FWFW 10-Q
Flywheel Advanced Technology, Inc. (FWFW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from ______ to ______
Commission
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Registrant’s
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Securities registered pursuant to Section 12(b) of the Act:
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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. ☒
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by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
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| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
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The number of shares outstanding of the registrant’s common stock as of May 5, 2025, was shares.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 15 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk. | 22 |
| Item 4. | Controls and Procedures. | 22 |
| PART II – OTHER INFORMATION | 23 | |
| Item 1. | Legal Proceedings. | 23 |
| Item 1A. | Risk Factors. | 23 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 23 |
| Item 3. | Defaults Upon Senior Securities. | 23 |
| Item 4. | Mine Safety Disclosures. | 23 |
| Item 5. | Other Information. | 23 |
| Item 6. | Exhibits. | 23 |
| SIGNATURES | 24 | |
| 2 |
PART I- FINANCIAL INFORMATION
FLYWHEEL ADVANCED TECHNOLOGY, INC.
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2025
| 3 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONTENTS
| 4 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2025 | September 30, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Prepaid expenses and other current assets | $ | $ | ||||||
| INVESTMENTS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
| Due to a related party | ||||||||
| Total current liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value , shares authorized, shares issued and outstanding as of March 31, 2025 and September 30, 2024 | ||||||||
| Paid in Capital | ||||||||
| Accumulated other comprehensive income/(loss) | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 5 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| For the three months ended March 31, | For the six months ended March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| REVENUE, NET | $ | $ | $ | $ | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| OPERATING LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Discontinued operations, net of tax | ( | ) | ||||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
OTHER COMPREHENSIVE (LOSS)/INCOME | ||||||||||||||||
| Foreign currency translation (loss)/gain | ( | ) | ||||||||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss from continuing operations per share - basic and diluted: | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Net loss - basic and diluted: | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 6 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Accumulated | ||||||||||||||||||||||||
| other | ||||||||||||||||||||||||
| Common Stock | Paid | comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Value | in Capital | (loss)/income | Deficit | Total | |||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| other | ||||||||||||||||||||||||
| Common Stock | Paid | comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Value | in Capital | (loss)/income | Deficit | Total | |||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Exchange difference on translation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Exchange difference on translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 7 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the six months March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjusted to reconcile net loss to cash provided (used) by operating activities: | ||||||||
| Amortization | ||||||||
| Depreciation | ||||||||
| Lease amortization | ||||||||
| Allowance of expected credit losses | ||||||||
| Reversal of allowance of expected credit losses | ( | ) | ||||||
| Deferred income taxes | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase)/decrease in: | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Assets held for sale | ( | ) | ||||||
| Increase/(decrease) in: | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Liabilities held for sale | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Advance to related parties | ||||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayment of borrowings | ( | ) | ||||||
| Advances from/ (Repayment to) related party | ( | ) | ||||||
| Net cash provided by financing activities | ( | ) | ||||||
| NET DECREASE IN CASH AND EQUIVALENTS | ( | ) | ||||||
| EFFECT OF EXCHANGE RATES ON CASH | ||||||||
| AT BEGINNING OF PERIOD | ||||||||
| CASH AND EQUIVALENTS AT END OF PERIOD | $ | $ | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 8 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2025 and 2024
(Unaudited)
NOTE- 1 ORGANIZATION AND BUSINESS BACKGROUND
Flywheel Advanced Technology, Inc. (formerly known as Pan Global Corp.) (“the Company”) was incorporated in the state of Nevada on April 30, 2010.
