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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of Report (Date of earliest event
reported) September 17, 2024 (September 16,
2024)
DH Enchantment, Inc.
.(Exact name of registrant as specified in its charter)
| Nevada |
|
000-56322 |
|
20-1415044 |
|
(State or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
3/F, Yeung Yiu Chung (No.6) Industrial Building
19 Cheung Shun Street, Lai Chi Kok
Kowloon, Hong Kong
(Address of principal executive offices) (Zip Code)
+ 852 34263795
Registrant’s telephone number, including area code
00000
Unit A, 13/F, Gee Luen Factory Building 5.
316-318 Kwun Tong Road
Kowloon, Hong Kong
(Former name or former address,
if changed since last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
☐ Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b)
of the Act:
| Title of each class |
Trading Symbols(s) |
Name of each exchange on which registered |
| Common |
ENMI |
NA |
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
TABLE OF CONTENTS
INTRODUCTORY COMMENT
DH Enchantment Inc.
is a Nevada holding company with no operations of its own. DH Enchantment Inc. operates through its wholly owned subsidiaries OLS Asia
Corporation, a British Virgin Island corporation (“Buyippee”), Online Logistics Services Limited, a Hong Kong private limited
company (“OLS Hong Kong”) and Online Logistics Services Limited Taiwan Branch, a Taiwan private limited company (“OLS
Taiwan”). Buyippee is engaged primarily in the logistics business. Buyippee’s operations are located in Hong Kong and Taiwan
and are solely conducted through OLS Hong Kong and OLS Taiwan. All references in this Form 8-K to the “Company,” “we,”
“us” or “our” are to DH Enchantment Inc., Buyippee, OLS Hong Kong and OLS Taiwan on a consolidated basis.
Our investors will hold common
stock of DH Enchantment, Inc., the Nevada holding company that has no operations of its own, and not in OLS Hong Kong or OLS Taiwan, its
operating companies. This holding company structure presents unique risks as our investors may never directly hold equity interests in
our Hong Kong and Taiwan subsidiaries. Holding indirect equity interests in OLS Hong Kong and OLS Taiwan, our operating subsidiaries,
is not as effective as holding a direct ownership interest as DH Enchantment, Inc. will be dependent upon contributions from our subsidiaries
to finance the cash flow needs of DH Enchantment, Inc. DH Enchantment, Inc.’s ability to obtain contributions from its subsidiaries
are significantly affected by regulations promulgated by Hong Kong and Taiwan authorities. Any limitation on the ability of our subsidiaries
to transfer cash or assets to us could have a material adverse effect on our ability to conduct business. As a result, any change in the
interpretation of existing rules and regulations or the promulgation of new rules and regulations that adversely affects our ability to
transfer cash or assets may adversely affect our operations and or the value of our securities, including causing the value of our securities
to significantly decline or become worthless. For a detailed description of the risks facing the Company associated with our structure,
please refer to “Risk Factors- Our Hong Kong and Taiwan subsidiaries may be subject to restrictions on paying dividends or
making other payments to us, which may restrict its ability to satisfy liquidity requirements, conduct business and pay dividends to holders
of DH Enchantment, Inc.’s common stock.” and more generally, “Risk Factors – Risk Relating to Doing
Business in Hong Kong and Taiwan.”
DH Enchantment, Inc. and OLS
Hong Kong, our Hong Kong subsidiary, are not required to obtain permission from Hong Kong or Chinese authorities including the China Securities
Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to operate or to issue securities to foreign investors.
DH Enchantment, Inc. and OLS Hong Kong are not subject to permission requirements from any other governmental agencies to approve Buyippee’s
operations. Buyippee has received all requisite permissions to operate its business. The business of OLS Hong Kong until now is not subject
to cybersecurity review with the Cyberspace Administration of China, or CAC, given that: (i) OLS Hong Kong’s products and services
are only offered to consumer and business customers in Hong Kong; (ii) OLS Hong Kong does not possess a large amount of personal information
in its business operations. In addition, we believe that OLS Hong Kong is not subject to merger control review by China’s anti-monopoly
enforcement agency due to the level of our revenues and the fact that we currently do not expect to propose or implement any acquisition
of control of, or decisive influence over, any company with revenues within China of more than RMB400 million. Currently, these statements
and regulatory actions have had no impact on Buyippee’s daily business operation, our ability to accept foreign investments and
the ability of DH Enchantment, Inc. to list its securities on an U.S. or other foreign exchange. However, in light of the recent statements
and regulatory actions by the PRC and Hong Kong government, such as those related to Hong Kong’s national security, the promulgation
of regulations prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and
anti-monopoly concerns, we may be subject to the risks of uncertainty of any future actions of the PRC government in this regard. For
example, if DH Enchantment, Inc. or OLS Hong Kong inadvertently concludes that such approvals are not required, or if applicable laws,
regulations or interpretations change such that we are required to obtain approvals in the future, or if the PRC government disallows
our holding company structure, these actions would likely result in a material change in our operations, including our ability to continue
our existing holding company structure, carry on OLS Hong Kong’s current business, accept foreign investments, and offer or continue
to offer securities of DH Enchantment, Inc. to its investors. These adverse actions would likely cause the value of DH Enchantment, Inc.’s
common stock to significantly decline or become worthless. We may also be subject to penalties and sanctions imposed by the PRC regulatory
agencies, including the Chinese Securities Regulatory Commission, if we fail to comply with such rules and regulations, which would likely
adversely affect the ability of DH Enchantment, Inc.’s securities to continue to trade on the Over-the-Counter Bulletin Board, which
would likely cause the value of its securities to significantly decline or become worthless. For a detailed description of the risks facing
the Company’s operations in Hong Kong, please refer to “Risk Factors – Risk Factors Relating to Doing Business
in Hong Kong and Taiwan.”
There are prominent
legal and operational risks associated with our operations being based in Hong Kong which could result in a material change in our operations
and the value of DH Enchantment, Inc.’s securities. We are subject to risks arising from the legal system in China where
there are risks and uncertainties regarding the enforcement of laws including where the Chinese government can change the rules and regulations
in China and Hong Kong, including the enforcement and interpretation thereof, at any time with little to no advance notice and can intervene
at any time with little to no advance notice. By way of example, the PRC government initiated a series of regulatory actions and statements
to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities
market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures
to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. While these regulatory actions
and statements currently do not impact our business or our ability to accept foreign investments or list our securities on a U.S. or
foreign exchange, the Chinese government can change its rules and regulations and the enforcement and interpretation thereof with little
to no advance notice. Such changes in Chinese internal regulatory mandates, such as the M&A rules, Anti-Monopoly Law, and the Data
Security Law, may target the Company’s corporate structure and negatively impact our ability to conduct business in Hong Kong,
accept foreign investments, or list on an U.S. or other foreign exchange. These risks may significantly limit or completely hinder our
ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Please see “Risk Factors — Risks Relating to Doing Business in Hong Kong and Taiwan.”
The recent joint statement
by the SEC and PCAOB, and the Holding Foreign Companies Accountable Act (HFCAA) all call for additional and more stringent criteria to
be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not
inspected by the PCAOB. Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act and the Accelerating
the Holding Foreign Companies Account Act if the PCAOB determines that it cannot inspect or investigate completely our auditor, and that
as a result an exchange may determine to delist our securities. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign
Companies Accountable Act which would reduce the number of consecutive non-inspection years required for triggering the prohibitions under
the HFCAA from three years to two thus reducing the time before our securities may be prohibited from trading or being delisted. Our auditor
is not subject to the determinations announced by the PCAOB on December 16, 2021. However, in the event the
Nigerian authorities subsequently take a position disallowing the PCAOB to inspect our auditor, then we would need to change our
auditor to avoid having our securities delisted. Please see “Risk Factors- The Holding Foreign Companies Accountable Act requires
the Public Company Accounting Oversight Board (PCAOB) to be permitted to inspect the issuer’s public accounting firm within three years.
This three- year period was shortened to two years upon the enactment of the Accelerating Holding Foreign Companies Accountable Act in
December 2022. There are uncertainties under the PRC Securities Law relating to the procedures and requisite timing for the U.S. securities
regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. If the U.S. securities regulatory
agencies are unable to conduct such investigations, they may suspend or de-register DH Enchantment, Inc.’s registration with the
SEC and delist its securities from applicable trading market within the US.”
In addition to the foregoing
risks, we face various legal and operational risks and uncertainties arising from doing business in Hong Kong and China as summarized
below and in “Risk Factors — Risks Factors Relating to Doing Business in Hong Kong and Taiwan.”
| |
· |
Adverse changes in economic and political policies of the PRC government could have a material and adverse effect on overall economic growth in China and Hong Kong, which could materially and adversely affect our business. |
| |
· |
DH Enchantment, Inc. is a holding company and will rely on dividends paid by its subsidiaries for its cash needs. Any limitation on the ability of its subsidiaries to make payments to DH Enchantment, Inc. could have a material adverse effect on our ability to conduct business. We do not anticipate paying dividends in the foreseeable future; you should not buy stock of DH Enchantment, Inc. if you expect dividends. |
| |
· |
There is a possibility that the PRC could prevent our cash maintained in Hong Kong from leaving or the PRC could restrict the deployment of the cash into our business or for the payment of dividends. We rely on dividends from our Hong Kong subsidiary for our cash and financing requirements, such as the funds necessary to service any debt we may incur. Any such controls or restrictions may adversely affect our ability to finance our cash requirements, service debt or make dividend or other distributions to our shareholders. Please see “Risk Factors - Our Hong Kong subsidiary may be subject to restrictions on paying dividends or making other payments to us, which may restrict its ability to satisfy liquidity requirements, conduct business and pay dividends to holders of DH Enchantment, Inc.’s common stock.”; “Risk Factors - PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds we receive from offshore financing activities to make loans to or make additional capital contributions to our Hong Kong subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand business.”; “Risk Factors - Because our holding company structure creates restrictions on the payment of dividends or other cash payments, our ability to pay dividends or make other payments is limited.” and “Transfers of Cash to and from our Subsidiaries.” |
| |
· |
PRC regulation of loans to and direct investments in PRC entities by offshore holding companies may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to DH Enchantment, Inc.’s operating subsidiary in Hong Kong. |
| |
· |
Substantial uncertainties exist with respect to the interpretation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. |
| |
· |
We are subject to the risks arising from the legal system in China. The Chinese government can change the rules and regulations in China and Hong Kong, including the enforcement and interpretation thereof, at any time with little to no advance notice and can intervene at any time with little to no advance notice. OLS Hong Kong is currently not required to obtain approval from Chinese authorities to list on U.S. exchanges. However, if the subsidiaries of DH Enchantment, Inc. or the holding company were required to obtain approval in the future, or we erroneously conclude that approvals were not required, or OLS Hong Kong was denied permission from Chinese authorities to operate or to list on U.S. exchanges, we will not be able to continue listing on a U.S. exchange and the value of DH Enchantment, Inc. common stock would likely significantly decline or become worthless, which would materially affect the interest of the investors. There is a risk that the Chinese government may intervene or influence OLS Hong Kong’s operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in Hong Kong-based issuers, which could result in a material change in our operations and/or the value of DH Enchantment, Inc.’s securities. Further, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers would likely significantly limit or completely hinder our ability to offer or continue to offer DH Enchantment, Inc. securities to investors and cause the value of such securities to significantly decline or be worthless. Please see “Risk Factors-We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the Hong Kong and the profitability of such business.” and “Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in Hong Kong and accordingly on the results of our operations and financial condition.” |
| |
· |
Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment. |
| |
· |
OLS Hong Kong may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. HSY may be liable for improper use or appropriation of personal information provided by our customers. |
| |
· |
Under the Enterprise Income Tax Law, we may be classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders. |
| |
· |
PRC regulation of loans to, and direct investments in, Hong Kong entities by offshore holding companies may delay or prevent us from using proceeds from this offering and/or future financing activities to make loans or additional capital contributions to our Hong Kong operating subsidiary. |
| |
· |
Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident Shareholders to personal liability, may limit our ability to acquire Hong Kong and PRC companies or to inject capital into our Hong Kong subsidiary, may limit the ability of our Hong Kong subsidiary to distribute profits to us or may otherwise materially and adversely affect us. |
| |
· |
The recent joint statement by the SEC and PCAOB,
and the Holding Foreign Companies Accountable Act (HFCAA) all call for additional and more stringent criteria to be applied to emerging
market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB determines that it cannot
inspect or investigate completely our auditor, and that as a result an exchange may determine to delist our securities. On June 22, 2021,
the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act which would reduce the number of consecutive non-inspection
years required for triggering the prohibitions under the HFCAA from three years to two thus reducing the time before our securities may
be prohibited from trading or being delisted. On December 2, 2021, the U.S. Securities and Exchange Commission adopted rules to implement
the HFCAA. Pursuant to the HFCAA, the Public Company Accounting Oversight Board (PCAOB) issued its report notifying the Commission that
it is unable to inspect or investigate completely accounting firms headquartered in mainland China or Hong Kong due to positions taken
by authorities in mainland China and Hong Kong. Our auditor is not subject to the determinations announced by the PCAOB on December 16,
2021. However, in the event the Nigerian authorities subsequently take a
position disallowing the PCAOB to inspect our auditor, then we would need to change our auditor to avoid having our securities delisted.
Please see “Risk Factors- The Holding Foreign Companies Accountable Act requires the Public Company Accounting Oversight
Board (PCAOB) to be permitted to inspect the issuer’s public accounting firm within three years. This three-year period wase shortened
to two years upon the enactment of the Accelerating Holding Foreign Companies Accountable Act in December 2022. There are uncertainties
under the PRC Securities Law relating to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations
and collect evidence within the territory of the PRC. If the U.S. securities regulatory agencies are unable to conduct such investigations,
they may suspend or de-register DH Enchantment, Inc.’s registration with the SEC and delist its securities from applicable trading
market within the US.” |
| |
· |
You may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of shares of our common stock. |
| |
· |
We face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. |
| |
· |
DH Enchantment, Inc. is organized under the laws of the State of Nevada as a holding company that conducts its business through a number of subsidiaries organized under the laws of foreign jurisdictions such as Hong Kong and the British Virgin Islands. This may have an adverse impact on the ability of U.S. investors to enforce a judgment obtained in U.S. Courts against these entities, bring actions in Hong Kong against us or our management or to effect service of process on the officers and directors managing the foreign subsidiaries. |
| |
· |
U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in Hong Kong. |
| |
· |
There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of PRC subsidiary, and dividends payable by a PRC subsidiary to offshore subsidiaries may not qualify to enjoy certain treaty benefits. |
Transfers of Cash to and from Our Subsidiaries
DH Enchantment, Inc. is a
Nevada holding company with no operations of its own. DH Enchantment, Inc. conducts its operations in Hong Kong primarily through OLS
Hong Kong and OLS Taiwan, DH Enchantment, Inc.’s subsidiaries in Hong Kong and Taiwan. DH Enchantment, Inc. may rely on dividends
to be paid by its Hong Kong and Taiwan subsidiaries to fund its cash and financing requirements, including the funds necessary to pay
dividends and other cash distributions to its shareholders, to service any debt it may incur and to pay its operating expenses. In order
for DH Enchantment, Inc. to pay dividends to its shareholders, it will rely on payments made from its Hong Kong and Taiwan subsidiaries
to DH Enchantment, Inc. As of the date of this prospectus, DH Enchantment, Inc. does not have bank accounts. There has been no dividends,
distributions or any other cash flows or transfers of assets made among the holding company or the subsidiaries and no dividends, distributions
or any other cash flows or transfers of assets made to U.S. investors. Please see our consolidated financial statements beginning on page
F-1 of this Current Report.
DH Enchantment, Inc. does
not intend to make dividends or distributions to investors of DH Enchantment, Inc. in the foreseeable future.
We currently intend to retain
all available funds and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying
any dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our
board of directors after considering our financial condition, results of operations, capital requirements, contractual requirements, business
prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.
DH Enchantment, Inc. (Nevada
corporation)
Subject to the Nevada Revised
Statutes and our bylaws, the board of directors of DH Enchantment, Inc. may authorize and declare a dividend to shareholders at such time
and of such an amount as they think fit if they are satisfied, on reasonable grounds, that immediately following the dividend the value
of the assets of DH Enchantment, Inc. will exceed its liabilities and it will be able to pay its debts as they become due. There is no
further Nevada statutory restriction on the amount of funds which may be distributed by DH Enchantment, Inc.by dividend to its U.S. investors.
DH Enchantment, Inc. is permitted under the Nevada laws to provide funding to its subsidiaries in Hong Kong, Taiwan and the British Virgin
Islands through loans or capital contributions without restrictions on the amount of the funds.
OLS Asia Corporation (British
Virgin Islands)
Buyippee is permitted under
the laws of BVI to provide funding to and receive funding from DH Enchantment, Inc. and its subsidiaries through dividend distributions
or other payments of cash without restrictions on the amount of the funds. There are no BVI law restrictions on Buyippee’s
ability to receive and provide funding from DH Enchantment Inc. and its subsidiaries.
Online Logistics Services
Limited (Hong Kong)
Online Logistics Services
is permitted under the laws of Hong Kong to provide funding to and receive funding from DH Enchantment, Inc., Buyippee and OLS Taiwan
through dividend distributions or other payments of cash without restrictions on the amount of the funds. If DH Enchantment, Inc.’s
Hong Kong subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends
or make other distributions to us. There are no HK law restrictions on Online Logistics Services’ ability to transfer cash to or
receive cash from the BVI or Nevada entity in the event Online Logistics Services incurs debt.
Under the current practice
of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by OLS Hong Kong. There
are no restrictions or limitation under the laws of Hong Kong imposed on the conversion of HK dollar into foreign currencies and the remittance
of currencies out of Hong Kong or across borders and to U.S investors. The laws and regulations of the PRC currently may materially impact
the transfer of cash from DH Enchantment, Inc. to OLS Hong Kong or from OLS Hong Kong to DH Enchantment, Inc.
PRC Laws
There is a possibility that
the PRC could prevent our cash maintained in Hong Kong from leaving or the PRC could restrict the deployment of the cash into our business
or for the payment of dividends. Any such controls or restrictions may adversely affect our ability to finance our cash requirements,
service debt or make dividend or other distributions to our shareholders. Please see “Risk Factors - Our Hong Kong subsidiary
may be subject to restrictions on paying dividends or making other payments to us, which may restrict its ability to satisfy liquidity
requirements, conduct business and pay dividends to holders of DH Enchantment, Inc.’s common stock.”; “Risk Factors
- PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency
conversion may delay or prevent us from using the proceeds we receive from offshore financing activities to make loans to or make additional
capital contributions to our Hong Kong subsidiary, which could materially and adversely affect our liquidity and our ability to fund and
expand business.”; “Risk Factors - Because our holding company structure creates restrictions on the payment of dividends
or other cash payments, our ability to pay dividends or make other payments is limited.”
Current PRC regulations permit
PRC subsidiaries to pay dividends to Hong Kong subsidiaries only out of their accumulated profits, if any, determined in accordance with
Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10% of
its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of
such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although
the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be
used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective
companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. As of the date of this prospectus,
we do not have any PRC subsidiaries.
The PRC government also imposes
controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience
difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from
our profits, if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the
debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenues
from our operations, we may be unable to pay dividends on our common stock.
Cash dividends, if any, on
our common stock will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay
to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of
up to 10.0%.
If in the future we have PRC
subsidiaries, certain payments from such PRC subsidiaries to Hong Kong subsidiaries will be subject to PRC taxes, including business taxes
and VAT. As of the date of this prospectus, we do not have any PRC subsidiaries, and our Hong Kong subsidiary has not made any transfers,
dividends or distributions to date. We do not expect our Hong Kong subsidiaries to make any such transfers, dividends or distributions
in the foreseeable future.
Pursuant to the Arrangement
between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income,
or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no
less than 25% of a PRC entity. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied,
including, without limitation, that (a) the Hong Kong entity must be the beneficial owner of the relevant dividends; and (b) the Hong
Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive months preceding its receipt
of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to
apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case
basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and
enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by a PRC
subsidiary to its immediate holding company. As of the date of this prospectus, we do not have a PRC subsidiary. In the event that we
acquire or form a PRC subsidiary in the future and such PRC subsidiary desires to declare and pay dividends to our Hong Kong subsidiary,
our Hong Kong subsidiary will be required to apply for the tax resident certificate from the relevant Hong Kong tax authority. In such
event, we plan to inform the investors through SEC filings, such as a current report on Form 8-K, prior to such actions. See “Risk
Factors – Risk Factors Relating to Doing Business in Hong Kong and Taiwan.”
Online Logistics Services Limited Taiwan Branch
(Taiwan)
OLS Taiwan is permitted under
the laws of Taiwan to provide funding to and receive funding from DH Enchantment, Inc. and its other subsidiaries through dividend distributions
or other payments of cash without restrictions on the amount of the funds. There are no Taiwanese law restrictions on OLS’s
ability to receive and provide funding from DH Enchantment Inc. and its other subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for historical information,
this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements
regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others,
those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar
language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause
or contribute to such differences include, but are not limited to, those discussed in the sections “Description of Business,”
“Risk Factors.” You should carefully review the risks described in this Current Report on Form 8-K and in other documents we
file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking
statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking
statements or reflect events or circumstances after the date of this document.
Although we believe that
the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking statements.
All references in this Form
8-K to the “Company,” “we,” “us” or “our” are to DH Enchantment Inc., Buyippee, OLS Hong Kong
and OLS Taiwan on a consolidated basis.
ITEM 2.01 Completion of Acquisition or Disposition of
Assets.
On March 29, 2024, DH
Enchantment Inc., a Nevada corporation (the “Issuer”), entered into a Share Exchange Agreement with OLS Asia Corporation,
a British Virgin Island corporation (“Buyippee”) and the shareholders of Buyippee (“Buyippee Shareholders”), pursuant
to which the Issuer agreed to purchase from the Buyippee Shareholders an aggregate of One Thousand shares of common stock of Buyippee,
representing all of the issued and outstanding securities of Buyippee. In consideration, the Issuer agreed to issue to the Buyippee Shareholders
an aggregate of Twenty Billion (20,000,000,000) shares of its common stock at a per share price of $0.001 .
The acquisition
consummated on September 16, 2024, however, the Issuer was only issued Three Billion of the Twenty Billion shares of
common stock due to the fact that the Issuer did not have sufficient authorized shares. In connection with the acquisition of
Buyippee, the Issuer agreed to effectuate a reverse stock split of its common stock whereby each 1000 shares of the Issuer’s
common stock would be exchanged for 1 one share the Issuer’s common stock. The Issuer intends to effectuate the contemplated
reverse stock split in the near future. Upon the effective date of the reverse stock split, the Issuer will issue the remaining
balance of the shares due to the Buyippee Shareholders pursuant to the Share Exchange Agreement.
As a result of the acquisition
of Buyippee, Buyippee became a wholly owned subsidiary of the Issuer. Buyippee holds 100% of Online Logistics Services Limited, a Hong
Kong private limited company (“OLS Hong Kong”). OLS Hong Kong holds 100% of Online Logistics Services Limited Taiwan Branch,
a Taiwan private limited company (“OLS Taiwan”).
Upon consummation
of our acquisition of Buyippee, we became engaged in the online ecommerce and logistic business. Concurrently therewith, we discontinued
our prior business of selling and distributing COVID-19 antigen tester sets. Shares of DH Investment Group, a British Virgin Islands corporation,
and Ho Shun Yi, a Hong Kong private limited company, companies through which the prior COVID-19 antigen testing business was operated,
were transferred to Sally Kin Yi Lo for nominal consideration.
The foregoing description
of the Share Exchange Agreement is qualified in its entirety by reference to the Share Exchange Agreement which is filed as Exhibit 10.1
to this Current Report and is incorporated herein by reference.
CORPORATE HISTORY
DH Enchantment, Inc. was incorporated
in the state of Nevada on July 9, 2004, under the name Amerivestors, Inc. On March 3, 2009, we changed our name to Gust Engineering &
Speed Production, Inc. and on October 27, 2009, we changed our name to Energy Management International, Inc. On August 11, 2012, we changed
our name to DH Enchantment, Inc., our current name.
Since inception to 2018, the
Company posted periodic reports on the OTCMarkets website under the alternative reporting standard with the 12/31/2010 Quarterly Report
being the last report. Thereafter, the Company ceased reporting and failed to file its Annual list due July 31, 2019 with the Nevada Secretary
of State. This resulted in the revocation of the Company’s corporate charter.
In November, 2020, Barbara
McIntyre Bauman in her capacity as a stockholder of the Company applied for custodianship of the Company with the District Court sitting
in Clark County, Nevada (the “Court”) to revive the Company. Ms. Bauman was ultimately appointed by the Court to serve as
custodian of the Company on January 11, 2021. Ms. Bauman served as the custodian until April 19, 2021, when Ms. Bauman’s motion
to terminate custodianship of the Company was granted by the Court. A copy of the court records relating to the application and termination
of custodianship of the Company are attached as Exhibit 99.1 hereto.
In connection with serving
as the custodian, Ms. Bauman was appointed to serve as the sole executive officer and director of the Company effective January 11, 2021.
Ms. Bauman subsequently returned the Company to Good Standing Status with the Nevada Secretary of State and caused the Company to re-commence
posting periodic reports on the OTC Markets website under the alternative reporting standard. On March 2, 2021, the Company issued to
Ms. Bauman 400,000,000 shares of common stock for repayment of related party debt totaling $6,610. On February 22, 2021, the Company issued
to Ms. Bauman 3,500,000 shares of Series A Preferred Stock, for repayment of the related party debt totaling $4,403. These debts were
incurred in connection with reviving and maintaining the Company.
On May 13, 2021, Ms. Bauman
sold 400,000,000 shares of the Company’s common stock and 3,500,000 shares of the Company’s Series A Preferred Stock to Sally
Kin Yi LO and Daily Success Development Ltd. for aggregate consideration of Three Hundred Forty Thousand Dollars ($340,000). In connection
with the acquisition, Ms. Bauman resigned from her positions as Chief Executive Officer and Chief Operating Officer and Sally Kin Yi LO
was appointed to serve as our Chief Executive Officer, Chief Financial Officer, Secretary and director. It is our understanding that the
purchasers are not U.S. Persons within the meaning of Regulations S. Accordingly, the Shares are being sold pursuant to the exemption
provided by Section 4(a)(2) of the Securities Act of 1933, as amended, Regulation D and Regulation S promulgated thereunder.
Effective July 1, 2021, Daily
Success Development Limited converted 520,000 shares of its Series A Preferred Stock into 41,600,000 shares of Common Stock. As a result,
Daily Success Development Limited holds 468,000,000 Common Shares (56.30%) and 1,755,000 Series A Preferred Shares (56.30%).
Effective July 1, 2021, Sally
Lo converted 280,000 shares of her Series A Preferred Stock into 22,400,000 shares of Common Stock. As a result, Sally Lo holds 252,000,000
Common Shares (30.31%) and 945,000 Series A Preferred Shares (30.29%).
Acquisition of DH Investment
Group Limited (“DHIG”), Our Testing Business
On July 26, 2021, we acquired
all of the issued and outstanding shares of DH Investment Group Limited, a limited liability company organized under the laws of the British
Virgin Islands (“DHIG”), from its shareholders Sally Lo and Daily Success Development Limited in exchange for 100,000 shares
of our Series B Preferred Stock. DHIG operates its COVID-19 antigen testing business through its wholly owned subsidiary Ho Shun Yi Limited,
a limited liability company organized under the laws of Hong Kong. In connection with the acquisition, each of Sally Lo and Daily Success
Development Limited received 35,000 and 65,000 shares of our Series B Convertible Preferred Stock, respectively. Each one (1) shares of
the Series B Convertible Preferred Stock is convertible ten (10) shares of our Common Stock. The Company relied on the exemption from
registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Act in selling the Company’s
securities to the shareholders of DHIG.
Prior to the DHIG Share Exchange,
the Company was considered as a shell company due to its nominal assets and limited operation. The transaction will be treated as a recapitalization
of the Company.
The Share Exchange between
the Company and DHIG on July 26, 2021, was deemed a merger of entities under common control for which Miss Sally Kin Yi LO is the common
director and shareholder of both the Company and DHIG. Under the guidance in ASC 805 for transactions between entities under common control,
the assets, liabilities and results of operations, are recognized at their carrying amounts on the date of the Share Transfer, which required
the retrospective combination of the Company and DHIG for all periods presented.
On June 29, 2021, the Board
of Directors of the Company approved the designation of 10,000,000 shares of Series B Convertible Preferred Stock which took effect immediately.
On August 12, 2021, our Board of Directors authorized and approved the amendment and restatement of our Articles of Incorporation to:
(i) change our name to DH Enchantment Inc.; and (ii) amend the powers, rights and designation of the Series A Convertible Preferred Stock;
and (iii) effectuate a 5:1 reverse split, all of which are subject to final authorization by FINRA. This reverse split was abandoned by
the Issuer.
Acquisition of Buyippee
On March 29, 2024, DH Enchantment
Inc., a Nevada corporation (the “Issuer”), entered into a Share Exchange Agreement with OLS Asia Corporation, a British Virgin
Island corporation (“Buyippee”) and the shareholders of Buyippee (“Buyippee Shareholders”), pursuant to which
the Issuer agreed to purchase from the Buyippee Shareholders an aggregate of One Thousand shares of common stock of Buyippee, representing
all of the issued and outstanding securities of Buyippee. In consideration, the Issuer agreed to issue to the Buyippee Shareholders an
aggregate of Twenty Billion (20,000,000,000) shares of its common stock at a per share price of $0.001 .
The acquisition consummated
on September 16, 2024, however, the Issuer was only issued Three Billion of the Twenty Billion shares of common stock due to the fact
that the Issuer did not have sufficient authorized shares. In connection with the acquisition of Buyippee, the Issuer agreed to effectuate
a reverse stock split of its common stock whereby each 1000 shares of the Issuer’s common stock would be exchanged for 1 one share
the Issuer’s common stock. The Issuer intends to effectuate the contemplated reverse stock split in the near future. Upon the effective
date of the reverse stock split, the Issuer will issue the remaining balance of the shares due to the Buyippee Shareholders pursuant to
the Share Exchange Agreement.
As a result of the acquisition
of Buyippee, Buyippee became a wholly owned subsidiary of the Issuer. Buyippee holds 100% of Online Logistics Services Limited, a Hong
Kong private limited company (“OLS Hong Kong”). OLS Hong Kong holds 100% of Online Logistics Services Limited Taiwan Branch,
a Taiwan private limited company (“OLS Taiwan”).
Upon consummation of our
acquisition of Buyippee, we became engaged in the online ecommerce and logistic business. Concurrently therewith, we discontinued our
prior business of selling and distributing COVID-19 antigen tester sets. Shares of DH Investment Group, a British Virgin Islands corporation,
and Ho Shun Yi, a Hong Kong private limited company, companies through which the prior COVID-19 antigen testing business was operated,
were transferred to Sally Kin Yi Lo for nominal consideration.
The foregoing description
of the Share Exchange Agreement is qualified in its entirety by reference to the Share Exchange Agreement which is filed as Exhibit 10.1
to this Current Report and is incorporated herein by reference.
Buyippee Business Overview
OLS Asia Corporation, a
British Virgin Island corporation was incorporated on March 21, 2024. The Company’s executive office is located at 16/F, Benson
Tower, 74 Hung To Road, Kwun Tong, Kowloon, Hong Kong. In addition, Buyippee has an additional office in 16/F, Benson Tower, 74 Hung To
Road, Kwun Tong, Kowloon, Hong Kong. Buyippee conducts business through two subsidiaries: OLS Hong Kong and OLS Taiwan. Its customers
are located primarily in Hong Kong (70%) and Taiwan (30%).
Buyippee
is an ecommerce platform (Buyippee.com) that provides global online purchasing and shipping services for customers in Hong Kong seeking
to shop across US, Europe, Asia and Australia with ease and comfort. Buyippee seeks to provide its users with the most cost effective
one-stop shopping experience to find and buy what they want which may only be available overseas. Buyippee provides a platform for users
in Hong Kong to shop from a curated selection of offline stores around the world. Buyippee chooses the overseas stores based on local
consumer interests in Hong Kong market. Currently Buyippee.com allows its users to access overseas stores in the USA, Japan, United Kingdom,
China, Taiwan, Australia and Germany. Buyippe serves as an online shopping portal for consumers, where they can purchase products that
are not customarily available to be purchased in Hong Kong, or otherwise at a discount to prices typically offered in local Hong Kong
stores.
Users
search for and make product purchases from our online store at Buyippee.com using Hong Kong Dollars. Buyippee purchases the product from
overseas stores using the applicable overseas currency. To mitigate risks associated with operating in foreign currencies, Buyippee charges
its customers a higher foreign exchange rate and limits its purchases to merchants located in countries with a stable currency exchange
rate.
To provide cost and time
effective on the delivery of the purchased foreign products to purchasers in Hong Kong, Buyippee works with local regional warehouse providers
at overseas service locations. All purchased items will be shipped to and collected at the local serviced warehouse, grouped together,
and transported as a group to Hong Kong, which greatly reduces shipping costs. As Hong Kong is a tax free port, there is no extra cost
or risk for shipping of the overseas purchased products to Hong Kong. Buyippee currently does not carry any product that is assessed import
tax upon entry into Hong Kong.
Future Plans
In the future, Buyippee
intends to focus on the following areas of expansion as finances and opportunities permit:
| · | Expand the selection of products made available in each region, with an initial focus on fashion products.
Buyippee believes that this will increase the average spend per user. |
| · | Expand its global transportation and warehousing service coverage through future merger and acquisitions
of transportation and delivery operators in different regions to further decrease costs of delivery. |
| · | Expand its purchaser platform outside of Hong Kong to other major cities in Asia market. |
Market
Hong Kong has a high rate
of internet and smartphone use, which is expected to reach 83.8% by 2025. The widespread digital use creates a strong base for ecommerce
businesses. According to Statista, total revenue in the Hong Kong ecommerce market is projected
to reach US$4,771 million in 2024, where revenue is expected to show an annual growth of 8.72%, resulting in a projected market volume
of US$7,248 million by 2029. Ecommerce user penetration in Hong Kong is expected to reach 52.9% in 2024 and 73.1% by 2029.
Technology, infrastructure and operations.
We have designed our platform
with enterprise-grade security, reliability, and scalability as top priorities. Our platform is built using PHP based open source technologies,
deployed across geographically-distributed data centers hosted by Amazon Web Service (AWS). Our platform is subject to a rigorous set
of security standards designed to ensure the security of customer data.
AWS, as one of the leading
cloud computing providers, provides server hosting and security infrastructure to Buyippee.com. AWS’s global cloud computing infrastructure
ensures the availability of Buyippee.com to users on a 24/7 standard.
Buyippee.com has developed its platform based on PHP, which lowers the costs of development and maintenance of its website. It also
simplifies integration with many other third-party functionality, such as payment gateway, statistic tracking, and the like. We find
that developers with knowledge and experience of working with PHP based platforms are widely available. As a result, we do not believe
that we will experience significant challenges with finding qualified personnel to help maintain our platform or to develop future new
functionality.
Our customers.
We serve retail customers
in Hong Kong who registered with the Buyippee.com platform. Our platform enables customers in Hong Kong can browse and purchase products
available from overseas selective stores offer through the Buyippee.com platform. Our customers pay Buyippee online with Hong Kong Dollars,
with exchange rate of our payment gateway at the time of transaction made. Buyippee purchases the products on behalf of our customers
at overseas with local foreign currencies.
At this time, Buyippee only purchase and deliver products from selected overseas locations
to customers’ Hong Kong addresses. We may expand our services to people in other Asia and China cities in the future.
INTELLECTUAL PROPERTY AND PATENTS
We rely on, trade secrets,
copyrights, know-how, trademarks, license agreements and contractual provisions to establish our intellectual property rights and protect
the “Buyippee” brand. These legal means, however, afford only limited protection and may not adequately protect our rights.
Litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or determine the validity
and scope of the proprietary rights of others. Litigation could result in substantial costs and diversion of resources and management
attention. Any unauthorized disclosure or use of our intellectual property could increase our costs and harm our operating results.
The laws of the Taiwan, Hong
Kong and PRC may not protect our brand and intellectual property to the same extent as U.S. laws, if at all. We may be unable to fully
protect our intellectual property rights in our country. Further, companies in the internet, social media technology and other industries
may own large numbers of patents, copyrights and trademarks and may frequently request license agreements, threaten litigation or file
suit against us based on allegations of infringement or other violations of their intellectual property rights.
We intend to seek the widest
possible protection for significant product and process developments in our major markets through a combination of trade secrets, trademarks,
copyrights and patents, if applicable. We anticipate that the form of protection will vary depending upon the level of protection afforded
by the particular jurisdiction. We expect that our revenue will be derived principally from our operations in the PRC and Hong Kong where
intellectual property protection may be more limited and difficult to enforce. In such instances, we may seek protection of our intellectual
property through measures taken to increase the confidentiality of our findings.
We intend to register trademarks
as a means of protecting the brand names of our companies and products. We intend to protect our trademarks against infringement and also
seek protection of registered design and product patents.
We rely on trade secrets and
unpatentable know-how that we seek to protect, in part, by confidentiality agreements. We expect that, where applicable, we will require
our employees to execute confidentiality agreements upon the commencement of employment with us. We expect these agreements to provide
that all confidential information developed or made known to the individual during the course of the individual’s relationship with
us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements will also provide
that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive property of the
Company. There can be no assurance, however, that all persons who we desire to sign such agreements will sign, or if they do, that these
agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets or unpatentable know-how
will not otherwise become known or be independently developed by competitors.
COMPETITION
We operate in a highly competitive
market and fragmented market. Some of our competitors include Lazada, Shoppee, EBay and Amazon. Smaller competitors include individual
travelers and flight crew members that offer overseas purchasing services. We believe the principal competitive factors in our market
include the following:
| |
· |
Local brand and trust; |
| |
· |
Product diversity and quality from curated merchants; |
| |
· |
Pricing; and |
| |
· |
Reliable service through our logistics services. |
Buyippee is a local company
registered and with operating office in Hong Kong with our local support team. This gives customers more trust against those local individual
providers. Buyippee provides local customer services to our local customers in Hong Kong, which is an additional benefit over their bigger
overseas platforms.
Although we believe we compete
favorably on the factors described above, many of our current and potential competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, larger product and services offerings, larger customer base and greater brand
recognition. These factors may allow our competitors to benefit from their existing customer or subscriber base with lower acquisition
costs or to respond more quickly than we can to new or emerging technologies and changes in customer requirements. These competitors may
engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing
policies, which may allow them to build a larger subscriber base or to monetize that subscriber base more effectively than us. Our competitors
may develop products or services that are similar to our products and services or that achieve greater market acceptance than our products
and services. In addition, although we do not believe that merchant payment terms are a principal competitive factor in our market, they
may become such a factor and we may be unable to compete fairly on such terms.
EMPLOYEES
We
are currently operating with 1 executive director and sole executive officer and director is located in Hong Kong.
We have the following fulltime
employees located in Hong Kong and Taiwan as set forth below:
| |
Hong Kong |
|
Taiwan |
|
|
Total |
| Executive officers |
1 |
|
0 |
|
|
1 |
| Operational Management |
4 |
|
2 |
|
|
6 |
| Business Development |
0 |
|
0 |
|
|
0 |
| Total |
5 |
|
2 |
|
|
7 |
We
are required to contribute to the pension benefits for all eligible employees in Hong Kong and Taiwan
between the ages of eighteen and sixty-five. We are required to contribute a specified percentage of the participant’s income based
on their ages and wage level. For the years ended March 31, 2024 and 2022, the aggregate contributions
made by us were $20,292 and $19,856, respectively. We have not experienced any significant labor disputes or any difficulties in
recruiting staff for our operations.
None of our employees in
the Taiwan or Hong Kong are members of a trade union. We believe that we maintain good relationships with our employees and have not experienced
any strikes or shutdowns and have not been involved in any labor disputes.
GOVERNMENT AND INDUSTRY REGULATIONS
Taiwan
OLS Taiwan’s activities
in Taiwan are subject to the laws and regulations of Taiwan governing businesses in general, including labor, occupational safety and
health, contracts, tort and intellectual property.
Personal Data Protection
Laws in Taiwan
Under the Taiwan Personal
Data Protection Act (“PDPA”), each individual or governmental or non-governmental agencies, including our affiliate in Taiwan,
should be subject to certain requirements and restrictions for collecting, processing or using personal data. The definition of “personal
data” is extended to cover a broad scope, including name, birthday, ID, special features, fingerprints, marriage status, family,
education, occupation, medical records, medical history, genetic information, sex history, health examination report, criminal records,
contact information, financial status, social activities, and any other data which is sufficient to directly or indirectly identify a
specific person. Due to the nature of the use of medical devices, our operation and the operation of our partners might collect, process,
or use the data pertaining to a person’s medical records and healthcare, genetics (collectively, sensitive data), which is subject to
stricter scrutiny. Generally, we can only obtain such sensitive data when the person consents in writing or electronically. Furthermore,
in September 2021, the TFDA published the draft bill of Regulations Governing Security Measures of the Personal Information File for the
Business of Wholesale of Medical Devices and Retail Sale of Medical Apparatus authorized under the PDPA, which requires the medical devices
wholesalers and retailers to adopt necessary data security/protection measures, and establish prevention and reporting mechanisms in relation
to any data breach. The draft bill also empowers the TFDA to conduct regular inspections and audits. If we fail to comply with the PDPA,
we may be subject to serious punishment for civil claims, criminal offenses and administrative liabilities: the ceiling of the aggregate
compensation amount for damages payable in a single case will be up to NT$200,000,000 or the actual value of loss arising from our violation
provided the amount of actual value of such loss is higher than NT$200,000,000; the defendant may be subject to an imprisonment of up
to five years; and the penalty for administrative liabilities will be up to NT$500,000 for each violation, and may be imposed consecutively
if such violation continues.
