CXJ GROUP CO., Ltd 10-Q for FY2025 Q1
CXJ GROUP CO., Ltd (ECXJ)
About this 10-Q
CXJ GROUP CO., Ltd filed this 10-Q on November 27, 2024, covering the quarter ended August 31, 2024 (FY2025 Q1).
Headline figures
Quarter ended August 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $114.38K
- down 77.3% from $504.52K a year earlier
- Net loss
- $41.57K
- compared with a net loss of $502.94K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarter ended
For the transition period from ____________to ____________
Commission
File Number :
(Exact name of registrant as specified in its charter)
(State or jurisdiction of Classification Code Number) |
(I.R.S. Employer incorporation or organization) |
Zhejiang
Province,
(Address of principal executive offices, including zip code)
(Registrant’s phone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).
☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” or an “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at October 24, 2024 | |
| Common Stock, $ par value |
CXJ GROUP CO LIMITED.
TABLE OF CONTENTS
| 2 |
SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate”, “approximate” or “continue”, or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The accompanying interim financial statements of CXJ GROUP CO., Limited (“the Company”, “we”, “us” or “our”), have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted principles have been condensed or omitted pursuant to such rules and regulations.
The interim financial statements are unaudited and condensed and should be read in conjunction with the Company’s latest annual financial statements.
In the opinion of management, the financial statements contain all material adjustments, consisting only of normal adjustments considered necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
| 3 |
CXJ GROUP CO., LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF August 31, 2024 and May 31, 2024
(Currency Expressed In United States Dollars (“US$”), Except For Number Of Shares)
| August 31, 2024 | May 31, 2024 | |||||||
| Unaudited | Audited | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivables | ||||||||
| Prepayments | ||||||||
| Deposits and other receivables | ||||||||
| Due from related parties | ||||||||
| Inventories | ||||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets | ||||||||
| Total Non-current Assets | ||||||||
| TOTAL ASSETS | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payables | ||||||||
| Advanced received | ||||||||
| Accrued expenses and other payables | ||||||||
| Amount due to related parties | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total Current Liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Operating lease liabilities, non-current portion | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value, and shares authorized, and shares issued and outstanding as of August 31,2024 and May 31, 2024 respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total CXJ Group Stockholders’ Equity | ||||||||
| Non-controlling interest | ||||||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| 4 |
CXJ GROUP CO., LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED AUGUST 31, 2024
and 2023
(Currency Expressed In United States Dollars (“US$”), Except For Number Of Shares)
| August 31, 2024 | August 31, 2023 | |||||||
| For The Three Months Ended | ||||||||
| August 31, 2024 | August 31, 2023 | |||||||
| Unaudited | Unaudited | |||||||
| $ | $ | |||||||
| REVENUE | ||||||||
| COST OF SALES | ( | ) | ( | ) | ||||
| GROSS PROFIT | ||||||||
| OTHER (EXPENSE)/INCOME | ( | ) | ||||||
| SELLING AND DISTRIBUTION EXPENSES | ( | ) | ( | ) | ||||
| GENERAL AND ADMINISTRATIVE EXPENSES | ( | ) | ( | ) | ||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| INTEREST INCOME | ||||||||
| LOSS BEFORE INCOME TAX | ( | ) | ( | ) | ||||
| INCOME TAXES EXPENSE | ||||||||
| LOSS AFTER TAXATION | ( | ) | ( | ) | ||||
| Less: Non-controlling Interest | ( | ) | ||||||
| LOSS ATTRIBUTABLE TO SHAREHOLDERS | ( | ) | ( | ) | ||||
| Other comprehensive loss: | ||||||||
| - Foreign exchange adjustment (loss)/income | ( | ) | ||||||
| COMPREHENSIVE LOSS | ( | ) | ( | ) | ||||
| Net loss per share - Basic and diluted | ) | ) | ||||||
| Weighted average number of common shares outstanding – Basic and diluted | ||||||||
| 5 |
CXJ GROUP CO., LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED AUGUST 31, 2024 AND 2023
(Currency Expressed In United States Dollars (“US$”), Except For Number Of Shares)
(Unaudited)
For the three months ended August 31, 2024
| Number
of Shares | Amount | Paid-In Capital | Comprehensive Income | Accumulated Deficit | Controlling Interest | Stockholders’ Equity | ||||||||||||||||||||||
| Common Stock | Additional | Accumulated Other | Non- | Total | ||||||||||||||||||||||||
| Number
of Shares | Amount | Paid-In Capital | Comprehensive Income | Accumulated Deficit | Controlling Interest | Stockholders’ Equity | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance as of May 31, 2024 | ( | ) | ||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of August 31, 2024 | ( | ) | ||||||||||||||||||||||||||
For the three months ended August 31, 2023
| Common Stock | Additional
| Accumulated | Non- | Total | ||||||||||||||||||||||||
| Number
of Shares | Amount | Paid-In Capital | Comprehensive Income | Accumulated Deficit | Controlling Interest | Stockholders’ Equity | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance as of May 31, 2023 | ( | ) | ||||||||||||||||||||||||||
| Disposal of Subsidiary | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Accumulated Other Comprehensive Income | - | ( | ) | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Non-controlling interest | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of August 31, 2023 | ( | ) | ||||||||||||||||||||||||||
| Balance | ( | ) | ||||||||||||||||||||||||||
| 6 |
CXJ GROUP CO., LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2024 and 2023
(Currency Expressed In United States Dollars (“US$”), Except For Number Of Shares)
(Unaudited)
| August 31, 2024 | August 31, 2023 | |||||||
| For The Three Months Ended | ||||||||
| August 31, 2024 | August 31, 2023 | |||||||
| $ | $ | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash provided by operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right-of-use assets | ||||||||
| Amortization of intangible assets | ||||||||
| Impairment of intangible assets | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivables | ( | ) | ( | ) | ||||
| Prepayments, deposits and other receivables | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Advance received | ( | ) | ||||||
| Accrued liabilities and other payable | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Disposal of subsidiary, net of cash disposed | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advances to related parties | ( | ) | ( | ) | ||||
| Advances to directors | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of year | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | ||||||||
| 7 |
CXJ GROUP CO., LIMITED
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
FOR THE THREE MONTHS ENDED AUGUST 31, 2024 and year ended may 31, 2024
EXPRESS IN UNITED STATES DOLLARS
(Unaudited)
Note 1. Company Overview
CXJ Group Co., Limited (“we”, “us”, the “the Company” or “ECXJ”) was originally incorporated in State of Nevada on August 20, 1998 under the name Global II, Inc and underwent several name changes prior to its current name. Until August 2019, the Company was known as Global Entertainment Corp., which was a dormant company.
On March 04, 2019, the eight judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for the Company, proper notice having been given to the officers and directors of Global Entertainment Corporation. There was no opposition.
On
June 18, 2019, control of the Company was transferred by the entity controlled by Custodian Ventures, LLC to Xinrui Wang, our director,
by selling him shares of Series A Preferred stock and shares of common stock for a purchase price of $
On June 21, 2019, Lixin Cai was appointed act as the new President, CEO, Secretary and Chairman of the Board of Directors of the Company. On June 21, 2019, Cuiyao Luo was appointed act as the new CFO, Treasurer and Member of the Board of Directors of the Company. On September 30, 2019, the Company appointed three more members to the Board of Directors of the Company, and they are Xinrui Wang, Wenbin Mao and Baiwan Niu.