The Company had the following significant events:
| ● | Stock Purchase Agreement (July 13, 2021) – In July 2021, the Company entered into a Stock Purchase Agreement between NYJJ Hong Kong Limited (Seller) and Sparta Universal Industrial Ltd. (Purchaser), wherein the Purchaser purchased shares of Series A-1 Preferred Stock, par value $ per share (the “Shares”) of the Company. | |
| ● | Name Change (November 21, 2021) – On November 21, 2021, Board of directors and majority shareholder approved the change of the Company’s name to “Flywheel Advanced Technology, Inc.”. | |
| ● | Reverse Stock Split (July 13, 2022) – On July 13, 2022, the Company completed a | |
| ● | Ticker Symbol Change (August 5, 2022) – On August 5, 2022, the Company was informed by the FINRA that the new ticker symbol of the Company is “FWFW”. | |
| ● | Issuance of Preferred Stock A-1 (September 15, 2022) – On September 15, 2022, the Company filed with the Secretary of State of the State of Nevada an Amendment (the “Amendment ” ) to the Certificate of Designation for the Series A-1 Preferred Stock (the “Preferred Stock”). The Amendment was approved by the Board of Directors of the Company and Sparta Universal Industrial Ltd. (“Sparta”), the sole holder of all the issued and outstanding shares of Preferred Stock. Pursuant to the Amendment, the conversion rate of the Preferred Stock was changed to provide that each share of Preferred Stock shall be convertible, at the option of the holder, into 1.62 fully paid and nonassessable shares of the Company’s common stock. | |
| ● | The Company’s outstanding shares of Preferred Stock were converted on a one for | |
| ● | Formation
of Blue Print Global, Inc. (November 30, 2022) – On November 30, 2022, the Company incorporated Blue Print Global, Inc. (
“Blue Print ” ) in the British Virgin Islands to establish an operation to source the supply and sale of warehouse
patrol robots. |
| 9 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| ● | Blue Print Agency Agreement (December 7, 2022) – On December 7, 2022, Blue Print entered into an Agency Agreement (the “Agency Agreement”) with International Supply Chain Alliance Co., Ltd. of Hong Kong ( “ISCA”). Pursuant to the Agency Agreement, Blue Print appointed ISCA as its authorized agent to distribute warehouse patrol robots in the People’ s Republic of China ( “China”). The Agency Agreement is valid for five years and will be automatically renewed for another five years unless a written non-renewal notice is provided by either party at least 30 days before the expiration date. However, there is no early termination option in the Agency Agreement. | |
| ● | Share Exchange with QBS System Limited (December 15, 2022) – On December 15, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with QBS System Limited, a limited company incorporated under the laws of Hong Kong ( “QBS System” ), and its shareholder, QBS Flywheel Limited, a company incorporated under the laws of Australia (the “Seller”). On March 22, 2023, the Seller transferred and assigned to the Company all of the issued and outstanding shares of QBS System in exchange for newly issued shares of the Company’s common stock, par value $ per share (the “Common Stock”). Following the closing of the share exchange, there will be no change in the officers and directors of the Company, and QBS System will continue its business as a wholly owned subsidiary of the Company. | |
| ● | Common Stock Issuances (May 24, 2023) – On May 24, 2023, the Company issued shares of common stock to each of Sau Ping Leung and So Ha Tsang. Such shares were issued on May 24, 2023. So Ha Tsang holds 15% of Blue Print. | |
| ● | Formation of Mega Fortune Company Limited and Ponte Fides Company Limited (January 30, 2024 and February 13, 2024) – On January 30, 2024 and February 13, 2024, the Company incorporated Mega Fortune Company Limited (“Mega Fortune”) in the Cayman Islands and Ponte Fides Company Limited (“Ponte Fides”) in the British Virgin Islands, respectively. | |
| ● | Transfer of QBS System Shares to Ponte Fides Company Limited (April 29, 2024) – On April 29, 2024, the Company transferred all of the issued and outstanding shares of QBS System at HK$ under a restructuring. Following the closing of the share transfer, there will be no change in the officers and directors of the Company, and QBS System will continue its business as a wholly owned subsidiary of the Company. | |
