Aphoenity International Holdings Inc 10-Q for FY2024 Q2
Aphoenity International Holdings Inc. (LDSN)
About this 10-Q
Aphoenity International Holdings Inc filed this 10-Q on August 12, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $12.5M
- compared with $0 a year earlier
- Net income
- $12.48M
- compared with a net loss of $3325 a year earlier
- Diluted EPS
- $0.02
- compared with $0.00 a year earlier
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| (Mark One) | ||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended |
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ |
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
| (State of other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification Number) |
(Address of registrant’s principal executive offices)
Registrant’s telephone number, including
area code: +
Securities registered under Section 12(g) of the Act:
| Title of each Class | Trading Symbol | Name of each exchange on which registered |
| 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 (§232.405
of this chapter) 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, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting 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
As of June 30, 2024, the issuer had shares of common stock issued and outstanding.
| TABLE OF CONTENTS | Page | |
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Unaudited Condensed Consolidated Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 18 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 20 |
| Item 4. | Controls and Procedures | 21 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 22 |
| Item 1A. | Risk Factors | 22 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 22 |
| Item 3. | Defaults Upon Senior Securities | 22 |
| Item 4. | Submission of Matters to a Vote of Security Holders | 22 |
| Item 5. | Other Information | 22 |
| Item 6. | Exhibits | 22 |
| 2 |
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical facts, included in this Form 10-Q including, without limitation, statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); expansion and growth of the Company's business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar terms. These statements appear in a number of places in this filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; and, (iii) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company's limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to our filings with the SEC under the Exchange Act and the Securities Act of 1933, as amended, including the Risk Factors section of the Company’s Annual Report for the year ended December 31, 2023 on Form 10-K filed with the SEC on April 04, 2024.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
| 3 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LUDUSON G INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investment in unlisted shares | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Intelligential property rights | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accrued liabilities and other payables | $ | $ | ||||||
| Current portion of long-term loan payables | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liabilities | ||||||||
| Long-term loan payables | ||||||||
| Total Non-Current Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding as of June 30, 2024 and December 31, 2023 respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated loss | ( | ) | ( | ) | ||||
| Shareholders’ Equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to financial statements.
| 4 |
LUDUSON G INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME
(Currency expressed in United States Dollars (“US$”))
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income from operations | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Listing expense | ( | ) | ||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Income before income tax provision | ( | ) | ( | ) | ||||||||||||
| Income tax provision (benefits) | ||||||||||||||||
| Net Income | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Net loss per share | ||||||||||||||||
| Basic and diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See accompanying notes to financial statements.
| 5 |
LUDUSON G INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars (“US$”))
| Six Months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Stock based revenue | ( | ) | ||||||
| Stock based compensation | ||||||||
| Changes in assets and liabilities | ||||||||
| Decrease in inventory | ||||||||
| Increase in other receivables and other current assets | ||||||||
| Increase in accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of equipment | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash Flows from Financing Activities | ||||||||
| Repayment to borrowings | ||||||||
| Proceeds from sale of subsidiaries | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign currency translation on cash and cash equivalents | ||||||||
| Net decrease in cash and cash equivalents | ( | ) | ||||||
| Cash and Cash Equivalents | ||||||||
| Beginning | ||||||||
| Ending | $ | $ | ||||||
| Supplemental Disclosure of Cash Flows | ||||||||
| Cash paid during the periods for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Debt converted to common stock | $ | $ | ||||||
| Issuance of common stock for Metaverse Innovation Laboratory as long-term assets | $ | $ | ||||||
See accompanying notes to financial statements.