Effective
July 9, 2019 we changed our name from Global Entertainment Corp to CXJ Group Co., Limited. On July 12, 2019, the Company effectuated
a
On
October 4, 2019, Xinrui Wang (the “Seller”), entered into a Stock Purchase Agreement to pursuant to which the Seller agreed
to sell to Wenbin Mao and Baiwan Niu (the “Purchasers”), totaling preferred stock of the Company (“Shares”)
owned by the Seller, for an amount of $
On May 28, 2020, we consummated the transactions contemplated by the Share Exchange Agreement among the Company, CXJ Investment Group Company Limited, a British Virgin Islands Corporation (“CXJ”) and the shareholder of CXJ, pursuant to which we acquired all the ordinary shares of CXJ in exchange for the issuance to the shareholder of CXJ of an aggregate of shares of the Company. The shareholder is the selling security holder in this prospectus and are all affiliates. As a result of the transactions contemplated by the Share Exchange, CXJ became a wholly-owned subsidiary of the Company.
Effective May 13, 2022, we have appointed Messrs. Tianbing Yang and Rudong Shi as members of our Board of Directors.
On
June 14, 2022, the Company completed the issuance and sales of an aggregate of shares at a price of $ per shares with each
share consisting of one share of the Company’s common stock, par value $ per share (the “Common Stock”) in a private
placement to Minggang Qian (the “Purchaser”), pursuant to the Subscription Agreement dated as of June 9, 2022 between the
Company and the Purchaser. The net proceeds to the Company amounted to $
| 8 |
On July 15, 2022, Mr. Wenbin Mao, Mr. Baiwan Niu, Mr. Tianbing Yang and Ms. Cuiyao Luo tendered their resignation for personal reasons and resigned as members of the Board of the Company effective from 28 July, 2022. The Board accepted the resignation of Mr. Wenbin Mao, Mr. Baiwan Niu, Mr. Tianbing Yang and Ms. Cuiyao Luo, and expressed sincere gratitude for their service term as a member of the Board.
On
August 1, 2023, CXJ Technology (Hangzhou) Co., Ltd, a Chinese corporation and a subsidiary of the Company signed an equity transfer agreement
(the “Agreement”) with Mr. Qing Wang. Under this agreement, the Company will dispose
On August 14, 2023, the Board approved the appointment of Zhen Hui Certified Public Accountant (“Zhen Hui”) as the Company’s new independent registered public accounting firm for the fiscal year ending May 31, 2022 and May 31, 2023 effective immediately.
On May 3, 2024, the Board approved the resignation of Zhen Hui as the Company’s independent registered public accounting firm with immediate effective.
On May 3, 2024, the Board approved the appointment of J & S Associate PLT (“J & S”) as the Company’s new independent registered public accounting firm for the fiscal year ending May 31, 2024 effective immediately.
On
September 1, 2024, the Company entered the Subscription Agreement with Zhongxin Lei (the “Purchaser”) to issue and sales
of an aggregate of shares at a price of $ per shares with each share consisting of one share of the Company’s common
stock, par value $ per share (the “Common Stock”). The net proceeds to the Company amounted to $
On
September 1, 2024, the Company entered the Subscription Agreement with Shiguo Wang (the “Purchaser”) to issue and sales of
an aggregate of shares at a price of $ per shares with each share consisting of one share of the Company’s common
stock, par value $ per share (the “Common Stock”). The net proceeds to the Company amounted to $
On
September 2, 2024, the Company entered the Subscription Agreement with Shiguo Wang (the “Purchaser”) to issue and sales of
an aggregate of shares at a price of $ per shares with each share consisting of one share of the Company’s common
stock, par value $ per share (the “Common Stock”). The net proceeds to the Company amounted to $
ECXJ, through its wholly owned subsidiary, CXJ and its subsidiaries and the VIE own and operate an active automobiles products trading and services business in the People’s Republic of China.
Note 2. Summary of Significant Accounting Policies
(a) Basis of presentation and liquidation
The condensed consolidated balance Sheets as of August 31, 2024 and May 31, 2024 and the condensed consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flow for the three months ended August 31, 2024 and 2023 have been prepared by the Company is in conformity with generally accepted accounting principles in the United States (“US GAAP”).
The
Company incurred net loss of $
| 9 |
As
of August 31, 2024 and May 31, 2024, the Company had cash and cash equivalents of $
(b) Going Concern Uncertainties
The
accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP which contemplates
continuation of the Company as a going-concern basis. The going-concern basis assumes that assets are realized, and liabilities are settled
in the ordinary course of business at amounts disclosed in the unaudited condensed consolidated financial statements. The Company’s
ability to continue as a going concern depends upon its ability to market and sell its products to generate positive operating cash flows.
The Company has an accumulated deficit of $
The Company’s cash position is not significant to support the Company’s daily operation. While the Company believes in the viability of its business strategy plans such as Flash Lion e-commerce sales model, Cloud chain (including Wechat, REDnote and Tik Tok’s short videos e-commerce sales model), and its ability to raise additional funds, there can be no assurance to that effect.
The Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and increase of market share, our business plan is to extend our market share through acquiring quality businesses in the automotive aftermarket industries, in order to increase our customer base and supply channels, as well as to acquire more skilled employees and business connections in the industries. We plan to further develop our online and offline marketing platform and internal enterprise resource planning system (ERP) by engaging an external IT company during 2025.
We plan to diversify our existing product portfolio strategically, and thereby provide our customers with a wider range of choices and broaden our existing customer base.
In addition, major shareholder agrees to provide financial support to the Company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
(c) Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIE. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE have been eliminated upon consolidation.
To comply with PRC laws and regulations, the Company provides trading of motor oil, auto parts, exhaust gas cleaners and brand name management services in China via its VIE, which hold critical operating licenses that enable the Company to do business in China. Substantially all of the Company’s revenues, costs and net income (loss) in China are directly or indirectly generated through this VIE. The Company has signed various agreements with its VIE and legal shareholders of the VIE to allow the transfer of economic benefits from the VIE to the Company and to direct the activities of the VIE.
| 10 |
The Company believes that the contractual arrangements among its subsidiaries, the VIE and its shareholders are in compliance with the current PRC laws and legally enforceable. However, uncertainties in the interpretation and enforcement of the PRC laws, regulations and policies could limit the Company’s ability to enforce these contractual arrangements. As a result, the Company may be unable to consolidate the VIE and its subsidiary in the unaudited condensed consolidated financial statements. The Company’s ability to control its VIE also depends on the authorization by the shareholders of the VIE to exercise voting rights on all matters requiring shareholders’ approval in the VIE. The Company believes that the agreements on authorization to exercise shareholder’s voting power are legally enforceable. In addition, if the legal structure and contractual arrangements with its VIE were found to be in violation of any future PRC laws and regulations, the Company may be subject to fines or other actions. The Company believes the possibility that it will no longer be able to control and consolidate its VIE as a result of the aforementioned risks and uncertainties is remote.
The following table sets forth its subsidiaries and the VIE, including their country of incorporation or residence and our ownership interest in such subsidiaries. Please see “Note 4 VIE Structure and Arrangements”.
Schedule of Ownership Interest in Subsidiaries
| Entity Name | Date of Incorporation | Parent Entity | Interest % |
Nature of Operation | Place of Incorporation | |||||
CXJ Investment Group Company Ltd (BVI CXJ) |
US CXJ | |||||||||
CXJ (HK) Technology Group Company Ltd (HK CXJ) |
BVI CXJ | |||||||||
CXJ (Shenzhen) Technology Co., Ltd (SZ CXJ) |
HK CXJ | |||||||||
| VIE: | ||||||||||
CXJ Technology (Hangzhou) Co., Ltd (HZ CXJ) |
SZ CXJ | |||||||||
Qingdao Hong Run Kuo Ye Network Technology Co., Ltd (QD CXJ) |
HZ CXJ | |||||||||
Xishijie Automobile Industry Ecology Technology Co., Ltd (formerly known as Shenzhen Lanbei Ecological Technology Co., Ltd) (SZ Lanbei) |
HZ CXJ | |||||||||
Longkou Xianganfu Trading Co., Ltd. (Longkou CXJ) |
SZ CXJ |
The
Company disposed
(d) Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to going concern, current expected credit loss, allowance of deferred tax asset, useful lives and impairment of long-lived assets, valuation of intangible assets acquired and impairment of goodwill. Actual results may materially differ from these estimates.
| 11 |
(e) Foreign Currency
The Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “Foreign Currency Matters”.