| ● | Sale of QBS System, Ponte Fides, and Mega Fortune (July 5, 2024) – On July 5, 2024, the Company and Mega Fortune, its wholly-owned subsidiary, completed the sale (the “Mega Fortune Disposition”) to Mericorn Company Limited (the “Buyer” ), which is non-wholly owned and controlled by spouse of an owner of a significant shareholder of FWFW, of all of the equity associated with Mega Fortune, which is comprised of the Company’ s subsidiaries, Ponte Fides, QBS System and QBS System Pty, pursuant to a Share Purchase Agreement, dated as of July 5, 2024. Mega Fortune and its subsidiaries are engaged in the business of provision of IoT maintenance and support services, IoT BPO services and IoT development services in Hong Kong and Australia. Under the terms of the Share Purchase Agreement, the Buyer paid HK$ (or approximately $) by the transfer of shares of the Buyer’s wholly owned subsidiary, Elison Virtus Company Limited (“Elison”) from the Buyer to the Company for the Mega Fortune Disposition. |
| 10 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company’s subsidiaries are as follows as of March 31, 2025:
| Name of Corporation |
Date of Formation |
Ownership | Description of Business | |||
| Flywheel Advanced Technology, Inc. | ||||||
| (Nevada Corporation) | ||||||
| Blue Print Global, Inc. | ||||||
| (British Virgin Islands Corporation) |
We use the terms “Company”, “we” and “us” to refer to both Flywheel Advanced Technology, Inc. and its subsidiaries.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Basis of Presentation
The accompanying unaudited interim consolidated financial statements (“consolidated financial statements”) have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
(B) Unaudited Interim Consolidated financial statements
The accompanying interim unaudited condensed consolidated financial statements (“Interim Financial Statements “) of the Company and its wholly owned and majority owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America ( “ GAAP ” ) for interim financial information and are presented in accordance with the requirements of Form 10-Q and Regulation S-X. Accordingly, these Interim Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. These Interim Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended September 30, 2024 included in the Company’s Form 10-K. In the opinion of management, the Interim Financial Statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the Company’s financial position, the results of operations and cash flows for the periods presented.
The operating results and cash flows of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.
| 11 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(C) Going Concern
Pursuant to the guidance in ASC
205-40 Going Concern, for each annual and interim reporting period an entity’s management must evaluate whether there are conditions
and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within
one year after the date that the financial statements are issued. To that extent, the Company incurred a net operating loss of approximately
$
(D) Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements are presented using the accrual basis of accounting and include the Company and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
(E) Use of estimates
The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these unaudited condensed consolidated financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
(F) Investments
The Company applies the cost method of accounting to investments when it does not have significant influence or a controlling interest in the investee and the fair value of the investment is not readily determinable. Dividends on cost method investments received are recorded as income.
The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investments during the three months and six months ended March 31, 2025 and determined that the Company’s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired. The carrying value of our cost method investments is reported as “ investments ” on the consolidated balance sheets. Note 4 contains additional information on our cost method investments.
| 12 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basic earnings(loss) per share are computed by dividing income available to stockholders by the weighted average number of shares outstanding during the period. Diluted income per share is computed like basic income per share except that the denominator is increased to include the number of additional shares that would have been outstanding if the potential shares had been issued and if the additional shares were diluted. There were no potentially dilutive securities for 2025 and 2024.
(H) Commitments and contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with such liabilities are expensed as incurred.
(I) Recently Issued Accounting Standards
There are no recent accounting pronouncements that impact the Company’s operations.