Regulations on Intellectual Property Rights
Patent Protection
Pursuant to the Taiwan Patent
Act, amended on May 4, 2022, there are three types of patents in Taiwan: invention patents, utility model patents, and design patents.
The respective patent terms are 20, 10, and 15 years, all calculated from the filing date of a patent application, while the patent rights
are actionable from the issue date of the patent. An extension of patent term of a maximum of 5 years is possible for invention patents
involving pharmaceuticals, agrichemicals, or manufacturing processes thereof to compensate for the regulatory delay caused by marketing
authorization procedures.
In terms of the infringement
disputes of a patent, the civil division of the Intellectual Property Court (“IP Court”) hears civil actions relating to patent
infringement. If the defendant of an infringement action challenges the validity of the disputed patent as a defense, the civil division
will deal with the infringement and validity issues simultaneously. However, any person who intends to invalidate the disputed patent
in all aspects must file revocation proceedings (invalidation action) with the TIPO. Decisions of the TIPO in an invalidation action can
be appealed to the Ministry of Economic Affairs, and subsequently to the IP Court by way of filing an administrative lawsuit.
Copyright
The Taiwan Copyright Law provides
that original copyrightable works shall enjoy exclusive rights automatically upon their completion, with no form of registration required.
The competent authority for the application and registration of trademarks is the Taiwan Intellectual Property Office (“TIPO”)
under the Ministry of Economic Affairs. A copyrighted work is protected throughout the author’s lifetime and 50 years after.
As a copyright holder, when
enforcing a copyright, bears the burden of proving the copyright ownership (and sometimes even the creation time of the copyright, if
such issue is being raised), it is recommended to preserve relevant evidence by having it notarized by a notary public. For important
copyrighted work, it is recommendable to obtain a copyright certificate issued by a copyright owners’ organization so as to serve
as prima facie evidence of the completion and ownership of the copyright. However, it is important to note that such private organizations
do not and cannot conduct any substantive examination of the copyrightability of a work. Therefore, when a work’s copyrightable
is being challenged, only a court will have a final say over such dispute on a case-by-case basis.
Trademarks
Trademark rights in Taiwan
are governed by the Trademark Act. The competent authority for the application and registration of trademarks is the TIPO. Types of protection
include trademarks, certification marks, collective membership marks and collective trademarks. The trademarks which were registered are
protected for 10 years from publication in the Trademark Gazette. This term may be extended successively every 10 years via application
for renewal.
Trade Secrets
The Taiwan Trade Secret Act
mainly governs the following items: (1) the required elements of a trade secret; (2) ownership of a trade secret; (3) the licensing of
a trade secret; (4) misappropriation of a trade secret; (5) the civil remedy and criminal penalty for the misappropriation of a trade
secret; (6) the issuance of a protective order during criminal investigation. Pursuant to the Trade Secret Act, the information that can
be protected under the Trade Secret Act is defined as any method, technique, process, formula, program, design, or other information that
may be used in the course of production, sale or operation, and must meet the following requirements: (1) secrecy; (2) economic value;
and (3) reasonable measures to maintain secrecy. Under the Trade Secret Act, the types of misappropriation include acquisition, use and
divulging of a trade secret by unlawful means. The Trade Secret Act provides civil remedies and criminal penalties for trade-secret misappropriation.
Regulations on Consumer
Protection
In Taiwan, the main regulation
governing the consumer protection is the Consumer Protection Act. Pursuant to the Consumer Protection Act, a manufacture shall be liable
for any damage caused by its products, unless it is able to prove that the products have met and complied with the contemporary technical
and professional standards of reasonably expected safety requirements prior to the launching of such products into the market. Furthermore,
if the products may endanger consumers’ lives, bodies, health or property, they shall be labelled in a conspicuous place with a
warning and the methods for emergency handling of such danger. If an enterprise fails to perform its labelling obligations in this regard,
it will be held liable for the damage caused thereby.
Regulations on Foreign Currency Exchange
The principal regulation governing
foreign currency exchange in Taiwan is the Foreign Exchange Regulation Act, amended on April 29, 2009. Pursuant to the Foreign Exchange
Regulation Act, Taiwan Dollars amounting under the amount of NTD$500,000 are freely convertible no matter what transaction they are in
relation with. On the other hand, the transactions involving NTD$500,000 or more or its equivalent in foreign currency shall fulfill certain
obligations as provided in the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions.
Under the Regulations Governing
the Declaration of Foreign Exchange Receipts and Disbursements or Transactions, for those foreign exchange transactions which amounts
more than NTD$500,000 and relates to the sales of goods or provision of services, such transaction shall be declared through filing a
declaration statement. For those foreign exchange transactions which are not related to the sales of goods or provision of services, ranging
from NTD$500,000 to US$ 50 million, such transaction shall be declared through filing a declaration statement, and providing supporting
documents, such as contracts or letters of approval, to the bank. For those foreign exchange transactions which are not related to the
sales of goods or provision of services, amounting more than USD 50 million, such transaction shall be declared through filing a declaration
statement, providing supporting documents to the bank, and obtaining the approval of the Central Bank of Taiwan.
Though Taiwan government has
promulgated the Regulations Governing Foreign Exchange Control on July 2, 1997, pursuant to the Foreign Exchange Regulation Act, the requirements
for the government to implement those foreign exchange control measures should be subject to either of the following conditions: (1) When
the domestic or foreign economic disorder might endanger the stability of the domestic economy; and (2) When this country suffers a severe
balance of payments deficit. From the past history, Taiwan government only implemented those foreign exchange control measures once in
1997 during the Asian Financial Crisis.
Regulations on Dividend Distribution
The principal regulations
governing dividend distribution is the Company Act. Pursuant to the Company Act, a Taiwan company shall not pay dividends unless its losses
have been covered and statutory reserve funds has been set aside, which should be 10% of the company’s after-tax net profits. However,
in the event that the company’s statutory reserve funds have reached the total amount of the company’s capital, the company
does not need to set aside any amounts for its statutory reserve funds. If the company has no net profits, in principle, it shall not
pay dividends.
Regulations on Employee Stock Incentive Plan
The principal regulations
governing dividend distribution is the Company Act. Pursuant to the Company Act, a Taiwan company may choose to implement the employee
stock incentive plan through five kinds of strategies: (1) employee stock compensation, (2) employee stock option certificates, (3) employee
subscription of new shares using cash as consideration, (4) treasury shares transferred to employees, (5) employee restricted share units.
After the amendment of the Company Act on August 1, 2018, transferring the company’s securities to the employees of the company’s
parent company or its subsidiaries under the employee stock incentive plan is also permitted by law.
Regulations on Employment and Social Insurance
The labor law in Taiwan is
regulated mainly by the Labor Standards Act, amended in June 2020. The Labor Standards Act governs the terms and conditions of employment
such as working hours, holidays, rest periods, wages, overtime, leave, and termination of employment. According to Labor Standard Act,
an employer is required to reach an agreement on salary with the employees, in which the agreed salary shall meet with the minimum amount
set by the competent authority. Violations of the Labor Standards Act may result in fines and other administrative sanctions, and serious
violations may result in criminal liabilities.
In order to protect workers’
safety and health and to prevent occupational accidents, the employers in Taiwan are also required to comply with the Occupational Safety
and Health Act. According to the Occupational Safety and Health Act, the employer shall arrange safety equipment to prevent any emergency.
In addition, the employer shall provide safety education and trainings for the employees which shall enable the employees to protect themselves
when any accident occurs.
Taiwan governmental authorities
have passed a variety of laws and regulations regarding social insurance and employee’s pension from time to time, including, among
others, the Labor Insurance Act, the National Health Insurance Act, the Labor Pension Act, and the Employment Insurance Act. Pursuant
to these laws and regulations, Taiwan companies must make contributions at specified levels for their employees to the relevant social
insurance and pension funds. Failure to comply with such laws and regulations may result in various fines and legal sanctions.
Regulations on Taxation
According to the Taiwan Income
Tax Act, a company incorporated in Taiwan is a Taiwan tax resident and will be subject to 20% corporate income tax on its worldwide income.
A non-resident company will be subject to 20% corporate income tax on its Taiwan-sourced income. If a resident company does not distribute
its financial earnings generated in a year to its shareholders by the end of the following year, a surtax of 5% would be imposed on the
undistributed earnings.
Effective from 2020, the Taiwan
Statute for Industrial Innovation was amended, which extends the tax incentive by 10 years until December 31, 2029 for research and development
(“R&D”) expenditure. Under the tax incentive program, a company conducting qualifying R&D activities may select one
of the following incentives: (i) up to 15% of qualifying R&D expenses may be credited against corporate income tax payable in the
current year; or (ii) up to 10% of qualifying R&D expenses may be credited against corporate income tax payable in the year expenses
incurred and carried forward for the next 2 years. In addition, if a company uses NTD 1 million or more of its undistributed earnings
to construct or purchase buildings, software or hardware equipment, or technology for use in production or operation within 3 years from
the year such earnings are derived, such investment amounts may be deducted from the undistributed earnings in calculation of the current
year’s undistributed earnings for assessment of surtax imposed on undistributed earnings from the year 2018.
The alternative minimum tax
(“AMT”) imposed under the Taiwan Income Basic Tax Act is a supplemental income tax which applies if the amount of regular
income tax calculated pursuant to the Taiwan Income Tax Act and relevant laws and regulations is below the amount of basic tax prescribed
under the Taiwan Income Basic Tax Act. The taxable income for calculating AMT includes most income that is exempt from income tax under
various legislations, such as capital gains from qualified securities and future transactions. The prevailing AMT rate for business entities
is 12%.
According to the Taiwan Income
Tax Act, a withholding tax rate of 21% shall generally be applicable to dividends distributed to non-Taiwan resident enterprise/individual
investors. The withholding tax on the dividends may be reduced pursuant to a tax treaty between Taiwan and the jurisdictions in which
the non-Taiwan shareholders reside. Taiwan currently has a treaty network with 34 countries.
Hong Kong
OLS Hong Kong’s operations
in Hong Kong are subject to the laws and regulations of Hong Kong governing businesses concerning, in particular labor, occupational safety
and health, contracts, tort and intellectual property. Furthermore, we need to comply with the rules and regulations of Hong Kong governing
the data usage and regular terms of service applicable to our potential customers or clients. As the information of our potential customers
or clients is preserved in Hong Kong, we need to comply with the Hong Kong Personal Data (Privacy) Ordinance.
China
OLS Hong Kong is also subject
to the laws and regulations of China governing foreign exchange regulations which limit our ability to convert foreign currency into Renminbi,
acquire PRC companies, or make dividend payments to Buyippee.
PRC Regulations on Tax
Enterprise Income Tax
The EIT Law was promulgated
by the Standing Committee of the National People’s Congress on March 16, 2007 and became effective on January 1, 2008,
and was later amended on February 24, 2017. The Implementation Rules of the EIT Law (the “Implementation Rules”)
were promulgated by the State Council on December 6, 2007 and became effective on January 1, 2008. According to the EIT Law
and the Implementation Rules, enterprises are divided into resident enterprises and non-resident enterprises. Resident enterprises shall
pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%. Non-resident enterprises setting up institutions
in the PRC shall pay enterprise income tax on the incomes obtained by such institutions in and outside the PRC at the rate of 25%. Non-resident
enterprises with no institutions in the PRC, and non-resident enterprises whose incomes having no substantial connection with their institutions
in the PRC, shall pay enterprise income tax on their incomes obtained in the PRC at a reduced rate of 10%.
The Arrangement between the
PRC and Hong Kong Special Administrative Region for the Avoidance of Double Taxation the Prevention of Fiscal Evasion with respect to
Taxes on Income (the “Arrangement”) was promulgated by the State Administration of Taxation (“SAT”) on August 21,
2006 and came into effect on December 8, 2006. According to the Arrangement, a company incorporated in Hong Kong will be subject
to withholding tax at the lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds a 25% interest
or more in the PRC company. The Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty (the “Notice”)
was promulgated by SAT and became effective on October 27, 2009. According to the Notice, a beneficial ownership analysis will be
used based on a substance-over-form principle to determine whether or not to grant tax treaty benefits.
In April 2009, the Ministry
of Finance, or MOF, and SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring
Business, or Circular 59. In December 2009, SAT issued the Notice on Strengthening Administration of Enterprise Income Tax for
Share Transfers by Non-PRC Resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively
as of January 2008. In February 2011, SAT issued the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises,
or SAT Circular 24, effective April 2011. By promulgating and implementing these circulars, the PRC tax authorities have enhanced
their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.
Under Circular 698, where
a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise”
indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may
be subject to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable
commercial purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular
698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related
parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable
income of the transaction.
In February 2015, the SAT
issued Circular 7 to replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that
is significantly different from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth
under Circular 698 but also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate
holding company. In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and
has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market.
Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer)
of the taxable assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets
indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the
transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer.
Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company
if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result,
gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated
to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests
in a PRC resident enterprise.
On October 17,
2017, the SAT issued a Notice Concerning Withholding Income Tax of Non-Resident Enterprise, or SAT Notice No. 37, which
abolishes Circular 698 and certain provisions of Circular 7. SAT Notice No. 37 reduces the burden of the withholding
obligator, such as revocation of contract filing requirements and tax liquidation procedures, strengthens the cooperation of tax
authorities in different places, and clarifies the calculation of tax payable and mechanism of foreign exchange.
Value-added Tax
Pursuant to the Provisional
Regulations on Value-added Tax of the PRC, or the VAT Regulations, which were promulgated by the State Council on December 13, 1993, took
effect on January 1, 1994, and were amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and the Rules
for the Implementation of the Provisional Regulations on Value-added Tax of the PRC, which were promulgated by the MOF on December 25,
1993, and were amended on December 15, 2008, and October 28, 2011, respectively, entities and individuals that sell goods or labor services
of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People’s
Republic of China are taxpayers of value-added tax. The VAT rate is 17% for taxpayers selling goods, labor services, or tangible
movable property leasing services or importing goods, except otherwise specified; 11% for taxpayers selling services of transportation,
postal, basic telecommunications, construction and lease of immovable, selling immovable, transferring land use rights, selling and importing
other specified goods including fertilizers; 6% for taxpayers selling services or intangible assets.
According to the Notice on
the Adjustment to the Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT taxable sales or
import goods, the applicable tax rates shall be adjusted from 17% to 16% and from 11% to 10%, respectively. Subsequently, the Notice on
Policies for Deepening Reform of Value-added Tax was issued by the SAT, the MOF and the General Administration of Customs on March 30,
2019 and took effective on April 1, 2019, which further adjusted the applicable tax rate for taxpayers making VAT taxable sales or importing
goods. The applicable tax rates shall be adjusted from 16% to 13% and from 10% to 9%, respectively.
Dividend Withholding Tax
The EIT Law provides that
since January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident investors that
do not have an establishment or place of business in the PRC, or that have such establishment or place of business but the relevant income
is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within
the PRC.
PRC Laws and Regulations
on Employment and Social Welfare
Labor Law of the PRC
Pursuant to the Labor Law of the PRC, which was
promulgated by the Standing Committee of the NPC on July 5, 1994 with an effective date of January 1, 1995 and was last amended
on August 27, 2009 and the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, became effective on January 1,
2008 and was last amended on December 28, 2012, with the amendments coming into effect on July 1, 2013, enterprises and institutions
shall ensure the safety and hygiene of a workplace, strictly comply with applicable rules and standards on workplace safety and hygiene
in China, and educate employees on such rules and standards. Furthermore, employers and employees shall enter into written employment
contracts to establish their employment relationships. Employers are required to inform their employees about their job responsibilities,
working conditions, occupational hazards, remuneration and other matters with which the employees may be concerned. Employers shall pay
remuneration to employees on time and in full accordance with the commitments set forth in their employment contracts and with the relevant
PRC laws and regulations.
Social Insurance and Housing
Fund
Pursuant to the Social
Insurance Law of the PRC, which was promulgated by the Standing Committee of the NPC on October 28, 2010 and became effective on
July 1, 2011, employers in the PRC shall provide their employees with welfare schemes covering basic pension insurance, basic medical
insurance, unemployment insurance, maternity insurance, and occupational injury insurance. Failure
to make the required contributions shall result in late payment fines computed from the due date at the rate of 0.05% per day;
where payment is not made within the stipulated period, the relevant administrative authorities shall impose a fine ranging from one to
three times the amount of the amount in arrears.
In accordance with the Regulations
on Management of Housing Provident Fund, which were promulgated by the State Council on April 3, 1999 and last amended on March 24,
2002, employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing
funds. Employers and employees are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average
salary of the employee in the preceding year in full and on time. Buyippee and its subsidiaries
have not registered at the designated administrative centers nor opened bank accounts for depositing employees’ housing funds.
It also has not deposited employees’ housing funds. Buyippee may be ordered by the housing provident fund management center to complete
the registration formalities, open bank accounts, make the payment and deposit within a prescribed time limit if it becomes subject to
PRC laws. Failing to register or open bank accounts at the expiration of the time limit could result in fines of not less than RMB10,000
nor more than RMB50,000. And an application may be made to a people’s court for compulsory enforcement if payment and deposit has
not been made after the expiration of the time limit.
PRC Regulations Relating
to Foreign Exchange
General Administration
of Foreign Exchange
The principal regulation governing
foreign currency exchange in the PRC is the Administrative Regulations of the PRC on Foreign Exchange (the “Foreign Exchange
Regulations”), which were promulgated on January 29, 1996, became effective on April 1, 1996 and were last amended on
August 5, 2008. Under these rules, RMB is generally freely convertible for payments of current account items, such as trade- and
service-related foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as capital
transfer, direct investment, investment in securities, derivative products or loans unless prior approval by competent authorities for
the administration of foreign exchange is obtained. Under the Foreign Exchange Regulations, foreign-invested enterprises in the PRC may
purchase foreign exchange without the approval of SAFE to pay dividends by providing certain evidentiary documents, including board resolutions,
tax certificates, or for trade and services related foreign exchange transactions, by providing commercial documents evidencing such transactions.
Circular No. 37 and Circular
No. 13
Circular 37 was released by
SAFE on July 4, 2014 and abolished Circular 75 which had been in effect since November 1, 2005. Pursuant to Circular 37, a PRC
resident should apply to SAFE for foreign exchange registration of overseas investments before it makes any capital contribution to a
special purpose vehicle, or SPV, using his or her legitimate domestic or offshore assets or interests. SPVs are offshore enterprises directly
established or indirectly controlled by domestic residents for the purpose of investment and financing by utilizing domestic or offshore
assets or interests they legally hold. Following any significant change in a registered offshore SPV, such as capital increase, reduction,
equity transfer or swap, consolidation or division involving domestic resident individuals, the domestic individuals shall amend the registration
with SAFE. Where an SPV intends to repatriate funds raised after completion of offshore financing to the PRC, it shall comply with
relevant PRC regulations on foreign investment and foreign debt management. A foreign-invested enterprise established through return investment
shall complete relevant foreign exchange registration formalities in accordance with the prevailing foreign exchange administration regulations
on foreign direct investment and truthfully disclose information on the actual controller of its shareholders.
If any shareholder who is
a PRC resident (as determined by the Circular No. 37) holds any interest in an offshore SPV and fails to fulfil the required foreign exchange
registration with the local SAFE branches, the PRC subsidiaries of that offshore SPV may be prohibited from distributing their profits
and dividends to their offshore parent company or from carrying out other subsequent cross-border foreign exchange activities. The offshore
SPV may also be restricted in its ability to contribute additional capital to its PRC subsidiaries. Where a domestic resident fails to
complete relevant foreign exchange registration as required, fails to truthfully disclose information on the actual controller of the
enterprise involved in the return investment or otherwise makes false statements, the foreign exchange control authority may order them
to take remedial actions, issue a warning, and impose a fine of less than RMB 300,000 on an institution or less than RMB 50,000 on an
individual.
Circular 13 was issued by
SAFE on February 13, 2015, and became effective on June 1, 2015. Pursuant to Circular 13, a domestic resident who makes a capital
contribution to an SPV using his or her legitimate domestic or offshore assets or interests is no longer required to apply to SAFE for
foreign exchange registration of his or her overseas investments. Instead, he or she shall register with a bank in the place where the
assets or interests of the domestic enterprise in which he or she has interests are located if the domestic resident individually seeks
to make a capital contribution to the SPV using his or her legitimate domestic assets or interests; or he or she shall register with a
local bank at his or her permanent residence if the domestic resident individually seeks to make a capital contribution to the SPV using
his or her legitimate offshore assets or interests.
We cannot assure that our
PRC beneficial shareholders have completed registrations in accordance with Circular 37.
Circular 19 and Circular
16
Circular 19 was promulgated
by SAFE on March 30, 2015, and became effective on June 1, 2015. According to Circular 19, the foreign exchange capital in the
capital account of foreign-invested enterprises, meaning the monetary contribution confirmed by the foreign exchange authorities or the
monetary contribution registered for account entry through banks, shall be granted the benefits of Discretional Foreign Exchange Settlement
(“Discretional Foreign Exchange Settlement”). With Discretional Foreign Exchange Settlement, foreign capital in the capital
account of a foreign-invested enterprise for which the rights and interests of monetary contribution have been confirmed by the local
foreign exchange bureau, or for which book-entry registration of monetary contribution has been completed by the bank, can be settled
at the bank based on the actual operational needs of the foreign-invested enterprise. The allowed Discretional Foreign Exchange Settlement percentage
of the foreign capital of a foreign-invested enterprise has been temporarily set to be 100%. The Renminbi converted from the foreign capital
will be kept in a designated account and if a foreign-invested enterprise needs to make any further payment from such account, it will
still need to provide supporting documents and to complete the review process with its bank.
Furthermore, Circular 19 stipulates
that foreign-invested enterprises shall make bona fide use of their capital for their own needs within their business scopes. The capital
of a foreign-invested enterprise and the Renminbi it obtained from foreign exchange settlement shall not be used for the following purposes:
| · | directly or indirectly used for expenses beyond its business scope or prohibited by relevant laws or regulations; |
| · | directly or indirectly used for investment in securities unless otherwise provided by relevant laws or
regulations; |
| · | directly or indirectly used for entrusted loan in Renminbi (unless within its permitted scope of business),
repayment of inter-company loans (including advances by a third party) or repayment of bank loans in Renminbi that have been sub-lent
to a third party; or |
| · | directly or indirectly used for expenses related to the purchase of real estate that is not for self-use
(except for foreign-invested real estate enterprises). |
Circular 16 was issued by
SAFE on June 9, 2016. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign
currency to RMB on a self-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange capital
items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis applicable to all enterprises
registered in the PRC. Circular 16 reiterates the principle that an enterprise’s Renminbi capital converted from foreign currency-denominated
capital may not be directly or indirectly used for purposes beyond its business scope or purposes prohibited by PRC laws or regulations,
and such converted Renminbi capital shall not be provided as loans to non-affiliated entities.
PRC subsidiaries’ distributions
to their offshore parents are required to comply with the requirements as described above.
PRC Share Option Rules
Under the Administration Measures
on Individual Foreign Exchange Control issued by the PBOC on December 25, 2006, all foreign exchange matters involved in employee share
ownership plans and share option plans in which PRC citizens participate require approval from SAFE or its authorized branch. Pursuant
to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications
to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. In addition, under
the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Share Incentive Plans of
Overseas Publicly-Listed Companies, or the Share Option Rules, issued by SAFE on February 15, 2012, PRC residents who are granted shares
or share options by companies listed on overseas stock exchanges under share incentive plans are required to (i) register with SAFE or
its local branches, (ii) retain a qualified PRC agent, which may be a PRC subsidiary of the overseas listed company or another qualified
institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the share incentive
plans on behalf of the participants, and (iii) retain an overseas institution to handle matters in connection with their exercise of share
options, purchase and sale of shares or interests and funds transfers.
PRC Regulation of Dividend
Distributions
The principal laws, rules
and regulations governing dividend distributions by foreign-invested enterprises in the PRC are the Company Law of the PRC, as amended,
the Wholly Foreign-owned Enterprise Law and its implementation regulations, the Chinese-foreign Cooperative Joint Venture Law and its
implementation regulations, and the Chinese-foreign Equity Joint Venture Law and its implementation regulations. Under these laws, rules
and regulations, foreign-invested enterprises may pay dividends only out of their accumulated profit, if any, as determined in accordance
with PRC accounting standards and regulations. Both PRC domestic companies and wholly-foreign owned PRC enterprises are required to set
aside a general reserve of at least 10% of their after-tax profit, until the cumulative amount of such reserve reaches 50% of their registered
capital. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained
from prior fiscal years may be distributed together with distributable profits from the current fiscal year.
INSURANCE
We maintain insurance policies
that we consider to be in line with market practice and adequate for our business. We currently maintain insurance for adverse events
in clinical trials as we estimate the risk exposure to be minimal. We currently do not maintain product liability insurance or key person
insurance.
CORPORATE INFORMATION
Our corporate and executive
office is located at Unit A, 13/F, Gee Luen Factory Building 5, 316-318 Kwun Tong Road, Kowloon, Hong Kong , telephone number +852-26213288
.. In addition to the Hong Kong administrative office of DH Enchantment Inc., Buyippee currently has offices located in Hong Kong and Taiwan
as more fully set forth in the section entitled “Real Properties.”
NEAR-TERM REQUIREMENTS FOR ADDITIONAL CAPITAL
We believe that we will
require approximately $2,000,000 over the next 12 months and an additional $3,000,000 for the twelve months following to implement
our business plan. For the immediate future, we intend to finance our business expansion efforts through loans and investments from existing
shareholders, financial institutions and investors.
RISK FACTORS
An investment in our
securities involves a high degree of risk. You should consider carefully the following information about these risks, together with the
other information contained in this prospectus before making an investment decision. Our business, prospects, financial condition, and
results of operations may be materially and adversely affected as a result of any of the following risks. The value of our securities
could decline as a result of any of these risks. You could lose all or part of your investment in our securities. Some of the statements
in “Risk Factors” are forward looking statements.
Risks Related to Doing Business in Taiwan,
Hong Kong and China
We face the risk that
the policies of China towards Taiwan could have a significant impact on our business in Taiwan.
OLS Taiwan, one of our two
operating subsidiaries, is located in Taiwan. Taiwan’s economy is highly dependent upon the demand from China and Hong Kong. Accordingly,
our business, financial condition and results of operations and the market price of our ordinary shares may be affected by changes in
governmental policies, taxation, growth rate, inflation rate or interest rates and by social instability and diplomatic and social developments
in or affecting Taiwan. Taiwan is facing increasingly tense geopolitical relationships with China. If tensions between the two nations
increase, China may implement policies and actions including economic sanctions and possible military action against Taiwan. Past developments
related to the interactions between China and Taiwan, especially in relation to trade activities such as bans on exports of goods from
time to time, have on occasions depressed the transactions and business operations of certain Taiwanese companies and overall economic
environment. We cannot predict whether there will be an escalation of the tensions between PRC and Taiwan which would lead to new bans
or tariffs on exports or even conflict. Any conflict which threatens the military, political or economic stability in Taiwan could have
a material adverse effect on our current or future business and financial condition and results of operations.
We face the risk that
changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in Taiwan, Hong
Kong and the PRC and the profitability of such business.
We have conducted and expect
to continue to conduct our operations and generate revenue in Taiwan, Hong Kong, S.A.R. and China Accordingly, economic, political and
legal developments in the PRC will significantly affect our business, financial condition, results of operations and prospects. Policies
of the PRC government can have significant effects on economic and geopolitical conditions in Hong Kong and Taiwan. While we believe that
the PRC will continue to strengthen its economic and trading relationships with foreign countries and that business development in the
PRC will continue to follow market forces, we cannot assure you that this will be the case. Further, we cannot assure you that tensions
between the PRC government and Taiwan will alleviate. Our interests may be adversely affected by changes in policies by the PRC government,
including:
| |
· |
changes in laws, regulations or their interpretation especially with respect to Hong Kong and Taiwan; |
| |
· |
confiscatory taxation; |
| |
· |
restrictions on currency conversion, imports or sources of supplies, or ability to continue as a for-profit enterprise; |
| |
· |
expropriation or nationalization of private enterprises; |
| |
· |
Military action against Taiwan; and |
| |
· |
the allocation of resources. |
Substantial uncertainties
and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant
impact upon the business that we may be able to conduct in Taiwan and Hong Kong and accordingly on the results of our operations and financial
condition.
Our business operations
may be adversely affected by the current and future political environment in the PRC. The Chinese government exerts substantial influence
and control over the manner in which we must conduct our business activities. Our ability to operate in Hong Kong may be adversely affected
by changes in Chinese laws and regulations. Under the current government leadership, the government of the PRC has been pursuing reform
policies which have adversely affected China-based operating companies whose securities are listed in the United States, with significant
policies changes being made from time to time without notice. These policies may be extended to apply to companies that operate in Hong
Kong.
There are substantial uncertainties
regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing
our business, or the enforcement and performance of our contractual arrangements with borrowers in the event of the imposition of statutory
liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive system
of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance,
commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing,
China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects
of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published
cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties.
New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have
been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society
and economy in China. Because government agencies and courts provide interpretations of laws and regulations and decide contractual disputes
and issues, their inexperience in adjudicating new business and new polices or regulations in certain less developed areas causes uncertainty
and may affect our business. Consequently, we cannot predict the future direction of Chinese legislative activities with respect to either
businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including
new laws and regulations and changes of existing laws, as well as judicial interpretation by inexperienced officials in the agencies and
courts in certain areas, may cause possible problems to foreign investors.
Although the PRC government
has been pursuing economic reform policies for more than two decades, the PRC government continues to exercise significant control over
economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and
imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue to pursue
policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the event of a
change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC.
The Chinese government
exerts substantial influence over the manner in which we must conduct our business activities. We are currently not required to
obtain approval from Chinese authorities to list on U.S. exchanges. However, to the extent that the Chinese government exerts more control
over offerings conducted overseas and/or foreign investment in China-based issuers over time and if our Hong Kong/PRC subsidiaries or
the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S.
exchanges, we will not be able to continue listing on U.S. exchange and the value of our common stock may significantly decline or become
worthless, which would materially affect the interest of the investors.
The Chinese government has
exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state
ownership. Our ability to operate in Hong Kong may be harmed by changes in its laws and regulations, including those relating to taxation,
environmental regulations, land use rights, property and other matters. The central or local governments of these jurisdictions may impose
new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part
to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision
not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in
the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof,
and could require us to divest ourselves of any interest we then hold in Chinese properties.
For example, the Chinese cybersecurity
regulator announced on July 2 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the
company’s app be removed from smartphone app stores.
As such, the Company’s
business segments may be subject to various government and regulatory interference in the provinces in which they operate. The Company
could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government
sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties
for any failure to comply. The Company’s operations could be adversely affected, directly or indirectly, by existing or future laws
and regulations relating to its business or industry. Given that the Chinese government may intervene or influence our operations at any
time, it could result in a material change in our operation and the value of our common stock. Given recent statements by the Chinese
government indicating an intent to exert more oversight and control over offerings that are conducted overseas, any such action could
significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such
securities to significantly decline or be worthless.
Recently, 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 Severe
and Lawful Crackdown on Illegal Securities Activities, which were available to the public on July 6, 2021. These opinions emphasized
the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies.
These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the
risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. Moreover,
the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective) on July 10,
2021, which require operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity review
with the Office of Cybersecurity Review. The aforementioned policies and any related implementation rules to be enacted may subject us
to additional compliance requirement in the future. While we believe that our operations are not affected by this, as these opinions were
recently issued, official guidance and interpretation of the opinions remain unclear in several respects at this time. Therefore, we cannot
assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules
on a timely basis, or at all.
The Holding Foreign
Companies Accountable Act requires the Public Company Accounting Oversight Board (PCAOB) to be permitted to inspect the issuer’s public
accounting firm within three years. This three-year period wase shortened to two years upon the enactment of the Accelerating Holding
Foreign Companies Accountable Act in December 2022. There are uncertainties under the PRC Securities Law relating to the procedures and
requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the
PRC. If the U.S. securities regulatory agencies are unable to conduct such investigations, they may suspend or de-register our registration
with the SEC and delist our securities from applicable trading market within the US.
On December 28, 2019, the
newly amended Securities Law of the PRC (the “PRC Securities Law”) was promulgated, which became effective on March 1, 2020.
According to Article 177 of the PRC Securities Law (“Article 177”), the securities regulatory authority of the State Council
may establish a regulatory cooperation mechanism with securities regulatory authorities of another country or region for the implementation
of cross-border supervision and administration. Article 177 further provides that overseas securities regulatory authorities shall not
engage in activities pertaining to investigations or evidence collection directly conducted within the territories of the PRC, and that
no Chinese entities or individuals shall provide documents and information in connection with securities business activities to any organizations
and/or persons aboard without the prior consent of the securities regulatory authority of the State Council and the competent departments
of the State Council. As of the date of this prospectus, we are not aware of any implementing rules or regulations which have been published
regarding application of Article 177.
We believe Article 177 is
only applicable where the activities of overseas authorities constitute a direct investigation or evidence collection by such authorities
within the territory of the PRC. Our principal business operation is conducted in Hong Kong. In the event that the U.S. securities regulatory
agencies carry out an investigation on us such as an enforcement action by the Department of Justice, the SEC or other authorities, such
agencies’ activities will constitute conducting an investigation or collecting evidence directly within the territory of the PRC
and accordingly fall within the scope of Article 177. In that case, the U.S. securities regulatory agencies may have to consider establishing
cross-border cooperation with the securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or establishing
a regulatory cooperation mechanism with the securities regulatory authority of the PRC. However, there is no assurance that the U.S. securities
regulatory agencies will succeed in establishing such cross-border cooperation in this particular case and/or establish such cooperation
in a timely manner.
Furthermore, as Article
177 is a recently promulgated provision, it remains unclear as to how it will be interpreted, implemented or applied by the Chinese Securities
Regulatory Commission or other relevant government authorities. As such, there are uncertainties as to the procedures and requisite timing
for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. The Holding
Foreign Companies Accountable Act requires the Public Company Accounting Oversight Board (PCAOB) be permitted to inspect the issuer’s
public accounting firm within three years. This three-year period wase shortened to two years upon the enactment of the Accelerating
Holding Foreign Companies Accountable Act in December 2022. If the U.S. securities regulatory agencies are unable to conduct such
investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist
our securities from applicable trading market within the US.
We are also subject
to other risks and uncertainties that affect many other businesses which are unpredictable and in certain instances are outside of our
control, including:
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increasing costs, the volatility of costs and funding requirements and other legal mandates for employee benefits, especially pension and healthcare benefits; |
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· |
the increasing costs of compliance with federal, state and foreign governmental agency mandates (including the Foreign Corrupt Practices Act) and defending against inappropriate or unjustified enforcement or other actions by such agencies; |
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· |
the impact of any international conflicts on the U.S. and global economies in general, the transportation industry or us in particular, and what effects these events will have on our costs or the demand for our services; |
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· |
any impacts on our business resulting from new domestic or international government laws and regulation; |
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· |
market acceptance of our new service and growth initiatives; |
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· |
the impact of technology developments on our operations and on demand for our services; |
| |
· |
governmental underinvestment in transportation infrastructure, which could increase our costs and adversely impact our service levels due to traffic congestion or sub-optimal routing of our vehicles; |
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· |
widespread outbreak of an illness or any other communicable disease, or any other public health crisis; |
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· |
availability of financing on terms acceptable to our ability to maintain our current credit ratings, especially given the capital intensity of our operations; |
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· |
the impact of cyberattacks and security breaches on our platform or our third-party partners; |
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· |
the impact on our business due to the system failure of our platform or our third-party partners; |
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· |
our ability to attract, maintain, and grow our collector base and engage our collectors; |
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· |
pricing for our products and services; |
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· |
our ability to diversify and grow our services revenue; |
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· |
macroeconomic conditions; |
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· |
adverse legal proceedings or regulatory enforcement actions, judgments, settlements, or other legal proceeding and enforcement-related costs; |
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· |
our ability to attract and retain talent; and |
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· |
our ability to compete with our competitors. |
If we are unable to
protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
We may rely on trade secrets,
including unpatented know-how, technology and other proprietary information, to maintain our competitive position. However, trade secrets
are difficult to protect. We limit disclosure of such trade secrets where possible but we also seek to protect these trade secrets, in
part, by entering into non-disclosure and confidentiality agreements with parties who do have access to them, such as our employees, contract
manufacturers, consultants, advisors and other third parties. Despite these efforts, any of these parties may breach the agreements and
may unintentionally or wilfully disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate
remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive
and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or
unwilling to protect trade secrets. Moreover, if any of our trade secrets were to be lawfully obtained or independently developed by a
competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to
compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position
would be harmed.
Risks Related to Our Operations.
We have experienced
significant growth in recent periods, and our recent growth rates may not be indicative of our future growth.
We have experienced significant
growth in recent years. In future periods, we may not be able to sustain revenue growth consistent with recent history, or at all. We
believe our revenue growth depends on a number of factors, including:
| · | our ability to attract new customers and retain and increase sales
to existing customers; |
| · | our ability to maintain and expand our relationships with our
partners; |
| · | our ability to, and the ability of our partners to, successfully
implement our platform, increase our existing customers’ use of our platform, and provide our customers with excellent customer
support; |
| · | our ability to increase the number of our partners; |
| · | our ability to develop our existing platform and introduce new
functionality to our platform; |
| · | our ability to expand into new markets and internationally; and |
| · | our ability to earn revenue share and customer referrals from
our partner ecosystem. |
We may not accomplish
any of these objectives and, as a result, it is difficult for us to forecast our future revenue or revenue growth. If our assumptions
are incorrect or change in reaction to changes in our market, it may be difficult to achieve and maintain profitability. You should not
rely on our revenue for any prior periods as any indication of our future revenue or revenue growth.
Failure to effectively
develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market
acceptance of our platform. If we are not able to generate traffic to our website through digital marketing our ability to attract new
customers may be impaired.
Our ability to increase
our customer base and achieve broader market acceptance of our ecommerce platform will depend on our ability to expand our marketing
and sales operations. We plan to continue expanding our sales force and strategic partners, both domestically and internationally. We
also plan to continue dedicating significant resources to sales and marketing programs, including search engines and other online advertising.
The effectiveness of our online advertising may continue to vary due to competition for key search terms, changes in search engine use,
and changes in search algorithms used by major search engines and other digital marketing platforms. Our business and operating results
will be harmed if our sales and marketing efforts do not generate a corresponding increase in revenue. We may not achieve anticipated
revenue growth from expanding our sales force if we are unable to hire, develop, and retain talented sales personnel, if our new sales
personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are
not effective.
If the cost of marketing
our platform over search engines or other digital marketing platforms increases, our business and operating results could be adversely
affected. Competitors also may bid on the search terms that we use to drive traffic to our website. Such actions could increase our marketing
costs and result in decreased traffic to our website.
Furthermore, search engines and digital marketing platforms may change their
advertising policies from time to time. If these policies delay or prevent us from advertising through these channels, it could result
in reduced traffic to our website and subscriptions to our platform. New search engines and other digital marketing platforms may develop,
particularly in specific jurisdictions, that reduce traffic on existing search engines and digital marketing platforms. If we are not
able to achieve prominence through advertising or otherwise, we may not achieve significant traffic to our website through these new
platforms and our business and operating results could be adversely affected.
We store and process
confidential information, including personal information of our customers and their shoppers. If we or our third-party providers fail
to protect the security of this information and/or experience a data security incident, our reputation may be harmed and we may be exposed
to material financial penalties and legal liability, which could materially adversely affect our business, results of operations, and
financial condition.
We rely on onsite and cloud-based
computer systems, hardware, software, technology infrastructure and networks for both internal and external operations that are critical
to our business (collectively, “IT Systems”). We own and manage some of these IT Systems but also rely on third parties for
a range of IT Systems and related products and services, including but not limited to cloud computing services and the network security
systems. We and certain of our third-party providers collect, maintain, transmit, process or store data about our employees, our partners,
our customers, and their shoppers, including personal information, payment card information, and proprietary information belonging to
our business such as trade secrets (collectively, “Confidential Information”). Third-party applications available on our
platform and mobile applications may also store Confidential Information. We generally cannot and do not proactively monitor the content
that our customers upload or the information provided to us through the applications integrated with our ecommerce platform; therefore,
we do not control the substance of the content on our servers, which may include Confidential Information.
