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
file number:
| (Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| N/A | N/A | N/A |
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. ☒
Indicate
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).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes ☐ No
The number of shares outstanding of the registrant’s common stock as of August 19, 2024, was shares.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 3 | |
| Item 1. | Unaudited Financial Statements. | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 18 |
| 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 | 23 | |
| 2 |
PART I- FINANCIAL INFORMATION
Item 1. Financial Statements.
FLYWHEEL ADVANCED TECHNOLOGY, INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2024 AND SEPTEMBER 30, 2023
| 3 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONTENTS
| 4 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, | September 30, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Assets held for sale | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
| Due to related parties | ||||||||
| Liabilities held for sale | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value , shares authorized, shares issued and outstanding as of June 30, 2024 and September 30, 2023 | ||||||||
| 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 June 30, | For the Nine Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 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 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PROFIT/(LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | ( | ) | ( | ) | ||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER COMPREHENSIVE INCOME | ||||||||||||||||
| Foreign currency translation 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)
| Common Stock | Paid | Accumulated
other 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 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Exchange difference on translation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Common Stock | Paid | Accumulated
other comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Value | in Capital | (loss)/income | Deficit | Total | |||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Issuance of common stock for acquisition | ||||||||||||||||||||||||
| Exchange
difference on translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||
| Exchange difference on translation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
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)
| Nine Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjusted to reconcile net loss to cash provided by (used in) 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 | ||||||||
| Cash acquired from purchase of a subsidiary | ||||||||
| Advance to related parties | ||||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Net cash (used in)/provided by investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayment of borrowings | ( | ) | ( | ) | ||||
| Advances from related party | ||||||||
| Net cash provided by financing activities | ||||||||
| NET (DECREASE)/INCREASE 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
June 30, 2024 and 2023
(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 $per share (the “Common Stock”). Following the closing of the share exchange, there will be no change in the officers and directors of the Company, and QBS System will continue its business as a wholly owned subsidiary of the Company. | |
| ● | Common Stock Issuances (May 24, 2023) – On May 24, 2023, the Company issued shares of common stock to each of Sau Ping Leung and So Ha Tsang. Such shares were issued on May 24, 2023. These two individuals collectively hold 30% of Blue Print. | |
| ● | Formation of Mega Fortune Company Limited and Ponte Fides Company Limited (January 30, 2024 and February 13, 2024) – On January 30, 2024 and February 13, 2024, the Company incorporated Mega Fortune Company Limited ( “Mega Fortune” ) in the Cayman Islands and Ponte Fides Company Limited (“Ponte Fides”) in the British Virgin Islands, respectively. | |
| ● | Transfer of QBS System Shares to Ponte Fides Company Limited (April 29, 2024) – On April 29, 2024, the Company transferred all of the issued and outstanding shares of QBS System at HK$ 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 Mega Fortune, which is 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$ |
QBS System was incorporated in Hong Kong on April 14, 2011 with limited liability and its principal activities are providing Internet of Things (“IoT”) solutions and services across industries. Its IoT solutions help clients to build applications using available IoT device, sensors, framework and platform, to integrate the available hardware and software solution with clients’ existing landscape or implement a new IoT solution for enterprises.
QBS System provides a full-range IoT services comprising consulting development and implementation, analytics, support, and evolution. It has a business portfolio providing IoT integration solution services, IoT maintenance, support services, IoT projects and ventures Business Process Outsourcing (“BPO”) services, and approximately years of experience in Hong Kong providing IoT software and hardware engineering services. Clients range across various industries, such as logistics and supply chain management, food and beverage, automation and smart building. The applications of QBS System’s IoT Solution include connected equipment in the enterprise (“Enterprise IoT”) and industrial assets such as machines, robots, or even workers in smart factories and industrial facilities (“Industrial IoT”, the essential component of Industry 4.0).
QBS System formed a wholly owned subsidiary, QBS System Pty Ltd (“QBS System Pty”) in Australia on May 8, 2020 and its principal activities are providing computer network systems design and integration services.
| 10 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company’s subsidiaries are as follows as of June 30, 2024:
| Name of Corporation | Date of Formation |
Ownership | Description of Business | |||
| Flywheel Advanced Technology, Inc. | ||||||
| (Nevada Corporation) | ||||||
| Blue Print Global, Inc. | ||||||
| (British Virgin Islands Corporation) | ||||||
| QBS System Limited (Hong Kong Corporation) | (date of acquisition) |
|||||
| Mega Fortune Company Limited | ||||||
| (Cayman Islands Corporation) | ||||||
| Ponte Fides Company Limited | ||||||
| (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 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.
| 11 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(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, 2023 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.