NOTE 3 – DISCONTINUED OPERATIONS
On July 5, 2024, the Company and
Mega Fortune Company Limited, its wholly-owned subsidiary, completed the sale (the “Mega Fortune Disposition”) to
Mericorn Company Limited (the “Buyer”), of all of the equity associated with the Company ’ s Mega Fortune Company
Limited, which is composed of the Company ’ s subsidiaries, Pontes Fides Company Limited, QBS System Limited and QBS System
Pty Ltd, pursuant to a Share Purchase Agreement, dated as of July 5, 2024. The Mega Fortune Company Limited and its subsidiaries are
engaged in the business of provision of IoT maintenance and support services, IoT BPO services and IoT development services in Hong
Kong and Australia. Under the terms of the Share Purchase Agreement, the Buyer paid HK$
(or approximately $)
by the transfer of
shares of the Buyer’ s wholly owned subsidiary, Elison Virtus Company Limited ( “ Elison ” ) from the
Buyer to the Company for the Mega Fortune Disposition. As of July 5, 2024, the Company determined that the estimated fair value of
shares of Elison was $
| 13 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Summarized results of discontinued operations for the three reportable segments are as follows:
| For the three months ended | For the six months ended | |||||||
| March 31, 2024 | March 31, 2024 | |||||||
| Revenue, net | $ | $ | ||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Operating expenses | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Interest (expenses) income, net | ( | ) | ( | ) | ||||
| (Loss)/Income from discontinued operations before | ( | ) | ||||||
| Income taxes | ||||||||
| (Loss)/Income from discontinued operations, net of tax | $ | ( | ) | $ | ||||
Summarized cash flow information for the three reportable segments discontinued operations are as follows:
| For the six months ended | ||||
| March 31, 2024 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Amortization | $ | |||
| Depreciation | ||||
| Lease amortization | ||||
| Allowance of expected credit losses | ||||
| Reversal of allowance of expected credit losses | ( | ) | ||
| Deferred income taxes | ( | ) | ||
| Increase in accounts receivable | ( | ) | ||
| Increase in prepaid expenses and other current assets | ( | ) | ||
| Cash used in assets held for sale | ( | ) | ||
| Increase in accounts payable | ||||
| Decrease in operating lease liabilities | ( | ) | ||
| Increase in accrued expenses and other current liabilities | ||||
| Increase in income tax payable | ( | ) | ||
| Cash provided by liabilities held for sale | $ | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Advance to related parties | $ | |||
| Purchase of property, plant and equipment | $ | ( | ) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Repayment of borrowings | $ | ( | ) | |
| Repayment to related party | $ | ( | ) | |
NOTE 4 - INVESTMENTS
March 31, 2025 | September 30, 2024 | |||||||
| Cost Method Investment | ||||||||
| Elison Virtus Company Limited | $ | $ | ||||||
On July 5, 2024, the Company entered
into a Share Purchase Agreement. As consideration for entering into this agreement, the Company received shares,
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company owed a related company, Flywheel
Financial Strategy (Hong Kong) Company Limited of $
| 14 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report on Form 10-Q, “we”, “our”, “us” and “Company” refer to Flywheel Advanced Technology, Inc., a Nevada corporation unless the context requires otherwise.
Overview
Flywheel Advanced Technology, Inc. (“FWFW”) (formerly known as Pan Global Corp.) was incorporated in the state of Nevada on April 30, 2010. On November 30, 2022, FWFW incorporated Blue Print Global, Inc. (“Blue Print”) in the British Virgin Islands to establish an operation to source the supply and sale of warehouse patrol robots. FWFW currently holds 85% of Blue Print, and the balance is held by an individual unrelated to the Company. On March 22, 2023, FWFW acquired QBS System Limited (“QBS System”), a limited company incorporated under the laws of Hong Kong (the “QBS Acquisition”). FWFW and its subsidiaries (collectively, “we,” “us,” “our,” “FWFW” or the “Company,” unless context requires or indicates otherwise) were formed to provide Internet of Things (“IoT”) solutions and services to assist its clients to build applications using available IoT devices, sensors, frameworks, and platforms, integrate hardware and software solutions with clients existing landscape, or implement new IoT solutions for enterprises.
| 15 |
Through QBS System, we offered a comprehensive range of IoT services, including consulting, development and implementation, analytics, support, and continuous evolution. QBS System’s business portfolio encompassed IoT integration solutions, maintenance and support services, IoT projects and ventures, Business Process Outsourcing (“BPO”) services, and nearly twelve years of experience in Hong Kong providing both IoT software and hardware engineering services. Its clientele spanned a wide array of industries, including logistics and supply chain management, food & beverage, automation, and smart buildings. QBS System’s IoT solutions supported applications such as connected enterprise equipment and industrial assets, including machines and robots, which are integral to the fourth industrial revolution, or “Industry 4.0.”