Cyberattacks and other
malicious internet-based activity continue to increase, and cloud-based platform providers are expected to continue to be targeted, as
threat actors are becoming increasingly sophisticated in using techniques and tools—including artificial intelligence—that
circumvent security controls, evade detection and remove forensic evidence. We face numerous and evolving cybersecurity risks that threaten
the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors
such as state-sponsored organizations, attackers, and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing,
malware (such as viruses, worms, and ransomware), employee theft or misuse, action or inaction by our employees or contractors, human
or technological error, denial-of-service attacks, malicious code embedded in open-source software, or misconfigurations, bugs or other
vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT Systems,
products, or services. As a result, despite our efforts to create security barriers to such threats, we cannot entirely mitigate these
risks. We and our third-party partners and service providers also may face difficulties or delays in identifying, remediating or otherwise
responding to, cyberattacks and other security breaches and incidents. As we rely on third-party and public-cloud infrastructure, we
depend in part on third-party security measures to protect against unauthorized access, cyberattacks, and the mishandling of Confidential
Information. We and certain of our third-party providers have been subject to cyber-attacks and attempts in the past and will continue
to be subject to such attacks in the future. Though no such incident to date has had a material impact on our business, we cannot guarantee
that we will not experience material or adverse effects from any future incident. We have incurred substantial costs in efforts to protect
against and address potential impacts of security breaches and incidents, and anticipate doing so in the future. Nevertheless, while
we employ a number of security measures designed to prevent, detect, and mitigate potential harm to our platform, there can be no assurance
that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented,
complied with or effective in protecting our IT Systems and Confidential Information. Any adverse impact to the availability, integrity
or confidentiality of our IT Systems or Confidential Information could have significant costs, including regulatory enforcement actions,
litigation (such as class actions), litigation indemnity obligations, civil or criminal penalties, operational changes, remediation costs,
network downtime, increases in insurance premiums, and reputational damage. Any or all of the foregoing could materially adversely affect
our business, results of operations, and financial condition.
Many companies that provide
these services have reported a significant increase in cyberattack activity in recent years. Remote and hybrid working arrangements at
our company (and at many third-party providers) may also increase cybersecurity risks due to the challenges associated with managing
remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
Even if a data breach did
not arise out of our action or inaction, or if it were to affect one or more of our competitors or our customers’ competitors,
rather than us, the resulting concern could negatively affect our customers and our business. Concerns regarding data privacy and security
may cause some of our customers to stop using our platform. In addition, failures to meet our customers’ or shoppers’ expectations
with respect to security and confidentiality of their data and information could damage our reputation and affect our ability to retain
customers, attract new customers, and grow our business.
Our failure to comply with
legal, contractual, or standards-based requirements around the security of personal information could lead to significant fines and penalties,
as well as claims by our customers, their shoppers, or other stakeholders. Moreover, we may acquire companies with cybersecurity vulnerabilities
and/or unsophisticated security measures, which exposes us to significant cybersecurity, operational, and financial risks. If we acquire
companies that do not have security measures that are as robust as the measures we have in place, the risk of fines and penalties may
increase. Any such proceedings or violations could force us to spend money in defense or settlement of these proceedings, result in the
imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business,
and materially adversely affect our reputation and the demand for our platform. Any material interruptions or failures in our payment
related systems could have a material adverse effect on our business, results of operations and financial condition. If we or our service
providers are unable to comply with the security standards established by banks and the payment card industry, we could be liable to
our partners, the payment card associations, our customers, their shoppers and consumers with whom we have a direct relationship. In
addition, we could be subject to fines and higher transaction fees, face regulatory or other legal action, or lose customers. The limitations
of liability in our contracts may not be enforceable or adequate or would otherwise protect us from any such liabilities or damages with
respect to any particular claim.
Our insurance coverage,
including coverage for errors and omissions and cyber liability, may not continue to be available on acceptable terms or may not be available
in sufficient amounts to cover one or more large claims. Our insurers could deny coverage as to any future claim and our cyber liability
coverage may not adequately protect us against any losses, liabilities and costs that we may incur. The successful assertion of one or
more large claims against us, or changes in our insurance policies, including premium increases or the imposition of large deductible
or coinsurance requirements, could have an adverse effect on our business, financial condition, and results of operations.
Many jurisdictions
have enacted laws requiring companies to notify individuals of security breaches involving certain types of personal information. Our
agreements with certain customers and partners require us to notify them of certain security incidents. Some jurisdictions and customers
require us to safeguard personal information or confidential information using specific measures. If we fail to observe these requirements,
our business, operating results, and financial condition could be adversely affected.
We depend on third-party
data hosting and transmission services. Increases in cost, interruptions in service, latency, or poor service from our third-party data
center providers could impair the delivery of our platform. This could result in customer or shopper dissatisfaction, damage to our reputation,
loss of customers, limited growth, and reduction in revenue.
We currently serve the
majority of our platform functions from third-party data center hosting facilities operated by Amazon Web Service (AWS). Our platform
relies on the multiple data centers within the AWS infrastructure, with additional geographies available for disaster recovery. Our operations
depend, in part, on our third-party providers’ protection of these facilities from natural disasters, power or telecommunications
failures, criminal acts, or similar events. If any third-party facility’s arrangement is terminated, or its service lapses, we
could experience interruptions in our platform, latency, as well as delays and additional expenses in arranging new facilities and services.
A significant portion of
our operating cost is from our third-party data hosting and transmission services. If the costs for such services increase due to vendor
consolidation, regulation, contract renegotiation or otherwise, we may not be able to increase the fees for our ecommerce platform or
professional services to cover the changes. As a result, our operating results may be significantly worse than forecasted. Our servers
may be unable to achieve or maintain data transmission capacity sufficient for timely service of increased traffic or order processing.
Our failure to achieve or maintain sufficient and performant data transmission capacity could significantly reduce demand for our platform.
Many
shoppers may access our platform over short periods of time, including from new product releases, holiday shopping seasons and flash
sales. These events may significantly increase the traffic on our servers and the volume of transactions processed on our platform. Despite
precautions taken at our data centers, spikes in usage volume, or a natural disaster, an act of terrorism, vandalism or sabotage, closure
of a facility without adequate notice, or other unanticipated problems could result in lengthy interruptions or performance degradation
of our platform. Any damage to, or failure of, the systems of our third-party providers could result in interruptions to our platform.
Even with current and planned disaster recovery arrangements, our business could be harmed. If we experience damage or interruption,
our insurance policies may not adequately compensate us for or protect us against any losses, liabilities and costs that we may incur.
These factors in turn could further reduce our revenue or subject us to liability, any of which could materially adversely affect our
business.
If there are interruptions
or performance problems associated with our technology or infrastructure, our existing customers may experience service outages, and our
new customers may experience delays in using our platform.
Our operational performance
and profitability depend, in part, on the ability of our existing and potential customers to access our platform 24 hours a day, seven
days a week, without interruption or performance degradation. We have experienced and may, in the future, experience disruptions, data
loss, outages, and other performance problems with our infrastructure. These can be due to a variety of factors, including infrastructure
changes, introductions of new functionality, human or software errors, capacity constraints, denial-of-service attacks, or other security-related
incidents, any of which may be recurring. As we continue to add customers, expand geographically, and enhance our platform’s functionality,
the additional scale may increase complexity and our average uptime for future periods may decrease. We may not be able to identify the
cause or causes of these performance problems promptly. If our platform is unavailable or if our customers are unable to access our platform
within a reasonable amount of time, our business would be harmed. Any outage on our platform would impair the ability of our customers
to engage in ecommerce, which would negatively impact our brand, reputation and customer satisfaction. We depend on services from various
third parties to maintain our infrastructure and any disruptions to these services, including from causes outside our control, would
significantly impact our platform. In the future, these services may not be available to us on commercially reasonable terms, or at all.
Loss of any of these services could decrease our platform’s functionality until we develop equivalent technology or, if equivalent
technology is available from another party, we identify, obtain, and integrate it into our infrastructure. If we do not accurately predict
our infrastructure capacity requirements, our customers could experience service shortfalls. We may also be unable to address capacity
constraints, upgrade our systems, and develop our technology and network architecture to accommodate actual and anticipated technology
changes.
Any of the above circumstances or events may harm our reputation, cause customers to terminate their agreements with us,
impair our ability to grow our customer base, and otherwise harm our business, results of operations, and financial condition.
Risks Related to Our Finances and Capital Requirements
We will need additional
funding and may be unable to raise capital when needed, which would force us to delay any business expansions or acquisitions.
Our business plan contemplates
the expansion of our operations through organic means and through acquisitions or investments in additional complementary businesses,
products and technologies. While we currently have no commitments or agreements relating to any of these types of transactions, we do
not generate sufficient revenue from operations to finance expansion or acquisition needs. We expect to finance such future cash needs
through public or private equity offerings, debt financings or corporate collaboration and licensing arrangements, as well as through
interest income earned on cash and investment balances. We cannot be certain that additional funding will be available on acceptable terms,
or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our development
programs or our commercialization efforts.
Raising additional
capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights.
Until such time, if ever,
as we can generate substantial revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings,
grants and license and development agreements in connection with any collaborations. To the extent that we raise additional capital through
the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing and preferred equity financing, if
available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends.
If we raise additional funds
through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish
valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may
not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to
delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product
candidates that we would otherwise prefer to develop and market ourselves.
Risks Relating to Securities Markets and Investment
in Our Stock
There is not now and
there may not ever be an active market for our Common Stock. There are restrictions on the transferability of these securities.
There currently is no market
for our Common Stock and, except as otherwise described herein, we have no plans to file any registration statement or otherwise attempt
to create a market for the shares. Even if an active market develops for the shares, Rule 144, which provides for an exemption from the
registration requirements under the Securities Act under certain conditions, requires, among other conditions, a holding period prior
to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements
under the Securities Act. There can be no assurance that we will fulfil any reporting requirements in the future under the Exchange Act
or disseminate to the public any current financial or other information concerning us, as is required by Rule 144 as part of the conditions
of its availability.
Our common stock is
subject to the “penny stock” rules of the sec and the trading market in our securities is limited, which makes transactions
in our stock cumbersome and may reduce the value of an investment in our stock.
Under U.S. federal securities
legislation, our common stock will constitute “penny stock”. Penny stock is any equity security that has a market price of less
than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that
a broker or dealer approve a potential investor’s account for transactions in penny stocks, and the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order
to approve an investor’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment
experience objectives of the person, and make a reasonable determination that the transactions in penny stocks are suitable for that person
and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny
stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission
relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination.
Brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our stock. Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable
to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available
to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in penny stocks.
Our insiders beneficially
own a significant portion of our stock, and accordingly, may have control over stockholder matters, our business and management.
As of the date of this current
report, our executive officers and directors collectively beneficially own 3,372,000,000 shares of our common stock, or approximately
69.79%, of our issued and outstanding shares of common stock. As a result, our management team will have significant influence to:
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Elect or defeat the election of our directors; |
| |
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Amend or prevent amendment of our articles of incorporation or bylaws; |
| |
· |
effect or prevent a merger, sale of assets or other corporate transaction; and |
| |
· |
affect the outcome of any other matter submitted to the stockholders for vote. |
Moreover, because of the
significant ownership position held by our management team, new investors may not be able to effect a change in our business or management,
and therefore, shareholders would have no recourse as a result of decisions made by management. In addition, sales of significant amounts
of shares held by our management team, or the prospect of these sales, could adversely affect the market price of our common stock. Our
management team’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain
control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
State securities laws
may limit secondary trading, which may restrict the states in which and conditions under which you can sell the shares offered by this
registration statement.
Secondary trading in common
stock sold in this offering will not be possible in any state until the common stock is qualified for sale under the applicable securities
laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for
secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, the
common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In
the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock
could be significantly impacted thus causing you to realize a loss on your investment.
The Company does not intend
to seek registration or qualification of its shares of common stock the subject of this offering in any State or territory of the United
States. Aside from a “secondary trading” exemption, other exemptions under state law and the laws of US territories may be available
to purchasers of the shares of common stock sold in this offering,
Anti-takeover effects
of certain provisions of Nevada state law hinder a potential takeover of our company. Though not now, in the future we may become
subject to Nevada’s control share law. A corporation is subject to Nevada’s control share law if it has more than 200 stockholders, at
least 100 of whom are stockholders of record and residents of Nevada, and it does business in Nevada or through an affiliated corporation.
The law focuses on the acquisition of a “controlling interest” which means the ownership of outstanding voting shares sufficient,
but for the control share law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation
in the election of directors:
(i) one-fifth or more but
less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more. The ability to exercise such voting
power may be direct or indirect, as well as individual or in association with others.
The effect of the control
share law is that the acquiring person, and those acting in association with it, obtains only such voting rights in the control shares
as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of stockholders. The
control share law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority
to strip voting rights from the control shares of an acquiring person once those rights have been approved. If the stockholders do not
grant voting rights to the control shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The
acquiring person is free to sell its shares to others. If the buyers of those shares themselves do not acquire a controlling interest,
their shares do not become governed by the control share law.
If control shares are accorded
full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, any stockholder of
record, other than an acquiring person, who has not voted in favor of approval of voting rights is entitled to demand fair value for such
stockholder’s shares.
In addition to the control
share law, Nevada has a business combination law which prohibits certain business combinations between Nevada corporations and “interested
stockholders” for three years after the “interested stockholder” first becomes an “interested stockholder,” unless
the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an “interested stockholder”
is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting
shares of the corporation, or (ii) an affiliate or associate of the corporation and at any time within the three previous years was the
beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation.
The definition of the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would
allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather
than the interests of the corporation and its other stockholders.
The effect of Nevada’s business
combination law is to potentially discourage parties interested in taking control of our company from doing so if it cannot obtain the
approval of our board of directors.
Because we do not
intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they
sell them. We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate
paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to
receive a return on their shares unless they sell them. Stockholders may never be able to sell shares when desired. Before you invest
in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all
of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and
uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.
Our stock may be subject
to substantial price and volume fluctuations due to a number of factors, many of which are beyond our control and may prevent our stockholders
from reselling our Common Stock at a profit. The market prices for securities of logistics companies may be volatile and may fluctuate
substantially due to many factors, including:
| |
· |
market conditions in the logistics sectors or the economy as a whole; |
| |
· |
price and volume fluctuations in the overall stock market; |
| |
· |
announcements of the introduction of new products and services by us or our competitors; |
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actual fluctuations in our quarterly operating results, and concerns by investors that such fluctuations may occur in the future; |
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deviations in our operating results from the estimates of securities analysts or other analyst comments; |
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additions or departures of key personnel; |
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legislation, including measures affecting e-commerce or infrastructure development; and |
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developments concerning current or future strategic collaborations; and |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our financial statements for the three months
ended June 30, 2024 and 2023, as well as, the fiscal years ended March 31, 2024 and 2023 have been prepared assuming that we will continue
as a going concern. Our continuation as a going concern is dependent upon improving our profitability and the continuing financial support
from our stockholders.
Results of Operations.
Comparison of the Three Months ended June
30, 2024 and 2023
The following table sets forth certain operational
data for the periods indicated:
| | |
Three Months Ended June 30, | |
| | |
2024 | | |
2023 | |
| Revenues, net | |
| | | |
| | |
| Revenue from third parties | |
$ | 440,093 | | |
$ | 280,594 | |
| Revenue from related party | |
| 150,690 | | |
| 71,444 | |
| Total revenues, net | |
| 590,783 | | |
| 352,038 | |
| Cost of revenue | |
| (455,403 | ) | |
| (196,427 | ) |
| Gross profit | |
| 135,380 | | |
| 155,611 | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing expense | |
| (18,729 | ) | |
| (11,038 | ) |
| Personnel and benefit expense | |
| (45,429 | ) | |
| (112,924 | ) |
| General and administrative expenses | |
| (32,577 | ) | |
| (38,286 | ) |
| Income (loss) from operation | |
| 38,645 | | |
| (6,637 | ) |
| Other expenses, net | |
| (28,587 | ) | |
| (24,740 | ) |
| Income (loss) before income taxes | |
| 10,058 | | |
| (31,377 | ) |
| Income tax expense | |
| (2,684 | ) | |
| – | |
| Net income (loss) | |
$ | 7,374 | | |
$ | (31,377 | ) |
Revenue
The Company currently earns three types of income
sources:-
| | |
Three Months Ended June 30, | |
| Type of revenue | |
2024 | | |
2023 | |
| | |
| | |
| |
| Retail sales | |
$ | 328,152 | | |
$ | 138,324 | |
| Logistic and fulfilment services | |
| 111,941 | | |
| 142,270 | |
| Supply chain consulting service (related party) | |
| 150,690 | | |
| 71,444 | |
| | |
$ | 590,783 | | |
$ | 352,038 | |
Retail Sales (direct-to-consumer)
The Company provides customized customer-specific
solutions, involving with the purchase of designated merchandise, logistic and fulfilment services, through which the Company provides
the service of integrating a complex set of tasks and components into a single capability. The entire contract is accounted for as one
performance obligation. For these performance obligations, the Company typically has a right to consideration from customers in an amount
that corresponds directly with the value to the customers of the performance completed to date, and as such, the revenue is recognized
when control of the merchandise is transferred to the customer, which generally occurs upon shipment and accepted by the customer. Advanced
payment is typically made, prior to the date of shipment.
Deferred revenue is recorded when the Company
has received consideration (i.e., advanced payment) before satisfying its performance obligations. As such, customer orders are recorded
as deferred revenue prior to shipment or rendering of product or services. Deferred revenue primarily relates to e-commerce orders placed
for customer-specific solutions, but not shipped or accepted by the customers, prior to the end of the fiscal period.
Logistic and Fulfilment Services
The Company provides logistic and fulfilment services
to the customers and they receive the benefit of the Company’s services as the goods are transported from one location to another.
Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised
services is completed and transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive
in exchange for transferring and delivering services to a customer. Generally, the contracts require the customers to pay for service
when the customers collect the goods from the Company.
Supply Chain Consulting Service
The Company also renders supply chain consulting
services in relation to all activities involved in sourcing, procurement, conversion, and logistics management. The contract has a single
performance obligation, which is satisfied upon rendering of services, on a monthly basis. Revenue is recognized when performance obligation
is satisfied and the customer obtains the benefit of promised services. The amount of revenue recognized reflects the consideration to
which the Company expects to be entitled to receive in exchange for services, which is determined by performance-based fees and the amount
is varied, upon the monthly performance result.
Revenues of $590,783 for the three months ended
June 30, 2024, increased by $238,745 or 68% from $352,038 in the same period of 2023, which was mainly due to strong market demand in
outbound retain sales and supply chain consulting service with a related party. Revenues of $352,038 for the three months ended June 30,
2023 consisted primarily retail sales, logistic and fulfilment services, as well as supply chain consulting services.
Cost of Revenue
Cost of revenues of $455,403 for the three months
ended June 30, 2024 consisted primarily of the direct wages, telemarketing service charges, depreciation and amortization of right of
use assets. Cost of revenues increased by $258,976, or 132%, from $196,427 in the same period of 2023 which was mainly due to the increase
in direct operating cost in connection with logistics and warehousing services. Cost of revenues of $196,427 for the three months ended
June 30, 2023 consisted primarily of the associated costs in rendering the financial consulting service, such as, direct marketing costs.
Gross Profit
We achieved a gross profit of $135,380 and $155,611
for the three months ended June 30, 2024 and 2023, respectively. The decrease in gross profit is attributable to an increase in direct
operating cost in new rendering logistics and warehousing services.
Sales and Marketing Expenses (“S&M”)
S&M expenses increased by $7,691 or 69.7%,
to $18,729 for the three months ended June 30, 2024, as compared to the same period as of 2023, due primarily to increase in advertising
and online marketing fee.
S&M expenses of $11,038 for the three months
ended June 30, 2023. These expenses primarily include advertising, online marketing as well as consultancy fee.
Payroll and benefit Expenses (“P&B”)
P&B expenses decreased by $67,495 or 59.8%,
to $45,429 for the three months ended June 30, 2024, as compared to the same period as of 2023, due primarily to cost saving from system
upgrading to control labor cost.
P&B expenses of $112,924 for the three months
end June 30, 2023. These expenses primarily include wages and salaries and other staff benefits.
General and Administrative Expenses (“G&A”)
General and administrative expenses decreased
by $5,709 or 14.9%, to $32,577 for the three months ended June 30, 2024, as compared to the same period as of 2023, due primarily to decrease
in operating costs including rental charges and other supporting costs to the operation.
General and administrative expenses of $38,286
for the three months ended June 30, 2023. These expenses primarily include office operating cost, as well as professional fees.
Income Tax Expense
We incurred income tax expense of $2,684 under
Hong Kong tax regime during the three months ended June 30, 2024.
We incurred no income tax expense during the three
months ended June 30, 2023.
Comparison of the fiscal years ended March
31, 2024 and 2023
The following table sets forth certain operational
data for the years indicated:
| | |
Fiscal Years Ended March 31, | |
| | |
2024 | | |
2023 | |
| Revenues, net | |
| | | |
| | |
| Revenue from third parties | |
$ | 1,640,915 | | |
$ | 1,897,595 | |
| Revenue from related party | |
| 347,592 | | |
| – | |
| | |
| 1,988,507 | | |
| 1,897,595 | |
| Cost of revenue | |
| (1,409,944 | ) | |
| (1,338,014 | ) |
| Gross profit | |
| 578,563 | | |
| 559,581 | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing | |
| (85,090 | ) | |
| (16,745 | ) |
| Personnel and benefit | |
| (362,959 | ) | |
| (310,923 | ) |
| General and administrative | |
| (131,994 | ) | |
| (260,401 | ) |
| Loss from operation | |
| (1,480 | ) | |
| (28,488 | ) |
| Other expenses, net | |
| (106,677 | ) | |
| (1,048 | ) |
| Loss before income taxes | |
| (108,157 | ) | |
| (29,536 | ) |
| Income tax expense | |
| (628 | ) | |
| – | |
| Net loss | |
$ | (108,785 | ) | |
$ | (29,536 | ) |
Revenue
The Company currently earns three types of income
sources:-
| | |
Fiscal Years Ended March 31, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Retail sales | |
$ | 1,111,283 | | |
$ | 1,029,591 | |
| Logistic and fulfillment service | |
| 529,632 | | |
| 868,004 | |
| Supply chain consulting income | |
| 347,592 | | |
| – | |
| | |
$ | 1,988,507 | | |
$ | 1,897,595 | |
Retail sales (direct-to-consumer)
The Company provides customized customer-specific
solutions, involving with the purchase of designated merchandise, logistic and fulfilment services, through which the Company provides
the service of integrating a complex set of tasks and components into a single capability. The entire contract is accounted for as one
performance obligation. For these performance obligations, the Company typically has a right to consideration from customers in an amount
that corresponds directly with the value to the customers of the performance completed to date, and as such, the revenue is recognized
when control of the merchandise is transferred to the customer, which generally occurs upon shipment and accepted by the customer. Advanced
payment is typically made, prior to the date of shipment.
Deferred revenue is recorded when the Company
has received consideration (i.e., advanced payment) before satisfying its performance obligations. As such, customer orders are recorded
as deferred revenue prior to shipment or rendering of product or services. Deferred revenue primarily relates to e-commerce orders placed
for customer-specific solutions, but not shipped or accepted by the customers, prior to the end of the fiscal period.
Logistic and Fulfillment services
The Company provides logistic and fulfillment
services to the customers and they receive the benefit of the Company’s services as the goods are transported from one location
to another. Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the
promised services is completed and transferred to customers. Revenue is measured as the amount of consideration the Company expects to
receive in exchange for transferring and delivering services to a customer. Generally, the contracts require the customers to pay for
service when the customers collect the goods from the Company.
Supply Chain Consulting service
The Company also renders supply chain consulting
services in relation to all activities involved in sourcing, procurement, conversion, and logistics management. The contract has a single
performance obligation, which is satisfied upon rendering of services, on a monthly basis. Revenue is recognized when performance obligation
is satisfied and the customer obtains the benefit of promised services. The amount of revenue recognized reflects the consideration to
which the Company expects to be entitled to receive in exchange for services, which is determined by performance-based fees and the amount
is varied, upon the monthly performance result.
Revenues of $1,988,507 for the year ended March
31, 2024, increased by $90,912 or 4.8% from $1,897,595 in the same period of 2023, which was mainly due to introduction of new business
in rendering supply chain services to related party. Revenues of $1,897,595 for the year ended March 31, 2023 consisted primarily of retails
sale, logistic and fulfillment service.
For the year ended March 31, 2024, there is one
individual customer namely Viewider Limited who accounted for 30.5% of the Company’s revenues amounting to $606,482.
For the year ended March 31, 2023, there is no
individual customer, who accounted for 10% or more of the Company’s revenues.
These customers are located in Hong Kong.
Cost of Revenue
Cost of revenues of $1,409,944 for the year ended
March 31, 2024 consisted primarily of the cost of merchandised sold and logistic service providers, with the associated cost of payroll,
packing charges, direct operating cost. Cost of revenues increased by $71,930 or 5.4% from $1,338,014 in the same period of 2023 which
was mainly due to the increase in sale growth. Cost of revenues of $1,338,014 for the year ended March 31, 2023 consisted primarily of
the associated costs in rendering of retail sales, logistic and fulfillment services.
Gross Profit
We achieved a gross profit of $578,563 and $559,581
for the years ended March 31, 2024 and 2023, respectively. The increase in gross profit is attributable to an increase in new business
in rendering supply chain consulting services.
Sales and Marketing Expenses (“S&M”)
S&M expenses increased by $68,345 or 80.3%,
to $85,090 for the year ended March 31, 2024, as compared to the prior year, due primarily to increase in increase in advertising and
online marketing fee..
S&M expenses of $16,745 for the year ended
March 31, 2023. These expenses primarily include advertising, online marketing as well as consultancy fee.
Payroll and benefit Expenses (“P&B”)
P&B expenses increased by $52,036 or 16.7%,
to $362,959 for the year ended March 31, 2024, as compared to the prior year, due primarily to increase in payroll increment.
P&B expenses of $310,923 for the year ended
March 31, 2023. These expenses primarily include wages and salaries and other staff benefits.
General and Administrative Expenses (“G&A”)
G&A expenses decreased by $128,407 or 49.3%,
to $131,994 for the year ended March 31, 2024, as compared to the prior year, due primarily to cost saving to control in other supporting
costs to the operation.
G&A expenses of $260,401 for the year ended
March 31, 2023. These expenses primarily include payroll, office operating cost, as well as professional fees.
Other Expenses, Net
Other net expenses increased by $105,629 or 10,079%,
to $106,677 for the year ended March 31, 2024, as compared to the prior year, due primarily to an increase in the interest expense from
bank borrowings.
Other net expenses of $1,048 for the year ended
March 31, 2023. These expenses primarily include interest expense from bank borrowings, offset by government subsidy income of $13,777
Income Tax Expense
We incurred income tax expense of $628 under Hong
Kong tax regime during the year ended March 31, 2024.
We incurred no income tax expense during the year
ended March 31, 2023.
Liquidity and Capital Resources
The following summarizes the key component of
our cash flows for the three months ended June 30, 2024 and 2023.
| | |
Three Months ended June 30, | |
| | |
2024 | | |
2023 | |
| Net cash used in operating activities | |
$ | (10,012 | ) | |
$ | (59,075 | ) |
| Net cash used in investing activities | |
$ | (2,855 | ) | |
$ | – | |
| Net cash (used in) provided by financing activities | |
$ | (97,246 | ) | |
$ | 37,297 | |
Net Cash Used In Operating Activities
For the three months ended June 30, 2024, net
cash used in operating activities was $10,012, which consisted primarily of a net income of $7,374, an increase in accounts receivable
of $130,862, a decrease in accrued liabilities and other payables of $20,566, a decrease in income tax payable of $7,024, offset by a
decrease in deposits, prepayments and other receivables of $4,256, an increase in accounts payable of $744, an increase in deferred revenue
of $134,892 and adjusted for non-cash items such as depreciation of plant and equipment of $1,174.
For the three months ended June 30, 2023, net
cash used in operating activities was $59,075, which consisted primarily of a net loss of $31,377, an increase in accounts receivable
of $22,776, a decrease in deferred revenue of $23,244, offset by an increase in deposits, prepayments and other receivables of $2,163,
a increase in accounts payable of $5,413, an increase in accrued liabilities and other payables of $9,604, and adjusted for non-cash items
such as depreciation of plant and equipment of $1,142.
Net Cash Used In Investing Activities
For the
three months ended June 30, 2024, net cash used in investing activities was $2,855, relating
to the development of warehouse facilities.
For the
three months ended June 30, 2023, no investing activities were incurred.
Net Cash (Used in) Provided by Financing Activities
For the three months ended June 30, 2024, net
cash used in financing activities was $97,246, mainly relating to $31,820 of repayment to bank borrowings and $65,426 of repayments to
the directors.
For the three months ended June 30, 2023, net
cash provided by financing activities was $37,297, mainly relating to $12,725 of net repayment from bank borrowings, offset by $50,022
of temporary advances from the director to support the operation.
The following summarizes the key component of
our cash flows for the years ended March 31, 2024 and 2023.
| | |
Years ended March 31, | |
| | |
2024 | | |
2023 | |
| Net cash used in operating activities | |
$ | (504,966 | ) | |
$ | (79,164 | ) |
| Net cash used in investing activities | |
$ | – | | |
$ | (13,712 | ) |
| Net cash provided by (used in) financing activities | |
$ | 802,058 | | |
$ | (305,127 | ) |
Net Cash (Used In) Provided by Operating Activities
For the year ended March 31, 2024, net cash used
in operating activities was $504,966, which consisted primarily of a net loss of $108,785, an increase in accounts receivable of $396,752,
a decrease in accrued liabilities and other payables of $4,286, a decrease in deferred revenue of $13,605 and a decrease in income tax
payable of $9,228, offset by an increase in deposits, prepayments and other receivables of $20,680, and adjusted for non-cash items such
as depreciation of plant and equipment of $7,010.
For the year ended March 31, 2023, net cash used
in operating activities was $79,164, which consisted primarily of a net loss of $29,536, an increase in accounts receivable of $36,759,
a decrease in accounts payable of $272,742, a decrease in income tax payable of $7,861, offset by an increase in deposits, prepayments
and other receivables of $148,021, an increase in accrued liabilities and other payables of $35,671, an increase in deferred revenue of
$78,419 and adjusted for non-cash items such as depreciation of plant and equipment of $5,623.
Net Cash Used In Investing Activities
For the
year ended March 31, 2024, no investing activities were incurred.
For the
year ended March 31, 2023, net cash used in investing activities was $13,712, relating to
the purchase of office equipment.
Net Cash Provided by (Used in) Financing Activities
For the year ended March 31, 2024, net cash provided
by financing activities was $802,058, mainly relating to the net proceeds of $616,096 from bank borrowings and $185,962 of temporary advances
from the director to support the operation.
For the year ended March 31, 2023, net cash used
in financing activities was $305,127, mainly relating to the net proceeds of $449,206 from bank borrowings, offset by $754,333 of repayments
to the director.
Working Capital
As of June 30, 2024, we have cash and cash equivalents
of $343,849, accounts receivable of $1,106,187, and prepayments and other current assets of $330,957.
As of March 31, 2024, we have cash and cash equivalents
of $443,455, total current assets of $1,681,543 and total current liabilities of $1,945,446.
As of March 31, 2023, we have cash and cash equivalents
of $130,775, total current assets of $1,169,485 and total current liabilities of $1,343,407.
As of June 30, 2024, we have a working capital
deficit of $251,753.
As of March 31, 2024 and 2023, we have a working
capital deficit of $263,903 and $173,922, respectively.
Going Concern
Our continuation as a going
concern is dependent upon improving our profitability and the continuing financial support from our stockholders. While we believe that
we will obtain external financing and the existing shareholders will continue to provide the additional cash to meet our obligations as
they become due, there can be no assurance that we will be able to raise such additional capital resources on satisfactory terms. We believe
that our current cash and other sources of liquidity discussed below are adequate to support operations for at least the next 12 months.
We
require additional funding to meet its ongoing obligations and to fund anticipated operating losses. Our auditor has expressed substantial
doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on raising capital to
fund its initial business plan and ultimately to attain profitable operations. These consolidated financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result
in the Company not being able to continue as a going concern.
We
expect to incur marketing and professional and administrative expenses as well expenses associated with maintaining our filings with the
Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. If we are unable
to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business
plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. We intend to
continue to fund its business by way of equity or debt financing and advances from related parties. Any inability to raise capital as
needed would have a material adverse effect on our business, financial condition and results of operations.
If
we cannot raise additional funds, we will have to cease business operations. As a result, our common stock investors would lose all of
their investment.
Material Cash Requirements
We
have not achieved profitability since our inception and we expect to continue to improve the operating result for the foreseeable future.
We expect net cash expended in 2024 to be significantly higher than 2023. As of June 30, 2024, we have accumulated losses of $261,330.
Our material cash requirements are highly dependent upon the additional financial support from our major shareholders in the next 12 -
18 months.
We had no contractual obligations
and commercial commitments as of June 30, 2024 and March 31, 2024.
Indebtedness
Bank borrowings comprised of the followings:
| |
|
|
|
|
|
| |
|
Interest |
|
|
As of |
| Bank borrowings, secured: |
Maturity date |
rate |
|
|
June 30, 2024 |
|
March 31, 2024 |
| |
|
(p.a.) |
|
|
|
|
|
|
|
| Loan : HK$0.83 million |
April 28, 2029 |
2.88% |
|
|
$ |
101,152 |
|
$ |
100,931 |
| Loan : HK$1.09 million |
March 30, 2030 |
2.88% |
|
|
|
133,828 |
|
|
133,536 |
| Loan : HK$1.79 million |
May 23, 2032 |
2.88% |
|
|
|
229,263 |
|
|
228,762 |
| Loan : HK$4.20 million |
August 28, 2024 |
7.51% |
|
|
|
518,689 |
|
|
517,556 |
| Loan : HK$3.80 million |
August 28, 2024 |
7.51% |
|
|
|
483,509 |
|
|
485,640 |
| Loan : HK$3.00 million |
March 18, 2028 |
4.80% |
|
|
|
355,614 |
|
|
383,400 |
|
|
|
|
|
|
$ |
1,822,055 |
|
$ |
1,849,825 |
These loans bear annual interest at the bank prevailing
rates ranging from 2.88% to 7.51%. The Company is subject to various financial covenants under certain loan agreements, which include
repayment on-demand clause.
These banking facilities are guaranteed and secured,
details of which are set out as follows:-
| (a) |
unlimited personal guarantee by Mr. Cheung, the director of the Company |
| (b) |
guaranteed by HKMC Insurance Limited under the Hong Kong SME Financing Guarantee Scheme, launched by The Hong Kong Mortgage Corporation Limited |
Off-Balance Sheet Arrangements
We are not party to any off-balance
sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.
Critical Accounting Policies and Estimates.
The preparation of combined
financial statements in conformity with accounting principles generally accepted in the United States requires our management to make
assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our consolidated
financial statements. These accounting policies are important for an understanding of our financial condition and results of operations.
Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations
and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that
are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their
significance to consolidated financial statements and because of the possibility that future events affecting the estimate may differ
significantly from management’s current judgments. We believe the following accounting policies are critical in the preparation of our
combined financial statements.
Use of estimates and assumptions
The preparation of the consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the years presented. Significant accounting estimates reflected in the Company’s
consolidated financial statements include the useful lives of plant and equipment, impairment of long-lived assets, allowance for expected
credit losses, revenue recognition, income tax provision, deferred taxes and uncertain tax position.
Accounts Receivable
Certain
accounts receivables due from payment gateway providers and credit card processors, as the cash proceeds from accounts receivables are
received within the next 3-5 working days, which are recorded at the gross billing amounts, net of the fee charges by payment gateway
providers and credit card processors.
The
Company also offers credit terms to certain corporate customers, who have prolonging business history and current market creditworthiness.
These accounts receivable are recorded at the gross billing amount less an allowance for expected credit losses. Accounts receivable do
not bear interest and are considered overdue after 30 days from the date of sale invoices.
The
Company records impairment losses for accounts receivable based on assessments of the recoverability of the accounts receivable and individual
account analysis, including the current creditworthiness and the past collection history of each customer and current economic industry
trends. Impairments arise when there is objective evidence indicating that the balances may not be collectible. The identification of
bad and doubtful debts, in particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific
losses on individual exposures, as well as a provision on historical trends of collections. Based on analysis of customers’ credit
and ongoing relationship, management makes conclusions about whether any balances outstanding at the end of the period will be deemed
non-collectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with
a corresponding charge recorded in the consolidated statements of operations. Delinquent account balances are written off against the
allowance for expected credit losses after management has determined that the likelihood of collection is not probable.
As
of March 31, 2024 and 2023, no allowances for expected credit losses are recorded as the Company considers all of the outstanding accounts
receivable fully collectible in the foreseeable future.
Revenue Recognition
The Company receives revenue
from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers (Topic 606) (“ASC 606”).
ASC Topic 606 provided the
following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be
entitled in exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in
the contract.
Step 3: Determine the transaction price –
The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring
promised goods or services to a customer.
Step 4: Allocate the transaction price to the
performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on
the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity
satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring
a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized
is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically
for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
All of the Company’s
revenue is recognized at a point in time based on the transfer of control. In addition, the Company’s contracts do not contain variable
consideration and contract modifications are minimal. The Company’s revenue arrangements generally consist of a single performance
obligation to transfer promised goods. Revenue is reported net of sale rebates, refund and discounts.
Currently, the Company generates its revenues
in the following streams:
Retail sales (direct-to-consumer)
The Company provides customized
customer-specific solutions, involving with the purchase of designated merchandise, logistic and fulfilment services, through which the
Company provides the service of integrating a complex set of tasks and components into a single capability. The entire contract is accounted
for as one performance obligation. For these performance obligations, the Company typically has a right to consideration from customers
in an amount that corresponds directly with the value to the customers of the performance completed to date, and as such, the revenue
is recognized when control of the merchandise is transferred to the customer, which generally occurs upon shipment and accepted by the
customer. Advanced payment is typically made, prior to the date of shipment.
Deferred revenue is recorded
when the Company has received consideration (i.e., advanced payment) before satisfying its performance obligations. As such, customer
orders are recorded as deferred revenue prior to shipment or rendering of product or services. Deferred revenue primarily relates to e-commerce
orders placed for customer-specific solutions, but not shipped or accepted by the customers, prior to the end of the fiscal period.
Logistic and fulfillment services
The Company provides logistic
and fulfillment services to the customers and they receive the benefit of the Company’s services as the goods are transported from
one location to another. Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when
control of the promised services is completed and transferred to customers. Revenue is measured as the amount of consideration the Company
expects to receive in exchange for transferring and delivering services to a customer. Generally, the contracts require the customers
to pay for service when the customers collect the goods from the Company.
Supply Chain Consulting service
The
Company also provides supply chain consulting services in relation to all activities involved in sourcing, procurement, conversion, and
logistics management. The contract has a single performance obligation, which is satisfied upon rendering of services, on a monthly basis.
Revenue is recognized when performance obligation is satisfied and the customer obtains the benefit of promised services. The amount of
revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for services, which is
determined by performance-based fees and the amount is varied, upon the monthly performance result.
Principal vs Agent Considerations
When
another party is involved in providing goods to the customer, the Company will apply the principal versus agent guidance in ASC Topic
606 to determine if the Company is acting as the principal or an agent to the transaction. This evaluation determined that the Company
is in control of establishing the transaction price, managing all aspects of the shipment term, and taking the risk of loss for delivery,
collection, and returns. Based on the Company’s evaluation of the control model, it determined that all the Company’s major
businesses act as the principal rather than the agent within their revenue arrangements and such revenues are reported on a gross basis.
Impairment of long-lived assets
In accordance with the provisions
of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as plant and equipment owned and held
by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its
estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
Recent accounting pronouncements
From time to time, new accounting
pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted
by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued
standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
The Company has reviewed all
recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the results of its operations.
REAL PROPERTIES
Our corporate and executive
office is located at Unit A, 13/F, Gee Luen Factory, Building 5, 316-318 Kwun Tong Road, Kowloon, Hong Kong, telephone number +852-26213288.
We have offices located in the below locations:
| City, County |
Expiration Date |
Use |
| Hong Kong |
December 31, 2024 |
Office |
| Taiwan |
May 26, 2025 |
Commercial |
OLS Limited and Dimbuy.com
Company Limited are parties to a Management Consultant Service Agreement, dated January 1, 2024, pursuant to which Dimbuy.com agreed to
provide management consultant services (including customer service, administrative support, marketing and business development assistance
and information technology support) and office space for a monthly fee of HKD 63,000 (approximately $8,000). This agreement expires December
31, 2024, with the option to renew for additional 12-month periods. Each party may terminate this agreement upon 30 days written notice.
OLS Taiwan is a party to a
rental agreement for use of office space in Taiwan effective May 15, 2024, with a monthly rent of $1,537. This rental agreement expires
on May 15, 2025.