The reporting currency for the Company and its subsidiaries is the U.S. dollar. The Company, BVI CXJ and HK CXJ’s functional currency is the U.S. dollar; SZ CXJ and their VIEs and subsidiary which are incorporated in PRC use the Chinese Renminbi (“RMB”) as their functional currency.
The Company’s subsidiaries, whose records are not maintained in that company’s functional currency, re-measure their records into their functional currency as follows:
| ● | Monetary assets and liabilities at exchange rates in effect at the end of each period | |
| ● | Nonmonetary assets and liabilities at historical rates | |
| ● | Revenue and expense items at the average rate of exchange prevailing during the period |
Gains and losses from these re-measurements were not significant and have been included in the Company’s results of operations.
The Company’s subsidiaries, whose functional currency is not the U.S. dollar, translate their records into the U.S. dollar as follows:
| ● | Assets and liabilities at the rate of exchange in effect at the balance sheet date | |
| ● | Equities at the historical rate | |
| ● | Revenue and expense items at the average rate of exchange prevailing during the period |
Adjustments arising from such translations are included in accumulated other comprehensive income in shareholders’ equity.
Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective periods:
Schedule of Exchange Rates
| 2024 | 2023 | |||||||
| As
of and for the three months ended August 31, | ||||||||
| 2024 | 2023 | |||||||
| Period-end RMB: US$1 exchange rate | ||||||||
| Period-average RMB: US$1 exchange rate | ||||||||
| Exchange rate | ||||||||
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation.
(f) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, demand deposits placed with banks or other financial institutions and have original maturities of less than three months. The Company’s primary bank deposits are located in the USA, Hong Kong and the PRC.
(g) Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable is presented net of allowance for doubtful accounts. Our accounts receivable consists mainly of trade receivables derived from selling of motor oil and auto parts with contractual payment terms. The provision for doubtful accounts reflects the current estimate of credit losses expected to be incurred over the life of the financial asset, based on historical experience, current conditions and reasonable forecasts of future economic conditions.
Further, we evaluate the collectability of our accounts receivable and if there is doubt that we will collect the full amount, we will record a reserve specific to that customer’s receivable balance. There was no provision for doubtful accounts for the period ended August 31, 2024.
(h) Inventories, Net
Inventories consisting of finished goods are stated at the lower of cost or market value. The Company used the weighted average cost method of accounting for inventory. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete, spoiled, or in excess of future demand. The Company provides impairment that is charged directly to cost of sales when is has been determined the product is obsolete, spoiled, and the Company will not be able to sell it at a normal profit above its carrying cost. The Company’s primary products are motor oil and auto parts.
i) Property and equipment
Property
and equipment are stated at cost, less depreciation, amortization and impairments. Depreciation and amortization of property and equipment
are provided using the straight-line method. The estimated useful lives for computer equipment, computer software, engineering and test
equipment and furniture and fixtures are generally to
(j) Prepayments
Prepayments are mainly consisted of prepaid income tax, rental, prepayments for consulting fee and advances to supplies.
| 12 |
(k) Intangible Assets
The intangible assets consist of costs occurred to develop the software and purchased patents for business operations. We evaluate intangible assets for impairment when factors indicate that the carrying value of an asset may not be recoverable. When factors indicate that such assets should be evaluated for possible impairment, we review whether we will be able to realize our intangible assets by analyzing the projected undiscounted cash flows in measuring whether the asset is recoverable.
If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
The
Company recognized an impairment loss on intangible assets amounted to $
(l) Impairment of Long-lived Assets Other Than Goodwill
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Impairment may be the result of becoming obsolete from a change in the industry or new technologies. Impairment is present if the carrying amount of an asset is less than its undiscounted cash flows to be generated.
If an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
(m) Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with FASB ASC Topic 350, “Intangibles-Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.
In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim reporting periods beginning after December 15, 2022 for smaller reporting companies. The Company has early adopted ASU 2017-04 on June 1, 2020.
(n) Fair Value of Financial Instruments
The Company accounts for financial instruments in accordance to ASC Topic 820, “Fair Value Measurements and Disclosures,” which requires disclosure of the fair value of financial instruments held by the Company and ASC Topic 825, “Financial Instruments,” which defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the condensed consolidated balance sheets for financial assets and liabilities, which primarily consist of cash and cash equivalents, accounts receivable, prepayments and other current assets, accounts payable, accrued liabilities, customer advances, are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
● Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
| 13 |
(o) Revenue Recognition
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Under Topic 606, revenues are recognized when the promised products have been confirmed of delivery or services have been transferred to the consumers in amounts that reflect the consideration the customer expects to be entitled to in exchange for those services. The Company presents value added taxes (“VAT”) as reductions of revenues. The Company recognizes revenues net of value added taxes (“VAT”) and relevant charges.
Product Revenue
We generate revenue primarily from the sales of motor oil, auto parts and automobile exhaust cleaners directly to customers. We recognize product revenue at a point in time when the control of the products has been transferred to customers. The transfer of control is considered complete when products have been picked up by or shipped to our customers. Our sales arrangements for automobile exhaust cleaners and auto parts usually require a full prepayment before the delivery of products.
We also generate revenue from the sales of auto parts directly to the customers, such as a business or individual engaged in auto parts businesses. We recognize revenue at a point in time when products are delivered and customer acceptance is made. For the sales arrangements of auto parts products, we generally require payment upon issuance of invoices.
Service Revenue
We also generate revenue from brand name authorization fee and brand name management service under separate contracts. Revenue from brand name authorization and management services include service fees for provision of brand name “teenage hero car” to our customers, and provision of management service. Revenue from the maintenance service to the customers is recognized at a point in time when services are provided. Revenue from the management service to the customer is recognized as the performance obligation is satisfied over time over the contracting period.
(p) Sales and Distribution Expense
Sales and distribution expenses consist of payroll related costs, promotion expenses, transportation costs, conference expenses, office expenses, travelling and entertainment expenses.
| 14 |
(q) General and Administrative Expenses
General and administrative expenses consist of payroll related costs, consultancy expenses, bad debts written off, intangible assets written off, rental expenses, office expense, travelling and entertainment expenses.
(r) Operating Leases
The Company recognizes its leases in accordance with ASC 842 - Leases. Under ASC 842, operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. The Company elected the short-term lease exemption for contracts with lease terms of 12 months or less. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.
(s) Value-added Taxes
Revenue
is recognized net of value-added taxes (“VAT”).
(t) Income Taxes
The Company followed the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes, or ASC 740. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company recorded a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate.
| 15 |
The Company accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit recognized in accordance with ASC 740 are classified in the consolidated statements of comprehensive loss as income tax expense.
(u) Employee Benefit Expenses
As stipulated by the regulations of the PRC, full-time employees of the Company are entitled to various government statutory employee benefit plans, including medical insurance, maternity insurance, workplace injury insurance, unemployment insurance and pension benefits through a PRC government-mandated multi-employer defined contribution plan. The Company is required to make contributions to the plan and accrues for these benefits based on certain percentages of the qualified employees’ salaries.
(v) Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the changes in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. For each of the periods presented, the Company’s comprehensive income (loss) includes net loss and foreign currency translation adjustment and is presented in the consolidated statements of operations and comprehensive income (loss).