On January 30, 2024, and February 13, 2024, the Company incorporated Mega Fortune Company Limited (“Mega Fortune”) in the Cayman Islands and Ponte Fides Company Limited (“Ponte Fides”) in the British Virgin Islands, respectively. On April 29, 2024, the Company transferred all issued and outstanding shares of QBS System to Ponte Fides for HK$100 as part of a restructuring. Following the completion of the share transfer, there were no changes to the officers and directors of the Company, and QBS System continued its operations as a wholly owned subsidiary of the Company.
On July 30, 2024, Tang Siu Fung notified the Company of his resignation from all positions, including sole director, Chief Executive Officer, and President, effective as of the close of business on July 30, 2024. In connection with his resignation as Chief Executive Officer and President, Mr. Tang was also removed as the “Principal Executive Officer,” “Principal Financial Officer,” and “Principal Accounting Officer” for Securities and Exchange Commission (“SEC”) reporting purposes.
On the same day, July 30, 2024, the Company appointed Luk Yuen Leung as President, Chief Executive Officer, and Chairman of the Board of Directors, effective as of the close of business on July 30, 2024. Mr. Leung was appointed to serve until his successor is duly appointed, unless he resigns, is removed from office, or is otherwise disqualified from serving as an officer and/or director of the Company. In connection with his appointment as Chief Executive Officer and President, Mr. Leung was designated as the Company’s “Principal Executive Officer,” “Principal Financial Officer,” and “Principal Accounting Officer” for SEC reporting purposes.
On August 2, 2024, Cheng Sin Yi notified the Company of her resignation from all positions, including Secretary and Treasurer, effective as of the close of business on August 2, 2024. Ms. Cheng’s resignation did not arise from any disagreement with the Company regarding its operations, policies, or practices.
On August 4, 2024, the Company appointed Luk Yuen Leung as Treasurer and Secretary, effective immediately, to serve until his successor is duly appointed, unless he resigns, is removed from office, or is otherwise disqualified from serving as an officer of the Company.
On August 5, 2024, Tang Siu Fung notified Blue Print of his resignation as the sole director of Blue Print. His resignation did not arise from any disagreement with the Company regarding its operations, policies, or practices. On the same date, Blue Print appointed Luk Yuen Leung as a director and officer, effective immediately. Mr. Leung was appointed to serve until his successor is duly appointed, unless he resigns, is removed from office, or is otherwise disqualified from serving as an officer and/or director of Blue Print.
As a result of the Mega Fortune Disposition, the Company is now classified as a “shell company”.
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Shell Company
Under SEC Rule 405, the Company qualifies as a “shell company” due to its nominal assets and lack of significant operations. Management has no plans to develop a market for the Company’s securities, either debt or equity, until a successful business combination is completed or an operating business is developed. The Company will continue to comply with the periodic reporting requirements of the Act as long as it remains subject to them.
Plan of Operation
The Company’s primary objective for the next 12 months and beyond is to achieve long-term growth through a business combination or the successful development of its operating business. As of the date of this report, the Company has not entered into any definitive agreements or specific discussions with potential business combination candidates. The Company has unrestricted flexibility in seeking, analyzing, and participating in potential business opportunities.
Potential Acquisition Structure
Should the Company pursue an acquisition, for which no assurances can be given, the structure of the transaction will depend on the specific opportunity, the needs of the Company, and the negotiating strength of all parties involved. Possible structures include leases, purchase and sale agreements, licenses, joint ventures, and other contractual arrangements. The Company may participate directly or indirectly through partnerships, corporations, or other forms of organization. Implementing such structures could involve mergers, consolidations, or reorganizations, and the Company may not necessarily emerge as the surviving entity.
