Notes
to Financial Statements
For
the Years Ended December 31, 2020 and 2019
NOTE
1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE
OF OPERATIONS
MS
Young Adventure Enterprise, Inc. (formerly “AllyMe Holding Inc,” and formerly “Rain Sound Acquisition Corporation”)
(the “Company” or “MS Young”) was incorporated on December 7, 2016 under the laws of the state of Delaware.
The Company engages in consulting services.
On
November 13, 2017, the Company changed of the Company’s name to AllyMe Holding Inc.
On
August 6, 2019, the Company changed the Company’s name to MS Young Adventure Enterprise, Inc.
The
Company is a marketing and management consulting company that provides advisory services to companies located in Asia for the
purpose of facilitating the competitiveness of those companies in the international market. The Company offers a wide assortment
of advisory services, ranging from business planning consulting services, mergers and acquisitions advising, and marketing services.
As of the date of this report, the Company has signed few clients.
The
outbreak of COVID19 coronavirus in China and Asia starting from the beginning of 2020 has resulted delay for our business. The
Company followed the restrictive measures implemented in China, by suspending contacting clients or contacting clients remotely
during February and March 2020. The Company gradually resumed contacting clients in person starting in April 2020. The recent
developments of COVID 19 are expected to result in lower revenue and net income in 2020. Other financial impact could occur though
such potential impact is unknown at this time.
BASIS
OF PRESENTATION
The
summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial
statements. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”)
in all material respects and have been consistently applied in preparing the accompanying financial statements.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those
estimates.
CASH
Cash
includes petty cash on hand and cash on deposit at banking institutions, which are liquid and are unrestricted as to withdrawal
or use.
Accounts Receivable
Accounts receivable are recognized and
carried at original amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers
with good credit standing with a maximum of one year and determines the adequacy of reserves for doubtful accounts based on individual
account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is
objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best
estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision
is recorded against other receivable balances, with a corresponding charge recorded in the consolidated statements of income and
comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic
environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable.
CONCENTRATION
OF RISK
Financial instruments that potentially subject
the Company to concentrations of credit risk consist principally of cash and other receivable. All of the Company’s cash
is held in bank accounts in the United States and is protected by FDIC insurance. $11,899 and $57,719 are amounts
that are covered by FDIC insurance as of December 31, 2020 and 2019, respectively. Other receivable amounted to $38,274
and $91,709 as of December 31, 2020 and 2019, respectively. These receivables are due on demand, interest free, and without collateral.
The Company estimated the uncollectable amount and reserved $63,453 and $0 as allowance for other receivable for the years
ended December 31, 2020 and 2019, respectively.
REVENUE
RECOGNITION
The
Company adopted Accounting Standards Codification (“ASC”) 606. ASC 606, Revenue from Contracts with Customers, establishes
principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the
entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue
to depict the transfer of services to customers in an amount that reflects the consideration that it expects to be entitled to
receive in exchange for those services recognized as performance obligations are satisfied.
The
Company has assessed the impact of the guidance by performing the following five steps analysis:
Step
1: Identify the contract
Step
2: Identify the performance obligations
Step
3: Determine the transaction price
Step
4: Allocate the transaction price
Step
5: Recognize revenue
For
the years ended December 31, 2020 and 2019, the Company recognized revenue from providing consulting services, for which the Customer
makes full payment at time of service purchase. The Company does not offer customers right of refund for service purchased.
INCOME
TAXES
Under
ASC 740, “Income Taxes,” deferred tax assets and liabilities are recognized for the future tax consequences attributable
to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when
it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2020 and 2019,
there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.
LOSS
PER COMMON SHARE
Basic
loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding
during the period. Diluted loss per common share reflect the potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared
in the loss of the entity. As of December 31, 2020 and 2019, there are no outstanding dilutive securities.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
The
Company follows ASC 825-10 guidance for accounting for fair value measurements of financial assets and financial liabilities and
for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on
a recurring basis. Additionally, the Company adopted ASC 825-10 guidance for fair value measurement related to nonfinancial items
that are recognized and disclosed at fair value in the financial statements on a nonrecurring basis. ASC 825-10 requires certain
disclosures regarding the fair value of financial instruments. The ASC 825-10 guidance establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs.