We believe that our existing
facilities are adequate to meet our current requirements. We do not own any real property.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets
forth certain information with respect to the beneficial ownership of our common stock, as of September 16, 2024, for: (i) each of our
named executive officers; (ii) each of our directors; (iii) all of our current executive officers and directors as a group; and (iv) each
person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.
Except as indicated in
footnotes to this table, we believe that the stockholders named in this table will have sole voting and investment power with respect
to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless
otherwise indicated, the address for each director, executive officer and 5% or greater shareholder listed is: c/o DH Enchantment, Inc.,
3/F, Yeung Yiu Chung (No.6) Industrial Building, 19 Cheung Shun Street, Lai Chi Kok, Kowloon, Hong Kong.
| Name and Address of Beneficial Owner (1) |
Common Stock |
Series A Preferred Stock* |
Series B Preferred Stock* |
| |
Number of Shares |
Percentage of Class |
Number of Shares |
Percentage of Class |
Number of Shares |
Percentage of Class |
| |
|
|
|
|
|
|
| Cheung, Cheuk Yin, CEO, CFO, Secretary and Director (2) |
2,529,000,000 |
66.01% |
– |
– |
– |
– |
| |
|
|
|
|
|
|
| All executive officers and directors as a Group (1 person) |
2,529,000,000 |
66.01% |
– |
– |
– |
– |
| |
|
|
|
|
|
|
| 5% or Greater Stockholders: |
|
|
|
|
|
|
| Ha Si Tsai |
201,000,000 |
5.25% |
– |
– |
– |
– |
|
Sally Kin Yi Lo (3)
G/F, 49A Cheung Po Tsuen Pat Heung
Yuen Long, Hong Kong |
252,000,000 |
6.58% |
945,000 |
30.29% |
35,000 |
35% |
| Yip Kam Hung |
468,000,000 |
12.22% |
1,755,000 |
56.25% |
– |
– |
| Daily
Success Development Limited(4) |
– |
– |
– |
– |
65,000 |
65% |
* Holders of the Series A Convertible Preferred
Stock will not be: (i) entitled to receive dividends or other distributions; (ii) vote on matters submitted to a vote of the stockholders;
and (iii) able to convert the Series A Convertible Preferred Stock into common stock or any other securities of the corporation. Each
one share of Series B Convertible Preferred Stock converts into 10 shares of common stock of the Corporation at the election of the holder,
subject to equitable adjustments.
| (1) |
|
Applicable percentage ownership is based on 3,831,310,013
shares of common stock outstanding as of September 16, 2024, together with securities exercisable or convertible into shares of common
stock within 60 days of September 16, 2024. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect to securities. Shares of common stock that a person has the
right to acquire beneficial ownership of upon the exercise or conversion of options, convertible stock, warrants or other securities that
are currently exercisable or convertible or that will become exercisable or convertible within 60 days of September 16, 2024, are deemed
to be beneficially owned by the person holding such securities for the purpose of computing the number of shares beneficially owned and
percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any
other person. |
| (2) |
|
Cheung Cheuk Yin was appointed to serve as our Chief Executive Officer,
Chief Financial Officer, Secretary and Director on July 5, 2024. |
| (3) |
|
Sally Kin Yi Lo resigned from her positions of Chief Executive Officer,
Chief Financial Officer, Secretary and Director effective July 5, 2024. In addition to the common stock owned, Sally Kin Yi LO also owns
945,000 shares of Series A Preferred Stock, par value $0.001, constituting approximately 30.29% of the issued and outstanding shares of
Series A Preferred Stock, and 35,000 shares of Series B Preferred Stock, par value $0.001, constituting 35% of the issued and outstanding
shares of Series B Preferred Stock. |
| (4) |
|
Daily Success Development Limited owns 65,000 shares of Series B Preferred
Stock, par value $0.001, constituting 65% of the issued and outstanding shares of Series B Preferred Stock. Daily Success Development
Limited is beneficially owned by Shing Lee. |
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS
Set forth below are the
present directors, director nominees and executive officers of the Company. There are no other persons who have been nominated or chosen
to become directors nor are there any other persons who have been chosen to become executive officers. There are no arrangements or understandings
between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer. Directors
are elected to serve until the next annual meeting of stockholders and until their successors have been elected and have qualified. Officers
are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors
have been elected and qualified.
| Name |
|
Age |
|
Position |
| CHEUNG, Cheuk Yin |
|
44 |
|
CEO, CFO, Secretary and Director |
CHEUNG, Cheuk Yin,
age 44, was appointed to serve as our Chief Executive Officer, Chief Financial Officer, Secretary and Director on July 5, 2024. Mr. Cheung
is currently the founder of Buyippee, an ecommerce platform providing global shipping services for customers who wishes to shop across
US, Europe, Asia and Australia with ease and comfort. Buyippee has established a network of self-operating and dedicated warehouses for
users to ensure fast and efficient delivery services. Scheduled transportation from these warehouses back to Hong Kong with affordable
shipping fees for overseas online shopping can be fulfilled with just a click of a button. From 2012 to 2020, Mr. Cheung served as the
top management of TMT Ventures where he focused on early stage investment, fundraising, financial technology, debt capital and credit
risk management, and supply chain finance. Mr. Cheung was the founder of Victoria Hub Capital where he has provided advise to early stage
businesses since 2020. Since 2021, he served as the Vice Chairman of the HKGCC YEC where he aims to strengthen the fellowship and development
of next generation business leaders. Mr. Cheung also held various senior management roles in fintech company, international supply chain
groups overseeing businesses in the Greater China region covering operations, credit control and regional business expansions including
Qupital, Euler Hermes Allianz and American Express. Mr. Cheung received his Degree in the Studies of Business and Commerce from Macquire
University and the Degree of Computer Science from Sydney Institute of Business and Technology, respectively. Mr. Cheung brings to our
Board his deep experience in business and financial management and operations.
Family Relationships
There are no family relationships
between any of our directors or executive officers.
Involvement in Certain Legal Proceedings
No executive officer or
director is a party in a legal proceeding adverse to us or any of our subsidiaries or has a material interest adverse to us or any of
our subsidiaries.
No executive officer or
director has been involved in the last ten years in any of the following:
| |
· |
Any bankruptcy petition filed by or against any business or property of such person, or of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| |
· |
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| |
· |
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; |
| |
· |
Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| |
· |
Being the subject of or a party to any judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated relating to an alleged violation of any federal or state securities or commodities law or regulation, or any law or regulation respecting financial institutions or insurance companies, including but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail, fraud, wire fraud or fraud in connection with any business entity; or |
| |
· |
Being the subject of or a party to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act, any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Board Committees
We have not yet established
Compensation, Audit, and Nominations and Corporate Governance committees nor do we have an Audit Committee financial expert as defined
in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act. Currently, the functions of these committees are performed by
our entire Board of Directors. We hope to establish these committees and appoint an Audit Committee financial expert as our business develops.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities
Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding
ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe
that during fiscal year ended March 31, 2024, and up to the date of this Current Report, our officers, directors and greater than 10%
percent beneficial owners timely filed all reports required by Section 16(a) of the Securities Exchange Act.
Code of Ethics
Our Board of Directors has
not yet adopted a Code of Ethics applicable to our senior management and employees of the Company. The Company intends to adopt such Code
of Ethics once its business stabilizes and matures.
EXECUTIVE COMPENSATION
Compensation Philosophy and Objectives
Our executive compensation
philosophy is to create a long-term direct relationship between pay and our performance. Our executive compensation program is designed
to provide a balanced total compensation package over the executive’s career with us. The compensation program objectives are to
attract, motivate and retain the qualified executives that help ensure our future success, to provide incentives for increasing our profits
by awarding executives when corporate goals are achieved and to align the interests of executives and long-term stockholders. The compensation
package of our named executive officers consists of two main elements:
| |
1. |
base salary for our executives that is competitive relative to the market, and that reflects individual performance, retention and other relevant considerations; and |
| |
|
|
| |
2. |
discretionary bonus awards payable in cash and tied to the satisfaction of corporate objectives. |
Process for Setting Executive Compensation
Until such time as we establish
a Compensation Committee, our Board is responsible for developing and overseeing the implementation of our philosophy with respect to
the compensation of executives and for monitoring the implementation and results of the compensation philosophy to ensure compensation
remains competitive, creates proper incentives to enhance stockholder value and rewards superior performance. We expect to annually review
and approve for each named executive officer, and particularly with regard to the Chief Executive Officer, all components of the executive’s
compensation. We process and factors (including individual and corporate performance measures and actual performance versus such measures)
used by the Chief Executive Officer to recommend such awards. Additionally, we expect to review and approve the base salary, equity-incentive
awards (if any) and any other special or supplemental benefits of the named executive officers.
The Chief Executive Officer
periodically provides the Board with an evaluation of each named executive officer’s performance, based on the individual performance
goals and objectives developed by the Chief Executive Officer at the beginning of the year, as well as other factors. The Board provides
an evaluation for the Chief Executive Officer. These evaluations serve as the bases for bonus recommendations and changes in the compensation
arrangements of our named executives.
Our Compensation Peer Group
We currently engage in informal
market analysis in evaluating our executive compensation arrangements. As the Company and its businesses mature, we may retain compensation
consultants that will assist us in developing a formal benchmark and selecting a compensation peer group of companies similar to us in
size or business for the purpose of comparing executive compensation levels.
Program Components
Our executive compensation
program consists of the following elements:
Base Salary
Our base salary structure
is designed to encourage internal growth, attract and retain new talent, and reward strong leadership that will sustain our growth and
profitability. The base salary for each named executive officer reflects our past and current operating profits, the named executive officer’s
individual contribution to our success throughout his career, internal pay equity and informal market data regarding comparable positions
within similarly situated companies. In determining and setting base salary, the Board considers all of these factors, though it does
not assign specific weights to any factor. The Board generally reviews the base salary for each named executive officer on an annual basis.
For each of our named executive officers, we review base salary data internally obtained by the Company for comparable executive positions
in similarly situated companies to ensure that the base salary rate for each executive is competitive relative to the market.
Discretionary Bonus
The objectives of our bonus
awards are to encourage and reward our employees, including the named executive officers, who contribute to and participate in our success
by their ability, industry, leadership, loyalty or exceptional service and to recruit additional executives who will contribute to that
success.
Summary Compensation Table
The following summary compensation
table sets forth the aggregate compensation we paid or accrued during the fiscal years ended March 31, 2024 and 2022, to (i) our Chief
Executive Officer (principal executive officer), (ii) our Chief Financial Officer (principal financial officer), (iii) our three most
highly compensated executive officers other than the principal executive officer and the principal financial officer who were serving
as executive officers on March 31, 2023, whose total compensation was in excess of $100,000, and (iv) up to two additional individuals
who would have been within the two-other-most-highly compensated but were not serving as executive officers on March 31, 2023.
SUMMARY COMPENSATION TABLE
| Name and Principal Position |
|
Year |
|
Salary
($) |
|
Bonus
($) |
|
Stock
Awards
($) |
|
Option
Awards
($) |
|
Non-Equity
Incentive
Plan
Compensation
($) |
|
Change in Pension Value and
Non-qualified
Deferred Compensation Earnings
($) |
|
All Other
Compensation
($) |
|
Total
($) |
|
| CHEUNG, Cheuk Yin |
|
2023 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
| CEO, CFO, Secretary and Director (1) |
|
2022 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
| Sally Kin Yi Lo |
|
2023 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
| CEO, CFO, Secretary and Director |
|
2022 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
0 |
|
___________________
| (1) | Mr. Cheung was appointed to serve as the Chief Executive Officer,
Chief Financial Officer, Secretary and Director on July 5, 2024. |
| (2) | Ms. Lo resigned from her positions of Chief Executive Officer,
Chief Financial Officer, Secretary and Director effective July 5, 2024. |
Narrative disclosure to Summary Compensation
Mr. CHEUNG did not receive
any compensation for services in his capacity as a director and the sole executive officer of the Company.
Other than set out above and
below, there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.
We expect to establish one or more incentive compensation plans in the future. Our directors and executive officers may receive securities
of the Company as incentive compensation at the discretion of our board of directors in the future. We do not have any material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.
Equity Awards
There are no unvested options,
warrants or convertible securities outstanding.
At no time during the last
fiscal year with respect to any of any of our executive officers was there:
| |
· |
any outstanding option or other equity-based award repriced or otherwise materially modified (such as by extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined; |
| |
· |
any waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included in non-stock incentive plan compensation or payouts; |
| |
· |
any option or equity grant; |
| |
· |
any non-equity incentive plan award made to a named executive officer; |
| |
· |
any nonqualified deferred compensation plans including nonqualified defined contribution plans; or |
| |
· |
any payment for any item to be included under All Other Compensation in the Summary Compensation Table. |
Compensation of Directors
During our fiscal year ended
March 31, 2024, we did not provide compensation to employees for serving as our directors. We currently have no formal plan for compensating
our directors for their services in their capacity as directors, although we may elect to issue stock options to such persons from time
to time. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services
on our behalf other than services ordinarily required of a director.
Compensation Risk Management
Our Board of directors and
human resources staff conducted an assessment of potential risks that may arise from our compensation programs. Based on this assessment,
we concluded that our policies and practices do not encourage excessive and unnecessary risk taking that would be reasonably likely to
have material adverse effect on the Company. The assessment included our cash incentive programs, which awards non-executives with cash
bonuses for punctuality. Our compensation programs are substantially identical among business units, corporate functions and global locations
(with modifications to comply with local regulations as appropriate). The risk-mitigating factors considered in this assessment included:
| |
· |
the alignment of pay philosophy, peer group companies and compensation amounts relative to local competitive practices to support our business objectives; and |
| |
· |
effective balance of cash, short- and long-term performance periods, caps on performance-based award schedules and financial metrics with individual factors and Board and management discretion. |
Compensation Committee Interlocks and Insider
Participation
We have not yet established
a Compensation Committee. Our Board of Directors performs the functions that would be performed by a compensation committee. During the
fiscal year ended March 31, 2024, none of our executive officers has served: (i) on the compensation committee (or other board committee
performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose
executive officers served on our board of directors; (ii) as a director of another entity, one of whose executive officers served on the
compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire
board of directors) of the registrant; or (iii) as a member of the compensation committee (or other board committee performing equivalent
functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers
served as a director of the company.
Compensation Committee Report
Our board of directors has
reviewed and discussed the Compensation Discussion and Analysis in this report with management. Based on its review and discussion with
management, the board of directors recommended that the Compensation Discussion and Analysis be included in this Current Report on Form
8-K for the year ended March 31, 2024. The material in this report is not deemed filed with the SEC and is not incorporated by reference
in any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made on,
before, or after the date of this Current Report on Form 8-K and irrespective of any general incorporation language in such filing.
Submitted by the board of directors:
Cheung, Cheuk Yin
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATING TO OEC
Other than as disclosed below, there are no transactions
during our two most recent fiscal years ended March 31, 2024 and 2023, or the three months ended June 30, 2024, or any currently proposed
transaction, in which our Company was or to be a participant and the amount exceeds the lesser of $120,000 or one percent of the average
of our Company’s total assets at year end for our last two completed years, and in which any of our directors, officers or principal
stockholders, or any other related person as defined in Item 404 of Regulation S-K, had or have any direct or indirect material interest.
Nature of relationships with related parties:
| Name of related party |
|
Relationship with the Company |
| Mr. Cheung |
|
Director and major shareholder of the Company |
| Ezy-Go International Trading Company Limited |
|
Entity controlled by common shareholder |
Three Months Ended June 30, 2024, and 2023
Related party balances consisted of the following:
| | |
| |
As of | |
| Name | |
Nature | |
June 30, 2024 | | |
March 31, 2024 | |
| | |
| |
| | |
| |
| Mr. Cheung | |
Amount due from a director | |
$ | 293,342 | | |
$ | 227,916 | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Accounts receivable, related party | |
$ | 423,507 | | |
$ | 382,324 | |
The amount due from a director represented the
temporary advances made by the Company, which is non-trade in nature. The amount is unsecured, interest-free and due on demand.
Accounts receivable represented the trade receivable
from the related party for rendering of logistic services. The amount is unsecured, interest-free and 30 days’ credit term is granted.
In the ordinary course of business, during the
three months ended June 30, 2024 and 2023, the Company has involved with transactions, either at cost or current market prices and on
the normal commercial terms among related parties. The following table provides the transactions with these parties for the periods as
presented (for the portion of such period that they were considered related):
| | |
| |
Three months ended June 30, | |
| Name | |
Nature | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Ezy-Go International Trading Company Limited | |
Consulting fee income | |
$ | 150,690 | | |
$ | 71,444 | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Service cost | |
$ | 159,762 | | |
$ | – | |
Apart from the transactions and balances detailed
above and elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant
or material related party transactions during the periods presented.
Years Ended March 31, 2024 and 2023
Related party balances consisted of the following:
| | |
| |
As of March 31, | |
| Name | |
Nature | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Mr. Cheung | |
Amount due from a director | |
$ | 227,916 | | |
$ | 413,878 | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Accounts receivable, related party | |
$ | 382,324 | | |
$ | – | |
The amount due from a director represented the
temporary advances made by the Company, which is non-trade in nature. The amount is unsecured, interest-free and due on demand.
Accounts receivable represented the trade receivable
from the related party for rendering of logistic services. The amount is unsecured, interest-free and 30 days’ credit term is granted.
In the ordinary course of business, during the
years ended March 31, 2024 and 2023, the Company has involved with transactions, either at cost or current market prices and on the normal
commercial terms among related parties. The following table provides the transactions with these parties for the years as presented (for
the portion of such period that they were considered related):
| | |
| |
For the years ended March 31, | |
| Name | |
Nature | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Ezy-Go International Trading Company Limited | |
Consulting fee income | |
$ | 347,592 | | |
$ | – | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Service cost | |
$ | 594,214 | | |
$ | – | |
Apart from the transactions and balances detailed
above and elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related
party transactions during the years presented.
LEGAL PROCEEDINGS
We are not a party to any
legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect
on our financial condition or results of operations. We may from time to time become a party to various legal or administrative
proceedings arising in the ordinary course of our business. There are no pending legal proceedings in which any director, officer or affiliate
of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, is a party adverse
to the Company or has a material interest adverse to the Company.
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a) Market Information
Shares of our common stock
are quoted on the OTC Pink under the symbol “ENMI”. As of September 16, 2024, the last closing price of our securities was
$0.0042. There is no established public trading market for our securities and a regular trading market may not develop, or if developed,
may not be sustained.
The following table sets forth,
for the fiscal quarters indicated, the high and low bid information for our common stock, as reported on the Pink Sheets. The following
quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
| Quarterly period | |
High | | |
Low | |
| First Quarter ended June 30, 2024 | |
$ | 0.0090 | | |
$ | 0.0020 | |
| Fiscal year ended March 31, 2024: | |
| | | |
| | |
| Fourth Quarter | |
$ | 0.0023 | | |
$ | 0.0006 | |
| Third Quarter | |
$ | 0.0088 | | |
$ | 0.0020 | |
| Second Quarter | |
$ | 0.0090 | | |
$ | 0.0025 | |
| First Quarter | |
$ | 0.0065 | | |
$ | 0.0030 | |
| Fiscal year ended March 31, 2023: | |
| | | |
| | |
| Fourth Quarter | |
$ | 0.0105 | | |
$ | 0.0035 | |
| Third Quarter | |
$ | 0.0148 | | |
$ | 0.0014 | |
| Second Quarter | |
$ | 0.0200 | | |
$ | 0.0076 | |
| First Quarter | |
$ | 0.0177 | | |
$ | 0.0087 | |
(b) Approximate Number of Holders of Common Stock
As of September 16,
2024, there were approximately 73 shareholders of record of our common stock. Such number does not include any shareholders holding
shares in nominee or “street name”.
(c) Dividends
We have never paid dividends
on any of DH Enchantment, Inc.’s capital stock and currently intend to retain our future earnings, if any, to fund the development
and growth of our business. We do not expect to pay any dividends on any of DH Enchantment, Inc.’s capital stock in the foreseeable
future.
(d) Equity Compensation Plan Information
None.
(e) Recent Sales of Unregistered Securities
None.
DESCRIPTION OF SECURITIES
The following description
summarizes the material terms of our capital stock as of the date of this registration statement. Because it is only a summary, it does
not contain all the information that may be important to you. For a complete description of our capital stock, you should refer to DH
Enchantment, Inc.’s Articles of Incorporation and Bylaws, and to the provisions of applicable Nevada law.
On June 29, 2021, our Board
of Directors authorized and approved the amendment and restatement of DH Enchantment, Inc.’s Articles of Incorporation to: (i) change
our name to DH Enchantment Inc.; and (ii) amend the powers, rights and designation of the Series A Convertible Preferred Stock as more
fully set forth below; and (iii) effectuate a 5:1 reverse split, all of which are subject to final authorization by FINRA. Our Board of
Directors also approved the designation of 10,000,000 shares of Series B Convertible Preferred Stock which took effect immediately.
Common Stock
DH Enchantment, Inc. is authorized
to issue up to 890,000,000 shares of common stock, par value $0.001. Each share of common stock entitles the holder to one (1) vote
on each matter submitted to a vote of our shareholders, including the election of Directors. There is no cumulative voting. Subject to
preferences that may be applicable to any outstanding preferred stock, our Shareholders are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the Board of Directors. Shareholders have no preemptive, conversion or other subscription
rights. There are no redemption or sinking fund provisions related to the common stock. In the event of liquidation, dissolution or winding
up of the Company, our Shareholders are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding.
Preferred Stock
DH Enchantment, Inc. is authorized
to issue up to 50,000,000 shares of preferred stock, par value $0.001, issuable in one or more series as may be determined by the Board.
Preferred Stock may be issued from time to time in one or more series as determined by the Board of Directors in its sole discretion.
Our Board of Directors is
authorized to determine or alter any or all of the rights, preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of preferred stock and, within the limitations or restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares
of any such series then outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series,
to set the designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation
preferences of the shares of any such series.
Series A Convertible Preferred
Stock
The Board has designated a
class of Preferred Stock as the “Series A Convertible Preferred Stock,” par value $0.002, with 5,000,000 authorized shares.
Currently, holders of Series A Convertible Preferred Stock are: (i) entitled to receive dividends or other distributions as may be declared
by the Board of Directors; (ii) entitled to vote on all matters submitted to a vote of the shareholders together with the Common Stock
holders on an as converted basis; (iii) entitled to convert each one (1) share of Series A Convertible Preferred Stock into two thousand
(2,000) shares of Common Stock.
On June 29, 2021, the Board
of Directors of the Company authorized and approved the amendment and restatement of DH Enchantment, Inc.’s Articles of Incorporation
to amend the powers, rights and designation of the Series A Convertible Preferred Stock, among other things. After the amendment, holders
of the Series A Convertible Preferred Stock will not be: (i) entitled to receive dividends or other distributions; (ii) vote on matters
submitted to a vote of the stockholders; and (iii) able to convert the Series A Convertible Preferred Stock into common stock or any other
securities of the corporation.
Series B Convertible Preferred
Stock
Effective June 29, 2021, the
Board designated a class of Preferred Stock as the “Series B Convertible Preferred Stock,” par value $0.001, with 10,000,000
authorized shares. Each one share of Series B Convertible Preferred Stock converts into 10 shares of common stock of the Corporation at
the election of the holder, subject to equitable adjustments. No fractional shares of common stock are issuable upon conversion of the
Series B Convertible Preferred Stock, and fractional shares shall be rounded up to the nearest whole common stock.
Voting. Holders of
Series B Convertible Preferred Stock vote on an “as converted” basis on matters submitted to holders of the common stock,
or any class thereof, and shall vote together with common stock holders as a class.
Dividends. Holders
of Series B Convertible Preferred Stock shall fully participate, on an as-converted basis, in any dividends declared and paid or distributions
on Common Stock as if the Series B Preferred Stock were converted into shares of Common Stock as of the record date for such dividend
or distribution. In addition, holders of Series B Convertible Preferred Stock are entitled to receive dividends, when and as declare by
the Board, on each outstanding share of Series B Convertible Preferred Stock.
Liquidation. Holders
of Series B Convertible Preferred Stock are entitled to receive, out of assets of the corporation available for distribution to shareholders
of the Corporation or their assignees, and subject to the rights of any outstanding shares of senior stock and before any amount shall
be distributed to the holders of junior stock, a liquidating distribution (the “Liquidation Distribution”) in an amount equal
to the amount such Series B Holder would have been entitled to receive had such holder converted its shares of Series B Convertible Preferred
Stock into shares of Common Stock at the conversion ratio effective immediately prior to such Liquidation. If, upon any Liquidation, the
amount payable with respect to the Liquidation Distribution is not paid in full, the Series B Holders and any parity stock shall share
equally and ratably in any distribution of the Corporation’s assets in proportion to the respective liquidation distributions to
which they are entitled.
Amendment. The corporation
may not amend the Certificate of Designations for the Series B Convertible Preferred Stock without the prior written consent of the holders
of the Series B Convertible Preferred Stock holding a majority of the Series B Convertible Preferred Stock then issued and outstanding,
in which vote each share of Series B Convertible Preferred Stock then issued and outstanding shall have one vote, voting separately as
a single class, in person or by proxy, either in writing without a meeting or at an annual or a special meeting of such holders of Series
B Convertible Preferred Stock.
Options
We have no options to purchase
shares of our common stock or any other of our securities outstanding as of the date of this Prospectus.
Warrants
We have no warrants to purchase
shares of our common stock or any other of our securities outstanding as of the date of this Prospectus.
Dividends
Dividends, if any, will be
contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will
be within the discretion of our board of directors. We intend to retain earnings, if any, for use in its business operations and accordingly,
the board of directors does not anticipate declaring any dividends in the foreseeable future.
Transfer Agent and Registrar
Our transfer agent is Pacific
Stock Transfer Company, Inc. located at 6725 Via Austi Pikeway, Suite 300, Las Vegas, Nevada 89119, telephone number is 702-361-3033.
Anti-takeover Effects of Nevada Law
Business Combinations
The “business combination”
provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, generally prohibit a Nevada corporation with
at least 200 stockholders from engaging in various “combination” transactions with any interested stockholder for a period
of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved
by the board of directors prior to the date the interested stockholder obtained such status; and extends beyond the expiration of the
three-year period, unless:
| |
· |
the transaction was approved by the board of directors prior to the person becoming an interested stockholder or is later approved by a majority of the voting power held by disinterested stockholders, or |
| |
· |
if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher. |
A “combination”
is generally defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer or other disposition,
in one transaction or a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal
to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the corporation, (c) 10% or more of the earning power or net income of the corporation,
and (d) certain other transactions with an interested stockholder or an affiliate or associate of an interested stockholder.
In general, an “interested
stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation’s
voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage
attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price
above the prevailing market price.
Because we have less than
200 shareholders of record, these “business combination” provisions do not currently apply to us. Our Articles of Incorporation
state that we have elected not to be governed by the “business combination” provisions.
Control Share Acquisitions
The “control share”
provisions of Sections 78.378 to 78.3793, inclusive, of the NRS apply to “issuing corporations,” which are Nevada corporations
with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly
or indirectly in Nevada. The control share statute prohibits an acquirer, under certain circumstances, from voting its shares of a target
corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation’s
disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than
a majority, and a majority or more, of the outstanding voting power. Generally, once an acquirer crosses one of the above thresholds,
those shares in an offer or acquisition and acquired within 90 days thereof become “control shares” and such control shares
are deprived of the right to vote until disinterested stockholders restore the right.
These provisions also provide
that if control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all
other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand payment for the
fair value of their shares in accordance with statutory procedures established for dissenters’ rights.
The effect of the Nevada control
share statutes is that the acquiring person, and those acting in association with the acquiring person, will obtain only such voting rights
in the control shares as are conferred by a resolution of the disinterested stockholders at an annual or special meeting. The Nevada control
share law, if applicable, could have the effect of discouraging takeovers of our company.
A corporation may elect to
not be governed by, or “opt out” of, the control share provisions by making an election in its articles of incorporation or
bylaws, provided that the opt-out election must be in place on the 10th day following the date an acquiring person has acquired a controlling
interest, that is, crossing any of the three thresholds described above. Our Articles of Incorporation state that we have elected not
to be governed by the “control share” provisions.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection 7 of Section 78.138
of the Nevada Revised Statutes (the “Nevada Law”) provides that, subject to certain very limited statutory exceptions, a director
or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure
to act in his or her capacity as a director or officer, unless it is proven that the act or failure to act constituted a breach of his
or her fiduciary duties as a director or officer and such breach of those duties involved intentional misconduct, fraud or a knowing violation
of law. The statutory standard of liability established by Section 78.138 controls even if there is a provision in the corporation’s articles
of incorporation unless a provision in the Company’s Articles of Incorporation provides for greater individual liability.
Subsection 1 of Section 78.7502
of the Nevada Law empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (any such person, a “Covered Person”), against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred by the Covered Person in connection with such action,
suit or proceeding if the Covered Person is not liable pursuant to Section 78.138 of the Nevada Law or the Covered Person acted in good
faith and in a manner the Covered Person reasonably believed to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceedings, had no reasonable cause to believe the Covered Person’s conduct was unlawful.
Subsection 2 of Section 78.7502
of the Nevada Law empowers a corporation to indemnify any Covered Person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person acted in the capacity of a Covered Person against expenses, including amounts paid in settlement and attorneys’
fees actually and reasonably incurred by the Covered Person in connection with the defense or settlement of such action or suit, if the
Covered Person is not liable pursuant to Section 78.138 of the Nevada Law or the Covered Person acted in good faith and in a manner the
Covered Person reasonably believed to be in or not opposed to the best interests of the Company. However, no indemnification may be made
in respect of any claim, issue or matter as to which the Covered Person shall have been adjudged by a court of competent jurisdiction
(after exhaustion of all appeals) to be liable to the corporation or for amounts paid in settlement to the corporation unless and only
to the extent that the court in which such action or suit was brought or other court of competent jurisdiction determines upon application
that in view of all the circumstances the Covered Person is fairly and reasonably entitled to indemnity for such expenses as the court
deems proper.
Section 78.7502 of the Nevada
Law further provides that to the extent a Covered Person has been successful on the merits or otherwise in the defense of any action,
suit or proceeding referred to in Subsection 1 or 2, as described above, or in the defense of any claim, issue or matter therein, the
corporation shall indemnify the Covered Person against expenses (including attorneys’ fees) actually and reasonably incurred by the Covered
Person in connection with the defense.
Subsection 1 of Section 78.751
of the Nevada Law provides that any discretionary indemnification pursuant to Section 78.7502 of the Nevada Law, unless ordered by a court
or advanced pursuant to Subsection 2 of Section 78.751, may be made by a corporation only as authorized in the specific case upon a determination
that indemnification of the Covered Person is proper in the circumstances. Such determination must be made (a) by the stockholders, (b)
by the board of directors of the corporation by majority vote of a quorum consisting of directors who were not parties to the action,
suit or proceeding, (c) if a majority vote of a quorum of such non-party directors so orders, by independent legal counsel in a written
opinion, or (d) by independent legal counsel in a written opinion if a quorum of such non-party directors cannot be obtained.
Subsection 2 of Section 78.751
of the Nevada Law provides that a corporation’s articles of incorporation or bylaws or an agreement made by the corporation may require
the corporation to pay as incurred and in advance of the final disposition of a criminal or civil action, suit or proceeding, the expenses
of officers and directors in defending such action, suit or proceeding upon receipt by the corporation of an undertaking by or on behalf
of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not
entitled to be indemnified by the corporation. Subsection 2 of Section 78.751 further provides that its provisions do not affect any rights
to advancement of expenses to which corporate personnel other than officers and directors may be entitled under contract or otherwise
by law.
Subsection 3 of Section 78.751
of the Nevada Law provides that indemnification pursuant to Section 78.7502 of the Nevada Law and advancement of expenses authorized in
or ordered by a court pursuant to Section 78.751 does not exclude any other rights to which the Covered Person may be entitled under the
articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action
in his or her official capacity or in another capacity while holding his or her office. However, indemnification, unless ordered by a
court pursuant to Section 78.7502 or for the advancement of expenses under Subsection 2 of Section 78.751 of the Nevada Law, may not be
made to or on behalf of any director or officer of the corporation if a final adjudication establishes that his or her acts or omissions
involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action. Additionally, the scope
of such indemnification and advancement of expenses shall continue for a Covered Person who has ceased to be a director, officer, employee
or agent of the corporation, and shall inure to the benefit of his or her heirs, successors, assigns, executors, and legal representatives.
Section 78.752 of the Nevada
Law empowers a corporation to purchase and maintain insurance or make other financial arrangements on behalf of a Covered Person for any
liability asserted against such person and liabilities and expenses incurred by such person in his or her capacity as a Covered Person
or arising out of such person’s status as a Covered Person whether or not the corporation has the authority to indemnify such person against
such liability and expenses.
Our Articles of Incorporation
provide that the liability of our directors and officers shall be eliminated or limited to the fullest extent permitted by Nevada Law.
In addition, our Articles of Incorporation and our Bylaws also provide that we will indemnify our directors and may indemnify our other
officers and employees and other agents to the fullest extent permitted by law. Our Articles of Incorporation and Bylaws provide that
the expenses of directors and officers of the Company incurred in defending any action, suit or proceeding, whether civil, criminal, administrative
or investigative, must be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding,
upon receipt of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it is ultimately determined
by a court of competent jurisdiction that the director or officer is not entitled to be indemnified by the Company.
This limitation of liability
does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such
as injunctive relief or rescission.
CHANGES in
and Disagreements with Accountants on Accounting and Financial DISCLOSURE
None.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits.
_______________
| * |
Filed herewith |
| |
|
| (1) |
Incorporated by reference to the Exhibits of the Registration Statement on Form 10 filed with the United States Securities and Exchange Commission on August 4, 2021. |
| (2) |
Incorporated by reference to the Exhibits of the Amendment No. 6 to the Registration Statement on Form 10 filed with the United States Securities and Exchange Commission on June 27, 2022. |
SIGNATURES
In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
DH ENCHANTMENT, INC. |
|
| |
|
|
|
| Date: September 17, 2024 |
By: |
/s/ Cheung, Cheuk Yin |
|
| |
|
Cheung Cheuk Yin, Chief Executive Officer, Chief Financial Officer and Secretary |
|
OLS APAC CORPORATION
AND SUBSIDIARIES
INDEX TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF AND FOR THE PERIOD ENDING JUNE 30, 2024
OLS APAC CORPORATION
AND SUBSIDIARIES
INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
AS
OF AND FOR THE PERIOD ENDING MARCH 31, 2024
DH
ENCHANTMENT, INC.
INDEX TO PRO FORMA FINANCIAL STATEMENTS
AS
OF AND FOR THE PERIOD ENDING JUNE 30, 2024
OLS APAC CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(Currency expressed
in United States Dollars (“US$”))
| | |
As of | |
| | |
June 30, 2024 | | |
March 31, 2024 | |
| | |
US$ | | |
US$ | |
| ASSETS | |
| | |
| |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 343,849 | | |
$ | 443,455 | |
| Accounts receivable, third parties, net | |
| 682,680 | | |
| 593,001 | |
| Accounts receivable, related parties, net | |
| 423,507 | | |
| 382,324 | |
| Amounts due from related parties | |
| 293,342 | | |
| 227,916 | |
| Income tax receivable | |
| 16,252 | | |
| 9,228 | |
| Deposit, prepayments and other receivables | |
| 21,363 | | |
| 25,619 | |
| Total current assets | |
| 1,780,993 | | |
| 1,681,543 | |
| | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | |
| Plant and equipment, net | |
| 9,238 | | |
| 7,646 | |
| | |
| | | |
| | |
| TOTAL ASSETS | |
$ | 1,790,231 | | |
$ | 1,689,189 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 744 | | |
$ | – | |
| Accrued liabilities and other payables | |
| 10,241 | | |
| 30,807 | |
| Bank borrowings | |
| 1,822,055 | | |
| 1,849,825 | |
| Deferred revenue | |
| 199,706 | | |
| 64,814 | |
| Total current liabilities | |
| 2,032,746 | | |
| 1,945,446 | |
| | |
| | | |
| | |
| TOTAL LIABILITIES | |
| 2,032,746 | | |
| 1,945,446 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| – | | |
| – | |
| | |
| | | |
| | |
| Shareholders’ deficit: | |
| | | |
| | |
| Ordinary share, US$1 par value, 50,000 shares authorized,
1,000 shares issued and outstanding as of June 30, 2024 and March 31, 2024* | |
| 1,000 | | |
| 1,000 | |
| Accumulated other comprehensive income | |
| 17,815 | | |
| 11,447 | |
| Accumulated losses | |
| (261,330 | ) | |
| (268,704 | ) |
| Total shareholders’ deficit | |
| (242,515 | ) | |
| (256,257 | ) |
| | |
| | | |
| | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | |
$ | 1,790,231 | | |
$ | 1,689,189 | |
See accompanying
notes to the unaudited condensed consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Currency expressed
in United States Dollars (“US$”))
| | |
Three Months ended June 30, | |
| | |
2024 | | |
2023 | |
| | |
US$ | | |
US$ | |
| Revenues, net | |
| | | |
| | |
| Revenue from third parties | |
$ | 440,093 | | |
$ | 280,594 | |
| Revenue from related party | |
| 150,690 | | |
| 71,444 | |
| Total revenues, net | |
| 590,783 | | |
| 352,038 | |
| Cost of revenue | |
| (455,403 | ) | |
| (196,427 | ) |
| | |
| | | |
| | |
| Gross profit | |
| 135,380 | | |
| 155,611 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing expense | |
| (18,729 | ) | |
| (11,038 | ) |
| Personnel and benefit expense | |
| (45,429 | ) | |
| (112,924 | ) |
| General and administrative expense | |
| (32,577 | ) | |
| (38,286 | ) |
| Total operating expenses | |
| (96,735 | ) | |
| (162,248 | ) |
| | |
| | | |
| | |
| Income (loss) from operations | |
| 38,645 | | |
| (6,637 | ) |
| | |
| | | |
| | |
| Other (expense) income: | |
| | | |
| | |
| Interest income | |
| 1,474 | | |
| 156 | |
| Interest expense | |
| (34,195 | ) | |
| (26,024 | ) |
| Sundry income | |
| 4,134 | | |
| 1,128 | |
| Total other expense, net | |
| (28,587 | ) | |
| (24,740 | ) |
| | |
| | | |
| | |
| Income (loss) before income taxes | |
| 10,058 | | |
| (31,377 | ) |
| | |
| | | |
| | |
| Income tax expense | |
| (2,684 | ) | |
| – | |
| | |
| | | |
| | |
| NET INCOME (LOSS) | |
$ | 7,374 | | |
$ | (31,377 | ) |
See accompanying
notes to the unaudited condensed consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Currency expressed
in United States Dollars (“US$”))
| | |
Ordinary shares | | |
| | |
| | |
| |
| | |
No. of shares | | |
Amount | | |
Accumulated losses | | |
Accumulated Other comprehensive income | | |
Total shareholders’ deficit | |
| | |
| | |
| | |
| | |
| | |
| |
| Balance as of April 1, 2023 | |
| 1,000 | | |
$ | 1,000 | | |
$ | (159,919 | ) | |
$ | 124 | | |
$ | (158,795 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss for the period | |
| – | | |
| – | | |
| (31,377 | ) | |
| – | | |
| (31,377 | ) |
| Foreign currency translation adjustment | |
| – | | |
| – | | |
| – | | |
| 4,794 | | |
| 4,794 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of June 30, 2023 | |
| 1,000 | | |
$ | 1,000 | | |
$ | (191,296 | ) | |
$ | 4,918 | | |
$ | (185,378 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of April 1, 2024 | |
| 1,000 | | |
$ | 1,000 | | |
$ | (268,704 | ) | |
$ | 11,447 | | |
$ | (256,257 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income for the period | |
| – | | |
| – | | |
| 7,374 | | |
| – | | |
| 7,374 | |
| Foreign currency translation adjustment | |
| – | | |
| – | | |
| – | | |
| 6,368 | | |
| 6,368 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of June 30, 2024 | |
| 1,000 | | |
$ | 1,000 | | |
$ | (261,330 | ) | |
$ | 17,815 | | |
$ | (242,515 | ) |
See accompanying
notes to the unaudited condensed consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed
in United States Dollars (“US$”))
| | |
Three Months ended June 30, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Cash flows from operating activities: | |
| | | |
| | |
| Net income (loss) | |
$ | 7,374 | | |
$ | (31,377 | ) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities | |
| | | |
| | |
| Depreciation of plant and equipment | |
| 1,174 | | |
| 1,142 | |
| | |
| | | |
| | |
| Change in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (130,862 | ) | |
| (22,776 | ) |
| Deposits, prepayments and other receivables | |
| 4,256 | | |
| 2,163 | |
| Accounts payable | |
| 744 | | |
| 5,413 | |
| Accrued liabilities and other payables | |
| (20,566 | ) | |
| 9,604 | |
| Deferred revenue | |
| 134,892 | | |
| (23,244 | ) |
| Income tax payable | |
| (7,024 | ) | |
| – | |
| Net cash used in operating activities | |
| (10,012 | ) | |
| (59,075 | ) |
| | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | |
| Purchase of plant and equipment | |
| (2,855 | ) | |
| – | |
| Net cash used in investing activities | |
| (2,855 | ) | |
| – | |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from bank borrowings | |
| – | | |
| 127,617 | |
| Repayments to bank borrowings | |
| (31,820 | ) | |
| (140,342 | ) |
| (Advances to) repayment from a shareholder | |
| (65,426 | ) | |
| 50,022 | |
| Net cash (used in) provided by financing activities | |
| (97,246 | ) | |
| 37,297 | |
| | |
| | | |
| | |
| Effect on exchange rate change on cash, cash equivalents | |
| 10,507 | | |
| 7,109 | |
| | |
| | | |
| | |
| Net change in cash and cash equivalent | |
| (110,113 | ) | |
| (21,778 | ) |
| | |
| | | |
| | |
| BEGINNING OF PERIOD | |
| 443,455 | | |
| 130,735 | |
| | |
| | | |
| | |
| END OF PERIOD | |
$ | 343,849 | | |
$ | 116,066 | |
| | |
| | | |
| | |
| SUPPLEMENTAL CASH FLOW INFORMATION: | |
| | | |
| | |
| Cash paid for income taxes | |
$ | 9,708 | | |
$ | – | |
| Cash paid for interest | |
$ | 34,195 | | |
$ | 26,024 | |
See accompanying
notes to the unaudited condensed consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 1 －
BUSINESS OVERVIEW AND BASIS OF PRESENTATION
OLS APAC Corporation (“OAC” or the
“Company”) was incorporated in British Virgin Islands (“BVI”) on March 21, 2024.