Following a reorganization, it is likely that the Company’s current management, board of directors, and stockholders will no longer hold a majority of voting shares. Existing management and directors may resign, and new management and directors may be appointed without a stockholder vote.
To facilitate an acquisition, the Company may issue common stock or other securities. While terms cannot be predicted, acquisitions structured as “tax-free” reorganizations under the Internal Revenue Code often require issuing controlling interest (80% or more) of the combined entity’s stock to the acquired company’s stockholders. This could significantly dilute the equity of current stockholders. Such issuances may coincide with the sale or transfer of controlling interest by principal stockholders. Disclosure to stockholders about a target company will only be provided if required by applicable law or regulation. The Company will file a current report on Form 8-K within four business days of a business combination that results in the Company ceasing to be a shell company. This report will include comprehensive details of the target company, including audited financial statements.
It is anticipated that any new securities issued in connection with a reorganization would rely on exemptions from registration under federal and state securities laws. In some cases, the Company may agree to register these securities at the time of the transaction or under specific conditions. The issuance of significant additional securities may depress any trading market that develops for the Company’s securities.
Stockholder and Management Considerations
Post-reorganization, the majority stockholder may no longer control the majority of voting securities. The sole director of the Company may resign, and new directors may be appointed by the majority stockholder. In cases involving statutory mergers or consolidations, stockholder approval may be required, potentially causing delays and additional costs. Management may seek to structure transactions to avoid the necessity of stockholder approval.
The Company will only proceed with a business opportunity after the negotiation and execution of a written agreement. Such agreements will typically include representations and warranties, default provisions, closing conditions, cost-sharing terms, remedies, and other customary provisions. Investigations, negotiations, and execution of agreements will likely incur substantial costs for legal, accounting, and other professional services. If an opportunity is abandoned, related costs may not be recoverable.
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Search for Business Opportunities
The Company intends to identify potential business combinations by contacting affiliates, lenders, investment banks, private equity firms, consultants, and attorneys. The number of contacts made will depend on the opportunities presented. Management anticipates dedicating substantial time and resources to investigating and negotiating these opportunities. Failure to consummate a transaction may result in the loss of related costs.
Management Time and Resources
The Company’s sole officer and director is engaged in external business activities and anticipates devoting limited time to the Company until a suitable business opportunity is identified. The time spent on Company matters will vary based on need, but management intends to fulfill its fiduciary duties. No significant changes to the number of employees are expected, apart from those resulting from a business combination.
Competition and Market Conditions
We face significant competition in our efforts to identify and pursue a viable business venture. Our primary competitors are expected to include other organizations established and funded for similar purposes, such as small venture capital firms, blank check companies, and high-net-worth investors, many of which possess substantially greater financial and operational resources than we do.
Given our limited financial and human resources, we are at a competitive disadvantage relative to many of these entities in acquiring an operating business or assets essential to initiating operations in a new industry. Furthermore, the economic downturn resulting from the coronavirus pandemic has intensified competition, as many venture capital firms and individual investors are seeking to acquire businesses at discounted valuations. This heightened competition presents additional challenges to securing a business. We anticipate these conditions will persist until the economy fully recovers.
Even if we successfully acquire a business or assets to commence operations, we expect to encounter heightened barriers to entry in the chosen marketplace. These challenges may stem from reduced demand, increased raw material costs, or other economic forces beyond our control.
Regulation
As of the date of this report, we are required to file reports with the SEC in compliance with Section 13 of the Securities Exchange Act of 1934 (the “Exchange Act”).
The direction our management ultimately pursues, along with any future business acquisitions, may subject us to additional laws or regulations. These may include requirements that necessitate significant compliance expenditures, such as the increasing regulation of privacy at the state level. Such obligations could divert considerable human and financial resources toward compliance efforts, potentially adversely affecting our future operating results.