Going Concern
The
accompanying unaudited interim financial statements have been prepared assuming the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date
of these financial statements. As of June 30, 2024, the Company had
Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Recently the Company being funded by our related company, Flywheel Financial Strategy (Hong Kong) Company Limited, who has extended interest-free demand loans to the Company. There can be no assurances that our related company will continue to fund the Company, or that the Company can obtain any other sources of financing.
(C) Principles of Consolidation
The accompanying Unaudited Condensed consolidated financial statements are presented using the accrual basis of accounting and include the Company and its wholly owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
(D) Use of estimates
The preparation of unaudited condensed consolidated financial statements in accordance with the U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, revenue recognition, allowance for credit losses, the measurement of lease liabilities and right-of-use (“ROU”) assets, measurements of assets and obligations related to employee benefits, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration, other obligations for revenue recognition, and other contingencies. Management believes the estimates used in the preparation of the Unaudited Condensed consolidated financial statements are reasonable, and management has made assumptions about the possible effects of the ongoing COVID-19 pandemic on critical and significant accounting estimates. Although these estimates and assumptions are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Any changes in estimates are adjusted prospectively in the Company’s unaudited condensed consolidated financial statements.
| 12 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(E) Foreign currency translation
The Company’s consolidated financial statements are reported in United States dollars (“US$”), the Company’s reporting currency, also the functional currency. The functional currency for the Company’s subsidiary organized in Hong Kong is Hong Kong dollars (“HK$”). The functional currency for the Company’s subsidiary organized in Australian is Australian dollars (“A$”). The translation of the functional currencies of the Company’s subsidiaries into US$ is performed for balance sheet accounts using the exchange rates in effect as of the balance sheet date and for revenues and expense accounts using a monthly average exchange rate prevailing during the respective period. The gains or losses resulting from such translation are reported as currency translation adjustments under other comprehensive income (loss), net, under accumulated other comprehensive income (loss) as a separate component of equity.
Monetary assets and liabilities of the Company and its subsidiary denominated in currencies other than the functional currency of the Company and subsidiary are translated into their respective functional currency at the rates of exchange prevailing on the balance sheet date.
Transactions of the Company and its subsidiary in currencies other than the Company’s and the Subsidiary’s functional currencies are translated into the respective functional currencies at the average monthly exchange rate prevailing during the period of the transaction. The gains or losses resulting from foreign currency transactions are included in the consolidated statements of income.
The exchange rates used to translate amounts in HK$ and A$ into US$ for the purposes of preparing the consolidated financial statements were as follows:
| June 30, 2024 | September 30, 2023 | |||||||
| Balance sheet items, except for common stock, additional paid-in capital and retained earnings, as of period end | US$1=HK$ | US$1=HK$ | ||||||
| US$1=A$ | US$1=A$ |
| For the Three Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Amounts included in the statements of operations and cash flows for the period | US$1=HK$ | US$1=HK$ | ||||||
| US$1=A$ | US$1=A$ | |||||||
| For the nine months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Amounts included in the statements of operations and cash flows for the period | US$1=HK$ | US$1=HK$ | ||||||
| US$1=A$ | US$1=A$1.49816 | |||||||
| 13 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(F) Other comprehensive (loss)/income
The foreign currency translation gain or loss resulting from translation of the financial statements expressed in HK$ and AU$ to US$ is reported as other comprehensive income or loss in the statements of operations and stockholders’ equity.
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 2024 and 2023.
(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
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.
NOTE 3 – DISCONTINUED OPERATIONS
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”), 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. As the disposition was completed during our fourth fiscal quarter of 2024, we expect to recognize a gain on the disposition during the three months ending September 31, 2024. The activities of the three reportable segments have been segregated and reported as discontinued operations for all periods presented.