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
(x) Segment Reporting
The
Company reports each material operating segment in accordance with ASC 280, “Segment Reporting”. Operating segments are defined
as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker
is the chief executive officer. The Company has determined that it has only
(y) Recently Issued Accounting Standards
During the period ended August 31, 2024, there have been no new, or existing, recently issued accounting pronouncements that are of significance, or potential significance, that impact the Company’s consolidated financial statements.
Note 3. Acquisition
On
March 28, 2019, Mr. Cai, Lixin (Mr. Cai), the Company’s Chairman of the Board and Chief Executive Officer and Chief Financial Officer,
incorporated CXJ Technology (Hangzhou) Co., Ltd (“HZ CXJ”) in Hangzhou, China. Mr. Cai in turn incorporated CXJ Investment
Group Company Ltd (“CXJ”), CXJ (HK) Technology Group Company Ltd (“HK CXJ”), and CXJ (Shenzhen) Technology Co.,
Ltd (“SZ CXJ”) and reorganized these entities with CXJ being a holding entity with the solely shareholder. As a result of
the reorganization, CXJ owns
| 16 |
On June 18, 2019, the Company underwent a change of control as a result of the transfer of shares of Series A Preferred stock (which voted on a 10 for one basis at the time of the change of control) from Custodian Ventures, LLC and shares of common stock to Xinrui Wang.
On May 28, 2020, we consummated the transactions contemplated by the Share Exchange Agreement among the Company, CXJ Investment Group Company Limited (“CXJ”), a British Virgin Islands Corporation and the shareholder of CXJ, pursuant to which we acquired all the ordinary shares of CXJ in exchange for the issuance to the shareholder of CXJ of an aggregate of shares of the Company. The shareholder is the selling security holder in this prospectus and are all affiliates. As a result of the transactions contemplated by the Share Exchange, CXJ became a wholly-owned subsidiary of the Company.
The Company accounted for above transaction as a reverse acquisition under ASC Subtopic 805-40, based on the fact that the CXJ is an accounting acquirer and the Company is the accounting acquiree. Meanwhile, the CXJ retrospectively consolidates the Company and as if it had been owned by CXJ since May 28, 2020, the date the Company was acquired by Mr. Lixin Cai, in accordance with ASC Subtopic 805-50.
On
August 19, 2021, CXJ Technology (Hangzhou) Co., Ltd acquired
On
June 14, 2022, the Company completed the issuance and sales of an aggregate of shares at a price of $ per shares with each
share consisting of one share of the Company’s common stock, par value $ per share (the “Common Stock”) in a private
placement to Minggang Qian (the “Purchaser”), pursuant to the Subscription Agreement dated as of June 9, 2022 between the
Company and the Purchaser. The net proceeds to the Company amounted to $
On
November 4, 2022, CXJ (Shenzhen) Technology Co., Ltd acquired
On
August 1, 2023, CXJ Technology (Hangzhou) Co., Ltd, a Chinese corporation and a subsidiary of the Company signed an equity transfer agreement
(the “Agreement”) with Mr. Qing Wang. Under this agreement, the Company will dispose
Note 4. VIE Structure and Arrangements
The Company consolidates VIE in which it holds a variable interest and is the primary beneficiary through contractual agreements. The Company is the primary beneficiary because it has the power to direct activities that most significantly affect their economic performance and have the obligation to absorb the majority of their losses or benefits. The results of operations and financial position of the VIE are included in the Company’s consolidated financial statements.
In order to operate its business in PRC and to comply with PRC laws and regulations that prohibit or restrict foreign ownership of companies that provides value-added services, the Company entered into a series of contractual agreements with the VIE: CXJ Technology (Hangzhou) Co., Ltd. (“HZ CXJ”). These contractual agreements may not be terminated by the VIE, except with the consent of, or a material breach by us. Currently, the Company is still evaluating the overall operating strategy for business and does not have plan to provide any funding to the VIE.
The key terms of the VIE Agreements are summarized as follows:
(a) Exclusive Consulting and Services Agreement
The wholly foreign owned enterprise (“WFOE”) has the exclusive right to provide technical service, marketing and management consulting service, financial support service and human resource support services to the VIE, and the VIE is required to take all commercially reasonable efforts to permit and facilitate the provision of the services by WFOE. As compensation for providing the services, WFOE is entitled to receive service fees from the VIE equivalent to the WFOE’s cost plus certain percentage of such costs as calculated on accounting policies generally accepted in the PRC. The WFOE and the VIE agree to periodically review the service fee and make adjustments as deemed appropriate. The term of the Technical Services Agreement is perpetual, and may only be terminated upon written consent of both parties.
(b) Equity Pledge Agreement
The VIE’s shareholders pledged all of their equity interests in VIE (the “Collateral”) to WFOE, our wholly owned subsidiary in PRC, as security for the performance of the obligations to make all the required technical service fee payments pursuant to the Technical Services Agreement and for performance of the VIEs’ Shareholders’ obligation under the Call Option Agreement. The terms of the Equity Pledge Agreement expire upon satisfaction of all obligations under the Technical Services Agreement and Call Option Agreement.
| 17 |
(c) Exclusive Option Agreement
The VIEs’ Shareholders granted an exclusive option to WFOE, or its designee, to purchase, at any time and from time to time, to the extent permitted under PRC law, all or any portion of the VIE’s shareholders’ equity in the VIE. The exercise price of the option shall be determined by WFOE at its sole discretion, subject to any restrictions imposed by PRC law. The term of the agreement is until all of the equity interest in the VIE held by the VIEs’. Shareholders are transferred to WFOE, or its designee and may not be terminated by any part to the agreement without consent of the other parties.
(d) Power of Attorney
The VIE’s shareholders granted WFOE the irrevocable right, for the maximum period permitted by law, all of its voting rights as shareholders of the VIE. The VIE’s shareholders may not transfer any of its equity interest in the VIE to any party other than WFOE. The Power of Attorney agreements may not be terminated except until all of the equity in VIEs has been transferred to WFOE or its designee.
Note 5. Shareholders’ Equity
The Company has shares of common stock authorized with a par value of $ per share as of August 31,2024 and May 31, 2024.
Effective
July 9,2019 we changed our name from Global Entertainment Corp to CXJ Group Co., Limited. On July 12, 2019, the Company effectuated a
On
October 4, 2019, Xinrui Wang (the “Seller”), entered into a Stock Purchase Agreement pursuant to which the Seller agreed
to sell to Wenbin Mao and Baiwan Niu (the “Purchasers”), totaling preferred stock of the Company (“Shares”)
owned by the Seller, for an amount of $
On May 28, 2020, we consummated the transactions contemplated by the Share Exchange Agreement among the Company, CXJ Investment Group Company Limited, a British Virgin Islands Corporation (“CXJ”) and the shareholder of CXJ, pursuant to which we acquired all the ordinary shares of CXJ in exchange for the issuance to the shareholder of CXJ of an aggregate of shares of the Company. The shareholder is the selling security holder in this prospectus and are all affiliates. As a result of the transactions contemplated by the Share Exchange, CXJ became a wholly-owned subsidiary of the Company.