| 6 |
LUDUSON G INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Common Stock | Treasury Stock | Additional | Total | |||||||||||||||||||||||||
| Number of | Number of | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Equity | ||||||||||||||||||||||
| Balance, December 31, 2022 (unaudited and restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net Loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Shares issued as debt conversion July 12, 2023 | – | |||||||||||||||||||||||||||
| Shares issued as debt conversion July 13, 2023 | – | |||||||||||||||||||||||||||
| Shares issued as debt conversion July 18, 2023 | – | |||||||||||||||||||||||||||
| Shares issued as debt conversion July 31, 2023 | – | |||||||||||||||||||||||||||
| Shares issued as debt conversion August 1, 2023 | – | |||||||||||||||||||||||||||
| Transfer to Treasury Stock August 15, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares issued at price USD0.2 as stock compensation August 22, 2023 | – | |||||||||||||||||||||||||||
| Treasury Stock was given for the purchase of 30 movie Intelligent Properties September 21, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares issued as debt conversion November 16, 2023 | – | |||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Net Income | – | – | ||||||||||||||||||||||||||
| Shares issued for the purchase of Metaverse Innovation Laboratory January 10, 2024 | – | |||||||||||||||||||||||||||
| Shares issued at par to Mr. Lap Yan CHEUNG, the Company’s COO for the services provided to the Company April 5, 2024 | – | |||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
See accompanying notes to financial statements.
| 7 |
LUDUSON G INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED June 30, 2024 AND 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE – 1 DESCRIPTION OF BUSINESS AND ORGANIZATION
Luduson G Inc. (“the Company” or “LDSN”) was organized under the laws of the State of Delaware on March 6, 2014 under the name Jovanovic-Steele, Inc. The Company’s name was changed to Baja Custom Designs, Inc. on November 30, 2017. The Company was established as part of the Chapter 11 Plan of Reorganization of Pacific Shores Development, Inc. (“PSD”). The Company’s name was further changed to Luduson G Inc. on July 15, 2020.
On July 06, 2023, the Company completed the Reverse Takeover of Glamourous Group Holding Limited (“GGHI”), a limited liability company incorporated in the United Kingdom of England and Wales, by the issuance of 320,000,000 common shares to Ho Chi Wan, the sole shareholder of GGHI, on July 01, 2023. The issuance of the shares was exempt from registration under the Securities Act of 1933 pursuant to Section 4(a)(2) thereof on the basis that the transaction did not involve a public offering. The shares are subject to restrictions on resale pursuant to Commission Rule 144 under the Securities Act.
As of May 24, 2023, the Company disposed of the investment in unlisted shares (“Unlisted Shares”), which are the subsidiaries that had been deconsolidated on May 12, 2023, to Mr. Lan CHAN, a substantial shareholder of the Company at a consideration of $2,821. The Unlisted Shares were classified as a financial asset at fair value through profit or loss at a carrying value of $2,821 as of the disposal date. There was no gain or loss arising from the disposal.
The Company issued an equivalent of 91.9% fully diluted shares to the business owner of the Target, Ms Ho Chi Wan, in exchange for 100% of the Target and the whole operation. After such a transaction, Ms Wan gained control of the Company and in effect completed a business combination of the Target with the Company, resulting in a reverse acquisition (the “Reverse Acquisition”). Glamourous Group Holding Limited includes an experienced team with full employment contracts, expertise, and customer and supplier list, but has immaterial tangible assets and liabilities. The estimated NAV is foreseen to create a big profit for the Company, with more than 1,000 Greater China influencers having a very dominant track record in the Hong Kong movie industry. At the same time, the deconsolidated entities will be returned to the former Director(s) (the “Spin-out”).
On September 26, 2023, Glamourous Group Holding Limited (UK) has been merged and replaced with a Hong Kong entity, Glamorous Holdings International Company Limited as part of group restructuring. The Company have also rolled in Glamourous Holdings Company Limited (HK) as part of the group restructuring.
On January 10, 2024, the Company issued 5,000,000 shares of common stock for a total compensation of $2,500,000 calculated with the quoted market price on OTC Markets of $0.50 per share as of the date of the agreement to Dr. Kin Fat CHAN, the major shareholder of Metaverse Innovation Laboratory (the “Projects”) with Headquarters in Shenzhen, China, for the purchase and performance of the Projects. Subsequently, the Company, along with the roll in of LWH Consulting Sdn Bhd on March 28, 2024 and the expansion of our operations to include listing consulting services (see Note – 2 “Roll in of LWH Consulting”), decided to retool this purchase along with the Company’s listing consulting services (see Note – 6 “Purchase of Metaverse Innovation Laboratory”).
| 8 |
Description of subsidiaries
| Schedule of description of Subsidiaries | ||||||||
| Name | Place of incorporation and kind of legal entity | Principal activities and place of operation | Particulars of registered/paid up share capital | Effective interest held | ||||
The Company and its subsidiaries are hereinafter referred to as (the “Company”).