The Company is one of the leading provider of
global shipping services through eCommerce platform under its brand “buyippee” ® in Hong Kong. The Company’s e-commerce
business platform features a mixture of online and offline retail shopping with global logistic services in Hong Kong.
Pursuant to its Memorandum of Association, the
authorized capital amounted to $50,000 representing 50,000 ordinary shares with a par value of $1 at its inception. As of the date of
filing, the Company has 1,000 ordinary shares issued and outstanding.
On March 29, 2024, the Company and its shareholders
entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with DH Enchantment, Inc, a Nevada corporation (“ENMI”),
and certain Investors pursuant to which ENMI agreed to issue Twenty Billion (20,000,000,000) shares of its common stock, par value $0.001,
(the “ENMI Shares”) to acquire One Thousand (1,000) ordinary shares of the Company.
Description of entities incorporated and controlled
by the Company:
| Name |
|
Background |
|
Effective ownership |
| |
|
|
|
|
|
Online Logistics Services Limited
(“OLSL”)
|
|
• Hong Kong
company
• Incorporated
on April 12, 2012
• Issued
and outstanding 1 ordinary share for HK$1
• Operating
the retail sales and online shopping |
|
100% owned by OAC
|
| |
|
|
|
|
|
Online Logistics Services Limited,
Taiwan Branch (“OLTW”)
|
|
• Foreign
company’s Taiwan branch, Republic of China (“Taiwan”)
• Formed
and registered on July 20, 2022
• Paid-in
capital of NTD500,000
• Wholesale
and retail sale in Taiwan |
|
100% owned by OSLS
|
| |
|
|
|
|
The Company and its subsidiaries are hereinafter
referred to as (the “Company”).
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 2 －
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying unaudited condensed consolidated
financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the
accompanying consolidated financial statements and notes.
These accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US
GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements
not misleading have been included. Operating results for the period ended June 30, 2024 are not necessarily indicative of the results
that may be expected for the fiscal year ending March 31, 2025.
The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been
eliminated upon consolidation.
| · | Use of Estimates and Assumptions |
The preparation of the consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s consolidated
financial statements include the useful lives of plant and equipment, impairment of long-lived assets, allowance for expected credit losses,
revenue recognition, income tax provision, deferred taxes and uncertain tax position.
The inputs into the management’s judgments
and estimates consider the geopolitical tension, inflationary and high-interest rate environment and other macroeconomic factors on the
Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
| · | Foreign Currency Translation and Transaction |
Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement
of operations.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The reporting currency of the Company is United
States Dollar (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the
Company has operations in Hong Kong and Taiwan and maintains the books and record in the local currency, Hong Kong Dollars (“HKD”)
and New Taiwan Dollars (“NTD”), which is a functional currency as being the primary currency of the economic environment in
which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional
currency is not US$ are translated into US$, in accordance with ASC 830-30, Translation of Financial Statement, using the exchange
rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive
income within the statements of changes in stockholder’s equity.
Translation of amounts from HKD and NTD into US$
has been made at the following exchange rates for the following periods:-
| |
June 30, 2024 |
|
June 30, 2023 |
| Period-end HKD:USD exchange rate |
0.1281 |
|
0.1276 |
| Annual average HKD:USD exchange rate |
0.1279 |
|
0.1276 |
| Period-end NTD:USD exchange rate |
0.0308 |
|
0.0321 |
| Annual average NTD: USD exchange rate |
0.0314 |
|
0.0327 |
In the consolidated financial statements of the
Company, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the
exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated
in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet
date. All gains and losses arising from foreign currency transactions are recorded in the income statements during the period in which
they occur.
| · | Cash and Cash Equivalents |
Cash and cash equivalents consist primarily of
cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash
and that mature within three months or less from the date of purchase.
Certain
accounts receivables due from payment gateway providers and credit card processors, as the cash proceeds from accounts receivables are
received within the next 3-5 working days, which are recorded at the gross billing amounts, net of the fee charges by payment gateway
providers and credit card processors.
The Company
also offers credit terms to certain corporate customers, who have prolonging business history and current market creditworthiness. These
accounts receivable are recorded at the gross billing amount less an allowance for expected credit losses. Accounts receivable do not
bear interest and are considered overdue after 30 days from the date of sale invoices.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The Company
records impairment losses for accounts receivable based on assessments of the recoverability of the accounts receivable and individual
account analysis, including the current creditworthiness and the past collection history of each customer and current economic industry
trends. Impairments arise when there is objective evidence indicating that the balances may not be collectible. The identification of
bad and doubtful debts, in particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific
losses on individual exposures, as well as a provision on historical trends of collections. Based on analysis of customers’ credit
and ongoing relationship, management makes conclusions about whether any balances outstanding at the end of the period will be deemed
non-collectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with
a corresponding charge recorded in the consolidated statements of operations. Delinquent account balances are written off against the
allowance for expected credit losses after management has determined that the likelihood of collection is not probable.
As of June
30, 2024 and March 31, 2024, no allowances for expected credit losses are recorded as the Company considers all of the outstanding accounts
receivable fully collectible in the foreseeable future.
Plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected
useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| |
|
Expected useful life |
|
|
| Leasehold improvements |
|
Over the shorter of 3 years or lease term |
|
|
| Furniture and fixtures |
|
5 years |
|
|
| Computer and office equipment |
|
5 years |
|
|
Expenditures for maintenance and repairs are charged
to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or
loss is recognized in the results of operations.
Depreciation expense for the three months ended
June 30, 2024 and 2023 were $1,174 and $1,142, respectively.
| · | Impairment of Long-Lived Assets |
In accordance with the provisions of ASC Topic
360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as plant and equipment owned and held by the Company
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted
cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment losses were recognized for
the three months ended June 30, 2024 and 2023.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The Company receives revenue from contracts with
customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts
with Customers (Topic 606) (“ASC 606”).
ASC Topic 606 provided the following overview
of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in
the contract.
Step 3: Determine the transaction price –
The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring
promised goods or services to a customer.
Step 4: Allocate the transaction price to the
performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on
the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity
satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring
a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized
is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically
for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
All of the Company’s revenue is recognized
at a point in time based on the transfer of control. In addition, the Company’s contracts do not contain variable consideration
and contract modifications are minimal. The Company’s revenue arrangements generally consist of a single performance obligation
to transfer promised goods. Revenue is reported net of sale rebates, refund and discounts.
Currently, the Company generates its revenues
in the following streams:
Retail sales (direct-to-consumer)
The Company provides customized customer-specific
solutions, involving with the purchase of designated merchandise, logistic and fulfilment services, through which the Company provides
the service of integrating a complex set of tasks and components into a single capability. The entire contract is accounted for as one
performance obligation. For these performance obligations, the Company typically has a right to consideration from customers in an amount
that corresponds directly with the value to the customers of the performance completed to date, and as such, the revenue is recognized
when control of the merchandise is transferred to the customer, which generally occurs upon shipment and accepted by the customer. Advanced
payment is typically made, prior to the date of shipment.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Deferred revenue is recorded when the Company
has received consideration (i.e., advanced payment) before satisfying its performance obligations. As such, customer orders are recorded
as deferred revenue prior to shipment or rendering of product or services. Deferred revenue primarily relates to e-commerce orders placed
for customer-specific solutions, but not shipped or accepted by the customers, prior to the end of the fiscal period.
Logistic and fulfillment services
The Company provides logistic and fulfillment
services to the customers and they receive the benefit of the Company’s services as the goods are transported from one location
to another. Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the
promised services is completed and transferred to customers. Revenue is measured as the amount of consideration the Company expects to
receive in exchange for transferring and delivering services to a customer. Generally, the contracts require the customers to pay for
service when the customers collect the goods from the Company.
Supply chain consulting service
The Company also provides
supply chain consulting services in relation to all activities involved in sourcing, procurement, conversion, and logistics management.
The contract has a single performance obligation, which is satisfied upon rendering of services, on a monthly basis. Revenue is recognized
when performance obligation is satisfied and the customer obtains the benefit of promised services. The amount of revenue recognized reflects
the consideration to which the Company expects to be entitled to receive in exchange for services, which is determined by performance-based
fees and the amount is varied, upon the monthly performance result.
Principal vs Agent Considerations
When another
party is involved in providing goods to the customer, the Company will apply the principal versus agent guidance in ASC Topic 606 to determine
if the Company is acting as the principal or an agent to the transaction. This evaluation determined that the Company is in control of
establishing the transaction price, managing all aspects of the shipment term, and taking the risk of loss for delivery, collection, and
returns. Based on the Company’s evaluation of the control model, it determined that all the Company’s major businesses act
as the principal rather than the agent within their revenue arrangements and such revenues are reported on a gross basis.
Disaggregation of Revenue
The Company has disaggregated its revenue from
contracts with customers into categories based on the business operation of the revenue as follows:
| | |
| |
For the three months ended June 30, | |
| Type of revenue | |
Point of recognition | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Retail sales | |
At the point in time | |
$ | 328,152 | | |
$ | 138,324 | |
| Logistic and fulfilment services | |
At the point in time | |
| 111,941 | | |
| 142,270 | |
| Supply chain consulting service | |
Over time | |
| 150,690 | | |
| 71,444 | |
| | |
| |
| | | |
| | |
| | |
| |
$ | 590,783 | | |
$ | 352,038 | |
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
ASC Topic
280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the
Company’s internal organizational structure as well as information about geographical areas, business segments and major customers
in financial statements for detailing the Company’s business segments. As the Company’s chief operating decision maker has
been identified as the chief executive officer, who reviews the combined results when making decisions about allocating resources and
assessing performance of the Company, thus for the three months ended June 30, 2023, and 2024, the Company has business segments in Hong
Kong and Taiwan.
The Company adopts the FASB Accounting Standards
Update (“ASU”) 2016-02 “Leases (Topic 842).” for all periods presented. This standard requires lessees to recognize
lease assets (“right-of-use”) and related lease obligations (“lease liabilities”) on the balance sheet for leases
with terms in excess of twelve months. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election
not to recognize lease assets and liabilities.
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 are recognized, 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. The incremental borrowing rate is the rate that the Company would have to pay to borrow, on a collateralized basis, an
amount equal to the lease payments, in a similar economic environment and over a similar term. The Company depreciated the ROU assets
on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the ROU assets or the end of
the lease term. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Income taxes are determined in accordance with
the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected
to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how
companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to
be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely
than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be
measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the
tax authority assuming full knowledge of the position and relevant facts.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
For the three months ended June 30, 2024 and 2023,
the Company did not have any interest and penalties associated with tax positions. As of June 30, 2024 and March 31, 2024, the Company
did not have any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign
jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax
authorities.
The Company follows the ASC Topic 850-10, Related
Party (“ASC 850”) for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850, the related parties include:
a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the
fair value option under the Fair Value Option Subsection of ASC Topic 825–10–15, to be accounted for by the equity method
by the investing entity; c) trusts for the benefit of employees, such as pension and income-sharing trusts that are managed by or under
the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company
may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting
parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.
The consolidated financial statements shall include
disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items
in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial
statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description
of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements
of operations are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the
financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and
the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to
related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| · | Commitments and Contingencies |
The Company follows the ASC Topic 450-20, Commitments
to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result
in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such
contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the
perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought therein.
If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate
of the range of possible losses, if determinable and material, would be disclosed.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time that these matters will have a material adverse effect on the Company’s financial position, results
of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.
The Company follows the guidance of the ASC Topic
820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), with respect to financial assets and liabilities that
are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair
value as follows:
| · |
Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; |
| · |
Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and |
| · |
Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
The carrying value of the Company’s financial
instruments: cash and cash equivalents, accounts receivable, amounts due from related parties, deposit, prepayments and other receivables,
accounts payable, accrued liabilities and other payables and amounts due to related parties approximate at their fair values because of
the short-term nature of these financial instruments.
| · | Recently Issued Accounting Pronouncements |
From time to time, new accounting pronouncements
are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that
are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
In November 2023, the FASB issued ASU No. 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosures
requirements included in ASU 2023-07 are required for all public entities, including those with a single reportable segment. ASU 2023-07
is effective for annual periods beginning after December 15, 2024, on a retrospective basis, and early adoption is permitted. The Company
is currently evaluating the potential impact of ASU 2023-07 on its consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
In December 2023, the FASB issued ASU No. 2023-09,
Income Taxes (Topic 720): Improvements to Income Tax Disclosures (“ASU 2023-09”), which prescribes standard categories
for the components of the effective tax rate reconciliation and requires disclosure of additional information for reconciling items meeting
certain quantitative thresholds, requires disclosure of disaggregated income taxes paid, and modifies certain other income tax-related
disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis,
with a retrospective option. The Company is currently evaluating the potential impact of the adoption of ASU 2023-09 on its consolidated
financial statements.
In March 2024, the FASB issued ASU No. 2024-02,
Codification Improvements-Amendments to Remove References to the Concepts Statements (“ASU 2024-02”). The amendments
in this Update affect a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the
affected accounting guidance. This update contains amendments to the Codification that remove references to various Concepts Statements.
In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references
were used in prior statements to provide guidance in certain topical areas. ASU 2024-02 is effective for public business entities for
fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after
December 15, 2025. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made
available for issuance. The Company is currently evaluating the potential impact of the adoption of ASU 2024-02 on its consolidated financial
statements.
Except for the above-mentioned pronouncements,
there are no new recently issued accounting standards that will have a material impact on the unaudited condensed consolidated balance
sheets, statements of operations and cash flows.
NOTE 3 －
GOING CONCERN UNCERTAINTIES
The accompanying unaudited condensed consolidated
financial statements have been prepared using going concern basis of accounting, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
As of June 30, 2024, the Company suffered from
a working capital deficit of $251,753 and accumulated deficit of $261,330. The Company has not yet established an ongoing source of revenues
sufficient to cover its operating costs and allow it to continue as a going concern. The continuation of the Company as a going concern
is dependent upon improving the profitability and the continued financial support from external borrowings and its stockholders. Management
believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However,
there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
These raise substantial doubt about the Company’s
ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company
not being able to continue as a going concern.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 4 －
ACCOUNTS RECEIVABLE
| | |
As of | |
| | |
June 30, 2024 | | |
March 31, 2023 | |
| Accounts receivable, at cost: | |
| | | |
| | |
| Corporate clients | |
$ | 1,027,654 | | |
$ | 838,334 | |
| Payment gateway providers | |
| 78,533 | | |
| 136,991 | |
| | |
| 1,106,187 | | |
| 975,325 | |
| Less: allowance for expected credit losses | |
| – | | |
| – | |
| Accounts receivable, net | |
$ | 1,106,187 | | |
$ | 975,325 | |
For the three months ended June 30, 2024 and 2023,
no allowance of expected credit losses was recognized, respectively. The Company has not experienced any significant bad debt or write-offs
of accounts receivable in the past.
The Company generally conducts its business with
creditworthy third parties. The Company determines, on a continuing basis, the probable losses and an allowance for expected credit losses,
based on several factors including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience
and forecasted economic and market conditions. Accounts receivable are written off after exhaustive collection efforts occur and the receivable
is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
NOTE 5 －
BANK BORROWINGS
Bank borrowings comprised of the followings:
| |
|
|
|
|
|
|
| |
|
Interest |
|
|
As of |
|
| Bank borrowings, secured: |
Maturity date |
rate |
|
|
June 30, 2024 |
|
March 31, 2024 |
|
| |
|
(p.a.) |
|
|
|
|
|
|
|
|
| Loan : HK$0.83 million |
April 28, 2029 |
2.88% |
|
|
$ |
101,152 |
|
$ |
100,931 |
|
| Loan : HK$1.09 million |
March 30, 2030 |
2.88% |
|
|
|
133,828 |
|
|
133,536 |
|
| Loan : HK$1.79 million |
May 23, 2032 |
2.88% |
|
|
|
229,263 |
|
|
228,762 |
|
| Loan : HK$4.20 million |
August 28, 2024 |
7.51% |
|
|
|
518,689 |
|
|
517,556 |
|
| Loan : HK$3.80 million |
August 28, 2024 |
7.51% |
|
|
|
483,509 |
|
|
485,640 |
|
| Loan : HK$3.00 million |
March 18, 2028 |
4.80% |
|
|
|
355,614 |
|
|
383,400 |
|
|
|
|
|
|
|
$ |
1,822,055 |
|
$ |
1,849,825 |
|
The Company obtained certain loans from several
financial institutions in Hong Kong, in the aggregate principal amount up to $1,880,385 (equal to HK$14.71 million). These loans bear
annual interest at the bank prevailing rates ranging from 2.88% to 7.51%. The Company is subject to various financial covenants under
certain loan agreements, which include repayment on-demand clause. Hence, all of these bank borrowings are reclassified as “current
liabilities”.
Interest related to the bank borrowings was $34,195
and $26,024, for the three months ended June 30, 2024 and 2023, respectively.
These banking facilities are guaranteed and secured,
details of which are set out as follows:-
| (a) |
unlimited personal guaranteed by Mr. Cheung, the director of the Company |
| (b) |
guaranteed by HKMC Insurance Limited under the Hong Kong SME Financing Guarantee Scheme, launched by The Hong Kong Mortgage Corporation Limited |
As of June 30, 2024, the Company has fully complied
with certain financial covenants pursuant to the facility letter issued by the banks.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 6 －
SHAREHOLDERS’ EQUITY
Ordinary
Shares
The Company was established under the laws of
British Virgin Island on March 21, 2024, with authorized to issue one class of ordinary share. At the date of filing, the total number
of ordinary shares which the Company is authorized to issue 50,000 ordinary shares, consisting of 1,000 ordinary shares issued and outstanding,
at par value of $1.
NOTE 7 －
INCOME TAX EXPENSE
The provision for income tax expense consisted
of the following:
| | |
Three months ended June 30, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Current income tax | |
$ | 2,684 | | |
$ | – | |
| Deferred income tax | |
| – | | |
| – | |
| | |
| | | |
| | |
| Income tax expense | |
$ | 2,684 | | |
$ | – | |
The effective tax rate in the periods presented
is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates
in Hong Kong and Taiwan that are subject to taxes in the jurisdictions in which it operates, as follows:
British Virgin
Islands
OAC is incorporated in the British Virgin Islands
and is not subject to taxation. In addition, upon payments of dividends by these entities to their shareholder, no British Virgin Islands
withholding tax will be imposed.
Hong Kong
OLSL is operating in Hong Kong and is subject
to the Hong Kong profits tax at the two-tiered income tax rates at the rate of 8.25% on the estimated assessable income up to HK$2,000,000
and 16.5% on any part of assessable income over HK$2,000,000 arising in Hong Kong during its tax year.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The reconciliation of income tax rate to the effective
income tax rate based on income before income tax expense for the three months ended June 30, 2024 and 2023 are as follows:
| | |
Three months ended June 30, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Income before income taxes | |
$ | 34,782 | | |
$ | 36,927 | |
| Statutory income tax rate | |
| 16.5% | | |
| 16.5% | |
| Income tax expense at statutory rate | |
| 5,739 | | |
| 6,093 | |
| Income not subject to taxes | |
| (235 | ) | |
| (7 | ) |
| Tax adjustment | |
| (137 | ) | |
| (309 | ) |
| Net operating loss | |
| – | | |
| (5,777 | ) |
| Tax holidays | |
| (2,683 | ) | |
| – | |
| Income tax expense | |
$ | 2,684 | | |
$ | – | |
OLTW is registered as a foreign branch in Taiwan.
A foreign branch is subject to the Taiwan Income Tax Law at a unified enterprise income tax rate of 20%, upon the threshold of taxable
income exceeding NTD120,000. No provision for income tax is made, as OLTW has not generated any taxable income during the three months
ended June 30, 2024 and 2023.
Uncertain
tax positions
The Company evaluates the uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated
with the tax positions. As of June 30, 2024 and 2023, the Company did not have any significant unrecognized uncertain tax positions. The
Company did not incur any interest and penalties related to potential underpaid income tax expenses for the three months ended June 30,
2024 and 2023 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from
June 30, 2024.
NOTE 8 －
RELATED PARTY BALANCES AND TRANSACTIONS
Nature of relationships with related parties
| Name of related party |
|
Relationship with the Company |
| Mr. Cheung |
|
Director and major shareholder of the Company |
| Ezy-Go International Trading Company Limited |
|
Entity controlled by common shareholder |
Related party balances consisted of the following:
| | |
| |
As of | |
| Name | |
Nature | |
June 30, 2024 | | |
March 31, 2024 | |
| | |
| |
| | |
| |
| Mr. Cheung | |
Amount due from a director | |
$ | 293,342 | | |
$ | 227,916 | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Accounts receivable, related party | |
$ | 423,507 | | |
$ | 382,324 | |
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The amount due from a director represented the
temporary advances made by the Company, which is non-trade in nature. The amount is unsecured, interest-free and due on demand.
Accounts receivable represented the trade receivable
from the related party for rendering of logistic services. The amount is unsecured, interest-free and 30 days’ credit term is granted.
In the ordinary course of business, during the
three months ended June 30, 2024 and 2023, the Company has involved with transactions, either at cost or current market prices and on
the normal commercial terms among related parties. The following table provides the transactions with these parties for the periods as
presented (for the portion of such period that they were considered related):
| | |
| |
Three months ended June 30, | |
| Name | |
Nature | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Ezy-Go International Trading Company Limited | |
Consulting fee income | |
$ | 150,690 | | |
$ | 71,444 | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Service cost | |
$ | 159,762 | | |
$ | – | |
Apart from the transactions and balances detailed
above and elsewhere in these accompanying unaudited condensed consolidated financial statements, the Company has no other significant
or material related party transactions during the periods presented.
NOTE 9 －
CONCENTRATIONS OF RISK
The Company is
exposed to the following concentrations of risk:
For the three months ended June 30, 2024, the
individual customer who accounted for 10% of the Company’s revenue and its outstanding receivables balance at period-end rates,
as presented as follows:
| | |
Three months ended June 30, 2024 | | |
As of June 30, 2024 | |
| Customer | |
Revenue | | |
Percentage of revenue | | |
Accounts receivable | |
| | |
| | |
| | |
| |
| Customer A | |
$ | 194,216 | | |
| 32.87% | | |
$ | 61,444 | |
| Customer B | |
| 150,690 | | |
| 25.51% | | |
| 423,507 | |
| | |
| | | |
| | | |
| | |
| | |
$ | 344,906 | | |
| 58.38% | | |
$ | 484,951 | |
For the three months ended June 30, 2023, the
individual customer who accounted for 10% of the Company’s revenue and its outstanding receivables balance at period-end rates,
as presented as follows:
| | |
Three months ended June 30, 2023 | | |
As of June 30, 2023 | |
| Customer | |
Revenue | | |
Percentage of revenue | | |
Accounts receivable | |
| | |
| | |
| | |
| |
| Customer B | |
$ | 71,444 | | |
| 20.29% | | |
$ | 84,692 | |
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
These customers are mainly located in Hong Kong.
For the three months ended June 30, 2024, the
individual vendor who accounted for 10% or more of the Company’s service cost and its outstanding payable balances at period-end
dates, are presented as follows:
| | |
Three months ended June 30, 2024 | | |
As of June 30, 2024 | |
| Vendor | |
Service cost | | |
Percentage of service cost | | |
Accounts payable | |
| | |
| | |
| | |
| |
| Vendor A | |
$ | 159,762 | | |
| 35.08% | | |
$ | – | |
| Vendor B | |
| 74,267 | | |
| 16.31% | | |
| – | |
| | |
| | | |
| | | |
| | |
| | |
$ | 234,029 | | |
| 51.39% | | |
$ | – | |
For the three months ended June 30, 2023, the
individual vendor who accounted for 10% or more of the Company’s service cost and its outstanding payable balances at period-end
dates, are presented as follows:
| | |
Three months ended June 30, 2023 | | |
As of June 30, 2023 | |
| Vendor | |
Service cost | | |
Percentage of service cost | | |
Accounts payable | |
| | |
| | |
| | |
| |
| Vendor B | |
$ | 35,091 | | |
| 17.86% | | |
$ | – | |
These vendors are mainly located in Hong Kong.
Financial instruments that potentially subject
the Company to credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. Cash equivalents are maintained
with high credit quality institutions in Hong Kong, the composition and maturities of which are regularly monitored by the management.
The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$500,000 (US$63,694) if the bank in Hong Kong with which an
individual/a company holds its eligible deposit fails.
As of June 30, 2024, cash and cash equivalents
of $319,057 was maintained at financial institutions in Hong Kong, of which approximately $237,040 was subject to credit risk. While management
believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
For accounts receivable, the Company determines,
on a continuing basis, the probable losses and sets up an allowance for expected credit losses.
Interest rate risk is the risk that the fair value
or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates.
The Company is exposed to interest rate risk primarily
relates to the variable-rate bank borrowings and is mainly concentrated on the fluctuation of Hong Kong Prime Rate and HIBOR arising from
the Company’s bank borrowings. The Company has not used any derivative instruments to mitigate its exposure associated with interest
rate risk. However, the management monitors interest rate exposure and will consider other necessary actions when significant interest
rate exposure is anticipated.
The Company is also exposed to cash flow interest
rate risk related to bank balances and cash held at financial institutions carried at the prevailing market rates and variable-rate bank
borrowings.
The Company cannot guarantee that the current
exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable
periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted
to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
| (f) | Economic and political risk |
The Company’s major operations are conducted
in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s
economy may influence the Company’s business, financial condition, and results of operations.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 10
－ COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be involved
in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings
or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition,
operating results, or cash flows.
The Company is a party to a Management Consultant Service Agreement,
dated January 1, 2024, pursuant to which Dimbuy.com agreed to provide management consultant services (including customer service, administrative
support, marketing and business development assistance and information technology support) and office space for a monthly fee of HKD 63,000
(approximately $8,051). This agreement expires December 31, 2024, with the option to renew for additional 12-month periods. Each party
may terminate this agreement upon 30 days written notice.
The Company also has entered a new rent agreement
for use of office space in Taiwan on May 15, 2024, with a monthly rent of $1,537, which will expire on May 15, 2025. As of June 30, 2024,
the Company is committed to pay $15,368 in the next twelve months.
Apart from the commitments and contingencies detailed
above and elsewhere in these accompanying consolidated financial statements, as of June 30, 2024, the Company did not have any significant
commitments or contingencies involved.
NOTE 11
－ SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent
Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but
before the consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after June
30, 2024, up to the date that the unaudited condensed consolidated financial statements were available to be issued.
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of
OLS APAC Corporation and Subsidiaries.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of OLS APAC Corporation and Subsidiaries (the ‘Company’) as of March 31, 2024, and 2023, and the related consolidated
statements of operations, changes in stockholders’ deficit and cash flows for each of the two years ended March 31, 2024, and 2023,
and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2024, and 2023,
and the results of its operations and its cash flows for each of the two years ended March 31, 2024, and 2023, in conformity with accounting
principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company suffered an accumulated
deficit of $(268,704), negative working capital of $(263,903). These matters raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans with regards to these matters are also described in Note 3 to the financial statements.
These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. Communication of critical audit matters does not alter in any way our opinion on the financial statements
taken as a whole and we are not, by communicating the critical audit matters, providing separate opinions on the critical audit matter
or on the accounts or disclosures to which they relate. We do not have a critical audit matter to communicate as of March 31, 2024.
/S/ Olayinka Oyebola
OLAYINKA OYEBOLA & CO.
(Chartered Accountants)
Lagos, Nigeria
We have served as the Company’s auditor
since 2024.
September 16, 2024
OLS APAC CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(Currency expressed
in United States Dollars (“US$”))
| | |
As of March 31, | |
| | |
2024 | | |
2023 | |
| | |
US$ | | |
US$ | |
| ASSETS | |
| | |
| |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 443,455 | | |
$ | 130,735 | |
| Accounts receivable, third parties, net | |
| 593,001 | | |
| 578,573 | |
| Accounts receivable, related parties, net | |
| 382,324 | | |
| – | |
| Amounts due from related parties | |
| 227,916 | | |
| 413,878 | |
| Income tax receivable | |
| 9,228 | | |
| – | |
| Deposit, prepayments and other receivables | |
| 25,619 | | |
| 46,299 | |
| Total current assets | |
| 1,681,543 | | |
| 1,169,485 | |
| | |
| | | |
| | |
| Non-current assets: | |
| | | |
| | |
| Plant and equipment, net | |
| 7,646 | | |
| 15,127 | |
| | |
| | | |
| | |
| TOTAL ASSETS | |
$ | 1,689,189 | | |
$ | 1,184,612 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accrued liabilities and other payables | |
$ | 30,807 | | |
$ | 35,093 | |
| Bank borrowings | |
| 1,849,825 | | |
| 1,229,895 | |
| Deferred revenue | |
| 64,814 | | |
| 78,419 | |
| Total current liabilities | |
| 1,945,446 | | |
| 1,343,407 | |
| | |
| | | |
| | |
| TOTAL LIABILITIES | |
| 1,945,446 | | |
| 1,343,407 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| – | | |
| – | |
| | |
| | | |
| | |
| Shareholders’ deficit: | |
| | | |
| | |
| Ordinary share, US$1 par value, 50,000 shares authorized, 1,000 shares issued and outstanding as of March 31, 2024 and 2023* | |
| 1,000 | | |
| 1,000 | |
| Accumulated other comprehensive income | |
| 11,447 | | |
| 124 | |
| Accumulated losses | |
| (268,704 | ) | |
| (159,919 | ) |
| Total shareholders’ deficit | |
| (256,257 | ) | |
| (159,795 | ) |
| | |
| | | |
| | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | |
$ | 1,689,189 | | |
$ | 1,184,612 | |
* The shares amounts are presented on a retroactive basis.
See accompanying
notes to the consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Currency expressed
in United States Dollars (“US$”))
| | |
Years ended March 31, | |
| | |
2024 | | |
2023 | |
| | |
US$ | | |
US$ | |
| Revenues, net | |
| | | |
| | |
| Revenue from third parties | |
$ | 1,640,915 | | |
$ | 1,897,595 | |
| Revenue from related party | |
| 347,592 | | |
| – | |
| Total revenues, net | |
| 1,988,507 | | |
| 1,897,595 | |
| Cost of revenue | |
| (1,409,944 | ) | |
| (1,338,014 | ) |
| | |
| | | |
| | |
| Gross profit | |
| 578,563 | | |
| 559,581 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing | |
| (85,090 | ) | |
| (16,745 | ) |
| Personnel and benefit | |
| (362,959 | ) | |
| (310,923 | ) |
| General and administrative | |
| (131,994 | ) | |
| (260,401 | ) |
| Total operating expenses | |
| (580,043 | ) | |
| (588,069 | ) |
| | |
| | | |
| | |
| Loss from operations | |
| (1,480 | ) | |
| (28,488 | ) |
| | |
| | | |
| | |
| Other (expense) income: | |
| | | |
| | |
| Interest income | |
| 390 | | |
| 88 | |
| Interest expense | |
| (114,244 | ) | |
| (52,203 | ) |
| Government subsidies | |
| – | | |
| 13,777 | |
| Sundry income | |
| 7,177 | | |
| 37,290 | |
| Total other expense, net | |
| (106,677 | ) | |
| (1,048 | ) |
| | |
| | | |
| | |
| Loss before income taxes | |
| (108,157 | ) | |
| (29,536 | ) |
| | |
| | | |
| | |
| Income tax expense | |
| (628 | ) | |
| – | |
| | |
| | | |
| | |
| NET LOSS | |
$ | (108,785 | ) | |
$ | (29,536 | ) |
| | |
| | | |
| | |
* The shares amounts are presented on a retroactive basis.
See accompanying
notes to the consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(Currency expressed
in United States Dollars (“US$”))
| | Ordinary shares | | |
| | |
| | |
| |
| | |
No. of shares | | |
Amount | | |
Accumulated losses | | |
Accumulated Other comprehensive income | | |
Total shareholders’ deficit | |
| | |
| | |
| | |
| | |
| | |
| |
| Balance as of April 1, 2022 | |
| 1,000 | | |
$ | 1,000 | | |
$ | (130,383 | ) | |
$ | – | | |
$ | (130,383 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss for the year | |
| – | | |
| – | | |
| (29,536 | ) | |
| – | | |
| (29,536 | ) |
| Foreign currency translation adjustment | |
| – | | |
| – | | |
| – | | |
| 124 | | |
| 124 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of March 31, 2023 | |
| 1,000 | | |
| 1,000 | | |
| (159,919 | ) | |
| 124 | | |
| (158,795 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss for the year | |
| – | | |
| – | | |
| (108,785 | ) | |
| – | | |
| (108,785 | ) |
| Foreign currency translation adjustment | |
| – | | |
| – | | |
| – | | |
| 11,323 | | |
| 11,323 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance as of March 31, 2024 | |
| 1,000 | | |
$ | 1,000 | | |
$ | (268,704 | ) | |
$ | 11,447 | | |
$ | (256,257 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
* The shares amounts are presented on a retroactive basis.
See accompanying
notes to the consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Currency expressed
in United States Dollars (“US$”))
| | |
Years ended March 31, | |
| | |
2024 | | |
2024 | |
| | |
| | |
| |
| Cash flows from operating activities: | |
| | | |
| | |
| Net loss | |
$ | (108,785 | ) | |
$ | (29,536 | ) |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities | |
| | | |
| | |
| Depreciation of plant and equipment | |
| 7,010 | | |
| 5,623 | |
| | |
| | | |
| | |
| Change in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (396,752 | ) | |
| (36,759 | ) |
| Deposits, prepayments and other receivables | |
| 20,680 | | |
| 148,021 | |
| Accounts payable | |
| – | | |
| (272,742 | ) |
| Accrued liabilities and other payables | |
| (4,286 | ) | |
| 35,671 | |
| Deferred revenue | |
| (13,605 | ) | |
| 78,419 | |
| Income tax payable | |
| (9,228 | ) | |
| (7,861 | ) |
| Net cash used in operating activities | |
| (504,966 | ) | |
| (79,164 | ) |
| | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | |
| Purchase of plant and equipment | |
| – | | |
| (13,712 | ) |
| Net cash used in investing activities | |
| – | | |
| (13,712 | ) |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from (repayments to) bank borrowings | |
| 894,640 | | |
| (799,694 | ) |
| Repayments to bank borrowings | |
| (278,544 | ) | |
| 1,248,900 | |
| Repayment from (advances to) a shareholder | |
| 185,962 | | |
| (754,333 | ) |
| Net cash provided by (used in) financing activities | |
| 802,058 | | |
| (305,127 | ) |
| | |
| | | |
| | |
| Effect on exchange rate change on cash, cash equivalents | |
| 15,628 | | |
| 10,057 | |
| | |
| | | |
| | |
| Net change in cash and cash equivalent | |
| 297,092 | | |
| (398,003 | ) |
| | |
| | | |
| | |
| BEGINNING OF YEAR | |
| 130,735 | | |
| 518,681 | |
| | |
| | | |
| | |
| END OF YEAR | |
$ | 443,455 | | |
$ | 130,735 | |
| | |
| | | |
| | |
| SUPPLEMENTAL CASH FLOW INFORMATION: | |
| | | |
| | |
| Cash paid for income taxes | |
$ | 9,857 | | |
$ | 7,853 | |
| Cash paid for interest | |
$ | 52,203 | | |
$ | 114,244 | |
See accompanying
notes to the consolidated financial statements.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 1 －
BUSINESS OVERVIEW AND BASIS OF PRESENTATION
OLS APAC Corporation (“OAC” or the
“Company”) was incorporated in British Virgin Islands (“BVI”) on March 21, 2024.
The Company is one of the leading provider of
global shipping services through eCommerce platform under its brand “buyippee” ® in Hong Kong. The Company’s e-commerce
business platform features a mixture of online and offline retail shopping with global logistic services in Hong Kong.
Pursuant to its Memorandum of Association, the
authorized capital amounted to $50,000 representing 50,000 ordinary shares with a par value of $1 at its inception. As of the date of
filing, the Company has 1,000 ordinary shares issued and outstanding.
On March 29, 2024, the Company and its shareholders
entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with DH Enchantment, Inc, a Nevada corporation (“ENMI”),
and certain Investors pursuant to which ENMI agreed to issue Twenty Billion (20,000,000,000) shares of its common stock, par value $0.001,
(the “ENMI Shares”) to acquire One Thousand (1,000) ordinary shares of the Company.
Description of entities incorporated and controlled
by the Company:
| Name |
|
Background |
|
Effective ownership |
| |
|
|
|
|
|
Online Logistics Services Limited
(“OLSL”)
|
|
• Hong Kong
company
• Incorporated
on April 12, 2012
• Issued
and outstanding 1 ordinary share for HK$1
• Operating
the online sale and online shopping |
|
100% owned by OAC
|
| |
|
|
|
|
|
Online Logistics Services Limited,
Taiwan Branch (“OLTW”)
|
|
• Foreign
company’s Taiwan branch, Republic of China (“Taiwan”)
• Formed
and registered on July 20, 2022
• Paid-in
operation capital of NTD500,000
• Wholesale
and retail sale in Taiwan |
|
100% owned by OSLS
|
| |
|
|
|
|
The Company and its subsidiaries are hereinafter
referred to as (the “Company”).
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 2
－ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These accompanying consolidated financial statements
reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying consolidated
financial statements and notes.
The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been
eliminated upon consolidation.
| · | Use of Estimates and Assumptions |
The preparation of the consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the years presented. Significant accounting estimates reflected in the Company’s consolidated
financial statements include the useful lives of plant and equipment, impairment of long-lived assets, allowance for expected credit losses,
revenue recognition, income tax provision, deferred taxes and uncertain tax position.
The inputs into the management’s judgments
and estimates consider the geopolitical tension, inflationary and high-interest rate environment and other macroeconomic factors on the
Company’s critical and significant accounting estimates. Actual results could differ from these estimates.
| · | Foreign Currency Translation and Transaction |
Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement
of operations.
The reporting currency of the Company is United
States Dollar (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the
Company has operations in Hong Kong and Taiwan and maintains the books and record in the local currency, Hong Kong Dollars (“HKD”)
and New Taiwan Dollars (“NTD”), which is a functional currency as being the primary currency of the economic environment in
which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional
currency is not US$ are translated into US$, in accordance with ASC 830-30, Translation of Financial Statement, using the exchange
rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive
income within the statements of changes in stockholder’s equity.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Translation of amounts from HKD and NTD into US$
has been made at the following exchange rates for the following years:-
| |
March 31, 2023 |
|
March 31, 2024 |
| Year-end HKD:USD exchange rate |
0.1274 |
|
0.1278 |
| Annual average HKD:USD exchange rate |
0.1276 |
|
0.1278 |
| Year-end NTD:USD exchange rate |
0.0328 |
|
0.0313 |
| Annual average NTD: USD exchange rate |
0.0329 |
|
0.0318 |
In the consolidated financial statements of the
Company, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the
exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated
in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet
date. All gains and losses arising from foreign currency transactions are recorded in the income statements during the year in which they
occur.
| · | Cash and Cash Equivalents |
Cash and cash equivalents consist primarily of
cash in readily available checking and saving accounts. They consist of highly liquid investments that are readily convertible to cash
and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities
of these instruments.
| | |
As of March 31, | |
| Cash and cash equivalent, located in: | |
2024 | | |
2023 | |
| | |
| | |
| |
| Hong Kong | |
$ | 425,152 | | |
$ | 84,482 | |
| Taiwan | |
| 18,303 | | |
| 46,253 | |
| Total | |
$ | 443,455 | | |
$ | 130,735 | |
Certain
accounts receivables due from payment gateway providers and credit card processors, as the cash proceeds from accounts receivables are
received within the next 3-5 working days, which are recorded at the gross billing amounts, net of the fee charges by payment gateway
providers and credit card processors.