On
June 14, 2022, the Company completed the issuance and sales of an aggregate of shares at a price of $ per shares with each
share consisting of one share of the Company’s common stock, par value $ per share (the “Common Stock”) in a private
placement to Minggang Qian (the “Purchaser”), pursuant to the Subscription Agreement dated as of June 9, 2022 between the
Company and the Purchaser. The net proceeds to the Company amounted to $
Note 6. Concentration of Risk
(a) Major Customers
For the three months ended August 31, 2024 and 2023, there was no customers who accounted for % or more of the Company’s revenue nor with significant outstanding receivables.
| 18 |
(b) Major Suppliers
For the three months ended August 31, 2024 and 2023, the vendors who accounted for % or more of the Company’s cost of revenue are presented as follows:
Schedule of Major Suppliers
| For
The Three Months Ended August 31, | For
The Three Months Ended August 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | % | % | |||||||||||||
| Foshanshi Yuansheng Blue Sea Automobile Technology Service Co., Ltd | % | % | ||||||||||||||
| Hubei Shuqi New Technology Co., Ltd | % | |||||||||||||||
| Total | % | % | ||||||||||||||
Note 7. Account Receivables, Net
As
of August 31, 2024 and May 31, 2024, there are no allowance for expected credit loss, our accounts receivables are $
Note 8. Prepayments
As
of August 31, 2024 and May 31, 2024, prepayments are $
Schedule of Prepayments
| August 31, 2024 | May 31, 2024 | (Decrease) | ||||||||||
| As of | Increase/ | |||||||||||
| August 31, 2024 | May 31, 2024 | (Decrease) | ||||||||||
| (unaudited) | (audited) | |||||||||||
| $ | $ | $ | ||||||||||
| Prepayments | ||||||||||||
Prepayments
balance $
Note 9. Deposits and Other Receivables
Deposit and other receivable consisted of the following as of August 31, 2024 and May 31, 2024:
Schedule of Deposits and Other Receivables
| August 31, 2024 | May 31, 2024 | (Decrease) | ||||||||||
| As of | Increase/ | |||||||||||
| August 31, 2024 | May 31, 2024 | (Decrease) | ||||||||||
| (unaudited) | (audited) | |||||||||||
| $ | $ | $ | ||||||||||
| Deposits | ||||||||||||
| Other receivables | ( | ) | ||||||||||
| Total | ||||||||||||
Deposits
balance $
As
of August 31, 2024 and May 31, 2024, the deposit and other receivables balances are $
| 19 |
Note 10. Property and Equipment
Property
and equipment are recorded at cost. Depreciation is computed using the straight-line method over estimated useful lives of to
Property and equipment consisted of the following:
Schedule of Property and Equipment
| August 31, 2024 | May 31, 2024 | |||||||
| As of | As of | |||||||
| August 31, 2024 | May 31, 2024 | |||||||
| (unaudited) | audited | |||||||
| $ | $ | |||||||
| Property and equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Foreign translation difference | ( | ) | ( | ) | ||||
| Total property and equipment, net | ||||||||
Note 11. Intangible Assets
The
intangible assets consist of costs incurred to develop the software and purchased patents for business operations. In October 2022, Lixin
Cai increased the share capital of HZ CXJ to $
As
of August 31, 2024, the intangible assets were impaired due to no projected undiscounted cash flow in future. The intangible assets balances
are $ for both the period ended August 31, 2024 and May 31, 2024. The impairment loss incurred during the period ended August 31, 2024
is $
Schedule of Intangible Assets
| August 31, 2024 | May 31, 2024 | |||||||
| As of | As of | |||||||
| August 31, 2024 | May 31, 2024 | |||||||
| (unaudited) | audited | |||||||
| $ | $ | |||||||
| Purchased patents and developed software | ||||||||
| Add: Capitalization of software | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Less: Accumulated impairment of intangible assets | ( | ) | ( | ) | ||||
| Foreign translation difference | ( | ) | ( | ) | ||||
| Total purchased patents and developed software, net | ||||||||
Note 12. Business Combination and Goodwill
On
May 28, 2020, ECXJ completed the acquisition of
| 20 |
The determination of fair values involves the use of significant judgment and estimates and in the case of HZ CXJ, this is with specific reference to acquired intangible asset. The judgments used to determine the estimated fair value assigned to assets acquired and liabilities assumed, as well as the intangible asset life and the expected future cash flows and related discount rate, can materially impact the Company’s consolidated financial statements. Significant inputs and assumptions used for the model included the amount and timing of expected future cash flows and discount rate. The Company utilized the assistance of a third-party valuation appraiser to determine the fair value as of the date of acquisition.
The purchase price was allocated on the acquisition date of HZ CXJ as follows:
Schedule of Purchase Price Allocated on Acquisition
As of May 28, 2020 | ||||
| $ | ||||
| Cash at banks and in hand | ||||
| Trade receivables | ||||
| Inventory on hand | ||||
| Prepayments, other receivables and deposits | ||||
| Due from a related party | ||||
| Due to directors | ||||
| Due from a shareholder | ||||
| Due from a related party | ||||
| Operating lease right-of-use assets | ||||
| Total assets | ||||
| $ | ||||
| Account Payable | ( | ) | ||
| Advanced Receipts | ( | ) | ||
| Accrued liabilities, other payable and deposits received | ( | ) | ||
| Due to a related company | ( | ) | ||
| Due to related parties | ( | ) | ||
| Due to directors | ( | ) | ||
| Operating lease liabilities, net of current portion | ( | ) | ||
| Operating lease liabilities, non current portion | ( | ) | ||
| Total liabilities | ( | ) | ||
| Net tangible liabilities | ( | ) | ||
| Goodwill | ||||
| Total purchase price | ||||
| $ | ||||
| Consideration in form of shares | ||||
| Total consideration | ||||
| 21 |
Goodwill
is tested for impairment annually as of the first day of fiscal May or more frequently when events or changes in circumstances indicate
that impairment may have occurred. The Company performed its fourth quarter 2024 annual goodwill impairment test using a quantitative
assessment for its HZ CXJ reporting unit. The quantitative assessment for HZ CXJ reporting unit indicated that its carrying amount exceeded
its fair value, and resulted in an impairment charge of $
The fair value estimate for the HZ CXJ reporting unit was based on a blended analysis of the present value of future discounted cash flows and market value approach. The significant estimates used in the discounted cash flow model included the Company’s weighted average cost of capital, projected cash flows and the long-term rate of growth. Significant estimates in the market approach model included identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and earnings multiples in estimating the fair value of the reporting unit.
The decline in the fair value of the HZ CXJ’s reporting unit has mainly resulted from changes to its projected revenue growth rates and timeline, which were finalized during the Company’s annual long-term planning process in the fourth quarter of 2024. The HZ CXJ reporting unit has been in operation since June 2019, therefore the Company has less experience estimating the operating performance of this reporting unit. The Company’s expected revenue increase has been slower than anticipated due to the time required to ramp up activity for new customers. In addition, during its long-term planning process performed, the Company made adjustments to reduce its forecasted spend on HZ CXJ in 2025 and beyond, which further impacted expected revenue growth rates and their timing. These changes in critical assumptions related to the reporting unit resulted in a reduction in its estimated fair value.
The Company will continue to evaluate the recoverability of goodwill at the reporting unit level on an annual basis and whenever events or changes in circumstances indicate there may be a potential impairment. If the operating results of the Company’s reporting units deteriorate in the future, it may cause the fair value of one or more of the reporting units to fall below their carrying value, resulting in additional goodwill impairment charges.
The
goodwill value $
During the annual impairment assessment, a quantitative assessment was conducted, which involved estimating the fair value of the reporting unit using the income approach.