The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The
three levels of the fair value hierarchy are as follows:
Level
1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability
to access at the measurement date.
Level
2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level
3 inputs are unobservable inputs for the asset or liability.
The
carrying amounts of financial assets such as cash, other receivable, accounts payable and accrued liabilities approximate their
fair values because of the short maturity of these instruments.
RECENT
ACCOUNTING PRONOUNCEMENTS
Recent
accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities and Exchange
Commission did not or are not believed by management to have a material impact on the Company’s present or future financial
statements.
NOTE
2 - GOING CONCERN
The
Company has generated only $82,415 revenue since inception to date and has sustained operating loss of $105,426 during
the years ended December 31, 2020. The Company had a working capital deficit of $69,873 and an accumulated deficit of $308,992
as of December 31, 2020. The Company’s continuation as a going concern is dependent on its ability to generate sufficient
cash flows from operations to meet its obligations and/or obtaining additional financing from its shareholders and officers
or other sources, as may be required.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern; however, the
above condition raises substantial doubt about the Company’s ability to do so. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications
of liabilities that may result should the Company be unable to continue as a going concern.
In
order to maintain its current level of operations, the Company will require additional working capital from either cash flow from
operations or from the sale of its equity. However, the Company currently has no commitments from any third parties for the purchase
of its equity. If the Company is unable to acquire additional working capital, it will be required to significantly reduce its
current level of operations.
NOTE
3 – ACCOUNTS RECEIVABLE
Accounts
receivable comprise amounts due to the Company for providing consulting services.
NOTE
4 – OTHER RECEIVABLE
Other
receivable represents professional fees the Company paid on behalf of its clients. These payments are due on demand, interest
free, and without collateral. The Company estimated the uncollectable amount and reserved $63,453 and $0 as allowance for other
receivable for the years ended December 31, 2020 and 2019, respectively.
NOTE
5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities mainly
are accrued professional fees.
NOTE
6 - RELATED PARTIES
Loan
from a related party
On
December 1, 2018, MS Young entered into an agreement to acquire a 51% interest in 0731380 B.C. Limited, a company registered in
British Columbia, Canada (“0731380”). Initially, this transaction was structured as a purchase of equity by MS Young,
however, the parties thereafter agreed (effective ab initio) that the transaction be structured as a convertible loan rather
than an equity purchase transaction.
The
restructuring of the initial Agreement and the amendment thereof on February 28, 2019 was approved by the Boards of Directors
of both MS Young and 0731380. This is a related-party transaction as Chunxia Jiang is the principal and controlling shareholder
and the sole director of both MS Young and 0731380.
Therefore,
the parties have agreed that, in lieu of any purchase of an equity interest in 0731380, MS Young would advance a loan to 0731380
in the initial face amount of $150,000 (the “Loan”), which will be payable One (1) year following the advance of funding
of the Loan. 0731380 will use the proceeds of the Loan to fund the acquisition of a license and development of a retail outlet
for the sale of cannabis-related products by its wholly-owned subsidiary, Natural Recreation in Kitimat, BC, Canada. The loan
bears interest at a rate of five percent (5%) per annum payable at Maturity. The Loan Agreement (“Loan Agreement”)
provides that if all licenses required to operate the retail store in Kitimat are issued by an agreed date, the Loan may be converted,
at the option of MS Young, into an equity investment in Natural Recreation. There is a further provision in the Loan Agreement
that if the Loan is converted, MS Young may, at its sole option, additionally issue 3,060,000 shares of its common stock to 0731380
which, together with the conversion of the Loan, will be MS Young’s purchase price for a 51% interest in Natural Recreation.
If full licensure for the retail store in Kitimat is not issued by the agreed date, then the loan will convert to a term loan
to be repaid on a schedule mutually agreed by the parties. There is no penalty for the early payment of the Loan. As of this date,
such licensure is only in the early application process and there is no guarantee when any license will be issued, if at all.
Interest
income amounted to $4,500 as of December 31, 2019. In the quarter ended December 31, 2019, 0731380 has repaid $150,000
to MS Young in advance. 0731380 BC Ltd has paid back interest of $4,500 before the end of December 2020.