The Company
also offers credit terms to certain corporate customers, who have prolonging business history and current market creditworthiness. These
accounts receivable are recorded at the gross billing amount less an allowance for expected credit losses. Accounts receivable do not
bear interest and are considered overdue after 30 days from the date of sale invoices.
The Company
records impairment losses for accounts receivable based on assessments of the recoverability of the accounts receivable and individual
account analysis, including the current creditworthiness and the past collection history of each customer and current economic industry
trends. Impairments arise when there is objective evidence indicating that the balances may not be collectible. The identification of
bad and doubtful debts, in particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific
losses on individual exposures, as well as a provision on historical trends of collections. Based on analysis of customers’ credit
and ongoing relationship, management makes conclusions about whether any balances outstanding at the end of the period will be deemed
non-collectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with
a corresponding charge recorded in the consolidated statements of operations. Delinquent account balances are written off against the
allowance for expected credit losses after management has determined that the likelihood of collection is not probable.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
As of March
31, 2024 and 2023, no allowances for expected credit losses are recorded as the Company considers all of the outstanding accounts receivable
fully collectible in the foreseeable future.
Plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected
useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| |
|
Expected useful life |
|
|
| Leasehold improvements |
|
Over the shorter of 3 years or lease term |
|
|
| Furniture and fixtures |
|
5 years |
|
|
| Computer and office equipment |
|
5 years |
|
|
Expenditures for maintenance and repairs are charged
to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or
loss is recognized in the results of operations.
| · | Impairment of Long-Lived Assets |
In accordance with the provisions of ASC Topic
360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as plant and equipment owned and held by the Company
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted
cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment losses were recognized for
the years ended March 31, 2024 and 2023.
The Company receives revenue from contracts with
customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts
with Customers (Topic 606) (“ASC 606”).
ASC Topic 606 provided the following overview
of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in
the contract.
Step 3: Determine the transaction price –
The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring
promised goods or services to a customer.
Step 4: Allocate the transaction price to the
performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on
the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Step 5: Recognize revenue when (or as) the entity
satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring
a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized
is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically
for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
All of the Company’s revenue is recognized
at a point in time based on the transfer of control. In addition, the Company’s contracts do not contain variable consideration
and contract modifications are minimal. The Company’s revenue arrangements generally consist of a single performance obligation
to transfer promised goods. Revenue is reported net of sale rebates, refund and discounts.
Currently, the Company generates its revenues
in the following streams:
Retail sales (direct-to-consumer)
The Company provides customized customer-specific
solutions, involving with the purchase of designated merchandise, logistic and fulfilment services, through which the Company provides
the service of integrating a complex set of tasks and components into a single capability. The entire contract is accounted for as one
performance obligation. For these performance obligations, the Company typically has a right to consideration from customers in an amount
that corresponds directly with the value to the customers of the performance completed to date, and as such, the revenue is recognized
when control of the merchandise is transferred to the customer, which generally occurs upon shipment and accepted by the customer. Advanced
payment is typically made, prior to the date of shipment.
Deferred revenue is recorded when the Company
has received consideration (i.e., advanced payment) before satisfying its performance obligations. As such, customer orders are recorded
as deferred revenue prior to shipment or rendering of product or services. Deferred revenue primarily relates to e-commerce orders placed
for customer-specific solutions, but not shipped or accepted by the customers, prior to the end of the fiscal period.
Deferred revenue as of March 31, 2023 was $78,419,
of which, $24,272 was recognized as revenue during the year ended March 31, 2024. The deferred revenue balance as of March 31, 2024 was
$64,814.
Logistic and fulfillment services
The Company provides logistic and fulfillment
services to the customers and they receive the benefit of the Company’s services as the goods are transported from one location
to another. Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the
promised services is completed and transferred to customers. Revenue is measured as the amount of consideration the Company expects to
receive in exchange for transferring and delivering services to a customer. Generally, the contracts require the customers to pay for
service when the customers collect the goods from the Company.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Supply chain consulting service
The Company also provides
supply chain consulting services in relation to all activities involved in sourcing, procurement, conversion, and logistics management.
The contract has a single performance obligation, which is satisfied upon rendering of services, on a monthly basis. Revenue is recognized
when performance obligation is satisfied and the customer obtains the benefit of promised services. The amount of revenue recognized reflects
the consideration to which the Company expects to be entitled to receive in exchange for services, which is determined by performance-based
fees and the amount is varied, upon the monthly performance result.
Principal vs Agent Considerations
When another
party is involved in providing goods to the customer, the Company will apply the principal versus agent guidance in ASC Topic 606 to determine
if the Company is acting as the principal or an agent to the transaction. This evaluation determined that the Company is in control of
establishing the transaction price, managing all aspects of the shipment term, and taking the risk of loss for delivery, collection, and
returns. Based on the Company’s evaluation of the control model, it determined that all the Company’s major businesses act
as the principal rather than the agent within their revenue arrangements and such revenues are reported on a gross basis.
Disaggregation of Revenue
The Company has disaggregated its revenue from
contracts with customers into categories based on the business operation of the revenue as follows:
| | |
| |
For the years ended March 31, | |
| Type of revenue | |
Point of recognition | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Retail sales | |
At the point in time | |
$ | 1,111,283 | | |
$ | 1,029,591 | |
| Logistic and fulfilment services | |
At the point in time | |
| 529,632 | | |
| 868,004 | |
| Supply chain consulting service | |
Over time | |
| 347,592 | | |
| – | |
| | |
| |
| | | |
| | |
| | |
| |
$ | 1,988,507 | | |
$ | 1,897,595 | |
Cost of revenues consists primarily of the cost
of merchandise purchased through third parties, material and direct, and the costs associated with logistic, shipping and fulfilment costs.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
No advertising expense was incurred and recorded
for the years ended March 31, 2024 and 2023, respectively.
Government assistance is not recognized until
there is reasonable assurance that: (a) the enterprise will comply with the conditions attached to the grant; and (b) the grant will be
received. When the Company receives government assistance but the conditions attached to the grants have not been fulfilled, such government
assistance is deferred and recorded under other payables and accrued expenses, and other long-term liability. The classification of short-term
or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled.
For the years ended March 31, 2024 and 2023, the Company received aggregated government assistances of $0 and $13,777, respectively from
government grants in Hong Kong. The government assistances are recognized as government subsidy income in the consolidated statements
of operations.
ASC Topic
280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the
Company’s internal organizational structure as well as information about geographical areas, business segments and major customers
in financial statements for detailing the Company’s business segments. As the Company’s chief operating decision maker has
been identified as the chief executive officer, who reviews the combined results when making decisions about allocating resources and
assessing performance of the Company, thus for the years ended March 31, 2023, and 2024, the Company has business segments in Hong Kong
and Taiwan.
Contributions to retirement plans (which are defined
contribution plans) are charged to general and administrative expenses in the accompanying statements of operations as the related employee
service are provided.
The Company adopts the FASB Accounting Standards
Update (“ASU”) 2016-02 “Leases (Topic 842).” for all periods presented. This standard requires lessees to recognize
lease assets (“right-of-use”) and related lease obligations (“lease liabilities”) on the balance sheet for leases
with terms in excess of twelve months. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election
not to recognize lease assets and liabilities.
The Company determines if an arrangement is a
lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities
in the consolidated balance sheets. Finance leases are included in finance lease ROU assets and finance lease liabilities in the consolidated
balance sheets.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
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 are recognized, 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. The incremental borrowing rate is the rate that the Company would have to pay to borrow, on a collateralized basis, an
amount equal to the lease payments, in a similar economic environment and over a similar term. The Company depreciated the ROU assets
on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the ROU assets or the end of
the lease term. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Income taxes are determined in accordance with
the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how
companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to
be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely
than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be
measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the
tax authority assuming full knowledge of the position and relevant facts.
For the years ended March 31, 2024 and 2023, the
Company did not have any interest and penalties associated with tax positions. As of March 31, 2024 and 2023, the Company did not have
any significant unrecognized uncertain tax positions.
The Company is subject to tax in local and foreign
jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the relevant tax
authorities.
The Company follows the ASC Topic 850-10, Related
Party (“ASC 850”) for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850, the related parties include:
a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the
fair value option under the Fair Value Option Subsection of ASC Topic 825–10–15, to be accounted for by the equity method
by the investing entity; c) trusts for the benefit of employees, such as pension and income-sharing trusts that are managed by or under
the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company
may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting
parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The consolidated financial statements shall include
disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items
in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated financial
statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description
of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements
of operations are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the
financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented and
the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to
related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
| · | Commitments and Contingencies |
The Company follows the ASC Topic 450-20, Commitments
to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result
in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such
contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the
perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought therein.
If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate
of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time that these matters will have a material adverse effect on the Company’s financial position, results
of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.
The Company
follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), with respect
to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes
the inputs used in measuring fair value as follows:
| · |
Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets; |
| · |
Level 2 : Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and |
| · |
Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. |
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
The carrying value of the Company’s financial
instruments: cash and cash equivalents, accounts receivable, amounts due from related parties, deposit, prepayments and other receivables,
accounts payable, accrued liabilities and other payables and amounts due to related parties approximate at their fair values because of
the short-term nature of these financial instruments.
| · | Recently Issued Accounting Pronouncements |
From time to
time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting
bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact
of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations
upon adoption.
In March 2023, the FASB issued ASU No. 2023-01,
Leases (Topic 842): Common Control Arrangements (“ASU 2023-01”) that is intended to improve the guidance for applying
Topic 842 to arrangements between entities under common control. This ASU requires all entities (that is, including public companies)
to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The standard
will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption
is permitted for both interim and annual financial statements that have not yet been made available for issuance. If an entity adopts
the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The
Company is currently evaluating the potential impact of ASU 2023-01 on its consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosures
requirements included in ASU 2023-07 are required for all public entities, including those with a single reportable segment. ASU 2023-07
is effective for annual periods beginning after December 15, 2024, on a retrospective basis, and early adoption is permitted. The Company
is currently evaluating the potential impact of ASU 2023-07 on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09,
Income Taxes (Topic 720): Improvements to Income Tax Disclosures (“ASU 2023-09”), which prescribes standard categories
for the components of the effective tax rate reconciliation and requires disclosure of additional information for reconciling items meeting
certain quantitative thresholds, requires disclosure of disaggregated income taxes paid, and modifies certain other income tax-related
disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis,
with a retrospective option. The Company is currently evaluating the potential impact of the adoption of ASU 2023-09 on its consolidated
financial statements.
In March 2024, the FASB issued ASU No. 2024-02,
Codification Improvements-Amendments to Remove References to the Concepts Statements (“ASU 2024-02”). The amendments
in this Update affect a variety of Topics in the Codification. The amendments apply to all reporting entities within the scope of the
affected accounting guidance. This update contains amendments to the Codification that remove references to various Concepts Statements.
In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references
were used in prior statements to provide guidance in certain topical areas. ASU 2024-02 is effective for public business entities for
fiscal years beginning after December 15, 2024. For all other entities, the amendments are effective for fiscal years beginning after
December 15, 2025. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made
available for issuance. The Company is currently evaluating the potential impact of the adoption of ASU 2024-02 on its consolidated financial
statements.
Except for the above-mentioned pronouncements,
there are no new recently issued accounting standards that will have a material impact on the consolidated balance sheets, statements
of operations and cash flows.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 3 －
GOING CONCERN UNCERTAINTIES
The accompanying consolidated financial statements
have been prepared using going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities
in the ordinary course of business.
As of March 31, 2024, the Company suffered from
recurring losses and a working capital deficit of $263,903 with accumulated deficit of $268,704. The Company has funded its operations
primarily through its stockholders. The continuation of the Company as a going concern is dependent upon improving the profitability and
the continued financial support from its stockholders. Management believes the existing stockholders will provide the additional cash
to meet with the Company’s obligations as they become due. However, there is no assurance that the Company will be successful in
securing sufficient funds to sustain the operations.
These raise substantial doubt about the Company’s
ability to continue as a going concern. These consolidated financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue
as a going concern.
NOTE 4 －
ACCOUNTS RECEIVABLE
| | |
As of March 31, | |
| | |
2024 | | |
2023 | |
| Accounts receivable, at cost: | |
| | | |
| | |
| Corporate clients | |
$ | 838,334 | | |
$ | 573,288 | |
| Payment gateway providers | |
| 136,991 | | |
| 5,285 | |
| | |
| 975,325 | | |
| 578,573 | |
| Less: allowance for expected credit losses | |
| – | | |
| – | |
| Accounts receivable, net | |
$ | 975,325 | | |
$ | 578,573 | |
For the years ended March 31, 2024 and 2023, no
allowance of expected credit losses was recognized, respectively. The Company has not experienced any significant bad debt or write-offs
of accounts receivable in the past.
The Company generally conducts its business with
creditworthy third parties. The Company determines, on a continuing basis, the probable losses and an allowance for expected credit losses,
based on several factors including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience
and forecasted economic and market conditions. Accounts receivable are written off after exhaustive collection efforts occur and the receivable
is deemed uncollectible. In addition, receivable balances are monitored on an ongoing basis and its exposure to bad debts is not significant.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 5 －
PLANT AND EQUIPMENT, NET
Plant and equipment
consisted of the following:
| | |
As of March 31, | |
| | |
2024 | | |
2023 | |
| As cost: | |
| | |
| |
| Leasehold improvements | |
$ | 57,939 | | |
$ | 58,402 | |
| Furniture and fixtures | |
| 7,110 | | |
| 7,088 | |
| Computer and office equipment | |
| 92,388 | | |
| 92,099 | |
| | |
| 157,437 | | |
| 157,589 | |
| Less: accumulated depreciation | |
| (149,791 | ) | |
| (142,462 | ) |
| Plant and equipment, net | |
$ | 7,646 | | |
$ | 15,127 | |
Depreciation expense for the years ended March
31, 2024 and 2023 were $7,010 and $5,623, respectively.
NOTE 6 －
BANK BORROWINGS
Bank borrowings comprised of the followings:
| | |
| |
Interest | | |
As of March 31, | |
| Bank borrowings, secured: | |
Maturity date | |
rate
(p.a.) | | |
2024 | | |
2023 | |
| Loan : HK$0.83 million | |
April 28, 2029 | |
| 2.88% | | |
$ | 100,931 | | |
$ | 105,742 | |
| Loan : HK$1.09 million | |
March 30, 2030 | |
| 2.88% | | |
| 133,536 | | |
| 139,311 | |
| Loan : HK$1.79 million | |
May 23, 2032 | |
| 2.88% | | |
| 228,762 | | |
| 228,046 | |
| Loan : HK$4.20 million | |
April 29, 2024 | |
| 7.51% | | |
| 517,556 | | |
| 527,476 | |
| Loan : HK$3.80 million | |
May 28, 2024 | |
| 7.51% | | |
| 485,640 | | |
| 229,320 | |
| Loan : HK$3.00 million | |
March 18, 2028 | |
| 4.80% | | |
| 383,400 | | |
| – | |
| | |
| |
| | | |
$ | 1,849,825 | | |
$ | 1,229,895 | |
The Company obtained certain loans from several
financial institutions in Hong Kong, in the aggregate principal amount of up to $1,880,385 (equal to HK$14.71 million). These loans bear
annual interest at the bank prevailing rates ranging from 2.88% to 7.51%. The Company is subject to various financial covenants under
certain loan agreements, which include repayment on-demand clause. Hence, all of these bank borrowings are reclassified as “current
liabilities”.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Interest related to the bank borrowings was $114,244
and $52,203, for the years ended March 31, 2024 and 2023, respectively.
These banking facilities are guaranteed and secured,
details of which are set out as follows:-
| (a) |
unlimited personal guaranteed by Mr. Cheung, the director of the Company |
| (b) |
guaranteed by HKMC Insurance Limited under the Hong Kong SME Financing Guarantee Scheme, launched by The Hong Kong Mortgage Corporation Limited |
As of March 31, 2024, the Company has fully complied
with certain financial covenants pursuant to the facility letter issued by the banks.
NOTE 7 －
SHAREHOLDERS’ EQUITY
Ordinary
Shares
The Company was established under the laws of
British Virgin Island on March 21, 2024, with authorized to issue one class of ordinary share. At the date of filing, the total number
of ordinary shares which the Company is authorized to issue 50,000 ordinary shares, consisting of 1,000 ordinary shares issued and outstanding,
at par value of US$1.
NOTE 8 －
INCOME TAX EXPENSE
The provision for income tax expense consisted
of the following:
| | |
Years ended March 31, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Current income tax | |
$ | 628 | | |
$ | – | |
| Deferred income tax | |
| – | | |
| – | |
| | |
| | | |
| | |
| Income tax expense | |
$ | 628 | | |
$ | – | |
The effective tax rate in the periods presented
is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates
in Hong Kong and Taiwan that are subject to taxes in the jurisdictions in which it operates, as follows:
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
British Virgin
Islands
OAC is incorporated in the British Virgin Islands
and is not subject to taxation. In addition, upon payments of dividends by these entities to their shareholder, no British Virgin Islands
withholding tax will be imposed.
Hong Kong
OLSL is operating in Hong Kong and is subject
to the Hong Kong profits tax at the two-tiered income tax rates at the rate of 8.25% on the estimated assessable income up to HK$2,000,000
and 16.5% on any part of assessable income over HK$2,000,000 arising in Hong Kong during its tax year.
The reconciliation of income tax rate to the effective
income tax rate based on income before income tax expense for the years ended March 31, 2024 and 2023 are as follows:
| | |
Years ended March 31, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Income (loss) before income taxes | |
$ | 36,991 | | |
$ | (5,901 | ) |
| Statutory income tax rate | |
| 16.5% | | |
| 16.5% | |
| Income tax expense at statutory rate | |
| 6,104 | | |
| (974 | ) |
| Income not subject to taxes | |
| (36 | ) | |
| (2,285 | ) |
| Expenses not subject to tax deduction | |
| – | | |
| 423 | |
| Tax adjustment | |
| (310 | ) | |
| (313 | ) |
| Net operating loss | |
| (4,502 | ) | |
| 3,149 | |
| Tax holidays | |
| (628 | ) | |
| – | |
| Income tax expense | |
$ | 628 | | |
$ | – | |
Taiwan
OLTW is registered as a foreign branch in Taiwan.
A foreign branch is subject to the Taiwan Income Tax Law at a unified enterprise income tax rate of 20%, upon the threshold of taxable
income exceeding NTD120,000. No provision for income tax is made, as OLTW has not generated any taxable income during the years ended
March 31, 2024 and 2023.
Uncertain
tax positions
The Company evaluates the uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated
with the tax positions. As of March 31, 2024 and 2023, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur any interest and penalties related to potential underpaid income tax expenses for the years ended March 31,
2024 and 2023 and also did not anticipate any significant increases or decreases in unrecognized tax benefits in the next 12 months from
March 31, 2024.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 9 －
EMPLOYEE BENEFIT
The Company is required to make contribution to
their employees under a government-mandated defined contribution pension scheme for its eligible full-times employees in Hong Kong. The
Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level.
For the years ended March 31, 2024 and 2023, the contribution to the defined contribution plans was approximately $20,292 and $19,856,
respectively.
NOTE 10
－ RELATED PARTY BALANCES AND TRANSACTIONS
Nature of relationships with related parties
| Name of related party |
|
Relationship with the Company |
| Mr. Cheung |
|
Director and major shareholder of the Company |
| Ezy-Go International Trading Company Limited |
|
Entity controlled by common shareholder |
Related party balances consisted of the following:
| | |
| |
As of March 31, | |
| Name | |
Nature | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Mr. Cheung | |
Amount due from a director | |
$ | 227,916 | | |
$ | 413,878 | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Accounts receivable, related party | |
$ | 382,324 | | |
$ | – | |
The amount due from a director represented the
temporary advances made by the Company, which is non-trade in nature. The amount is unsecured, interest-free and due on demand.
Accounts receivable represented the trade receivable
from the related party for rendering of logistic services. The amount is unsecured, interest-free and 30 days’ credit term is granted.
In the ordinary course of business, during the
years ended March 31, 2024 and 2023, the Company has involved with transactions, either at cost or current market prices and on the normal
commercial terms among related parties. The following table provides the transactions with these parties for the years as presented (for
the portion of such period that they were considered related):
| | |
| |
For the years ended March 31, | |
| Name | |
Nature | |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Ezy-Go International Trading Company Limited | |
Consulting fee income | |
$ | 347,592 | | |
$ | – | |
| | |
| |
| | | |
| | |
| Ezy-Go International Trading Company Limited | |
Service cost | |
$ | 594,214 | | |
$ | – | |
Apart from the transactions and balances detailed
above and elsewhere in these accompanying consolidated financial statements, the Company has no other significant or material related
party transactions during the years presented.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 11
－ CONCENTRATIONS OF RISK
The Company is
exposed to the following concentrations of risk:
For the year ended March 31, 2024, there is one
individual customer who accounted for 30.5% of the Company’s revenues amounting to $606,482.
For the year ended March 31, 2023, there is no
individual customer, who accounted for 10% or more of the Company’s revenues.
The customer is located in Hong Kong.
For the year ended March 31, 2024, the individual
vendor who accounted for 10% or more of the Company’s service cost and its outstanding payable balances at year-end dates, are presented
as follows:
| | |
Year ended
March 31, 2024 | | |
As of March 31, 2024 | |
| Vendor | |
Service cost | | |
Percentage of service cost | | |
Accounts payable | |
| | |
| | |
| | |
| |
| Vendor A | |
$ | 192,127 | | |
| 13.63% | | |
$ | – | |
| Vendor B | |
| 594,214 | | |
| 42.14% | | |
| – | |
| | |
| | | |
| | | |
| | |
| | |
$ | 786,341 | | |
| 55.77% | | |
$ | – | |
For the year ended March 31, 2023, the individual
vendor who accounted for 10% or more of the Company’s service costs and its outstanding payable balances at year-end dates, are
presented as follows:
| | |
Year ended
March 31, 2023 | | |
As of March 31, 2023 | |
| Vendor | |
Service cost | | |
Percentage of service cost | | |
Accounts payable | |
| | |
| | |
| | |
| |
| Vendor A | |
$ | 267,365 | | |
| 19.98% | | |
$ | – | |
These vendors are mainly located in Hong Kong.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
Financial instruments that potentially subject
the Company to credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. Cash equivalents are maintained
with high credit quality institutions in Hong Kong, the composition and maturities of which are regularly monitored by the management.
The Hong Kong Deposit Protection Board pays compensation up to a limit of HK$500,000 (US$63,694) if the bank in Hong Kong with which an
individual/a company holds its eligible deposit fails.
As of March 31, 2024, cash and cash equivalents
of $425,152 was maintained at financial institutions in Hong Kong, of which approximately $302,958 was subject to credit risk. While management
believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.
For accounts receivable, the Company determines,
on a continuing basis, the probable losses and sets up an allowance for expected credit losses.
Interest rate risk is the risk that the fair value
or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates.
The Company is exposed to interest rate risk primarily
relates to the variable-rate bank borrowings and is mainly concentrated on the fluctuation of Hong Kong Prime Rate and HIBOR arising from
the Company’s bank borrowings. The Company has not used any derivative instruments to mitigate its exposure associated with interest
rate risk. However, the management monitors interest rate exposure and will consider other necessary actions when significant interest
rate exposure is anticipated.
The Company is also exposed to cash flow interest
rate risk related to bank balances and cash held at financial institutions carried at the prevailing market rates and variable-rate bank
borrowings.
The Company cannot guarantee that the current
exchange rate will remain steady; therefore, there is a possibility that the Company could post the same amount of profit for two comparable
periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of HKD converted
to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.
| (l) | Economic and political risk |
The Company’s major operations are conducted
in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s
economy may influence the Company’s business, financial condition, and results of operations.
OLS APAC CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Currency expressed
in United States Dollars (“US$”))
NOTE 12
－ COMMITMENTS AND CONTINGENCIES
From time to time, the Company may be involved
in various legal proceedings and claims in the ordinary course of business. The Company currently is not aware of any legal proceedings
or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition,
operating results, or cash flows.
The Company is a party to a Management Consultant Service Agreement,
dated January 1, 2024, pursuant to which Dimbuy.com agreed to provide management consultant services (including customer service, administrative
support, marketing and business development assistance and information technology support) and office space for a monthly fee of HKD 63,000
(approximately $8,051). This agreement expires December 31, 2024, with the option to renew for additional 12-month periods. Each party
may terminate this agreement upon 30 days written notice.
The Company also has entered a new rent agreement
for use of office space in Taiwan on May 15, 2024, with a monthly rent of $1,537, which will expire on May 15, 2025.
Apart from the commitments and contingencies detailed
above and elsewhere in these accompanying consolidated financial statements, as of March 31, 2024, the Company did not have any significant
commitments or contingencies involved.
NOTE 13
－ SUBSEQUENT EVENTS
In accordance with ASC Topic 855, Subsequent
Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but
before the consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after March
31, 2024, up to the date that the audited consolidated financial statements were available to be issued.
DH ENCHANTMENT, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2024
(Unaudited)
| | |
Historical
ENMI | |
Historical
APAC | |
Pro Forma
Adjustments |
| Note |
|
Pro Forma
Condensed
Combined |
| | |
| |
| |
|
| |
|
|
| ASSETS | |
| | | |
| | | |
| | |
| |
|
| | |
| Current assets: | |
| | | |
| | | |
| | |
| |
|
| | |
| Cash and cash equivalents | |
$ | 2,954 | | |
$ | 343,849 | | |
| | |
| |
|
$ | 346,803 | |
| Accounts receivable | |
| – | | |
| 1,106,187 | | |
| | |
| |
|
| 1,106,187 | |
| Inventories | |
| 615 | | |
| – | | |
| | |
| |
|
| 615 | |
| Amount due from related parties | |
| – | | |
| 293,342 | | |
| | |
| |
|
| 293,342 | |
| Income tax receivable | |
| – | | |
| 16,252 | | |
| | |
| |
|
| 16,252 | |
| Deposits and prepayments | |
| – | | |
| 21,363 | | |
| | |
| |
|
| 21,363 | |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| Total current assets | |
| 3,569 | | |
| 1,780,993 | | |
| | |
| |
|
| 1,784,562 | |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| Non-current assets: | |
| | | |
| | | |
| | |
| |
|
| | |
| Plant and equipment, net | |
| – | | |
| 9,238 | | |
| | |
| |
|
| 9,238 | |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| TOTAL ASSETS | |
$ | 3,569 | | |
$ | 1,790,231 | | |
| | |
| |
|
$ | 1,793,800 | |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | | |
| | |
| |
|
| | |
| Current liabilities: | |
| | | |
| | | |
| | |
| |
|
| | |
| Accounts payable | |
$ | – | | |
$ | 744 | | |
| | |
| |
|
$ | 744 | |
| Accrued liabilities and other payables | |
| 143,438 | | |
| 10,241 | | |
| | |
| |
|
| 153,679 | |
| Accrued marketing expenses | |
| 452,732 | | |
| – | | |
| | |
| |
|
| 452,732 | |
| Deferred revenue | |
| – | | |
| 199,706 | | |
| | |
| |
|
| 199,706 | |
| Bank borrowings | |
| 434 | | |
| 1,822,055 | | |
| | |
| |
|
| 1,822,489 | |
| Amount due to a related party | |
| 206,825 | | |
| – | | |
| | |
| |
|
| 206,825 | |
| Amount due to a director | |
| 84,546 | | |
| – | | |
| | |
| |
|
| 84,546 | |
| Note payable, related party | |
| 133,557 | | |
| – | | |
| | |
| |
|
| 133,557 | |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| Total liabilities | |
| 1,021,532 | | |
| 2,032,746 | | |
| | |
| |
|
| 3,054,278 | |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| Stockholders’ deficit: | |
| | | |
| | | |
| | |
| |
|
| | |
| Series A Preferred stock | |
| 6,240 | | |
| – | | |
| | |
| |
|
| 6,240 | |
| Series B Preferred stock | |
| 100 | | |
| – | | |
| | |
| |
|
| 100 | |
| Common stock | |
| 831,310 | | |
| – | | |
| 20,000,000 |
| | (a) |
|
| 20,831,310 | |
| Additional paid in capital | |
| – | | |
| 1,000 | | |
| | |
| |
|
| 1,000 | |
| Accumulated other comprehensive income (loss) | |
| (512 | ) | |
| 17,815 | | |
| | |
| |
|
| 17,303 | |
| Accumulated deficit | |
| (1,855,101 | ) | |
| (261,330 | ) | |
| (20,000,000 | ) |
| (a) |
|
| (22,116,431 | ) |
| | |
| | | |
| | | |
| | |
| |
|
| | |
| Total stockholders’ deficit | |
| (1,017,963 | ) | |
| (242,515 | ) | |
| | |
| |
|
| (1,260,478 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
$ | 3,569 | | |
$ | 1,790,231 | | |
| | |
| |
|
$ | 1,793,800 | |
DH ENCHANTMENT, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2024
(Unaudited)
| | |
Historical
ENMI | |
Historical
APAC |
|
|
Pro Forma
Adjustment |
| |
Pro Forma
Condensed
Combined |
| | |
| |
|
|
|
|
| |
|
| Revenues, net | |
$ | – | | |
$ | 590,783 | |
|
|
|
| |
$ | 590,783 | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Cost of revenue | |
| – | | |
| (455,403 | ) |
|
|
|
| |
| (455,403 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Gross profit | |
| – | | |
| 135,380 | |
|
|
|
| |
| 135,380 | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Operating expenses: | |
| | | |
| | |
|
|
|
| |
| | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| General and administrative expenses | |
| (38,431 | ) | |
| (96,735 | ) |
|
|
|
| |
| (135,166 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Total operating expenses | |
| (38,431 | ) | |
| (96,735 | ) |
|
|
|
| |
| (135,166 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Other income (expenses) | |
| | | |
| | |
|
|
|
| |
| | |
| Interest income | |
| 9 | | |
| 1,474 | |
|
|
|
| |
| 1,483 | |
| Interest expense | |
| (2,717 | ) | |
| (34,195 | ) |
|
|
|
| |
| (36,912 | ) |
| Sundry income | |
| – | | |
| 4,134 | |
|
|
|
| |
| 4,134 | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Total other expenses, net | |
| (2,708 | ) | |
| (28,587 | ) |
|
|
|
| |
| (31,295 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| (LOSS) INCOME BEFORE INCOME TAXES | |
| (41,139 | ) | |
| 10,058 | |
|
|
|
| |
| (31,081 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Income tax expense | |
| – | | |
| (2,684 | ) |
|
|
|
| |
| (2,684 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| NET (LOSS) INCOME | |
$ | (41,139 | ) | |
$ | 7,374 | |
|
|
|
| |
$ | (33,765 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Net (loss) income per share | |
$ | (0.00 | ) | |
$ | 0.00 | |
|
|
|
| |
$ | (0.00 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Weighted average shares outstanding | |
| 831,310,013 | | |
| 20,000,000,000 | |
|
|
|
| |
| 20,831,310,013 | |
DH ENCHANTMENT, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2024
(Unaudited)
| | |
Historical
ENMI | |
Historical
APAC |
|
|
Pro Forma
Adjustment |
| |
Pro Forma
Condensed
Combined |
| | |
| |
|
|
|
|
| |
|
| Revenues, net | |
$ | 686 | | |
$ | 1,988,507 | |
|
|
|
| |
$ | 1,989,193 | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Cost of revenue | |
| (1,092 | ) | |
| (1,409,944 | ) |
|
|
|
| |
| (1,411,036 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Gross profit | |
| (406 | ) | |
| 578,563 | |
|
|
|
| |
| 578,157 | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Operating expenses: | |
| | | |
| | |
|
|
|
| |
| | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| General and administrative expenses | |
| (144,833 | ) | |
| (580,043 | ) |
|
|
|
| |
| (724,876 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Total operating expenses | |
| (144,833 | ) | |
| (580,043 | ) |
|
|
|
| |
| (724,876 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Other income (expenses) | |
| | | |
| | |
|
|
|
| |
| | |
| Interest income | |
| 9 | | |
| 390 | |
|
|
|
| |
| 399 | |
| Interest expense | |
| (10,923 | ) | |
| (114,244 | ) |
|
|
|
| |
| (125,167 | ) |
| Sundry income | |
| – | | |
| 7,177 | |
|
|
|
| |
| 7,177 | |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Total other expenses, net | |
| (10,914 | ) | |
| (106,677 | ) |
|
|
|
| |
| (117,591 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| LOSS BEFORE INCOME TAXES | |
| (156,153 | ) | |
| (108,157 | ) |
|
|
|
| |
| (264,310 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Income tax expense | |
| – | | |
| (628 | ) |
|
|
|
| |
| (628 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| NET LOSS | |
$ | (156,153 | ) | |
$ | (108,785 | ) |
|
|
|
| |
$ | (264,938 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Net income per share | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
|
|
|
| |
$ | (0.00 | ) |
| | |
| | | |
| | |
|
|
|
| |
| | |
| Weighted average shares outstanding | |
| 831,310,013 | | |
| 20,000,000,000 | |
|
|
|
| |
| 20,831,310,013 | |
DH ENCHANTMENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
AS OF JUNE 30, 2024
(Unaudited)
NOTE 1 – BACKGROUND
On March 29, 2024, DH Enchantment, Inc or the
Company or ENMI entered into the Share Exchange Agreement with OLS APAC Corporation (collectively “OLS”) (the “Share
Exchange”) for its 100% equity interest.
The consideration of the Share Exchange totaled
approximately 20,000,000,000 shares of the Company’s common stock, at the par value of $0.001, equal to $20 million.
NOTE 2 – BASIS OF PRESENTATION
Because ENMI is a shell company, OLS will comprise
the ongoing operations of the combined entity and its senior management will serve as the senior management of the combined entity, OLS
is deemed to be the accounting acquirer for accounting purposes. The transaction will be treated as a recapitalization of ENMI. Accordingly,
the consolidated assets, liabilities and results of operations of OLS will become the historical financial statements of OLS, and ENMI’s
assets, liabilities and results of operations will be consolidated with OLS beginning on the acquisition date. These pro forma financial
statements are presented as a continuation of OLS.
The pro forma balance sheet as of June 30, 2024,
is based on the historical financial statements of ENMI after giving effect to OLS’s acquisition of ENMI as a reverse merger using
the acquisition method of accounting and applying the assumptions and adjustments described in the notes to the pro forma financial statements
as if such acquisition had occurred as of June 30, 2024 for the balance sheet for pro forma financial statements purposes.
The pro forma financial statements have been prepared
by management for illustrative purposes only and are not necessarily indicative of the financial position or results of operations in
future periods. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this document
and assumptions that management believes are reasonable. The pro forma financial statements, including the notes thereto, are qualified
in their entirety by reference to, and should be read in conjunction with ENMI’s historical financial statements included elsewhere
on Form 10-Q for the three months ended June 30, 2024 and Form 10-K for the year ended March 31, 2024, as Exhibits filed with SEC herewith.
The pro forma financial statements do not purport
to represent what the results of operations or financial position of the combined entity would actually have been if the merger had in
fact occurred on April 1, 2023, nor do they purport to project the results of operations or financial position of the combined entity
for any future period or as of any date.
These pro forma financial statements do not give
effect to any restructuring costs or to any potential cost savings or other operating efficiencies that could result from the merger between
ENMI and OLS since such amounts, if any, are not presently determinable.
NOTE 3 – PRO FORMA ADJUSTMENTS
The pro forma financial statements have been prepared
as if the acquisition was completed on March 31, 2024 for the combined balance sheet purpose and reflects the following pro forma adjustment(s):
| (a) | To reflect the issuance of 20,000,000,000 shares of common stock of ENMI for the acquisition of 100% of
OLS outstanding capital stock |
| |
Dr. |
Accumulated deficit |
20,000,000 |
| |
Cr. |
Common stock |
20,000,000 |
DH ENCHANTMENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
AS OF JUNE 30, 2024
(Unaudited)
NOTE 4 – PRO FORMA EARNINGS PER SHARE
The pro forma earnings per share, giving effect
to the share exchange transaction has been computed as follows:
| Net loss – for the three months ended June 30, 2024 | |
$ | (33,765 | ) |
| | |
| | |
| Net loss per share – Basic and diluted # | |
$ | (0.00 | ) |
| | |
| | |
| Weighted average number of shares deemed issued and outstanding | |
| 20,831,310,013 | |
# less than $0.001
Exhibit 4.2
DESCRIPTION OF SECURITIES
The following description
summarizes the material terms of our capital stock as of the date of this registration statement. Because it is only a summary, it does
not contain all the information that may be important to you. For a complete description of our capital stock, you should refer to DH
Enchantment, Inc.’s Articles of Incorporation and Bylaws, and to the provisions of applicable Nevada law.
On June 29, 2021, our Board
of Directors authorized and approved the amendment and restatement of DH Enchantment, Inc.’s Articles of Incorporation to: (i) change
our name to DH Enchantment Inc.; and (ii) amend the powers, rights and designation of the Series A Convertible Preferred Stock as more
fully set forth below; and (iii) effectuate a 5:1 reverse split, all of which are subject to final authorization by FINRA. Our Board of
Directors also approved the designation of 10,000,000 shares of Series B Convertible Preferred Stock which took effect immediately.
Common Stock
DH Enchantment, Inc. is authorized
to issue up to 890,000,000 shares of common stock, par value $0.001. Each share of common stock entitles the holder to one (1) vote
on each matter submitted to a vote of our shareholders, including the election of Directors. There is no cumulative voting. Subject to
preferences that may be applicable to any outstanding preferred stock, our Shareholders are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the Board of Directors. Shareholders have no preemptive, conversion or other subscription
rights. There are no redemption or sinking fund provisions related to the common stock. In the event of liquidation, dissolution or winding
up of the Company, our Shareholders are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding.
Preferred Stock
DH Enchantment, Inc. is authorized
to issue up to 50,000,000 shares of preferred stock, par value $0.001, issuable in one or more series as may be determined by the Board.
Preferred Stock may be issued from time to time in one or more series as determined by the Board of Directors in its sole discretion.
Our Board of Directors is
authorized to determine or alter any or all of the rights, preferences, privileges and restrictions granted to or imposed upon any wholly
unissued series of preferred stock and, within the limitations or restrictions stated in any resolution or resolutions of the Board of
Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares
of any such series then outstanding) the number of shares comprising any such series subsequent to the issue of shares of that series,
to set the designation of any series, and to provide for rights and terms of redemption, conversion, dividends, voting rights, and liquidation
preferences of the shares of any such series.
Series A Convertible Preferred
Stock
The Board has designated a
class of Preferred Stock as the “Series A Convertible Preferred Stock,” par value $0.002, with 5,000,000 authorized shares.
Currently, holders of Series A Convertible Preferred Stock are: (i) entitled to receive dividends or other distributions as may be declared
by the Board of Directors; (ii) entitled to vote on all matters submitted to a vote of the shareholders together with the Common Stock
holders on an as converted basis; (iii) entitled to convert each one (1) share of Series A Convertible Preferred Stock into two thousand
(2,000) shares of Common Stock.
On June 29, 2021, the Board
of Directors of the Company authorized and approved the amendment and restatement of DH Enchantment, Inc.’s Articles of Incorporation
to amend the powers, rights and designation of the Series A Convertible Preferred Stock, among other things. After the amendment, holders
of the Series A Convertible Preferred Stock will not be: (i) entitled to receive dividends or other distributions; (ii) vote on matters
submitted to a vote of the stockholders; and (iii) able to convert the Series A Convertible Preferred Stock into common stock or any other
securities of the corporation.
Series B Convertible Preferred
Stock
Effective June 29, 2021, the
Board designated a class of Preferred Stock as the “Series B Convertible Preferred Stock,” par value $0.001, with 10,000,000
authorized shares. Each one share of Series B Convertible Preferred Stock converts into 10 shares of common stock of the Corporation at
the election of the holder, subject to equitable adjustments. No fractional shares of common stock are issuable upon conversion of the
Series B Convertible Preferred Stock, and fractional shares shall be rounded up to the nearest whole common stock.
Voting. Holders of
Series B Convertible Preferred Stock vote on an “as converted” basis on matters submitted to holders of the common stock,
or any class thereof, and shall vote together with common stock holders as a class.
Dividends. Holders
of Series B Convertible Preferred Stock shall fully participate, on an as-converted basis, in any dividends declared and paid or distributions
on Common Stock as if the Series B Preferred Stock were converted into shares of Common Stock as of the record date for such dividend
or distribution. In addition, holders of Series B Convertible Preferred Stock are entitled to receive dividends, when and as declare by
the Board, on each outstanding share of Series B Convertible Preferred Stock.
Liquidation. Holders
of Series B Convertible Preferred Stock are entitled to receive, out of assets of the corporation available for distribution to shareholders
of the Corporation or their assignees, and subject to the rights of any outstanding shares of senior stock and before any amount shall
be distributed to the holders of junior stock, a liquidating distribution (the “Liquidation Distribution”) in an amount equal
to the amount such Series B Holder would have been entitled to receive had such holder converted its shares of Series B Convertible Preferred
Stock into shares of Common Stock at the conversion ratio effective immediately prior to such Liquidation. If, upon any Liquidation, the
amount payable with respect to the Liquidation Distribution is not paid in full, the Series B Holders and any parity stock shall share
equally and ratably in any distribution of the Corporation’s assets in proportion to the respective liquidation distributions to
which they are entitled.