Key assumptions in the quantitative assessment included:
(i)
Discount rate:
(ii)
Projected sales and cost of sales:
(iii)
Terminal growth rate:
(iv)
Inflation rate:
The use of the estimates in the quantitative assessment are highly judgmental and actual results may differ significantly from what is currently assessed. Accordingly, fluctuations in any of the key attributes may result in a significant change in the projected cashflows underlying the quantitative assessment, which could have a material impact on the assessed values of goodwill.
| 22 |
The summary of impairment loss on goodwill is as below:
Schedule of Impaired Loss on Goodwill
| $ | ||||
| Goodwill as of May 31, 2020 | ||||
| Impaired goodwill written off - May 31, 2021 | ( | ) | ||
| Goodwill as of May 31, 2021 | ||||
| Impaired goodwill written off - May 31, 2022 | ( | ) | ||
| Goodwill as of May 31, 2022 | ||||
| Impaired goodwill written off - May 31, 2023 | ( | ) | ||
| Goodwill as of May 31, 2023 | ||||
| Impaired goodwill written off - May 31, 2024 | ( | ) | ||
| Goodwill as of May 31, 2024 | ||||
Disposal of subsidiary
On
August 1, 2023, HZ CXJ disposed
The purchase price was allocated on the disposal date of Xishijie Automobile Industry Ecology Technology Co., Ltd (formerly known as Shenzhen Lanbei Ecological Technology Co., Ltd) as follow:
Schedule of Purchase Price Allocated on Acquisition
As of August 1, 2023 | ||||
| $ | ||||
| Cash at banks and in hand | ||||
| Trade receivables | ||||
| Inventory on hand | ||||
| Prepayments, other receivables and deposits | ||||
| Due from a related party | ||||
| Operating lease right-of-use assets | ||||
| Total assets | ||||
| $ | ||||
| Account Payables | ( | ) | ||
| Accrued liabilities, other payables and deposits received | ( | ) | ||
| Due to a related company | ( | ) | ||
| Operating lease liabilities, net of current portion | ( | ) | ||
| Total liabilities | ( | ) | ||
| Net tangible assets | ||||
| Share of 49% of non-controlling interest | ||||
| 51% of equity interest | ||||
| Other comprehensive income | ||||
| Loss on disposal | ||||
| Total purchase price |
The
loss on disposal $
| 23 |
Note 13. Income Taxes
United States
Under the current tax laws of United States, the Company and its subsidiaries are not subject to tax on their income or capital gains. In addition, upon of dividends by the Company to its shareholders, no United States withholding tax will be imposed.
British Virgin Island
Under the current tax laws of British Virgin Island, the Company and its subsidiaries are not subject to tax on their income or capital gains. In addition, upon of dividends by the Company to its shareholders, no British Virgin Island withholding tax will be imposed.
Hong Kong
From
year of assessment of 2018/2019 onwards, Hong Kong profit tax rates are
P.R.C China
The
China Corporate Income Tax Law (“CIT Law”) became effective on January 1, 2008. Under the CIT Law, China’s dual tax
system for domestic enterprises and foreign investment enterprises (“FIEs”) was effectively replaced by a unified system.
The new law establishes a tax rate of
The following table reconciles the PRC statutory rates to the Company’s effective tax rate for the three months ended August 31, 2024 and August 31, 2023, respectively:
Schedule of Reconciles the PRC Statutory Rates to the Company’s Effective Tax Rate
For the three months ended August 31, 2024 | For the three months ended August 31, 2023 | |||||||
| PRC statutory rate | % | % | ||||||
| Net operating losses for which no deferred tax assets was recognized | ( | )% | ( | )% | ||||
| The Company’s expense is out of limit than that of PRC statutory tax policy allowed | % | % | ||||||
| Effective income tax rate | % | % | ||||||
Income tax expense for the three months ended August 31, 2024 and August 31, 2023, respectively are as follows:
Schedule of Income Tax Expense
| August 31, 2024 | August 31, 2023 | |||||||
| For the three months ended | ||||||||
| August 31, 2024 | August 31, 2023 | |||||||
| Current | ( | ) | ||||||
| Deferred | ||||||||
| Income tax expense/(income) | ( | ) | ||||||
Income
tax income $
| 24 |
Note 14. Accounts Payable
Accounts payable consists of the following:
Schedule of Accounts Payable
August 31, 2024 | May 31, 2024 | Increase/ (Decrease) | ||||||||||
| As of | ||||||||||||
August 31, 2024 | May 31, 2024 | Increase/ (Decrease) | ||||||||||
| (unaudited) | (audited) | |||||||||||
| $ | $ | $ | ||||||||||
| Accounts Payable | ( | ) | ||||||||||
The
account payable balance of $
Note 15. Advance Received
Advance received consists of the following:
Schedule of Advance Received
August 31, 2024 | May 31, 2024 | Increase/ (Decrease) | ||||||||||
| As of | ||||||||||||
August 31, 2024 | May 31, 2024 | Increase/ (Decrease) | ||||||||||
| (unaudited) | (audited) | |||||||||||
| $ | $ | $ | ||||||||||
| Advance Received | ||||||||||||
Advance
received balance $
As
of August 31, 2024 and May 31, 2024, the advance received are $
Note 16. Accrued Expenses, Deposit Received and Other Payable
Accrued expenses, deposit received and other payable consist of the following:
Schedule of Accrued Expenses, Deposit Received and Other Payable
August 31, 2024 | May 31, 2024 | Increase/ (Decrease) | ||||||||||
| As of | ||||||||||||
August 31, 2024 | May 31, 2024 | Increase/ (Decrease) | ||||||||||
| (unaudited) | (audited) | |||||||||||
| $ | $ | $ | ||||||||||
| Accrued Expenses | ( | ) | ||||||||||
| Deposit Received | ( | ) | ||||||||||
| Other Payable | ||||||||||||
| Total | ||||||||||||
Accrued
expenses balance $
As
of August 31, 2024 and May 31, 2024, the accrued expenses, deposit received and other payable balances are $
| 25 |
Note 17. Related Party Transaction
Amounts due from related parties as of August 31, 2024 and May 31, 2024 are as follows:
Schedule of Related Party Transaction
Amounts due from related parties
| As of | ||||||||||
| Relationship with the Company | August 31, 2024 | May 31, 2024 | ||||||||
| (unaudited) | (audited) | |||||||||
| $ | $ | |||||||||
| New Charles Technology Group Limited | Controlled by Lixin Cai | |||||||||
| Hangzhou Xieli Internet Technology Co., Ltd | Controlled by Cuiyao Luo | |||||||||
| Total | ||||||||||
As
of August 31, 2024, the Company paid expenses $
Amounts due to related parties
| As of | ||||||||||
| ` | Relationship with the Company | August 31, 2024 | May 31, 2024 | |||||||
| (unaudited) | (audited) | |||||||||
| $ | $ | |||||||||
| Cuiyao Luo | CFO & major shareholder | |||||||||
| Rudong Shi | Director | |||||||||
| Total | ||||||||||
As
of August 31, 2024 Cuiyao Luo advanced $
Note 18. Operating Lease
The Company has operating leases for its office facilities and warehouse. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.