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Results of Operations:
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table provides the consolidated results of our continuing operations:
For the Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue, net | $ | - | $ | - | ||||
| Operating expenses | (18,539 | ) | (45,838 | ) | ||||
| LOSS FROM OPERATIONS | (18,539 | ) | (45,838 | ) | ||||
| LOSS BEFORE INCOME TAXES | (18,539 | ) | (45,838 | ) | ||||
| Income taxes | - | - | ||||||
| NET LOSS FROM CONTINUING OPERATIONS | (18,539 | ) | (45,838 | ) | ||||
| Discontinued operations, net of tax | - | (22,495 | ) | |||||
| NET LOSS | (18,539 | ) | (68,333 | ) | ||||
| Foreign currency translation loss | - | 5,544 | ||||||
| COMPREHENSIVE LOSS | $ | (18,539 | ) | $ | (73,877 | ) | ||
Revenue
During the three months ended March 31, 2025 and 2024, we did not have any revenues.
Operating expenses
General and administrative expenses
During the three months ended March 31, 2025, our operating expenses consisted primarily of professional fees of $17,244 and filing and other fees of $1,295. During the three months ended March 31, 2024, our operation expenses consisted primarily of professional fees of $44,600 and filing and other fees of $1,238.
All operating expenses related to the QBS System segment were classified as held for sale or into discontinued operations due to the Mega Fortune Disposition.
Income tax expenses
There is no income tax expenses for the three months ended March 31, 2025 and 2024.
Discontinued Operations
Net profit from discontinued operations of $0 during the three months ended March 31, 2025, compared to net loss from discontinued operations of $22,495 during the three months ended March 31, 2024. The change was primarily attributable to the Mega Fortune Disposition completed on July 5, 2024.
Net loss
Net loss decreased by $49,795 to $18,538 from $68,333 for the three months ended March 31, 2025, compared to the same period in 2024. This decrease is primarily driven by decrease in professional fees due to Mega Fortune Disposition completed on July 5, 2024.
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Other comprehensive loss
Foreign currency translation loss
There is no foreign currency translation gain for the three months ended March 31, 2025. Foreign currency translation loss of $5,544 for the three months ended March 31, 2024 is incurred on translation of assets and liabilities of discontinued operations in reporting currency adopted to the reporting currency of the Company.
Comparison of the Six Months Ended March 31, 2025 and 2024
The following table provides the consolidated results of our continuing operations:
For the Six Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue, net | $ | - | $ | - | ||||
| Operating expenses | (45,252 | ) | (215,127 | ) | ||||
| LOSS FROM OPERATIONS | (45,252 | ) | (215,127 | ) | ||||
| LOSS BEFORE INCOME TAXES | (45,252 | ) | (215,127 | ) | ||||
| Income taxes | - | - | ||||||
| NET LOSS FROM CONTINUING OPERATIONS | (45,252 | ) | (215,127 | ) | ||||
| Discontinued operations, net of tax | - | 58,484 | ||||||
| NET LOSS | (45,252 | ) | (156,643 | ) | ||||
| Foreign currency translation gain | - | 2,999 | ||||||
| COMPREHENSIVE LOSS | $ | (45,252 | ) | $ | (153,644 | ) | ||
Revenue
During the six months ended March 31, 2025 and 2024, we did not have any revenues.
Operating expenses
General and administrative expenses
During the six months ended March 31, 2025, our operating expenses consisted primarily of professional fees of $42,868 and filing and other fees of $2,384. During the six months ended March 31, 2024, our operation expenses consisted primarily of professional fees arising from acquisition of QBS System of $212,736 and filing and other fees of $2,391.
All operating expenses related to the QBS System segment were classified as held for sale or into discontinued operations due to the Mega Fortune Disposition.
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Income tax expenses
There is no income tax expenses for the six months ended March 31, 2025 and 2024.
Discontinued Operations
Net profit from discontinued operations of $0 during the six months ended March 31, 2025, compared to net income from discontinued operations of $59,024 during the six months ended March 31, 2024. The change was primarily attributable to the Mega Fortune Disposition completed on July 5, 2024.