NOTE – 2 ROLL IN OF LWH CONSULTING
On March 28, 2024, the Company rolled in LWH Consulting Sdn Bhd (“LWH Consulting”), a limited liability company incorporated in Malaysia, to carry out the provision of listing consulting services for clients with business interests in the Greater Bay Area in China and other parts of the world and assisting them to achieve the largest market value for listing in a short period. LWH Consulting is a boutique listing consulting firm with extensive relationships, network and solid experience in the industry and assist clients in accessing the global capital markets including but not limited to the US stock exchanges, the most robust financial markets with a diverse investor base to optimize liquidity.
During the three months ended March 31, 2024,
LWH Consulting successfully reorganized GSG Group Inc. (OTC: GSGG) such that GSGG is able to raise funds from investors and on capital
markets. The Company received shares of GSGG’s common stock as compensation for the services provided. The 300,000 shares
are valued by the Company as Level 3 financial assets under the fair-value hierarchy stipulated by the U.S. GAAP. More information on
the valuation of these assets has been detailed in Notes to the Financial Statements under Note 3 ‘Fair Value of Financial Instruments’.
The Company determined a $
| 9 |
NOTE – 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying financial statements and notes.
l Basis of presentation
These accompanying unaudited condensed consolidated financial statements have been prepared in U.S. Dollars in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. Operating results for the interim period ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis, and the financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on April 04, 2024.
l Use of estimates and assumptions
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses during the periods reported. Actual results may differ from these estimates.
l Basis of consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
l Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
l Accounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer’s financial condition, the customer credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of fiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2024 and December 31, 2023, there were allowances for doubtful debts of and respectively.
| 10 |
l Plant and equipment
Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
| Schedule of estimated useful lives of assets | |||
| Expected useful lives | |||
| Plant and Equipment |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Depreciation expense for the three months ended June 30, 2024 and 2023 were and respectively.
l Revenue recognition
The Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers” (“ASC 606”). Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
| · | identify the contract with a customer; | |
| · | identify the performance obligations in the contract; | |
| · | determine the transaction price; | |
| · | allocate the transaction price to performance obligations in the contract; and | |
| · | recognize revenue as the performance obligation is satisfied. |
l Income taxes
The Company adopted the ASC 740 Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the unaudited condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
| 11 |
l Uncertain tax positions
The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the three months ended June 30, 2024 and 2023.
l Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.
The reporting currency of the Company is United States Dollar (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company mainly operates in Penang, Malaysia, and other parts of Asia, and maintains its books and record in their local currencies, mainly the Malaysian Ringgit (“MYR”), which is the functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
l Comprehensive income
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
l Debt issued with common stock
Debt issued with common stock is accounted for under the guidelines established by ASC 470-20 – Accounting for Debt With Conversion or Other Options. The Company recorded the relative fair value of common stock and warrants related to the issuance of debt as a debt discount or premium. The discount or premium is subsequently amortized to interest expense over the expected term of the debt.
l Leases
The Company adopts the FASB Accounting Standards Update (“ASU”) 2016-02 “Leases (Topic 842).” For all periods presented. This standard requires lessees to recognize lease assets (“right of use”) and related lease obligations (“lease liabilities”) on the balance sheet for leases with terms in excess of 12 months.
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. Finance leases are included in finance lease ROU assets and finance lease liabilities in the consolidated balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term discounted using the rate implicit in the lease. In cases where the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
| 12 |
l Related parties
The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The unaudited condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
l Commitments and contingencies
The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
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l Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
| Level 3 | Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits, prepayments and other receivables and operating lease right-of-use assets approximate their fair values because of the short maturity of these instruments.
l Recent accounting pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company has assessed and concluded that the impact of recently issued standards that became effective for the period did not have a material impact on its financial position or results of operations upon adoption.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and believes that the future adoption of any such pronouncements is not expected to cause a material impact on its financial condition or the results of its operations.