The following table provides a summary of leases as of August 31, 2024 and May 31, 2024:
Summary of Operating Leases Assets and Liabilities
| Assets/liabilities | Classification | August 31,2024 $ | May 31, 2024 $ | |||||||
| Assets | ||||||||||
| Operating lease right-of-use assets | Operating lease assets | |||||||||
| Liabilities | ||||||||||
| Current | ||||||||||
| Operating lease liability - current | Current operating lease liabilities | |||||||||
| Long-term | ||||||||||
| Operating lease liability – net of current portion | Long-term operating lease liabilities | |||||||||
| Total lease liabilities | ||||||||||
| 26 |
The operating lease expense for the three months ended August 31, 2024 and 2023 were as follows:
Schedule of Operating Lease Expense
| Three Months Ended | ||||||||||
| Lease cost | Classification | August 31, 2024 | August 31, 2023 | |||||||
| $ | $ | |||||||||
| Operating lease cost | General and administrative Expenses | |||||||||
Maturities of operating lease liabilities as of August 31, 2024 were as follows:
Schedule of Maturities of Operating Lease Liabilities
| Maturity of Lease Liabilities | Operating Leases $ | |||
| Remaining of 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease payments | ||||
Maturities of operating lease liabilities as of May 31, 2024, were as follows:
| Maturity of Lease Liabilities | Operating Leases $ | |||
| Remaining of 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease payments | ||||
| 27 |
Supplemental information related to operating leases was as follows:
Schedule of Supplemental Information
| Three Months Ended | ||||||||
August 31, 2024 | August 31, 2023 | |||||||
| $ | $ | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| New operating lease assets obtained in exchange for operating lease liabilities | ||||||||
| Weighted average remaining lease term | ||||||||
| Weighted average discount rate | % | % | ||||||
Amortization
expense was $
Note 19. Subsequent Event
IIn accordance with ASC 855-10, the Company has analyzed its operations subsequent to the August 31, 2024 to the date these financial statements were issued and has determined that:
| a) | On September 1, 2024, the Company entered the subscription agreement with Zhongxin Lei to issue shares at a price of $ per share with each share consisting of one share of the Company’s common stock, par value $ per share. |
| b) | On September 1, 2024, the Company entered the subscription agreement with Shiguo Wang to issue shares at a price of $ per share with each share consisting of one share of the Company’s common stock, par value $ per share. |
| c) | On September 2, 2024, the Company entered the subscription agreement with Shiguo Wang to issue shares at a price of $ per share with each share consisting of one share of the Company’s common stock, par value $ per share. |
Other than the above, there is no other matter or circumstance arisen since August 31, 2024, which has significantly affected the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.
| 28 |
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Information included in this Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerning future events and results. We generally use the words “believes,” “expects,” “intends,” “plans,” “anticipates,” “likely,” “will” and similar expressions to identify forward-looking statements. Such forward-looking statements, including those concerning our expectations, involve risks, uncertainties and other factors, some of which are beyond our control, which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, but are not limited to, those factors set forth in our Prospectus on Form S-1 for the period ended August 31, 2024 and the condensed consolidated financial statements included in this Report. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Report.
Results of Operations
The following table sets forth a summary of our consolidated results of operations and comprehensive loss for the periods presented, both in absolute amount and as a percentage of our revenues for the periods presented. This information should be read together with our audited consolidated financial statements and related notes as well as unaudited interim consolidated financial statements and related notes included elsewhere in this Form 10-Q. The results of operations in any period are not necessarily indicative of our future trends.
For the Three Months Ended August 31, | Quarter to Quarter Comparison Increase/ | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| $ | $ | $ | ||||||||||
| (unaudited) | (unaudited) | |||||||||||
| Revenue | 114,382 | 504,517 | (390,135 | ) | ||||||||
| Cost of Revenue | (19,373 | ) | (223,930 | ) | 204,557 | |||||||
| Gross Profit | 95,009 | 280,587 | (185,578 | ) | ||||||||
| Other (Expense)/Income | (165 | ) | 4,582 | (4,747 | ) | |||||||
| Selling and Distribution Expenses | (56,129 | ) | (156,563 | ) | 100,434 | |||||||
| General and Administrative Expenses | (82,547 | ) | (634,930 | ) | 552,383 | |||||||
| Loss from Operation | (43,832 | ) | (506,324 | ) | 462,492 | |||||||
| Interest Income | 2 | 115 | (113 | ) | ||||||||
| Loss before Income Taxes | (43,830 | ) | (506,209 | ) | 462,379 | |||||||
| Income Taxes | 2,263 | - | 2,263 | |||||||||
| Net Loss before Non-controlling Interest | (41,567 | ) | (506,209 | ) | 464,642 | |||||||
| Non-controlling Interest | - | (3,265 | ) | 3,265 | ||||||||
| Loss Attributable to Shareholders | (41,567 | ) | (502,944 | ) | 461,377 | |||||||
Revenues
For the three months period ended August 31, 2024, we generated total revenue of $114,382 that included brand name administrative fee $85,018, exhaust gas cleaner, motor oil and auto parts $29,297 and others $67.
| For the Three Months Ended August 31, | ||||||||||||||||||||
| 2024 | % of Net | 2023 | % of Net | Change | ||||||||||||||||
| $ | Sales | $ | Sales | $ | ||||||||||||||||
| Administrative fee of brand name | 85,018 | 74.3 | % | 183,081 | 36.3 | % | (98,063 | ) | ||||||||||||
| Exhaust gas cleaner, motor oil and auto parts | 29,297 | 25.6 | % | 321,126 | 63.7 | % | (291,829 | ) | ||||||||||||
| Others | 67 | 0.1 | % | 310 | 0.1 | % | (243 | ) | ||||||||||||
| Total | 114,382 | 100 | % | 504,517 | 100 | % | (390,135 | ) | ||||||||||||
Total revenues for three months ended August 31, 2024 were $114,382 compared to $504,517 for the three months ended August 31, 2023, which decreased by $390,135. Due to the slow market activity, brand name administrative fee decreased by $98,063 and exhaust gas cleaner, motor oil, auto parts and others decreased by $292,072.
The Company are engaging in trading of exhaust gas cleaner, auto parts and motor oil to their third-party agents in China. Revenues from services consist of administrative of brand name and training fees. Payments of services are generally received before delivery the services.
| 29 |
Sales of Exhaust Gas Cleaner, Motor Oil and Auto Parts
Revenues related to sales of exhaust gas cleaner, motor oil and auto parts are recognized in the consolidated statements of operations and comprehensive income/(loss) at the time when the goods are delivered and the ownership transfer to the customers.
Administrative Fee of Brand Name
We earned the brand name administrative fees from our customers, who pay one-time fixed fee RMB100,000, RMB200,000 and RMB300,000 for one year, RMB90,000 for one to three years and RMB200,000 for one to five years for exchange of (1) the right to use the brand name “Chejiangling / Teenage Hero Car” and “ECXJ”, (2) the right to receive 10% of other new shops’ brand name permission fee, (3) the right to receive 5% of other new shops’ selling, and (4) the right to receive 20% of other new shops’ administrative fee. The fee is not be refundable.
Cost of Revenue
Cost of revenue consist primarily of costs associated with the purchase of goods. For three months ended August 31, 2024 compared to three months ended August 31, 2023.
| For the Three Months Ended August 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| $ | $ | $ | ||||||||||
| Exhaust gas cleaner, motor oil and auto parts | 18,708 | 223,549 | (204,841 | ) | ||||||||
| Others | 665 | 381 | 284 | |||||||||
| Total | 19,373 | 223,930 | (204,557 | ) | ||||||||
Cost of revenue for the three months ended August 31, 2024 were $19,373 compared to $223,930 as of ended August 31, 2023, a decrement of $204,557. Due to the slow market activity, exhaust gas cleaner, motor oil and auto parts decreased by $204,841 and offset increase of others by $284.
Gross Profit
Gross profit for the three months ended August 31, 2024 were $95,009 compared to $280,587 as of August 31, 2023, a decrement of $185,578 is mainly due to the decrease of revenue from brand name administrative fee and sales of motor oil and auto parts.
Selling and Distribution Expenses
Selling and Distribution expenses include payroll costs, sales-related consultancy fee, travelling expenses, transportation costs, conference and function expenses and other operating expenses associated with sales and marketing.
For three months ended August 31, 2024 compared to three months ended August 31, 2023:
| For The Three Months Ended August 31, | ||||||||||||||||||||
| 2024 | % of Net | 2023 | % of Net | Change | ||||||||||||||||
| $ | Sales | $ | Sales | $ | ||||||||||||||||
| Selling and Distribution Expenses | 56,129 | 49.1 | % | 156,563 | 31.0 | % | (100,434 | ) | ||||||||||||
| 30 |
Selling and Distribution expenses for the three months ended August 31, 2024 were $56,129 compared to $156,563 as of August 31, 2023, a decrease of $100,434 is due to decrease in promotion expenses $54,022, payroll costs $24,552, consultancy fee $10,176, travelling expenses $7,367, conference expenses $3,782, transportation costs $2,568, other expenses $66, offset increased in office expenses $1,042, sales commission $900 and entertainment expenses $157. The decrease in selling and distribution expenses is due to slow market activity.