Amendment. The corporation
may not amend the Certificate of Designations for the Series B Convertible Preferred Stock without the prior written consent of the holders
of the Series B Convertible Preferred Stock holding a majority of the Series B Convertible Preferred Stock then issued and outstanding,
in which vote each share of Series B Convertible Preferred Stock then issued and outstanding shall have one vote, voting separately as
a single class, in person or by proxy, either in writing without a meeting or at an annual or a special meeting of such holders of Series
B Convertible Preferred Stock.
Options
We have no options to purchase
shares of our common stock or any other of our securities outstanding as of the date of this Prospectus.
Warrants
We have no warrants to purchase
shares of our common stock or any other of our securities outstanding as of the date of this Prospectus.
Dividends
Dividends, if any, will be
contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will
be within the discretion of our board of directors. We intend to retain earnings, if any, for use in its business operations and accordingly,
the board of directors does not anticipate declaring any dividends in the foreseeable future.
Transfer Agent and Registrar
Our transfer agent is Pacific
Stock Transfer Company, Inc. located at 6725 Via Austi Pikeway, Suite 300, Las Vegas, Nevada 89119, telephone number is 702-361-3033.
Anti-takeover Effects of Nevada Law
Business Combinations
The “business combination”
provisions of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, generally prohibit a Nevada corporation with
at least 200 stockholders from engaging in various “combination” transactions with any interested stockholder for a period
of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved
by the board of directors prior to the date the interested stockholder obtained such status; and extends beyond the expiration of the
three-year period, unless:
| |
· |
the transaction was approved by the board of directors prior to the person becoming an interested stockholder or is later approved by a majority of the voting power held by disinterested stockholders, or |
| |
· |
if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher. |
A “combination”
is generally defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer or other disposition,
in one transaction or a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal
to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the corporation, (c) 10% or more of the earning power or net income of the corporation,
and (d) certain other transactions with an interested stockholder or an affiliate or associate of an interested stockholder.
In general, an “interested
stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation’s
voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage
attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price
above the prevailing market price.
Because we have less than
200 shareholders of record, these “business combination” provisions do not currently apply to us. Our Articles of Incorporation
state that we have elected not to be governed by the “business combination” provisions.
Control Share Acquisitions
The “control share”
provisions of Sections 78.378 to 78.3793, inclusive, of the NRS apply to “issuing corporations,” which are Nevada corporations
with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly
or indirectly in Nevada. The control share statute prohibits an acquirer, under certain circumstances, from voting its shares of a target
corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation’s
disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than
a majority, and a majority or more, of the outstanding voting power. Generally, once an acquirer crosses one of the above thresholds,
those shares in an offer or acquisition and acquired within 90 days thereof become “control shares” and such control shares
are deprived of the right to vote until disinterested stockholders restore the right.
These provisions also provide
that if control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all
other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand payment for the
fair value of their shares in accordance with statutory procedures established for dissenters’ rights.
The effect of the Nevada control
share statutes is that the acquiring person, and those acting in association with the acquiring person, will obtain only such voting rights
in the control shares as are conferred by a resolution of the disinterested stockholders at an annual or special meeting. The Nevada control
share law, if applicable, could have the effect of discouraging takeovers of our company.
A corporation may elect to not be governed by, or “opt out”
of, the control share provisions by making an election in its articles of incorporation or bylaws, provided that the opt-out election
must be in place on the 10th day following the date an acquiring person has acquired a controlling interest, that is, crossing any of
the three thresholds described above. Our Articles of Incorporation state that we have elected not to be governed by the “control
share” provisions.
Exhibit 10.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT
(the “Agreement”) dated as of March 29, 2024, is entered into by and among DH Enchantment Inc., a Nevada corporation (“ENMI”),
and OLS Asia Corporation, a British Virgin Island corporation (“Buyippee”), and the shareholders of Buyippee listed on Annex
A to this Agreement (each, a “Shareholder” and, collectively, the “Shareholders”).
RECITALS
A. The Shareholders own the
number of shares of capital stock of Buyippee (the “Shares”) set forth opposite each Shareholder’s name on Annex
A, which Shares collectively constitute all of the issued and outstanding shares of capital stock in Buyippee
B. ENMI desires to purchase
from the Shareholders, and the Shareholders desire to sell to ENMI, the Shares in exchange for shares of ENMI common stock, par value
$0.001 (the “Common Stock”) all on the terms and subject to the conditions set forth in this Agreement (the “Exchange”).
D. As a result of the Exchange,
ENMI will become the sole shareholder of Buyippee.
E. Certain capitalized terms
used in this Agreement are defined on Exhibit A hereto.
AGREEMENT
In consideration of the agreements,
provisions and covenants set forth below, ENMI, Buyippee and the Shareholders, hereby agree as follows:
ARTICLE I.
EXCHANGE OF SHARES
1.1 Agreement to Sell.
Upon the terms and subject
to all of the conditions contained herein, each of the Shareholders hereby agrees to sell, assign, transfer and deliver to ENMI, and ENMI
hereby agrees to purchase and accept from each of the Shareholders, on the Closing Date, the Shares.
1.2 Purchase Price.
As full consideration for
the sale, assignment, transfer and delivery of the Shares by the Shareholders to ENMI, and upon the terms and subject to all of the conditions
contained herein, ENMI shall issue to the Shareholders an aggregate of 20,000,000,000 shares of ENMI Common Stock (the
“Acquisition Shares”) on a pro rata basis based upon their respective beneficial ownership interest in Buyippee, as certified
by the President of Buyippee, at the Closing.
1.3 Mechanics of Exchange.
(a) At the Closing, each Shareholder
shall be entitled to surrender the certificate or certificates that immediately prior to the Closing represented the Buyippee Shares of
Common Stock (the “Certificates”) to the exchange agent designated by ENMI in exchange for the Acquisition Shares.
(b) Promptly after the Closing,
ENMI or its designated exchange agent shall make available to each Shareholder a letter of transmittal and instructions for use in effecting
the surrender of Certificates in exchange for the Acquisition Shares. Upon surrender of a Certificate to such exchange agent together
with the letter of transmittal, duly executed, the Shareholder shall be entitled to receive in exchange therefore such number of Acquisition
Shares as such Shareholder has the right to receive in respect of the Certificate so surrendered pursuant to the provisions of this Article
I.
1.4 No Fractional Shares.
No fraction of a share of
ENMI Common Stock and Series B Preferred Stock shall be issued in the Exchange. In lieu of fractional shares, the Shareholders upon surrender
of their Certificates as set forth in Section 1.3 shall be issued that number of shares of Common Stock and Series B Preferred Stock resulting
by rounding up to the nearest whole number of shares of Acquisition Shares that each such Shareholder shall receive as a result of the
Exchange.
1.5 Closing.
The closing of the transactions contemplated by
this Agreement (the “Closing”) shall take place at 9:00 a.m., Hong Kong Time, at the principal administrative offices of ENMI,
or at a location mutually agreement upon by ENMI and Buyippee, on or before June 30, 2024 (the “Closing Date”); provided, however, that if all of the other conditions set forth in articles VI and VII hereof are not
satisfied or waived, unless this agreement has been terminated under Section 9 hereof, or at such date, the Closing Date shall be the
business day following the day on which all such conditions have been satisfied or waived, or at such other date, time and place as ENMI,
Buyippee and the Shareholders shall agree.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF BUYIPPEE
Except as set forth in the
Disclosure Schedule, consisting of information about Buyippee provided by Buyippee to ENMI in connection with this Agreement (the “Buyippee
Disclosure Schedule”), each of Buyippee and the Shareholders represents and warrants jointly and severally to ENMI as follows:
2.1 Organization and Qualification.
Buyippee is duly incorporated, validly and in good standing existing
under the laws of British Virgin Island, has all requisite authority and power (corporate and other), governmental licenses, authorizations,
consents and approvals to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its
properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof except where
the failure to be in good standing or to have such governmental licenses, authorizations, consents and approvals will not, in the aggregate,
either (i) have a Material Adverse Effect on the business, assets or financial condition of Buyippee, or (ii) impair the ability of Buyippee
to perform its material obligations under this Agreement. Buyippee is duly qualified, licensed or domesticated as a foreign corporation
in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased requires such qualification,
licensing or domestication, except where the failure to be so qualified, licensed or domesticated will not have a Material Adverse Effect.
Set forth as part of the Buyippee Disclosure Schedule is a list of those jurisdictions in which each of Buyippee presently conducts its
business, owns, holds and operates its properties and assets.
2.2 Subsidiaries.
Buyippee holds 100% of Online
Logistics Services Limited ("OLS”), which is incorporated in Hong Kong. OLS holds 100% of Online Logistics Services Limited
Taiwan Branch (“OLS Taiwan”).
Except as stated above, Buyippee
does not own directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity
or enterprise. Buyippee does not have any direct or indirect interests of stock ownership or otherwise in any corporation, partnership,
joint venture, firm, association or business enterprise, and is not party to any agreement to acquire such an interest.
2.3 Articles of Incorporation
and Bylaws.
The copies of the charter
document and corporate governance document of Buyippee (collectively, the “Organizational Documents”) that have been delivered
to ENMI prior to the execution of this Agreement are true and complete and have not been amended or repealed. Buyippee is not in violation
or breach of any of the provisions of the Organizational Documents, except for such violations or breaches which, in the aggregate, will
not have a Material Adverse Effect on Buyippee.
2.4 Authorization and Validity
of this Agreement.
This Agreement and each of
the Transaction Agreements constitute the legal, valid and binding obligation of each person or entity who is a party thereto (other than
ENMI), enforceable against each such person or entity in accordance with its terms, except as such enforcement is limited by general equitable
principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally. Each Buyippee
shareholder has all requisite legal capacity to execute and deliver this Agreement and the Transaction Agreements to which he or she is
a party, and to perform its, his or her obligations hereunder and thereunder. The execution and delivery by each of Buyippee and each
of the Shareholders of this Agreement and the Transaction Agreements (to the extent either is a party thereto), and the consummation of
the transactions contemplated herein and therein (the “Transactions”) have been authorized by all necessary corporate or other
action on the part of Buyippee and each of the Shareholders. This Agreement and the Transaction Agreements have been duly executed and
delivered by the parties thereto (other than ENMI).
2.5 No Violation.
Neither the execution nor
delivery of this Agreement or the Transaction Agreements, nor the consummation or performance of any of the Transactions by Buyippee or
the Shareholders will directly or indirectly:
(i) violate or conflict with
any provision of the Organizational Documents of Buyippee; (B) result in (with or without notice or lapse of time) a violation or breach
of, or conflict with or constitute a default or result in the termination or in a right of termination or cancellation of, or accelerate
the performance required by, or require notice under, any agreement, promissory note, lease, instrument or arrangement to which Buyippee
or any of its assets are bound or result in the creation of any Liens upon Buyippee or any of its assets; (C) violate any order, writ,
judgment, injunction, ruling, award or decree of any Governmental Body; (“Governmental Body”); (D) violate any statute, law
or regulation of any jurisdiction as such statute, law or regulation that relates to the Shareholders or Buyippee or any of the assets
of Buyippee; or (E) result in cancellation, modification, revocation or suspension of any permits, licenses, registrations, consents,
approvals, authorizations or certificates issued or granted by any Governmental Body which are held by or granted to the Shareholders
or Buyippee or which are necessary for the conduct of Buyippee’s business; or
(ii) to the knowledge of Buyippee
or any of the Shareholders, cause Buyippee to become subject to, or to become liable for the payment of, any Tax (as hereinafter defined)
or cause any of the assets owned by Buyippee to be reassessed or revalued by any taxing authority or other Governmental Body.
None of Buyippee or the Shareholders
is or will be required to give any notice to or obtain any approval, consent, ratification, waiver or other authorization (a “Consent”)
from any person or entity (including, without limitation, any Governmental Body) in connection with (i) the execution and delivery of
this Agreement or any of the Transaction Agreements, or (ii) the consummation or performance of any of the Transactions.
2.6 Capitalization and
Related Matters.
(a) Capitalization. Buyippee has issued and outstanding One
Hundred shares of common stock. Except as set forth in the preceding sentence, no other class of capital stock or other security of Buyippee
is authorized, issued, reserved for issuance or outstanding. The Shareholders, as of the Closing Date, are the lawful, record and beneficial
owners of the number of Buyippee Shares of Common Stock set forth opposite each Seller’s name on Annex A attached hereto.
The Shareholders have, as of the date hereof and as of the Closing Date, valid and marketable title to their respective Shares, free and
clear of all Liens (including, without limitation, any claims of spouses under applicable community property laws) and are the lawful,
record and beneficial owners of all of the Shares. Except as is issued to and held by the Shareholders or Buyippee, no other class of
capital stock or other security of Buyippee, as applicable, is authorized, issued, reserved for issuance or outstanding. At the Closing,
ENMI will be vested with good and marketable title to the Shares, free and clear of all Liens (including, without limitation, any claims
of spouses under applicable community property laws). No legend or other reference to any purported Lien appears upon any certificate
representing the Shares. Each of the Shares has been duly authorized and validly issued and is fully paid and nonassessable. None of the
outstanding capital or other securities of Buyippee was issued, redeemed or repurchased in violation of the Securities Act of 1933, as
amended (the “Securities Act”), or any other securities or “blue sky” laws.
(b) No Redemption Requirements.
There are no authorized or outstanding options, warrants, equity securities, calls, rights, commitments or agreements of any character
by which Buyippee or any of the Shareholders is obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any shares
of capital stock or other securities of Buyippee There are no outstanding contractual obligations (contingent or otherwise) of Buyippee
to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, Buyippee
or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.
2.7 Compliance with Laws
and Other Instruments.
Except as would not have a
Material Adverse Effect, the business and operations of Buyippee has been and are being conducted in accordance with all applicable foreign,
federal, provincial and local laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations
and awards of all courts and governmental agencies and instrumentalities. There are no permits, bonuses, registrations, consents, approvals,
authorizations, certificates, or any waiver of the foregoing, which are required to be issued or granted by a Governmental Body for the
conduct of the Business as presently conducted or the ownership of the assets of Buyippee Except as would not have a Material Adverse
Effect, Buyippee is not, and has not received notice alleging that it is, in violation of, or (with or without notice or lapse of time
or both) in default under, or in breach of, any term or provision of the Organizational Documents or of any indenture, loan or credit
agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment,
obligation or arrangement to which Buyippee is a party or by which any of Buyippee’s properties, assets or rights are bound or affected.
To the knowledge of Buyippee, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation
to which Buyippee is a party is (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof.
Buyippee is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of Buyippee, any event
or circumstance relating to Buyippee that materially and adversely affects in any way its business, properties, assets or prospects or
that prohibits Buyippee from entering into this Agreement and the Transaction Agreements or would prevent or make burdensome its performance
of or compliance with all or any part of this Agreement, the Transaction Agreements or the consummation of the Transactions contemplated
hereby or thereby.
2.8 Certain Proceedings.
There are no outstanding or
pending preceding that has been commenced against or involving Buyippee or any of its assets and, to the knowledge of Buyippee and the
Shareholders, no matters of the foregoing nature are contemplated or threatened. None of Buyippee or the Shareholders have been charged
with, and is not threatened with, or under any investigation with respect to, any allegation concerning any violation of any provision
of any federal, provincial, local or foreign law, regulation, ordinance, order or administrative ruling, and is not in default with respect
to any order, writ, injunction or decree of any Governmental Body.
2.9 No Brokers or Finders.
None of Buyippee, the Shareholders,
or any officer, director, independent contractor, consultant, agent or employee of Buyippee has agreed to pay, or has taken any action
that will result in any person or entity becoming obligated to pay or entitled to receive, any investment banking, brokerage, finder’s
or similar fee or commission in connection with this Agreement or the Transactions. Buyippee and the Shareholders shall jointly and severally
indemnify and hold ENMI harmless against any liability or expense arising out of, or in connection with, any such claim.
2.10 Title to and Condition
of Properties.
Buyippee has good, valid and
marketable title to all of its properties and assets (whether real, personal or mixed, and whether tangible or intangible) reflected as
owned in its books and records, free and clear of all Liens. Buyippee owns or holds under valid leases or other rights to use all real
property, plants, machinery, equipment and all assets necessary for the conduct of its business as presently conducted, except where the
failure to own or hold such property, plants, machinery, equipment and assets would not have a Material Adverse Effect on Buyippee No
Person other than Buyippee owns or has any right to the use or possession of the assets used in Buyippee’s business. The material
buildings, plants, machinery and equipment necessary for the conduct of the business of Buyippee as presently conducted are structurally
sound, are in good operating condition and repair and are adequate for the uses to which they are being put or would be put in the Ordinary
Course of Business, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment is in need of maintenance
or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.
2.11 Absence of Undisclosed
Liabilities.
Buyippee has no debt, obligation
or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether asserted or unasserted, whether due or to become
due, whether or not known to Buyippee) arising out of any transaction entered into prior to the Closing Date or any act or omission prior
to the Closing Date which individually or taken together would constitute a Material Adverse Effect on Buyippee and have no debt, obligation
or liability to each other or any of the Shareholders or their affiliates, except to the extent specifically set forth on or reserved
against on the Balance Sheet of Buyippee
The financial statements are
consistent with the books and records of Buyippee and fairly present in all material respects the financial condition, assets and liabilities
of Buyippee, as applicable, taken as a whole, as of the dates and periods indicated, and were prepared in accordance with GAAP (except
as otherwise indicated therein or in the notes thereto).
2.12 Changes.
Buyippee has not, since the
date of its incorporation:
(a) Ordinary Course of
Business. Conducted its business or entered into any transaction other than in the Ordinary Course of Business, except for this Agreement.
(b) Adverse Changes.
Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects which would have a Material Adverse Effect;
(c) Loans. Made any
loans or advances to any Person other than travel advances and reimbursement of expenses made to employees, officers and directors in
the Ordinary Course of Business;
(d) Compensation and Bonuses.
Made any payments of any bonuses or compensation other than regular salary payments, or increase in the salaries, or payment on any of
its debts in the Ordinary Course of Business, to any of its shareholders, directors, officers, employees, independent contractors or consultants
or entry into by it of any employment, severance, or similar contract with any director, officer, or employee, independent contractor
or consultant; Adopted, or increased in the payments to or benefits under, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any of its employees;
(e) Liens. Created
or permitted to exist any Lien on any of its properties or assets other than Permitted Liens;
(f) Capital Stock.
Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option
to acquire any shares of its capital stock or any other of its securities or any Equity Security, or altered the term of any of its outstanding
securities or made any change in its outstanding shares of capital stock or its capitalization, whether by reason of reclassification,
recapitalization, stock split, combination, exchange or readjustment of shares, stock dividend or otherwise; changed its authorized or
issued capital stock; granted any stock option or right to purchase shares of its capital stock; issued any security convertible into
any of its capital stock; granted any registration rights with respect to shares of its capital stock; purchased, redeemed, retired, or
otherwise acquired any shares of its capital stock; declared or paid any dividend or other distribution or payment in respect of shares
of capital stock of any other entity;
(g) Dividends. Declared,
set aside, made or paid any dividend or other distribution to any of its shareholders;
(h) Material Contracts.
Terminated or modified any of its Material Contract except for termination upon expiration in accordance with the terms of such agreements,
a description of which is included in the Buyippee’s Disclosure Schedule;
(i) Claims. Released,
waived or cancelled any claims or rights relating to or affecting Buyippee in excess of $1,000 in the aggregate or instituted or settled
any Proceeding involving in excess of $10,000 in the aggregate;
(j) Discharged Liabilities.
Paid, discharged, cancelled, waived or satisfied any claim, obligation or liability in excess of $1,000 in the aggregate, except for liabilities
incurred prior to the date of this Agreement in the Ordinary Course of Business;
(k) Indebtedness. Created,
incurred, assumed or otherwise become liable for any Indebtedness or commit to any endeavor involving a commitment in excess of $1,000
in the aggregate, other than contractual obligations incurred in the Ordinary Course of Business;
(l) Guarantees. Guaranteed
or endorsed in a material amount any obligation or net worth of any Person;
(m) Acquisitions. Acquired
the capital stock or other securities or any ownership interest in, or substantially all of the assets of, any other Person;
(n) Accounting. Changed
its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than
as required by GAAP;
(o) Agreements. Entered
into any agreement, or otherwise obligated itself, to do any of the foregoing.
2.13 Material Contracts.
Buyippee has delivered to
ENMI, prior to the date of this Agreement, true, correct and complete copies of each of its Material Contracts.
(a) No Defaults. The
Material Contracts of Buyippee are valid and binding agreements of Buyippee, as applicable, and are in full force and effect and are enforceable
in accordance with their terms. Except as would not have a Material Adverse Effect, Buyippee is not in breach or default of any of its
Material Contracts to which it is a party and, to the knowledge of Buyippee, no other party to any of its Material Contracts is in breach
or default thereof. Except as would not have a Material Adverse Effect, no event has occurred or circumstance has existed that (with or
without notice or lapse of time) would (a) contravene, conflict with or result in a violation or breach of, or become a default or event
of default under, any provision of any of its Material Contracts or (b) permit Buyippee or any other Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any of its Material Contracts.
Buyippee has not received any notice and has no knowledge of any pending or threatened cancellation, revocation or termination of any
of its Material Contracts to which it is a party, and there are no renegotiations of, or attempts to renegotiate.
2.14 Tax Returns and Audits.
(a) Tax Returns. (a)
All material Tax Returns required to be filed by or on behalf of Buyippee have been timely filed and all such Tax Returns were (at the
time they were filed) and are true, correct and complete in all material respects; (b) all Taxes of Buyippee required to have been paid
(whether or not reflected on any Tax Return) have been fully and timely paid, except those Taxes which are presently being contested in
good faith or for which an adequate reserve for the payment of such Taxes has been established on Buyippee’s balance sheet; (c)
no waivers of statutes of limitation have been given or requested with respect to Buyippee in connection with any Tax Returns covering
Buyippee or with respect to any Taxes payable by it; (d) no Governmental Body in a jurisdiction where Buyippee does not file Tax Returns
has made a claim, assertion or threat to Buyippee that Buyippee is or may be subject to taxation by such jurisdiction; (e) Buyippee has
duly and timely collected or withheld, paid over and reported to the appropriate Governmental Body all amounts required to be so collected
or withheld for all periods under all applicable laws; (f) there are no Liens with respect to Taxes on the property or assets of Buyippee
other than Permitted Liens; (g) there are no Tax rulings, requests for rulings, or closing agreements relating to Buyippee for any period
(or portion of a period) that would affect any period after the date hereof; and (h) any adjustment of Taxes of Buyippee made by a Governmental
Body in any examination that Buyippee is required to report to the appropriate provincial, local or foreign taxing authorities has been
reported, and any additional Taxes due with respect thereto have been paid. No state of fact exists or has existed which would constitute
ground for the assessment of any tax liability by any Governmental Body. All Tax Returns filed by Buyippee are true, correct and complete.
(b) No Adjustments, Changes.
Neither Buyippee nor any other Person on behalf of Buyippee (a) has executed or entered into a closing agreement pursuant to Section 7121
of the Code or any predecessor provision thereof or any similar provision of provincial, local or foreign law; or (b) has agreed to or
is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of provincial, local or foreign law.
(c) No Disputes. There
is no pending audit, examination, investigation, dispute, proceeding or claim with respect to any Taxes of or Tax Return filed or required
to be filed by Buyippee, nor is any such claim or dispute pending or contemplated. Buyippee has made available to ENMI true, correct and
complete copies of all Tax Returns, examination reports and statements of deficiencies assessed or asserted against or agreed to by Buyippee
since June 8, 2021, and any and all correspondence with respect to the foregoing. Buyippee does not have any outstanding closing agreement,
ruling request, request for consent to change a method of accounting, subpoena or request for information to or from a Governmental Body
in connection with any Tax matter.
(d) No Tax Allocation,
Sharing. Buyippee is not a party to any Tax allocation or sharing agreement. Buyippee (a) has not been a member of a Tax Group filing
a consolidated income Tax Return under Section 1501 of the Code (or any similar provision of provincial, local or foreign law), and (b)
does not have any liability for Taxes for any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of provincial,
local or foreign law) as a transferee or successor, by contract or otherwise.
2.15 Material Assets.
The financial statements of
Buyippee reflect the material properties and assets (real and personal) owned or leased by them.
2.16 Insurance Coverage.
Buyippee has no insurance
or general liability policies maintained by Buyippee on its properties and assets.
2.17 Litigation; Orders.
There is no Proceeding (whether
federal, provincial, local or foreign) pending or, to the knowledge of Buyippee, threatened or appealable against or affecting Buyippee
or any of its properties, assets, business or employees. To the knowledge of Buyippee, there is no fact that might result in or form the
basis for any such Proceeding. Buyippee is not subject to any Orders and has not received any written opinion or memorandum or legal advice
from their legal counsel to the effect that Buyippee is exposed, from a legal standpoint, to any liability which would be material to
its business. Buyippee is not engaged in any legal action to recover monies due it or for damages sustained by any of them.
2.18 Licenses.
Except as would not have a
Material Adverse Effect, Buyippee possesses from the appropriate Governmental Body all licenses, permits, authorizations, approvals, franchises
and rights that are necessary for it to engage in its business as currently conducted and to permit it to own and use its properties and
assets in the manner in which it currently owns and uses such properties and assets (collectively, “PERMITS”). Except as would
not have a Material Adverse Effect, Buyippee has not received any written notice from any Governmental Body or other Person that there
is lacking any license, permit, authorization, approval, franchise or right necessary for Buyippee to engage in its business as currently
conducted and to permit Buyippee to own and use its properties and assets in the manner in which it currently owns and uses such properties
and assets. Except as would not have a Material Adverse Effect, the Permits are valid and in full force and effect. Except as would not
have a Material Adverse Effect, no event has occurred or circumstance exists that may (with or without notice or lapse of time): (a) constitute
or result, directly or indirectly, in a violation of or a failure to comply with any Permit; or (b) result, directly or indirectly, in
the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Permit. Buyippee has not received
any written notice from any Governmental Body or any other Person regarding: (a) any actual, alleged, possible or potential contravention
of any Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or
modification to, any Permit. All applications required to have been filed for the renewal of such Permits have been duly filed on a timely
basis with the appropriate Persons, and all other filings required to have been made with respect to such Permits have been duly made
on a timely basis with the appropriate Persons. All Permits are renewable by their terms or in the Ordinary Course of Business without
the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, all of
which have, to the extent due, been duly paid.
2.19 Interested party Transactions.
No officer, director or shareholder
of Buyippee or any Affiliate, Related Person or “associate” (as such term is defined in Rule 405 of the Commission under the
Securities Act) of any such Person, either directly or indirectly, (1) has an interest in any Person which (a) furnishes or sells services
or products which are furnished or sold or are proposed to be furnished or sold by Buyippee, or (b) purchases from or sells or furnishes
to, or proposes to purchase from, sell to or furnish Buyippee any goods or services; (2) has a beneficial interest in any contract or
agreement to which Buyippee is a party or by which it may be bound or affected; or (3) is a party to any material agreements, contracts
or commitments in effect as of the date hereof with Buyippee “Related Person” means: (i) with respect to a particular individual,
the individual’s immediate family which shall include the individual’s spouse, parents, children, siblings, mothers and fathers-in-law,
sons and daughters-in-law, and brothers and sisters-in-law; and (ii) with respect to a specified individual or entity, any entity or individual
that, directly or indirectly, controls, is controlled by, or is under common control with such specified entity or individual.
2.20 Governmental Inquiries.
Buyippee has made available
to ENMI a copy of each material written inspection report, questionnaire, inquiry, demand or request for information received by Buyippee
from (and the response of Buyippee thereto), and each material written statement, report or other document filed by Buyippee with, any
Governmental Body since June 8, 2021.
2.21 Bank Accounts and
Safe Deposit Boxes.
The Buyippee Disclosure Schedule
discloses the title and number of each bank or other deposit or financial account, and each lock box and safety deposit box used by Buyippee,
the financial institution at which that account or box is maintained and the names of the persons authorized to draw against the account
or otherwise have access to the account or box, as the case may be.
2.22 Intellectual Property.
Any Intellectual Property
Buyippee uses in its business as presently conducted is owned by Buyippee or properly licensed.
2.23 Stock Option Plans;
Employee Benefits.
(a) Buyippee does not have
any employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect
of services provided to Buyippee Buyippee has no commitment, whether formal or informal and whether legally binding or not, to create
any additional plan, arrangement or practice similar to the Approved Plans.
2.24 Employee Matters.
(a) No former or current employee
of Buyippee is a party to, or is otherwise bound by, any agreement or arrangement (including, without limitation, any confidentiality,
non-competition or proprietary rights agreement) that in any way adversely affected, affects, or will affect (i) the performance of his,
her or its duties to Buyippee, or (ii) the ability of Buyippee to conduct its business.
(b) Buyippee has no employees,
directors, officers, consultants, independent contractors, representatives or agents whose contract of employment or engagement cannot
be terminated by three months’ notice. (c) Buyippee is not required or obligated to pay, and since the date if its incorporation,
have not paid any moneys to or for the benefit of, any director, officer, employee, consultant, independent contractor, representative
or agent of Buyippee (d) Buyippee is in compliance with all applicable laws respecting employment and employment practices, terms and
conditions or employment and wages and hours, and is not engaged in any unfair labor practice. There is no labor strike, dispute, shutdown
or stoppage actually pending or, to the knowledge of Buyippee or the Shareholders, threatened against or affecting Buyippee
2.25 Environmental and
Safety Matters.
Except as would not have a
Material Adverse Effect:
(a) Buyippee has at all times
been and is in compliance with all Environmental Laws and Orders applicable to Buyippee, as applicable.
(b) There are no Proceedings
pending or, to the knowledge of Buyippee, threatened against Buyippee alleging the violation of any Environmental Law or Environmental
Permit applicable to Buyippee or alleging that Buyippee is a potentially responsible party for any environmental site contamination. None
of Buyippee or the Shareholders are aware of, or has ever received notice of, any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance, or which may give rise to
any common law or legal liability, or otherwise form the basis of any claim, action, suit, proceeding, hearing or investigation, based
on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant, contaminant, or hazardous or toxic material or waste.
(c) Neither this Agreement
nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of
any Governmental Body or third Persons under any Environmental Laws applicable to Buyippee
2.26 Material Customers.
Since the date of its incorporation,
none of the Material Customers (as hereinafter defined) of Buyippee has notified any of Buyippee or the Shareholders of their intent to
terminate their business with Buyippee business because of any dissatisfaction on the part of any such person or entity. The Transactions
have not caused any of the Material Customers of Buyippee to terminate or provide notice of their intent or threaten to terminate their
business with Buyippee or to notify Buyippee or the Shareholders of their intent not to continue to do such business with Buyippee after
the Closing. As used herein, “Material Customers” means those customers from whom Buyippee derives annual revenues in excess
of US $5,000.
2.27 Inventories.
All inventories of Buyippee
are of good, usable and merchantable quality in all material respects, and, except as set forth in the Buyippee Disclosure Schedule, do
not include a material amount of obsolete or discontinued items. Except as set forth in the Buyippee Disclosure Schedule, (a) all such
inventories are of such quality as to meet in all material respects the quality control standards of Buyippee, (b) all such inventories
are recorded on the books at the lower of cost or market value determined in accordance with GAAP, and (c) no write-down in inventory
has been made or should have been made pursuant to GAAP during the past two years.
2.28 Money Laundering Laws.
The operations of Buyippee
are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the money
laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any Governmental Body (collectively, the “Money Laundering Laws”) and no
Proceeding involving Buyippee with respect to the Money Laundering Laws is pending or, to the knowledge of Buyippee, threatened.
2.29 Disclosure.
(a) Any information set forth
in this Agreement, the Buyippee Disclosure Schedule, or the Transaction Agreements shall be true, correct and complete in all material
respects.
(b) No statement, representation
or warranty of Buyippee or the Shareholders in this Agreement (taken with the Schedules) or the Transaction Agreements or any exhibits
or schedules thereto contain any untrue statement of a material fact or omits to state a material fact necessary to make the statements
herein or therein, taken as a whole, in light of the circumstances in which they were made, not misleading.
(c) Except as set forth in
the Buyippee Disclosure Schedule, the Shareholders and Buyippee have no knowledge of any fact that has specific application to Buyippee
(other than general economic or industry conditions) and that adversely affects the assets or the business, prospects, financial condition,
or results of operations of Buyippee.
(d) In the event of any inconsistency
between the statements in the body of this Agreement and those in the Schedules (other than an exception expressly set forth as such in
the Schedules with respect to a specifically identified representation or warranty), the statements in the Schedules shall control.
(e) The books of account,
minute books and stock record books of Buyippee, all of which have been made available to ENMI, are complete and accurate and have been
maintained in accordance with sound business practices. Without limiting the generality of the foregoing, the minute books of Buyippee
contain complete and accurate records of all meetings held, and corporate action taken, by the shareholders, the boards of directors,
and committees of the boards of directors of Buyippee, as applicable, and no meeting of any such shareholders, board of directors, or
committee has been held for which minutes have not been prepared and are not contained in such minute books.
2.30 Finders and Brokers.
(a) None of Buyippee or the
Shareholders or any Person acting on behalf of Buyippee or the Shareholders has engaged any finder, broker, intermediary or any similar
Person in connection with the Exchange.
(b) None of Buyippee the Shareholders
nor any Person acting on behalf of Buyippee or the Shareholders has entered into a contract or other agreement that provides that a fee
shall be paid to any Person or Entity if the Exchange is consummated.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ENMI
ENMI hereby represents and
warrants to the Shareholders as of the date hereof:
3.1 Organization; Good
Standing.
ENMI is duly incorporated,
validly and in good standing existing under the laws of Nevada, has all requisite authority and power (corporate and other), governmental
licenses, authorizations, consents and approvals to carry on its business as presently conducted and as contemplated to be conducted,
to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the
provisions hereof except where the failure to be in good standing or to have such governmental licenses, authorizations, consents and
approvals will not, in the aggregate, either (i) have a Material Adverse Effect on the business, assets or financial condition of ENMI,
or (ii) impair the ability of ENMI to perform its material obligations under this Agreement. ENMI is duly qualified, licensed or domesticated
as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased
requires such qualification, licensing or domestication, except where the failure to be so qualified, licensed or domesticated will not
have a Material Adverse Effect.
3.2 ENMI Common Stock and
Series B Preferred Stock.
ENMI
is authorized to issue: (i) Four Billion and Four Hundred Fifty Million (4,450,000,000) shares of common stock, par value $0.001, of which
831,310,013 are issued and outstanding as of March 27, 2024; and (ii) Five Million (5,000,000) shares of Series A Convertible Preferred
Stock, par value $0.001, of which 3,920,001 are issued and outstanding; and (iii) Ten Million (10,000,000) shares of Series B Convertible
Preferred Stock, par value $0.001, of which 100,000 shares are issued and outstanding. The Acquisition Shares, when issued in connection
with this Agreement and the other Transactional Agreements, will be duly authorized, validly issued, fully paid and nonassessable. ENMI
will take all reasonable efforts subsequent to the Closing to effect and amendment to its Articles of Incorporation, as amended, to effect
an increase in its authorized shares of Common Stock to issue and deliver to the Shareholders any portion of the Acquisition Shares not
delivered at Closing to the Shareholders.
3.3 Authority; Binding
Nature of Agreements.
(a) The execution, delivery
and performance of this Agreement, the Transactional Agreements, and all other agreements and instruments contemplated to be executed
and delivered by ENMI in connection herewith have been duly authorized by all necessary corporate action on the part of ENMI and its board
of directors.
(b) This Agreement, the Transactional
Agreements, and all other agreements and instruments contemplated to be executed and delivered by ENMI constitute the legal, valid and
binding obligation of ENMI, enforceable against ENMI in accordance with their terms, except to the extent that enforceability may be limited
by applicable bankruptcy, Exchange, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally
and by general principles of equity regardless of whether such enforceability is considered in a proceeding in law or equity.
(c) There is no pending Proceeding,
and, to ENMI’s knowledge, no Person has threatened to commence any Proceeding that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Exchange or ENMI’s ability to comply with or perform its obligations
and covenants under the Transactional Agreements, and, to the knowledge of ENMI, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such
Proceeding.
3.4 Non-contravention;
Consents.
The execution and delivery
of this Agreement and the other Transactional Agreements, and the consummation of the Exchange, by ENMI will not, directly or indirectly
(with or without notice or lapse of time):
(a) contravene, conflict with
or result in a material violation of (i) ENMI’s Certificate of Incorporation or Bylaws, or (ii) any resolution adopted by ENMI Board
or any committee thereof or the stockholders of ENMI;
(b) to the knowledge of ENMI,
contravene, conflict with or result in a material violation of, or give any Governmental Body the right to challenge the Exchange or to
exercise any remedy or obtain any relief under, any legal requirement or any Order to which ENMI or any material assets owned or used
by it are subject;
(c) to the knowledge of ENMI,
cause any material assets owned or used by ENMI to be reassessed or revalued by any taxing authority or other Governmental Body;
(d) to the knowledge of ENMI,
contravene, conflict with or result in a material violation of any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by ENMI or that otherwise
relates to ENMI’s business or to any of the material assets owned or used by ENMI, where such contraventions, conflict, violation,
revocation, withdrawal, suspension, cancellation, termination or modification would have a Material Adverse Effect on ENMI;
(e) contravene, conflict with
or result in a material violation or material breach of, or material default under, any Contract to which ENMI is a party;
(f) give any Person the right
to any payment by ENMI or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants,
rights, severance payments or other contingent obligations of any nature whatsoever of ENMI in favor of any Person, in any such case as
a result of the Exchange; or
(g) result in the imposition
or creation of any material Lien upon or with respect to any material asset owned or used by ENMI.
Except for Consents, filings
or notices required under the state and federal securities laws or any other laws or regulations or as otherwise contemplated in this
Agreement and the other Transactional Agreements, ENMI will not be required to make any filing with or give any notice to, or obtain any
Consent from, any Person in connection with the execution and delivery of this Agreement and the other Transactional Agreements or the
consummation or performance of the Exchange.
3.5 Finders and Brokers.
(a) Neither ENMI nor any Person
acting on behalf of ENMI has engaged any finder, broker, intermediary or any similar Person in connection with the Exchange.
(b) ENMI has not entered into
a contract or other agreement that provides that a fee shall be paid to any Person or Entity if the Exchange is consummated.
3.6 Compliance with Applicable
Law.
Results of operations or financial
condition of ENMI, to ENMI’s knowledge ENMI holds all Governmental Authorizations necessary for the lawful conduct of its business
under and pursuant to, and the business of ENMI is not being conducted in violation of, any Governmental Authorization applicable to ENMI.
3.8 Complete Copies of
Requested Reports.
ENMI has delivered or made
available true and complete copies of each document that has been reasonably requested by Buyippee or the Shareholders.
3.9 Full Disclosure.
(a) Neither this Agreement
(including all Schedules and exhibits hereto) nor any of the Transactional Agreements contemplated to be executed and delivered by ENMI
in connection with this Agreement contains any untrue statement of material fact; and none of such documents omits to state any material
fact necessary to make any of the representations, warranties or other statements or information contained therein not misleading.
(b) All of the information
set forth in the prospectus and all other information regarding ENMI and the business, condition, assets, liabilities, operations, financial
performance, net income and prospects of either that has been furnished to Buyippee or the Shareholders by or on behalf of ENMI or any
of the ENMI’s Representatives, is accurate and complete in all material respects.
ARTICLE IV.
COVENANTS OF BUYIPPEE
4.1 Access and Investigation.
Buyippee shall ensure that,
at all times during the Pre-Closing Period:
(a) Buyippee and their Representatives
provide ENMI and its Representatives access, at reasonable times and with twenty-four (24) hours’ notice from ENMI to Buyippee,
to all of the premises and assets of Buyippee, to all existing books, records, Tax Returns, work papers and other documents and information
relating to Buyippee, and to responsible officers and employees of Buyippee, and Buyippee and its Representatives provide ENMI and its
Representatives with copies of such existing books, records, Tax Returns, work papers and other documents and information relating to
Buyippee as ENMI may request in good faith;
(b) Each of Buyippee and its
Representatives confer regularly with ENMI upon its request, concerning operational matters and otherwise report regularly (not less than
semi-monthly and as ENMI may otherwise request) to ENMI and discuss with ENMI and its Representatives concerning the status of the business,
condition, assets, liabilities, operations, and financial performance of Buyippee, and promptly notify ENMI of any material change in
the business, condition, assets, liabilities, operations, and financial performance of Buyippee, or any event reasonably likely to lead
to any such change.