Due
to a related party
Due to related parties amounted to $1,295
and $1,295 as of December 31, 2020 and 2019, respectively. Due to a related party include fees paid on behalf of the Company
by Chunxia Jiang who is a current shareholder and also a current officer of the Company. The amount due to related parties are
unsecured, non-interest bearing, and due on demand. The accrued imputed interest amount for 2020 and 2019 is $0.
NOTE
7 - STOCKHOLDERS’ EQUITY (DEFICIT)
The
Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of preferred stock.
There
is no preferred stock issued and outstanding as of December 31, 2020 and 2019.
NOTE
8 – INCOME TAX
Deferred
income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to
the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and liabilities.
As of December 31, 2020, the Company
had net operating loss (NOL) carry forwards of $308,992 that $16,956 may be available to reduce future years’
taxable income through 2037 and $292,036 may be available to reduce future years’ taxable income indefinitely. The
deferred tax asset applicable to the net loss of $64,888 was offset entirely by a valuation allowance, which changed by
$22,139 during 2020. However, the Company’s ability to use the carryover net operating loss may be substantially
limited or eliminated pursuant to Internal Revenue Code Section 382. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly,
the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
U.S.
statutory federal rate of 21% rate is applied to the provision for income tax from the fiscal year of 2020 and 2019.
NOTE
9 – RESTATEMENT
The
following table presents the effect of the restatements on the Company’s previously issued balance sheet as of December
31, 2018:
|
|
As Previously
Reported
|
|
|
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Due to related parties
|
|
$
|
153,626
|
|
|
$
|
(33,408
|
)
|
|
$
|
120,218
|
|
Total Liabilities
|
|
|
187,471
|
|
|
|
(33,408
|
)
|
|
|
154,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
(177,501
|
)
|
|
|
33,408
|
|
|
|
(144,093
|
)
|
Total stockholders’ equity
|
|
$
|
61,618
|
|
|
$
|
33,408
|
|
|
$
|
95,026
|
|
The
following table presents the effect of the restatements on the Company’s previously issued statement of operations:
|
|
As Previously
Reported
|
|
|
Adjustments
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
184,692
|
|
|
$
|
(33,408
|
)
|
|
$
|
151,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(171,327
|
)
|
|
|
33,408
|
|
|
|
(137,919
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(160,545
|
)
|
|
|
33,408
|
|
|
|
(127,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(160,545
|
)
|
|
$
|
33,408
|
|
|
$
|
(127,137
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
$
|
(0.02
|
)
|
The
following table presents the effect of the restatements on the Company’s previously issued statement of stockholder’s
equity:
|
|
Accumulated
|
|
|
Total
|
|
|
|
Deficit
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2018, as previously reported
|
|
$
|
(177,501
|
)
|
|
$
|
61,618
|
|
|
|
|
|
|
|
|
|
|
Correction of errors
|
|
|
33,408
|
|
|
|
33,408
|
|
Balance as of December 31, 2018, as restated
|
|
$
|
(144,093
|
)
|
|
$
|
95,026
|
|
The
following table presents the effect of the restatements on the Company’s previously issued statement of cash flow:
|
|
As of December 31, 2018
|
|
|
|
As Previously Reported
|
|
|
Adjustments
|
|
|
Notes
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(160,545
|
)
|
|
$
|
33,408
|
|
|
|
8
|
|
|
$
|
(127,137
|
)
|
Net cash used in operating activities
|
|
|
(118,258
|
)
|
|
|
33,408
|
|
|
|
|
|
|
|
(84,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related parties
|
|
|
136,297
|
|
|
|
(33,408
|
)
|
|
|
6
|
|
|
|
102,889
|
|
Net cash provided by financing activities
|
|
$
|
362,347
|
|
|
$
|
(33,408
|
)
|
|
|
|
|
|
$
|
328,939
|
|
$33,408
bad debt expense related to other receivable in 2018 was reversed because that amount was collected in 2018.
NOTE
10 - SUBSEQUENT EVENT
Management
has evaluated subsequent events through March 15, 2021, the date that the financial statements were available to be issued.
All subsequent events requiring recognition as of December 31, 2020 have been incorporated into these financial statements and
there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”