Net loss
Net loss decreased by $111,391 to $45,252 from $156,643 for the six months ended March 31, 2025, compared to the same period in 2024. This decrease is primarily driven by decrease in professional fees due to Mega Fortune Disposition completed on July 5, 2024.
Other comprehensive loss
Foreign currency translation loss
There is no foreign currency translation loss for the six months ended March 31, 2025. Foreign currency translation gain of $2,999 for the six months ended March 31, 2024 is incurred on translation of assets and liabilities of discontinued operations in reporting currency adopted to the reporting currency of the Company.
Liquidity and Capital Resources
Comparison of the Six Months Ended March 31, 2025 and 2024
Our use of cash was primarily related to discontinued operations including cash used in operating activities and bank borrowings. As of March 31, 2025, we had $0 in cash and cash equivalents as compared to $439,518 for the same period ended March 31, 2024.
Cash flows from operating activities generally reflect net loss adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, and changes in allowance of expected credit losses. For the six months ended March 31, 2025, cash used in operating activities amounted to $110,674, compared to $98,912 for the same period in 2024. This increase of $11,762 in cash used during the six months ended March 31, 2025 was primarily due to discontinued operations.
Cash flows from investing activities reflect capital expenditure for the purchase of Company’s assets. Cash used in investing activities during the six month ended March 31, 2025 was $0 compared to cash used in investing activities of $7,299 due to purchase of property, plant and equipment during the six months ended March 31, 2024.
Cash flows from financing activities generally reflect changes in debt activity during the period. Net cash provided by financing activities was $110,674 for the six months ended March 31, 2025 compared to net cash used in financing activities of $75,893 for the six months ended March 31, 2024. Net cash provided by financing activities for the six months ended March 31, 2025 was primarily attributable to advance from related party of $110,674. Net cash used in financing activities for the six months ended March 31, 2024 was attributable to repayment of borrowings of $54,192 and repayment to related party of $21,701.
Management believes the net cash provided by financing activities will be sufficient to fund operations for the next 12 months and beyond.
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Going Concern
The Company incurred a net operating loss of approximately $0.05 million, had negative cash flows from operating activities of $0.11 million during the six months ended March 31, 2025, and had minimum cash balance as of its fiscal year end. The Company is currently in the process of entering into certain arrangements to raise additional capital, which it believes to be probable of occurring as of the date of the filing. As such, the Company believes that the substantial doubt about our ability to continue as a going concern has been alleviated as a result of consideration of management’s plans.
Critical Accounting Estimates
The preparation of our consolidated financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that impact the amounts reported in our consolidated financial statements and accompanying notes that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.
Recently issued Accounting Pronouncements
For the impact of recently issued accounting pronouncements on the Company’s consolidated financial statements, see Note 2 (I) to the unaudited condensed consolidated financial statements included in “Part I, Item 1 — Financial Statements” of this Quarterly Report on Form 10-Q and incorporated herein by reference.
Item 3. Quantitative And Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide the information called for by this Item.
Item 4. Controls and Procedures.
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (who is the same person), to allow for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive and Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, he concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of March 31, 2025.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the period ended March 31, 2025, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
Item 1A. Risk Factors.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading Arrangements
During
the three months ended March 31, 2025, no director or officer of the Company
Item 6. Exhibits.
The exhibits listed on the Exhibit Index below are provided as part of this report.
Exhibit No. |
Description | |
| 31.1* | Certification of principal executive and financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended. | |
| 32.1* | Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended. | |
| 101* | Inline XBRL Document Set for the condensed financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. | |
| 104 | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
| * | Filed herewith. |
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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.
| Dated: May 9, 2025 | ||
| FLYWHEEL ADVANCED TECHNOLOGY, INC. | ||
| By: | /s/ Luk Yuen Leung | |
| Name: | Luk Yuen Leung | |
| Title: | President and Chief Executive Officer | |
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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