| 14 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The carrying amounts of the assets and liabilities of the three reportable segments were classified as held for sale in our unaudited condensed consolidated balance sheets as of June 30, 2024. The asset and liability balances as of June 30, 2024 were classified as current as we anticipated the sale of these assets and liabilities within a one year period. The carrying amounts were as follows:
| June 30, | September 30, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowances | ||||||||
| Due from related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Deferred tax assets | ||||||||
| Total current assets held for sale | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| Acquisition-related intangibles | ||||||||
| Right-of-use assets | ||||||||
| Total assets held for sale | $ | $ | ||||||
| Bank loans - current portion | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Due to related parties | ||||||||
| Operating lease liabilities | ||||||||
| Income tax payable | ||||||||
| Total current liabilities for sale | ||||||||
| Bank loans | ||||||||
| Operating lease liabilities | ||||||||
| Deferred tax liabilities – arise from fair value gain | ||||||||
| Total liabilities for sale | $ | $ | ||||||
| 15 |
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 nine months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Interest (expenses) income, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Profit/ (loss) from discontinued operations before taxes | ( | ) | ( | ) | ||||||||||||
| Income taxes | ||||||||||||||||
| Profit/ (loss) from discontinued operations, net of tax | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
Summarized cash flow information for the three reportable segments discontinued operations are as follows:
| Nine Months Ended | ||||||||
| June 30, | ||||||||
| 2024 | 2023 | |||||||
| 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)/decrease in accounts receivable | ( | ) | ||||||
| Increase in prepaid expenses and other current assets | ( | ) | ||||||
| Cash (used in)/from assets held for sale | ( | ) | ||||||
| Decrease in accounts payable | ( | ) | ( | ) | ||||
| Decrease in operating lease liabilities | ( | ) | ( | ) | ||||
| Increase in accrued expenses and other current liabilities | ( | ) | ||||||
| (Decrease)/increase in income tax payable | ||||||||
| Cash used in liabilities held for sale | $ | ( | ) | $ | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash acquired from purchase of a subsidiary | $ | $ | ||||||
| Advance to related parties | ||||||||
| Purchase of property, plant and equipment | $ | ( | ) | $ | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayment of borrowings | $ | ( | ) | $ | ( | ) | ||
| Advances from related party | $ | $ | ||||||
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FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS
The
Company owed a related company, Flywheel Financial Strategy (Hong Kong) Company Limited of $
$
NOTE 5 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events occurring through the date these financial statements were issued, for their potential impact on the carve-out consolidated financial statements and disclosures and there were the following subsequent events to report:
On
July 5, 2024, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with Mericorn Company
Limited (“Buyer”), to sell all of the equity associated with the Company’s wholly owned subsidiary, Mega Fortune, which
is comprised of the Company’s subsidiaries, Ponte Fides, QBS System and QBS System Pty at consideration
of HK$ (or approximately $) by the transfer of shares of the Buyer’s wholly owned subsidiary, Elison from the Buyer to the Company which the Company will hold
On July 30, 2024, Tang Siu Fung notified the Company of his resignation from all his positions with the Company, 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 removed as “Principal Executive Officer”, “Principal Financial Officer” and “Principal Accounting Officer” of the Company for Securities and Exchange Commission (“SEC”) reporting purposes.
On 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 also appointed to serve until his successor has been 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 her positions with the Company, including Secretary and Treasurer, effective as of the close of business on August 2, 2024. Ms. Cheng’s resignation does not arise from any disagreement with the Company on any matter relating to its operations, policies, or practices.
On August 4, 2024, the Company appointed Luk Yuen Leung as Treasurer and Secretary of the Company, effective immediately, to serve until his successor has been 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. The resignation of Mr. Tang does not arise from any disagreement with the Company on any matter relating to its operations, policies, or practices. On same date, Blue Print appointed Luk Yuen Leung as a director and an officer of Blue Print, effective immediately. Mr. Luk is appointed to serve until his successor has been duly appointed, unless he resigns, is removed from office, or is otherwise disqualified from serving as an officer and or director of Blue Print.
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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 holds 70% of Blue Print, and the balance is held by two individuals unrelated to the Company, with each party holding 15%. 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.
We provide a full range of IoT services comprising consulting, development and implementation, analytics, support, and evolution. QBS System has a business portfolio consisting of IoT integration solution services, IoT maintenance and support services, IoT projects and ventures, Business Process Outsourcing (“BPO”) services, and approximately twelve years of experience in Hong Kong providing IoT software and hardware engineering services. Its clientele ranges across various industries, such as logistics and supply chain management, food & beverage, automation, and smart buildings. The applications of QBS System’s IoT solutions include connected equipment in the enterprise (“Enterprise IoT”) and industrial assets such as machines and robots (“Industrial IoT”), the essential component of the fourth revolution of manufacturing 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 of the issued and outstanding shares of QBS System to Ponte Fides at HK$100 under restructure. 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.