General and Administrative Expenses
General and Administrative (G&A) expenses consist primarily of payroll costs, audit fee, consultancy fee, rental fee and other related expenses.
For three months ended August 31, 2024 compared to three months ended August 31, 2023:
| For the Three Months Ended August 31, | ||||||||||||||||||||
| 2024 | % of Net | 2023 | % of Net | Change | ||||||||||||||||
| $ | Sales | $ | Sales | $ | ||||||||||||||||
| General and Administrative Expenses | 82,547 | 72.2 | % | 634,930 | 125.8 | % | (552,383 | ) | ||||||||||||
G&A expenses for the three months ended August 31, 2024 were $82,547 compared to $634,930 as of August 31, 2023, a decrease of $552,383 was primarily due to the decrease of consultancy fees $460,224, amortization of intangible assets $34,771, payroll costs $21,737, office expenses $16,998, impairment of development costs $14,907, travelling expenses $6,541, entertainment expenses $1,689 and others $1,056, offset increase in R&D expenses $3,165 and rental $2,375. The decrease in general and administrative expenses is due to slow market activity.
Taxation
We recorded a income tax refund of $2,263 and $0 income tax expenses for the period ended August 31, 2024 and August 31, 2023, respectively.
The Company, incorporated in the PRC, was governed by the income tax law of the PRC, and is subject to PRC enterprise income tax (“EIT”), The EIT rate of PRC is 25%.
Generally, our PRC subsidiaries, VIEs and their subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
We are subject to value-added tax at a rate of 13% on sales of motor oil and auto parts and 6% on the services (brand name management services), in each case less any deductible value-added tax we have already paid or borne. We are also subject to surcharges on value-added tax payments in accordance with PRC law.
Net Profit/(Loss)
Net loss $41,567 and $502,944 occurred for the three months ended August 31, 2024 and 2023 respectively, due to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Since commencing operations, our primary uses of cash have been to finance working capital needs for have financed these requirements primarily from cash generated from operations and related party advances.
We are in start-up stage operations and have generated limited revenues. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
| 31 |
We expect that we will be able to meet our needs to fund operations, capital expenditures and other commitments in the next 12 months primarily with our cash and cash equivalents, operating cash flows.
We may, however, require additional cash resources due to changes in business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could contractually result in additional dilution to stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations. Financing may not be available in amounts or on terms acceptable to us, or at all.
The following table sets forth a summary of our cash flows for the periods indicated.
For the Three Months Ended August 31, | Quarter to Quarter Comparison | |||||||||||
| 2024 | 2023 | |||||||||||
| $ | $ | $ | ||||||||||
| Cash Flows provided by operating activities | 75,876 | 100,463 | (24,587 | ) | ||||||||
| Cash Flows used in investing activities | (1,588 | ) | (21,600 | ) | 20,012 | |||||||
| Cash Flows used in financing activities. | (5,540 | ) | (14,204 | ) | 8,664 | |||||||
| Effects on change in foreign exchange rate | 785 | (13,225 | ) | 14,010 | ||||||||
| Net Change in cash during period | 69,533 | 51,434 | 18,099 | |||||||||
Operating Activities
Cash flow provided by operating activities for the three months ended August 31, 2024 and 2023 is $75,876 and $100,463 respectively, reflecting a decrease of cash flow $24,587. The decrease in net cash provided by operating activities is mainly due to decrease cash flow of advance received $428,134, prepayment, deposit and other receivable $83,464, amortization of intangible assets $51,266, inventory $17,690, accrued liabilities and other payable $12,199, operating lease liabilities $9,008, accounts receivable $872, and offset net cash inflow of decrease net loss $464,642, accounts payable $103,255, amortization of right-use of assets $8,480, impairment of intangible assets $1,588 and depreciation $81.
Investing Activities
Cash flow used in investing activities is $1,588 for the three months ended August 31, 2024, as compared to $21,600 for the three months ended August 31, 2023, reflecting an increase of cash flow $20,012. The increase is due to decrease of investment in development costs $14,907, disposal of subsidiary, net of cash disposed $2,804 and purchase of property, plant and equipment $2,301.
Financing Activities
Cash flow used in financing activities is $5,540 for the three months ended August 31, 2024, compared to provide by financing activities $14,204 for the three months ended August 31, 2023, reflecting an increase of $8,664. The decrease in net cash used in financing activities was mainly due to advance to director $13,904 and offset advance to related party $5,240.
The majority of the Company’s revenues and expenses were denominated primarily in Renminbi (“RMB”), the currency of the People’s Republic of China. There is no assurance that exchange rates between the RMB and the U.S. Dollar will remain stable. Inflation has not had a material impact on the Company’s business.
| 32 |
COMMITMENTS AND CONTINGENCIES
Contractual Obligations
Our contractual obligations as of August 31, 2024 are as follows:
| Payments due by period | ||||||||||||||||
| Operating leases | Total | Less than 1 year | 1-3 years | More than 3 years | ||||||||||||
| Total | 68,058 | 68,058 | - | - | ||||||||||||
A provision of $84,626 is provided, where the Company has a business dispute with a customer, and the customer lodged a police report but no legal action is taken against us.
Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of August 31, 2024.
Off-Balance Sheet Commitments and Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements.
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4 Controls and Procedures.
Management’s Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of May 31, 2024. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during our most recent quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 33 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
As of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Registration Statement filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
There is no other information required to be disclosed under this item that has not previously been reported.
Item 6. Exhibits
| 34 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CXJ Group Co., Ltd. | ||
| (Name of Registrant) | ||
| Date: November 27, 2024 | ||
| By: | /s/ Lixin Cai | |
| Title: | Chief Executive Officer and Director (Principal Executive Officer) | |
| By: | /s/ Cuiyao Luo | |
| Title: | Chief Financial Officer | |
| Date: November 27, 2024 | ||
| 35 |
EXHIBIT 31.1
CERTIFICATION
I, Lixin Cai, certify that:
1. I have reviewed this quarterly report on Form 10-Q of CXJ Group Co., Ltd. (the “Company”) for the quarter ended August 31, 2024;
2. Based on my knowledge, this quarterly 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. The registrant’s other certifying officer and I are 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 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. The registrant’s other certifying officer and I have disclosed, based on our 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: November 27, 2024 | ||
| By: | /s/ Lixin Cai | |
| Title: | Chairman and Chief Executive Officer and Director (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION
I, Cuiyao Luo, certify that:
1. I have reviewed this quarterly report on Form 10-Q of CXJ Group Co., Ltd. (the “Company”) for the quarter ended August 31, 2024;
2. Based on my knowledge, this quarterly 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. The registrant’s other certifying officer and I are 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 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. The registrant’s other certifying officer and I have disclosed, based on our 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: November 27, 2024 | ||
| By: | /s/ Cuiyao Luo | |
| Title: | Chief 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
In connection with the Quarterly Report of CXJ Group Co., Ltd (the “Company”) on Form 10-Q for the period ending August 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) 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 result of operations of the Company.
| Date: November 27, 2024 | ||
| By: | /s/ Lixin Cai | |
| Title: | Chairman and Chief Executive Officer and Director (Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CXJ Group Co., Ltd. (the “Company”) on Form 10-Q for the period ending August 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) 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 result of operations of the Company.
| Date: November 27, 2024 | ||
| By: | /s/ Cuiyao Luo | |
| Title: | Chief Financial Officer |