4.2 Operation of the Business.
Buyippee shall ensure that,
during the Pre-Closing Period:
(a) It conducts its operations
in the Ordinary Course of Business and in the same manner as such operations have been conducted prior to the date of this Agreement;
(b) It uses its commercially
reasonable efforts to preserve intact its current business organization, keep available and not terminate the services of its current
officers and employees and maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees,
employees and other Persons having business relationships with Buyippee;
(c) It does not declare, accrue,
set aside or pay any dividend or make any other distribution in respect of any shares of its capital stock, and does not repurchase, redeem
or otherwise reacquire any shares of its capital stock or other securities, except with respect to the repurchase of shares of Buyippee
Common Stock upon termination of employees at the original purchase price pursuant to agreements
existing at the date hereof;
(d) It does not sell or otherwise
issue (or grant any warrants, options or other rights to purchase) any shares of capital stock or any other securities, except the issuance
of Buyippee Common Stock pursuant to option grants to employees made under the Option Plan
in the Ordinary Course of Business;
(e) It does not amend its
charter document, corporate governance document or other Organizational Documents, and does not affect or become a party to any recapitalization,
reclassification of shares, stock split, reverse stock split or similar transaction;
(f) It does not form any subsidiary
or acquire any equity interest or other interest in any other Entity;
(g) It does not establish
or adopt any Employee Benefit Plan, and does not pay any bonus or make any profit sharing or similar payment to, or increase the amount
of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or
employees;
(h) It does not change any
of its methods of accounting or accounting practices in any respect;
(i) It does not make any Tax
election;
(j) It does not commence or
take any action or fail to take any action which would result in the commencement of any Proceeding;
(k) It does not (i) acquire,
dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or other assets, other than in the Ordinary Course of Business;
(ii) incur, assume or prepay any indebtedness, Indebtedness or obligation or any other liabilities
or issue any debt securities, other than in the Ordinary Course of Business; (iii) assume,
guarantee, endorse for the obligations of any other person, other than in the Ordinary Course of Business; (iv) make any loans, advances
or capital contributions to, or investments in, any other Person, other than in the Ordinary Course of Business; or (v) fail to maintain
insurance consistent with past practices for its business and property;
(l) It pays all debts and
Taxes, files all of its Tax Returns (as provided herein) and pays or performs all other obligations, when due;
(m) It does not enter into
or amend any agreements pursuant to which any other Person is granted distribution, marketing or other rights of any type or scope with
respect to any of its services, products or technology;
(n) It does not hire any new
officer-level employee;
(o) It does not revalue any
of its assets, including, without limitation, writing down the value of inventory or writing off notes or accounts receivable, except
as required under GAAP and in the Ordinary Course of Business;
(p) Except as otherwise contemplated
hereunder, it does not enter into any transaction or take any other action outside the Ordinary Course of Business; and
(q) It does not enter into
any transaction or take any other action that likely would cause or constitute a Breach of any representation or warranty made by it in
this Agreement.
4.3 Filings and Consents;
Cooperation.
Buyippee shall ensure that:
(a) Each filing or notice
required to be made or given (pursuant to any applicable Law, Order or contract, or otherwise) by Buyippee or the Shareholders in connection
with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange,
is made or given as soon as possible after the date of this Agreement;
(b) Each Consent required
to be obtained (pursuant to any applicable Law, Order or contract, or otherwise) by Buyippee or the Shareholders in connection with the
execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange,
is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date;
(c) It promptly delivers to
ENMI a copy of each filing made, each notice given and each Consent obtained by Buyippee during the Pre-Closing Period; and
(d) During the Pre-Closing
Period, it and its Representatives cooperate with ENMI and ENMI’s Representatives, and prepare and make available such documents
and take such other actions as ENMI may request in good faith, in connection with any filing, notice or Consent that ENMI is required
or elects to make, give or obtain.
4.4 Notification; Updates
to Disclosure Schedules.
(a) During the Pre-Closing
Period, Buyippee shall promptly notify ENMI in writing of:
(i) the discovery by it of
any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement which is contrary to any
representation or warranty made by it in this Agreement or in any of the other Transactional Agreements, or that would upon the giving
of notice or lapse of time, result in any of its representations and warranties set forth in this agreement to become untrue or otherwise
cause any of the conditions of Closing set forth in Article VI or Article VII not to be satisfied;
(ii) any event, condition,
fact or circumstance that occurs, arises or exists after the date of this Agreement (except as a result of actions taken pursuant to the
express written consent of ENMI) and that is contrary to any representation or warranty made by it in this Agreement, or that would upon
the giving of notice or lapse of time, result in any of its representations and warranties set forth in this agreement to become untrue
or otherwise cause any of the conditions of Closing set forth in Article VI or Article VII not to be satisfied;
(b) If any event, condition,
fact or circumstances that is required to be disclosed pursuant to Section 4.4(a) requires any material change in the Buyippee Disclosure
Schedule, or if any such event, condition, fact or circumstance would require such a change assuming the Buyippee Disclosure Schedule
were dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstances, then Buyippee, as
applicable, shall promptly deliver to ENMI an update to the Buyippee Disclosure Schedule specifying such change (a “Disclosure Schedule
Update”).
(c) It will promptly update
any relevant and material information provided to ENMI after the date hereof pursuant to the terms of this Agreement.
4.5 Commercially Reasonable
Efforts.
During the Pre-Closing Period,
Buyippee shall use its commercially reasonable efforts to cause the conditions set forth in Article VI and Article VII to be satisfied
on a timely basis and so that the Closing can take place on or before June 21, 2020, in accordance with Section 1.5, and shall not take
any action or omit to take any action, the taking or omission of which would or could reasonably be expected to result in any of the representations
and warranties of Buyippee set forth in this Agreement becoming untrue, or in any of the conditions of Closing set forth in Article VI
or Article VII not being satisfied.
4.6 Confidentiality; Publicity.
Buyippee shall ensure that:
(a) It and its Representatives
keep strictly confidential the existence and terms of this Agreement prior to the issuance or dissemination of any mutually agreed upon
press release or other disclosure of the Exchange; and
(b) neither it nor any of
its Representatives issues or disseminates any press release or other publicity or otherwise makes any disclosure of any nature (to any
of its suppliers, customers, landlords, creditors or employees or to any other Person) regarding any of the Exchange; except in each case
to the extent that it is required by law to make any such disclosure regarding such transactions or as separately agreed by the parties;
provided, however, that if it is required by law to make any such disclosure, Buyippee advises ENMI, at least five business days before
making such disclosure, of the nature and content of the intended disclosure.
ARTICLE V.
COVENANTS OF ENMI
5.1 Notification.
During the Pre-Closing Period,
ENMI shall promptly notify Buyippee in writing of:
(a) the discovery by ENMI
of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement which is contrary to
any representation or warranty made by ENMI in this Agreement; and,
(b) any event, condition,
fact or circumstance that occurs, arises or exists after the date of this Agreement (except as a result of actions taken pursuant to the
written consent of Buyippee) and that is contrary to any representation or warranty made by ENMI in this Agreement;
5.2 Filings and Consents;
Cooperation.
ENMI shall ensure that:
(a) Each filing or notice
required to be made or given (pursuant to any applicable Law, Order or contract, or otherwise) by ENMI in connection with the execution
and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is made or
given as soon as possible after the date of this Agreement;
(b) Each Consent required
to be obtained (pursuant to any applicable Law, Order or contract, or otherwise) by ENMI in connection with the execution and delivery
of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is obtained as soon as
possible after the date of this Agreement and remains in full force and effect through the Closing Date;
(c) ENMI promptly delivers
to Buyippee and a copy of each filing made, each notice given and each Consent obtained by ENMI during the Pre-Closing Period; and
(d) During the Pre-Closing
Period, ENMI and its Representatives cooperate with Buyippee and their Representatives, and prepare and make available such documents
and take such other actions as Buyippee may request in good faith, in connection with any filing, notice or Consent that Buyippee is required
or elects to make, give or obtain.
5.3 Commercially Reasonable
Efforts.
During the Pre-Closing Period,
ENMI shall use its commercially reasonable efforts to cause the conditions set forth in Article VI and Article VII to be satisfied on
a timely basis and so that the Closing can take place on or before July 31, 2024, o r as soon
thereafter as is reasonably practical, in accordance with Section 1.5, and shall not take any action or omit to take any action, the taking
or omission of which would or could reasonably be expected to result in any of the representations and warranties or ENMI set forth in
this Agreement becoming untrue or in any of the conditions of closing set forth in Article VI or Article VII not being satisfied.
5.4 Disclosure of Confidential
Information.
(a) Each of ENMI and the Shareholders
acknowledges and agrees that it may receive Confidential Information in connection with this Transaction including without limitation,
the Buyippee Disclosure Schedule and any information disclosed during the due diligence process, the public disclosure of which will harm
the disclosing party’s business. The Receiving Party may use Confidential Information only in connection with the Transaction. The
results of the due diligence review may not be used for any other purpose other than in connection with the Transaction. Except as expressly
provided in this Agreement, the Receiving Party shall not disclose Confidential Information to anyone without the Disclosing Party’s
prior written consent. The Receiving Party shall take all reasonable measures to avoid disclosure, dissemination or unauthorized use of
Confidential Information, including, at a minimum, those measures it takes to protect its own confidential information of a similar nature.
The Receiving Party shall not export any Confidential Information in any manner contrary to the export regulations of the governmental
jurisdiction to which it is subject.
(b) The Receiving Party may
disclose Confidential Information as required to comply with binding orders of governmental entities that have jurisdiction over it, provided
that the Receiving Party (i) gives the Disclosing Party reasonable notice (to the extent permitted by law) to allow the Disclosing Party
to seek a protective order or other appropriate remedy, (ii) discloses only such information as is required by the governmental entity,
and (iii) uses commercially reasonable efforts to obtain confidential treatment for any Confidential Information so disclosed.
(c) All Confidential Information
shall remain the exclusive property of the Disclosing Party. The Disclosing Party’s disclosure of Confidential Information shall
not constitute an express or implied grant to the Receiving Party of any rights to or under the Disclosing Party’s patents, copyrights,
trade secrets, trademarks or other intellectual property rights.
(d) The Receiving Party shall
notify the Disclosing Party immediately upon discovery of any unauthorized use or disclosure of Confidential Information or any other
breach of this Agreement by the Receiving Party. The Receiving Party shall cooperate with the Disclosing Party in every reasonable way
to help the Disclosing Party regain possession of such Confidential Information and prevent its further unauthorized use.
(e) The Receiving Party shall
return or destroy all tangible materials embodying Confidential Information (in any form and including, without limitation, all summaries,
copies and excerpts of Confidential Information) promptly following the Disclosing Party’s written request; provided, however, that,
subject to the provisions of this Agreement, the Receiving Party may retain one copy of such materials in the confidential, restricted
access files of its legal department for use only in the event a dispute arises between the parties related to the Transaction and only
in connection with that dispute. At the Disclosing Party’s option, the Receiving Party shall provide written certification of its
compliance with this Section.
5.5 Indemnification.
(a) Each of Buyippee and the
Shareholders, jointly and severally, each shall defend, indemnify and hold harmless ENMI, and its respective employees, officers, directors,
stockholders, controlling persons, affiliates, agents, successors and assigns (collectively, the “ENMI Indemnified Persons”),
and shall reimburse the ENMI Indemnified Person, for, from and against any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys’ fees) or diminution of value, whether or not involving a third-party claim (collectively,
“Damages”), directly or indirectly, relating to, resulting from or arising out of:
(i) any untrue representations,
misrepresentations or breach of warranty by or of Buyippee or the Shareholders contained in or pursuant to this Agreement, and the Buyippee
Disclosure Schedule; (ii) any breach or nonfulfillment of any covenant, agreement or other obligation by or of Buyippee or the Shareholders
(only to the extent made or occurring prior to or at the Closing) contained in or pursuant to this Agreement, the Transaction Agreements
executed by Buyippee or any of the Shareholders in their individual capacity, the Buyippee Disclosure Schedule, or any of the other agreements,
documents, schedules or exhibits to be entered into by Buyippee or any of the Shareholders in their individual capacity pursuant to or
in connection with this Agreement;
(iii) all of Pre-Closing liabilities
of Buyippee or the Shareholders; and
(iv) any liability, claim,
action or proceeding of any kind whatsoever, whether instituted or commenced prior to or after the Closing Date, which directly or indirectly
relates to, arises or results from, or occurs in connection with facts or circumstances relating to the conduct of business of Buyippee
or the assets of Buyippee, or events or circumstances existing on or prior to the Closing Date.
(b) ENMI shall defend, indemnify
and hold harmless Buyippee and its respective affiliates, agents, successors and assigns (collectively, the “Buyippee Indemnified
Persons”), and shall reimburse the Buyippee Indemnified Persons, for, from and against any Damages, directly or indirectly, relating
to, resulting from or arising out of:
(i) any untrue representation,
misrepresentation or breach of warranty by or of ENMI contained in or pursuant to this Agreement;
(ii) any breach or nonfulfillment
of any covenant, agreement or other obligations by or of ENMI contained in or pursuant to this Agreement, the Transaction Agreements or
any other agreements, documents, schedules or exhibits to be entered into or delivered to pursuant to or in connection with this Agreement.
(c) Promptly after receipt
by an indemnified Party under Section 5.6 of this Agreement of notice of a claim against it (“Claim”), such indemnified Party
shall, if a claim is to be made against an indemnifying Party under such Section, give notice to the indemnifying Party of such Claim,
but the failure to so notify the indemnifying Party will not relieve the indemnifying Party of any liability that it may have to any indemnified
Party, except to the extent that the indemnifying Party demonstrates that the defense of such action is prejudiced by the indemnified
Party’s failure to give such notice.
(d) A claim for indemnification
for any matter not involving a third-party claim may be asserted by notice to the Party from whom indemnification is sought.
5.6. Reverse Stock
Split. During the Pre-Closing Period, ENMI shall prepare for filing with the relevant governmental agencies such documents as required
to effectuate a reverse stock split of its common stock whereby each 1000 shares of ENMI common stock shall be exchanged for 1 share of
ENMI common stock. ENMI shall use commercially reasonable efforts to file the relevant documents with the Nevada Secretary of State on
or prior to Closing.
ARTICLE VI.
CLOSING CONDITIONS OF ENMI
ENMI’s obligations to
affect the Closing and consummate the Exchange are subject to the satisfaction of each of the following conditions:
6.1 Accuracy of Representations
and Warranties.
The representations and warranties
of Buyippee and the Shareholders in this Agreement shall have been true and correct as of the date of this Agreement and shall be true
and correct on and as of the Closing. Buyippee and the Shareholders shall have performed all obligations in this Agreement required to
be performed or observed by them on or prior to the Closing.
6.2 Additional Conditions
to Closing.
(a) All necessary approvals
under federal and state securities laws and other authorizations relating to the issuance of the Acquisition Shares and the transfer of
the Shares shall have been received.
(b) No preliminary or permanent
injunction or other order by any federal, state or foreign court of competent jurisdiction which prohibits the consummation of the Exchange
shall have been issued and remain in effect. No statute, rule, regulation, executive order, stay, decree, or judgment shall have been
enacted, entered, issued, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation
of the Exchange. All authorizations, consents, orders or approvals of, or declarations or filings with, and all expirations of waiting
periods imposed by, any Governmental Body which are necessary for the consummation of the Exchange, other than those the failure to obtain
which would not materially adversely affect the consummation of the Exchange or in the aggregate have a material adverse effect on ENMI
and its subsidiaries, taken as a whole, shall have been filed, occurred or been obtained (all such permits, approvals, filings and consents
and the lapse of all such waiting periods being referred to as the “Requisite Regulatory Approvals”) and all such Requisite
Regulatory Approvals shall be in full force and effect.
(c) There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Exchange, by any Governmental
Body which, in connection with the grant of a Requisite Regulatory Approval, imposes any material condition or material restriction upon
ENMI or its subsidiaries or Buyippee, including, without limitation, requirements relating to the disposition of assets, which in any
such case would so materially adversely impact the economic or business benefits of the Exchange as to render inadvisable the consummation
of the Exchange.
6.3 Performance of Agreements.
Buyippee or the Shareholders,
as the case may be, shall have executed and delivered each of the agreements, instruments and documents required to be executed and delivered,
and performed all actions required to be performed by Buyippee or any of the Shareholders, as the case may be, pursuant to this Agreement,
except as ENMI has otherwise consented in writing.
6.4 Consents.
Each of the Consents identified
or required to have been identified in the Buyippee Disclosure Schedule shall have been obtained and shall be in full force and effect,
other than those Consents, which have been expressly waived by ENMI.
6.5 No Material Adverse
Change and Satisfactory Due Diligence.
There shall not have been
any material adverse change in the business, condition, assets, liabilities, operations or financial performance of Buyippee since the
date of this Agreement as determined by ENMI in its discretion. ENMI shall be satisfied in all respects with the results of its due diligence
review of Buyippee
6.6 Buyippee Closing Certificate.
In addition to the documents
required to be received under this Agreement, ENMI shall also have received the following documents:
(a) copies of resolutions
of Buyippee, certified by a Secretary, Assistant Secretary or other appropriate officer of Buyippee, authorizing the execution, delivery
and performance of this Agreement and other Transactional Agreements;
(b) good standing certificate
of Buyippee; and
(c) such other documents as
ENMI may request in good faith for the purpose of (i) evidencing the accuracy of any representation or warranty made by Buyippee, (ii)
evidencing the compliance by Buyippee, or the performance by Buyippee of, any covenant or obligation set forth in this Agreement or any
of the other Transactional Agreements, (iii) evidencing the satisfaction of any condition set forth in Article VII or this Article VI,
or (iv) otherwise facilitating the consummation or performance of the Exchange.
6.7 Transactional Agreements.
Each Person (other than ENMI)
shall have executed and delivered prior to or on the Closing Date all Transactional Agreements to which it is to be a party.
6.8 Resignation of Directors
and Officers.
ENMI shall have received a
written resignation from each of the directors and officers of Buyippee effective as of the Closing.
6.9 Delivery of Stock Certificates,
Minute Book and Corporate Seal.
The Shareholders shall have
delivered to ENMI the stock books, stock ledgers, minute books and corporate seals of Buyippee
ARTICLE VII.
CLOSING CONDITIONS OF THE SHAREHOLDERS
The Shareholders’ obligations
to affect the Closing and consummate the Exchange are subject to the satisfaction of each of the following conditions:
7.1 Accuracy of Representations
and Warranties.
The representations and warranties of ENMI in
this Agreement shall have been true and correct as of the date of this Agreement and shall be true and correct on and as of the Closing
and ENMI shall have performed all obligations in this Agreement required to be performed or observed by them on or prior to the Closing.
7.2 Additional Conditions
to Closing.
(a) All necessary approvals
under federal and state securities laws and other authorizations relating to the issuance and transfer of the Acquisition Shares by ENMI
and the transfer of the Shares by Buyippee shall have been received.
(b) No preliminary or permanent
injunction or other order by any federal, state or foreign court of competent jurisdiction which prohibits the consummation of the Exchange
shall have been issued and remain in effect. No statute, rule, regulation, executive order, stay, decree, or judgment shall have been
enacted, entered, issued, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation
of the Exchange. All Requisite Regulatory Approvals shall have been filed, occurred or been obtained and all such Requisite Regulatory
Approvals shall be in full force and effect.
(c) There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Exchange, by any federal
or state Governmental Body which, in connection with the grant of a Requisite Regulatory Approval, imposes any condition or restriction
upon the Surviving Corporation or its subsidiaries (or, in the case of any disposition of assets required in connection with such Requisite
Regulatory Approval, upon ENMI, its subsidiaries, Buyippee or any of their subsidiaries), including, without limitation, requirements
relating to the disposition of assets, which in any such case would so materially adversely impact the economic or business benefits of
the Exchange as to render inadvisable the consummation of the Exchange.
7.3 ENMI Closing Certificates.
The Shareholders shall have
received the following documents:
(a) copies of resolutions
of ENMI, certified by a Secretary, Assistant Secretary or other appropriate officer of ENMI, authorizing the execution, delivery and performance
of the Transactional Agreements and the Exchange; and
(b) such other documents as
Buyippee may request in good faith for the purpose of (i) evidencing the accuracy of any representation or warranty made by ENMI, (ii)
evidencing the compliance by ENMI with, or the performance by ENMI of, any covenant or obligation set forth in this Agreement or any of
the other Transactional Agreements, (iii) evidencing the satisfaction of any condition set forth in Article VI or this Article VII, or
(iv) otherwise facilitating the consummation or performance of the Exchange.
7.4 No Material Adverse
Change.
There shall not have been
any material adverse change in ENMI’s business, condition, assets, liabilities, operations or financial performance since the date
of this Agreement.
7.5 Performance of Agreements.
ENMI shall have executed and
delivered each of the agreements, instruments and documents required to be executed and delivered, and performed all actions required
by ENMI pursuant to this Agreement, except as Buyippee and the Shareholders have otherwise consented in writing.
7.6 Consents.
Each of the Consents identified
or required to have been identified in Section 3.4 shall have been obtained and shall be in full force and effect, other than those Consents
the absence of which shall not have a material adverse effect on ENMI.
ARTICLE VIII.
FURTHER ASSURANCES
Each of the parties hereto
agrees that it will, from time to time after the date of the Agreement, execute and deliver such other certificates, documents and instruments
and take such other action as may be reasonably requested by the other party to carry out the actions and transactions contemplated by
this Agreement, including the closing conditions described in Articles VI and VII. Buyippee and the Shareholders shall reasonably cooperate
with ENMI in its obtaining of the books and records of Buyippee, or in preparing any solicitation materials to be sent to the shareholders
of ENMI in connection with the approval of the Exchange and the transactions contemplated by the Transactional Agreements.
ARTICLE IX.
TERMINATION
9.1 Termination.
This Agreement may be terminated
and the Exchange abandoned at any time prior to the Closing Date:
(a) by mutual written consent
of ENMI, Buyippee and the Shareholders;
(b) by ENMI if (i) there is
a material Breach of any covenant or obligation of Buyippee or the Shareholders; provided however, that if such Breach or Breaches are
capable of being cured prior to the Closing Date, such Breach or Breaches shall not have been cured within 10 days of delivery of the
written notice of such Breach, or (ii) ENMI reasonably determines that the timely satisfaction of any condition set forth in Article VI
has become impossible or impractical (other than as a result of any failure on the part of ENMI to comply with or perform its covenants
and obligations under this Agreement or any of the other Transactional Agreements);
(b) by Buyippee if (i) there
is a material Breach of any covenant or obligation of ENMI; provided, however, that if such Breach or Breaches are capable
of being cured prior to the Closing Date, such Breach or Breaches shall not have been cured within 10 days of delivery of the written
notice of such Breach, or (ii) Buyippee reasonably determines that the timely satisfaction of any condition set forth in Article VII has
become impossible or impractical (other than as a result of any failure on the part of Buyippee or any Shareholder to comply with or perform
any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements);
(d) by ENMI if the Closing
has not taken place on or before July 31, 2024, (except if as a result of any failure on the
part of ENMI to comply with or perform its covenants and obligations under this Agreement or in any other Transactional Agreement);
(e) by Buyippee if the Closing
has not taken place on or before July 31, 2024 (except if as a result of the failure on the part of Buyippee or the Shareholders to comply
with or perform any covenant or obligation set forth in this Agreement or in any other Transactional Agreement);
(f) by any of ENMI, on the
one hand or Buyippee, on the other hand, if any court of competent jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the Exchange
and such order, decree, ruling or any other action shall have become final and non-appealable; provided, however, that the party seeking
to terminate this Agreement pursuant to this clause (f) shall have used all commercially reasonable efforts to remove such order, decree
or ruling; or
(g) The parties hereby agree
and acknowledge that a breach of the provisions of Articles 4.1, 4.2, 4.3, 4.4 and 4.6 are, without limitation, material Breaches of this
Agreement.
9.2 Termination Procedures.
If ENMI wishes to terminate
this Agreement pursuant to Section 9.1, ENMI shall deliver to the Shareholders and Buyippee a written notice stating that ENMI is terminating
this Agreement and setting forth a brief description of the basis on which ENMI is terminating this Agreement. If Buyippee wishes to terminate
this Agreement pursuant to Section 9.1, Buyippee shall deliver to ENMI a written notice stating that Buyippee is terminating this Agreement
and setting forth a brief description of the basis on which Buyippee is terminating this Agreement.
9.3 Effect of Termination.
In the event of termination
of this Agreement as provided above, this Agreement shall forthwith have no further effect. Except for a termination resulting from a
Breach by a party to this Agreement, there shall be no liability or obligation on the part of any party hereto. In the event of a breach,
the remedies of the non-breaching party shall be to seek damages from the breaching party or to obtain an order for specific performance,
in addition to or in lieu of other remedies provided herein. Upon request after termination, each party will redeliver or, at the option
of the party receiving such request, destroy all reports, work papers and other material of any other party relating to the Exchange,
whether obtained before or after the execution hereof, to the party furnishing same; provided, however, that Buyippee and the Shareholders
shall, in all events, remain bound by and continue to be subject to Section 4.6 and all parties shall in all events remain bound by and
continue to be subject to Section 5.4 and 5.5.
Notwithstanding the above,
both ENMI, on the one hand, and Buyippee and the Shareholders, on the other hand, shall be entitled to announce the termination of this
Agreement by means of a mutually acceptable press release.
ARTICLE X.
MISCELLANEOUS
10.1 Survival of Representations
and Warranties.
All representations and warranties
of Buyippee and the Shareholders in this Agreement and the Buyippee Disclosure Schedule shall survive shall survive indefinitely. The
right to indemnification, reimbursement or other remedy based on such representations and warranties will not be affected by any investigation
conducted by the parties.
10.2 Expenses.
Except as otherwise set forth
herein, each of the parties to the Exchange shall bear its own expenses incurred in connection with the negotiation and consummation of
the transactions contemplated by this Agreement.
10.3 Entire Agreement.
This Agreement and the other
Transactional Agreements contain the entire agreement of the parties hereto, and supersede any prior written or oral agreements between
them concerning the subject matter contained herein, or therein. There are no representations, agreements, arrangements or understandings,
oral or written, between the parties to this Agreement, relating to the subject matter contained in this Agreement and the other Transaction
Agreements, which are not fully expressed herein or therein. The schedules and each exhibit attached to this Agreement or delivered pursuant
to this Agreement are incorporated herein by this reference and constitute a part of this Agreement.
10.4 Counterparts.
This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
10.5 Descriptive Headings.
The Article and Section headings
in this Agreement are for convenience only and shall not affect the meanings or construction of any provision of this Agreement.
10.6 Notices.
Any notices required or permitted
to be given under this Agreement shall be in writing and shall be deemed sufficiently given on the earlier to occur of the date of personal
delivery, the date of receipt or three (3) days after posting by overnight courier or registered or certified mail, postage prepaid, addressed
as follows:
If to ENMI:
13A Gee Luen Factory Building, Kowloon, Hong Kong
If to Buyippee:
16/F, Benson Tower, 74 Hung To Road, Kwun Tong,
Kowloon, Hong Kong
If to the Shareholders:
c/o 16/F, Benson Tower, 74 Hung To Road, Kwun
Tong, Kowloon, Hong Kong
To such address or addresses as a party
shall have previously designated by notice to the sender given in accordance with this section.
10.7 Choice of Law.
This Agreement shall be construed
in accordance with and governed by the laws of the State of Nevada without regard to choice of law principles. Each of the parties hereto
consents to the jurisdiction of the courts of Hong Kong Special Administrative Region.
10.8 Binding Effect; Benefits.
This Agreement shall inure
to the benefit of and be binding upon the parties and their respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended to confer on any Person other than the parties or their respective successors and permitted assigns, the Shareholders
and other Persons expressly referred to herein, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
10.9 Assignability.
Neither this Agreement nor
any of the parties’ rights hereunder shall be assignable by any party without the prior written consent of the other parties and
any attempted assignment without such consent shall be void.
10.10 Waiver and Amendment.
Any term or provision of this
Agreement may be waived at any time by the party, which is entitled to the benefits thereof. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. The parties may, by mutual agreement
in writing, amend this Agreement in any respect. Buyippee and the Shareholders hereby acknowledge their intent that this Agreement includes
as a party any holder of capital stock in Buyippee at the time of Closing. ENMI, Buyippee and the Shareholders therefore agree that this
Agreement may be amended, without the further consent of any party to this Agreement, (i) to add as a new Shareholder any existing shareholder
of Buyippee and (ii) to modify Annex A to reflect the addition of such shareholder.
10.11 Attorney’ Fees.
In the event of any action
or proceeding to enforce the terms and conditions of this Agreement, the prevailing party shall be entitled to an award of reasonable
attorneys’ and experts’ fees and costs, in addition to such other relief as may be granted.
10.12 Severability.
If any provision of this Agreement
is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect
to the extent not held invalid or unenforceable.
10.13 Construction.
In executing this Agreement,
the parties severally acknowledge and represent that each: (a) has fully and carefully read and considered this Agreement; (b) has or
has had the opportunity to consult independent legal counsel regarding the legal effect and meaning of this document and all terms and
conditions hereof; (c) has been afforded the opportunity to negotiate as to any and all terms hereof; and (d) is executing this Agreement
voluntarily, free from any influence, coercion or duress of any kind. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.
[signature page follows]
IN WITNESS WHEREOF, this Agreement has been executed
by the parties hereto as of the day and year first above written.
ENMI:
DH ENCHANTMENT INC.
By: /s/ Sally Kin Yi LO
Name: Sally Kin
Yi LO
Title: Executive
Director
Buyippee:
OLS Asia Corporation
By: /s/ CHEUNG Cheuk Yin
Name: CHEUNG Cheuk
Yin
Title: Director
BUYIPPEE SHAREHOLDER:
/s/ CHEUNG Cheuk Yin
CHEUNG Cheuk Yin
Number of shares of Buyippee to be selling: 843
Number of Common Stock of ENMI to be receiving: 168,860,000,000
BUYIPPEE SHAREHOLDER:
/s/ HA Si Tsai
HA Si Tsai
Number of shares of Buyippee to be selling: 67
Number of Common Stock of ENMI to be receiving: 1,340,000,000
BUYIPPEE SHAREHOLDER:
/s/ NG Sai Cheong
NG Sai Cheong
Number of shares of Buyippee to be selling: 45
Number of Common Stock of ENMI to be receiving: 900,000,000
BUYIPPEE SHAREHOLDER:
/s/ CHUNG Chun Chiu
CHUNG Chun Chiu
Number of shares of Buyippee to be selling: 45
Number of Common Stock of ENMI to be receiving: 900,000,000
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this
Exhibit A):
Agreement. “Agreement”
shall mean the Share Exchange Agreement to which this Exhibit A is attached (including all Disclosure Schedules and all Exhibits), as
it may be amended from time to time.
Approved Plans. “Approved
Plans” shall mean a stock option or similar plan for the benefit of employees or others, which has been approved by the shareholders
of Buyippee
Buyippee Shares of Common
Stock. “Buyippee Shares of Common Stock” shall mean the shares of common stock of Buyippee
Breach. There shall
be deemed to be a “Breach” of a representation, warranty, covenant, obligation or other provision if there is or has been
any inaccuracy in or breach of, or any failure to comply with or perform, such representation, warranty, covenant, obligation or other
provision.
Certificates. “Certificates”
shall have the meaning specified in Section 1.3 of the Agreement.
ENMI. “ENMI”
shall have the meaning specified in the first paragraph of the Agreement.
ENMI Common Stock.
“ENMI Common Stock” shall mean the shares of common stock of ENMI.
Closing. “Closing”
shall have the meaning specified in Section 1.5 of the Agreement.
Closing Date. “Closing
Date” shall have the meaning specified in Section 1.5 of the Agreement.
Code. “Code”
shall mean the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue
Code or any successor law.
Confidential Information.
“Confidential Information” shall mean all nonpublic information disclosed by one party or its agents (the “Disclosing
Party”) to the other party or its agents (the “Receiving Party”) that is designated as confidential or that, given the
nature of the information or the circumstances surrounding its disclosure, reasonably should be considered as confidential. Confidential
Information includes, without limitation (i) nonpublic information relating to the Disclosing Party’s technology, customers, vendors,
suppliers, business plans, intellectual property, promotional and marketing activities, finances, agreements, transactions, financial
information and other business affairs, and (ii) third-party information that the Disclosing Party is obligated to keep confidential.
Confidential Information does
not include any information that (i) is or becomes publicly available without breach of this Agreement, (ii) can be shown by documentation
to have been known to the Receiving Party at the time of its receipt from the Disclosing Party, (iii) is received from a third party who,
to the knowledge of the Receiving Party, did not acquire or disclose such information by a wrongful or tortious act, or (iv) can be shown
by documentation to have been independently developed by the Receiving Party without reference to any Confidential Information.
Consent. “Consent”
shall mean any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization).
Disclosure Schedule Update.
“Disclosure Schedule Update” shall have the meaning specified in Section 4.4 of the Agreement.
Buyippee Disclosure Schedule.
“Buyippee Disclosure Schedule” shall have the meaning specified in introduction to Article II of the Agreement.
Entity. “Entity”
shall mean any corporation (including any nonprofit corporation), general partnership, limited partnership, limited liability partnership,
joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company
or joint stock company), firm or other enterprise, association, organization or entity.
Environmental Laws.
“Environmental Laws” shall mean any Law or other requirement relating to the protection of the environment, health, or safety
from the release or disposal of hazardous materials.
Environmental Permit.
“Environmental Permit” means all licenses, permits, authorizations, approvals, franchises and rights required under any applicable
Environmental Law or Order.
Equity Securities.
“Equity Security” shall mean any stock or similar security, including, without limitation, securities containing equity features
and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration,
any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of capital
stock, or any such warrant or right.
Exchange Act. “Exchange
Act” means the United States Securities Exchange Act of 1934, as amended.
GAAP. “GAAP”
shall mean United States Generally Accepted Accounting Principles, applied on a consistent basis.
Governmental Authorization.
“Governmental Authorization” shall mean any:
| (F) | permit, license, certificate, franchise, concession, approval, consent, ratification, permission, clearance,
confirmation, endorsement, waiver, certification, designation, rating, registration, qualification or authorization that is issued, granted,
given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law; or |
(b) right under any contract
with any Governmental Body.
Governmental Body.
“Governmental Body” shall mean any:
| (F) | nation, principality, state, commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; |
(b) federal, state, local,
municipal, foreign or other government;
(c) governmental or quasi-governmental
authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council,
board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal); or
(d) individual, Entity or
body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature, including any court, arbitrator, administrative agency or commissioner, or other governmental authority
or instrumentality.
Indebtedness. “Indebtedness”
shall mean any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production
from, property of the relevant party will be deemed to be Indebtedness.
Intellectual Property.
“Intellectual Property” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S.
patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names,
service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published
and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical
data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications,
layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.
Knowledge. A corporation
shall be deemed to have “knowledge” of a particular fact or matter only if a director or officer of such corporation has,
had or should have had knowledge of such fact or matter.
Laws. “Laws”
means, with respect to any Person, any U.S. or non-U.S. federal, national, state, provincial, local, municipal, international, multinational
or other law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.
Lien. “Lien”
shall mean any mortgage, pledge, security interest, encumbrance, lien or charge, right of first refusal, encumbrance or other adverse
claim or interest of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the
nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and
including any lien or charge arising by Law.
Material Adverse Effect.
“Material Adverse Effect” means any change, effect or circumstance which, individually or in the aggregate, would reasonably
be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the affected
party, in each case taken as a whole or (b) materially impair the ability of the affected party to perform its obligations under this
Agreement and the Transaction Agreements, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or
consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii)
changes in general economic, currency exchange rate, political or regulatory conditions in industries in which the affected party operates.
Material Contract.
“Material Contract” means any and all agreements, contracts, arrangements, understandings, leases, commitments or otherwise,
providing for potential payments by or to the company in excess of $1,000, and the amendments, supplements and modifications thereto.
Order. “Order”
shall mean any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental
Body.
Ordinary Course of Business.
“Ordinary Course of Business” shall mean an action taken by Buyippee if (i) such action is taken in normal operation, consistent
with past practices, (ii) such action is not required to be authorized by the Shareholders, Board of Directors or any committee of the
Board of the Directors or other governing body of Buyippee and (iii) does not require any separate or special authorization or consent
of any nature by any Governmental Body or third party.
Permitted Liens. “Permitted
Liens” shall mean (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith
by appropriate proceedings and for the payment of which the relevant party has made adequate reserves; (b) Liens in respect of pledges
or deposits under workmen’s compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and materialmen
and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate
proceedings conducted and for the payment of which the relevant party has made adequate reserves; and (c) statutory Liens incidental to
the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of
advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof
in the operation of its business.
Person. “Person”
shall mean any individual, Entity or Governmental Body.
Pre-Closing Period.
“Pre-Closing Period” shall mean the period commencing as of the date of the Agreement and ending on the Closing Date.
Proceeding. “Proceeding”
shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate
proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation, commenced,
brought, conducted or heard by or before, or otherwise has involved, any Governmental Body or any arbitrator or arbitration panel.
Representatives. “Representatives”
of a specified party shall mean officers, directors, employees, attorneys, accountants, advisors and representatives of such party, including,
without limitation, all subsidiaries of such specified party, and all such Persons with respect to such subsidiaries. The Related Persons
of Buyippee shall be deemed to be “Representatives” of Buyippee, as applicable.
SEC. “SEC”
shall mean the United States Securities and Exchange Commission.
Securities Act. “Securities
Act” shall mean the United States Securities Act of 1933, as amended.
Taxes. “Taxes”
shall mean all foreign, federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including,
but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions,
intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll,
employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway
use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom,
duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or
additions to tax with respect to any of the foregoing; and “Tax” means any of the foregoing Taxes.
Tax Group. “Tax
Group” shall mean any federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group of which
Buyippee is now or was formerly a member.
Tax Return. “Tax
Return” shall mean any return, declaration, report, claim for refund or credit, information return, statement or other similar document
filed with any Governmental Body with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
Transaction Agreements.
“Transactional Agreements” shall mean this Agreement and any agreement or document to be executed pursuant to this Agreement.
ANNEX A
| Stockholder |
Number of Shares of Common Stock of Buyippee Held |
Number of Shares of Common Stock of Buyippee To Be Exchanged |
Number of Shares of Common Stock of ENMI To Be Issued |
| CHEUNG Cheuk Yin |
843 |
843 |
16,860,000,000 |
| HA Si Tsai |
67 |
67 |
1,340,000,000 |
| NG Sai Cheong |
45 |
45 |
900,000,000 |
| CHUNG Chun Chiu |
45 |
45 |
900,000,000 |
| |
|
|
|
| TOTAL |
1000 |
1000 |
20,000,000,000 |
Exhibit 21
|
Name |
|
Background |
|
Effective ownership |
| |
|
|
|
|
|
Online Logistics Services Limited
(“OLSL”)
|
|
• Hong Kong
company
• Incorporated
on April 12, 2012
• Issued
and outstanding 1 ordinary share for HK$1
• Operating
the retail sales and online shopping |
|
100% owned by OAC
|
| |
|
|
|
|
|
Online Logistics Services Limited,
Taiwan Branch (“OLTW”)
|
|
• Foreign
company’s Taiwan branch, Republic of China (“Taiwan”)
• Formed
and registered on July 20, 2022
• Paid-in
capital of NTD500,000
• Wholesale
and retail sale in Taiwan |
|
100% owned by OSLS
|
| |
|
|
|
|
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Cheung Cheuk Yin, certify that:
1. I have reviewed this current report on Form
8-K of DH Enchantment, Inc.;
2. Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the
registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting;
5. I have disclosed, based on my most recent evaluation
of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 17, 2024
| /s/ Cheung Cheuk Yin |
|
| Cheung Cheuk Yin |
|
|
Chief Executive Officer,
Chief Financial Officer, Secretary and Director |
|
|
(Principal Executive Officer and
Principal Financial Officer) |
|
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, Cheung Cheuk Yin, Chief Executive
Officer, Chief Financial Officer and Secretary of DH Enchantment, Inc., hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the current report on Form 8-K of DH Enchantment,
Inc. (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) the information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of DH Enchantment, Inc.
Dated: September 17, 2024
| /s/ Cheung Cheuk Yin |
|
| Cheung Cheuk Yin |
|
|
Chief Executive Officer,
Chief Financial Officer, Secretary and Director |
|
|
(Principal Executive Officer and
Principal Financial Officer) |
|
v3.24.3
Cover
|
Sep. 16, 2024 |
| Cover [Abstract] |
|
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8-K
|
| Amendment Flag |
false
|
| Document Period End Date |
Sep. 16, 2024
|
| Entity File Number |
000-56322
|
| Entity Registrant Name |
DH Enchantment, Inc.
|
| Entity Central Index Key |
0001300781
|
| Entity Tax Identification Number |
20-1415044
|
| Entity Incorporation, State or Country Code |
NV
|
| Entity Address, Address Line One |
3/F, Yeung Yiu Chung (No.6) Industrial Building
|
| Entity Address, Address Line Two |
19 Cheung Shun Street, Lai Chi Kok
|
| Entity Address, City or Town |
Kowloon
|
| Entity Address, Country |
HK
|
| Entity Address, Postal Zip Code |
00000
|
| City Area Code |
852
|
| Local Phone Number |
34263795
|
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false
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