 | ) |
Increase
(decrease) in valuation allowance | |
| 25,710 | | |
| 24,567 | |
Total
income tax expense | |
$ | — | | |
$ | — | |
The
Company’s net deferred tax asset as of July 31, 2022 and 2021 is as follows:
Schedule of Deferred Tax Assets | |
| | | |
| | |
| |
July 31,
2022 | | |
July 31,
2021 | |
Deferred
tax asset | |
| | | |
| | |
Net
operating loss | |
$ | 63,978 | | |
$ | 38,268 | |
Total | |
| 63,978 | | |
| 38,268 | |
Less:
valuation allowance | |
| (63,978 | ) | |
| (38,268 | ) |
Net
deferred tax asset | |
$ | — | | |
$ | — | |
NOTE
10 – SHARES ISSUED FOR EQUITY FINANCING
In
December 2020, the Company issued 150,000,000 shares of common stock of the Company to five individuals including the Company’s
CEO, at $0.002 per share. The Company received proceeds of $300,000 from this private placement. As of July 31, 2022 and July
31, 2021, the shares out issued and outstanding were 153,105,464 for both yearend periods.
NOTE
11 – SUBSEQUENT EVENTS
Management
has evaluated subsequent events through the date of filing the financial statements with the Securities and Exchange Commission,
the date the financial statements were available to be issued. Management is not aware of any reportable events that occurred
subsequent to the balance sheet date up to the date of filing this report.
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There
are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices
or financial statement disclosure. During fiscal year ended July 31, 2021, our auditor was changed to Jack Sharma, CPA.
Item
9A. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
In
connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the
participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act (“Exchange Act”)
as of July 31, 2022. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports
filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in
the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the
principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Based
on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s
disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required
to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not
accumulated and communicated to management, including the principal executive officer and the principal financial officer, to
allow timely decisions regarding required disclosures.
Management’s
Report on Internal Control over Financial Reporting
The
management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer
and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the Company’s financial statements for external purposes in accordance with United States generally
accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
| ● | Pertain
to the maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the Company’s assets; |
| ● | Provide
reasonable assurance that transactions are recorded as necessary to permit preparation
of the financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures are being made only in accordance with authorizations
of management and the board of directors; and |
| ● | Provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on
the financial statements. |
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The
Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of
July 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013) as set forth in its Internal Control - Integrated Framework. This assessment identified
material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination
of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement
in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness
of our internal control over financial reporting did identify a material weakness, management considers its internal control over
financial reporting to be ineffective.
Management
has concluded that our internal control over financial reporting had the following material deficiencies:
| ● | We
were unable to maintain segregation of duties within our business operations due to our
reliance on a single individual fulfilling the role of sole officer and director. |
| ● | Lack
of a functioning audit committee due to a lack of a majority of independent members and
a lack of a majority of outside directors on our Board of Directors, resulting in ineffective
oversight in the establishment and monitoring of required internal control and procedures. |
While
these control deficiencies did not adversely affect our 2022 or 2021 interim or annual financial statements, it could have resulted
in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly, we have determined
that this control deficiency constitutes a material weakness.
To
the extent reasonably possible, given our limited resources, our goal is, upon consummation of a merger with a private operating
company, to separate the responsibilities of principal executive officer and principal financial officer, intending to rely on
two or more individuals. We will also seek to expand our current board of directors to include additional individuals willing
to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel,
this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions
can be realized, we will continue to rely on the advice of outside professionals and consultants.
This
annual report does not include an attestation report of our registered public accounting firm regarding our internal controls
over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to Section 404(c) of the Sarbanes-Oxley Act that permit us to provide only management’s report in this annual report.
Changes
in Internal Controls over Financial Reporting
During
the year ended July 31, 2022, there has been no change in internal control over financial reporting that has materially affected
or is reasonably likely to materially affect our internal control over financial reporting.
Item
9B. Other Information.
None
Item 9C. Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections.
Not Applicable