Recent Events
On July 5, 2024, the Company entered into a share purchase agreement with Mericorn Company Limited, which is 25% held by Ms. Tin who is the spouse of the owner of significant shareholder of FWFW, (“Buyer”) to sell all of the equity associated with the Company’s wholly owned subsidiary, Mega Fortune, which is comprised of the Company’s subsidiaries Ponte Fides, QBS System and QBS System Pty at consideration of HK$56,360,000 (or approximately $7,230,000) by the transfer of 938 shares of the Buyer’s wholly owned subsidiary, Elison Virtus Company Limited (“Elison”) from the Buyer to the Company which the Company holds, 9.38% of the equity of Elison.
On July 30, 2024, Tang Siu Fung notified the Company of his resignation from all his positions with the Company, 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 removed as “Principal Executive Officer”, “Principal Financial Officer” and “Principal Accounting Officer” of the Company for Securities and Exchange Commission (“SEC”) reporting purposes.
On 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 also appointed to serve until his successor has been 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 her positions with the Company, including Secretary and Treasurer, effective as of the close of business on August 2, 2024. Ms. Cheng’s resignation does not arise from any disagreement with the Company on any matter relating to its operations, policies, or practices.
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On August 4, 2024, the Company appointed Luk Yuen Leung as Treasurer and Secretary of the Company, effective immediately, to serve until his successor has been 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. The resignation of Mr. Tang does not arise from any disagreement with the Company on any matter relating to its operations, policies, or practices. On same date, Blue Print appointed Luk Yuen Leung as a director and an officer of Blue Print, effective immediately. Mr. Luk is appointed to serve until his successor has been duly appointed, unless he resigns, is removed from office, or is otherwise disqualified from serving as an officer and or director of Blue Print.
Results of Operations:
Comparison of the Three Months Ended June 30, 2024 and 2023
| For the Three Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Revenue, net | $ | - | $ | - | ||||
| Operating expenses | (105,076 | ) | (115,482 | ) | ||||
| LOSS FROM OPERATIONS | (105,076 | ) | (115,482 | ) | ||||
| LOSS BEFORE INCOME TAXES | (105,076 | ) | (115,482 | ) | ||||
| Income taxes | - | - | ||||||
| NET LOSS FROM CONTINUING OPERATIONS | (105,076 | ) | (115,482 | ) | ||||
| PROFIT/(LOSS) FROM Discontinued operations, net of tax | 67,213 | (120,006 | ) | |||||
| NET LOSS | (37,863 | ) | (235,488 | ) | ||||
| Foreign currency translation gain | 3,873 | 763 | ||||||
| COMPREHENSIVE LOSS | $ | (33,990 | ) | $ | (234,725 | ) | ||
Revenue
During the three months ended June 30, 2024 and 2023, we did not have any revenues. Revenue from the three reportable segments relates to the provision of IoT maintenance and support services, IoT projects and ventures BPO services and IoT software and hardware engineering services were classified as held for sale or into discontinued operations due to the Mega Fortune Disposition.
Operating expenses
General and administrative expenses
During the three months ended June 30, 2024, our operating expenses consisted primarily of professional fees of $103,650 and filing and other fees of $1,426. During the nine months ended June 30, 2023, our operation expenses consisted primarily of professional fees of $112,895 and filing and other fees of $2,587.
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 June 30, 2024 and 2023. Income tax expenses were classified as held for sale or into discontinued operations due to the Mega Fortune Disposition.
Discontinued Operations
Net profit from discontinued operations of $67,213 during the three months ended June 30, 2024, compared to net loss from discontinued operations of $120,006 during the three months ended June 30, 2023. The change was primarily attributable to an increase in revenue at the three reportable segments of $305,953 and offset by an increase in operating expense of $147,118 due to an increase in allowance for expected credit losses during the period compared to the prior period.
Net loss
Net loss decreased by $201,498 to $33,990 from $235,488 for the three months ended June 30, 2024, compared to the same period in 2023. This decrease is primarily driven by change from net loss to net profit arising from discontinued operations.
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Other comprehensive income
Foreign currency translation gain
Foreign currency translation gain increased from $763 to $3,873 for the three months ended June 30, 2024, compared to the same period in 2023. It is incurred on translation of assets and liabilities of foreign subsidiaries in reporting currency adopted by the subsidiaries to the reporting currency of the Company.
Comparison of the Nine Months Ended June 30, 2024 and 2023
| For the Nine Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Revenue, net | $ | - | $ | - | ||||
| Operating expenses | (320,205 | ) | (1,245,600 | ) | ||||
| LOSS FROM OPERATIONS | (320,205 | ) | (1,245,600 | ) | ||||
| LOSS BEFORE INCOME TAXES | (320,205 | ) | (1,245,600 | ) | ||||
| Income taxes | - | - | ||||||
| NET LOSS FROM CONTINUING OPERATIONS | (320,205 | ) | (1,245,600 | ) | ||||
| PROFIT/(LOSS) FROM Discontinued operations, net of tax | 125,699 | (335,021 | ) | |||||
| NET LOSS | (194,506 | ) | (1,580,621 | ) | ||||
| Foreign currency translation gain | 6,872 | 441 | ||||||
| COMPREHENSIVE LOSS | $ | (187,634 | ) | $ | (1,580,180 | ) | ||
Revenue
During the nine months ended June 30, 2024 and 2023, we did not have any revenues. Revenue from the three reportable segments relates to the provision of IoT maintenance and support services, IoT projects and ventures BPO services and IoT software and hardware engineering services were classified as held for sale or into discontinued operations due to the Mega Fortune Disposition.
Operating expenses
General and administrative expenses
During the nine months ended June 30, 2024, our operating expenses consisted primarily of professional fees of $316,387 and filing and other fees of $3,818. During the nine months ended June 30, 2023, our operation expenses consisted primarily of professional fees of $1,232,779 and filing and other fees of $12,821. This decrease is primarily driven by decrease in legal and professional fees due to legal and professional fees was incurred for the acquisition of QBS system in late March 2023 while no such expenses incurred in 2024.
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 nine months ended June 30, 2024 and 2023. Income tax expenses were classified as held for sale or into discontinued operations due to the Mega Fortune Disposition.
Discontinued Operations
Net loss from discontinued operations decreased $460,720, to net income from discontinued operations of $125,699 during the nine months ended June 30, 2024, compared to net loss from discontinued operations of $335,021 during the nine months ended June 30, 2023. The decrease in net loss from discontinued operations was primarily attributable to an increase in revenue at the three reportable segments of $2,239,572 and offset by an increase in operating expense of $1,007,273 due to an increase in allowance for expected credit losses during the period compared to the prior period.
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Net loss
Net loss decreased by $1,386,115 to $194,506 from $1,580,621 for the nine months ended June 30, 2024, compared to the same period in 2023. This decrease is primarily driven by decrease in net loss from discontinued operations.
Other comprehensive income
Foreign currency translation gain
Foreign currency translation gain increased from $441 to $6,872 for the nine months ended June 30, 2024, compared to the same period in 2023. It is incurred on translation of assets and liabilities of foreign subsidiaries in reporting currency adopted by the subsidiaries to the reporting currency of the Company.
Liquidity and Capital Resources
Comparison of the Nine Months Ended June 30, 2024 and 2023
Our use of cash was primarily related to discontinued operations including cash used in operating activities and bank borrowings in related to discontinued operations. As of June 30, 2024, we had $156,549 in cash and cash equivalents.
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. Cash used in operating activities was $695,234 for the nine months ended June 30, 2024 compared to cash used in operating activities of $50,769 for the nine month ended June 30, 2023. Cash used in operating activities increased during the nine months ended June 30, 2024 was due to increase in cash used in discontinued operations was primarily attributable to increase in accounts receivable.
Cash flows from investing activities reflect capital expenditure for the purchase of Company’s assets. Cash used in investing activities during the nine month ended June 30, 2024 was $7,491 compared to cash from investing activities of $565,449 due to acquisition of QBS system during the nine months ended June 30, 2023.
Cash flows used in financing activities generally reflect changes in debt activity during the period. Net cash provided by financing activities was $236,963 for the nine months ended June 30, 2024 compared to net cash provided by financing activities of $198,486 for the nine month ended June 30, 2023. Net cash provided by financing activities for the nine months ended June 30, 2024 was primarily attributable to advance from related party of $318,568. Net cash provided by financing activities for the nine months ended June 30, 2023 was primarily attributable to advance from related party of $225,005.
Management believes the cash on hand combined with net cash provided by operations will be sufficient to fund operations for the next 12 months and beyond.
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 (W) 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.
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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 June 30, 2024.
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 June 30, 2024, 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.
None.
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: August 19, 2024 | ||
| 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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