NOTE – 4 STOCKHOLDERS’ EQUITY
Authorized shares
As of June 30, 2024, the authorized share capital of the Company consisted of shares of common stock with $ par value (December 31, 2023: shares of common stock), and shares of preferred stock also with $ par value (December 31, 2023: shares of preferred stock). No other classes of stock are authorized.
The Company's first issuance of common stock, totaling 580,000 shares, took place on March 6, 2014 pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S. Bankruptcy Court in the matter of Pacific Shores Development, Inc. (“PSD”). The Court ordered the distribution of shares in the Company to all general unsecured creditors of PSD, with these creditors to receive their Pro Rata share (according to amount of debt held) of a pool of 80,000 shares in the Company. The Court also ordered the distribution of shares in the Company to all administrative creditors of PSD, with these creditors to receive one share of common stock in the Company for each $0.10 of PSD's administrative debt which they held. A total of 500,000 shares were issued to PSD’s administrative creditors.
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The Court has also ordered the distribution of 2,500,000 warrants in the Company to all administrative creditors of PSD, with these creditors to receive five warrants in the Company for each $0.10 of PSD's administrative debt which they held. These creditors received 2,500,000 warrants consisting of 500,000 “A Warrants” each convertible into one share of common stock at an exercise price of $4.00; 500,000 “B Warrants” each convertible into one share of common stock at an exercise price of $5.00; 500,000 “C Warrants” each convertible into one share of common stock at an exercise price of $6.00; 500,000 “D Warrants” each convertible into one share of common stock at an exercise price of $7.00; and 500,000 “E Warrants” each convertible into one share of common stock at an exercise price of $8.00. All warrants are exercisable at any time prior to August 30, 2025. As of the date of this report, no warrants have been exercised.
On May 22, 2020, the Company consummated the acquisition of Luduson Holding Company Limited (“LHCL”) and agreed to issue to the shareholders of LHCL Ten Million (10,000,000) shares of its common stock, at a value of $0.10 per share, for an aggregate value of $1,000,000. LHCL has been deconsolidated and disposed on May 12, 2023.
As of June 30, 2024, no warrants have been exercised.
Issued and outstanding shares
As of June 30, 2024, common shares
were issued and outstanding (December 31, 2023: common shares issued and outstanding), and
According to RTO accounting, the financial statement presentation has been presented as if the merger had taken place on January 1, 2022. Therefore, the fully diluted shares as of December 31, 2022 is presented as 348,210,000 shares.
NOTE – 5 INCOME TAX
The Company mainly operates in Penang, Malaysia, and other parts of Asia, and is subject to different taxes in the governing jurisdictions in which it operates. The effective tax rate in the period presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate, as follows:
United States of America
LDSN is registered in the State of Delaware and is subject to US federal corporate income tax. The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) was signed into law. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in its income tax provision. The Company has not accrued or paid interest or penalties which were not material to its results of operations for the periods presented. Deferred tax asset is not provided for as the tax losses may not be able to carry forward after a change in substantial ownership of the Company in May 2020.
As of June 30, 2024, the operations in the United States of America incurred nil cumulative net operating income which can be carried forward to offset future taxable income. Any net operating loss carry forwards begin to expire in 2038, if unutilized.
ASC 740, Accounting for Income Taxes, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction by jurisdiction basis. The Company’s history of cumulative losses, along with expected future U.S. losses required that a full valuation allowance be recorded against all net deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.
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Malaysia
The income tax provision in respect of operations in Malaysia is calculated at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations, and practices. The principal legislation that governs a person’s income tax in Malaysia is the Income Tax Act 1967 (the “ITA”). The regulatory body implementing and enforcing the ITA is the Inland Revenue Board of Malaysia. Pursuant to Section 3 of the ITA, income tax shall be charged for each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia.
Under the ITA, enterprises incorporated in Malaysia are usually subject to a unified 24% enterprise income tax rate while preferential tax rates, tax holidays, and tax exemptions may be granted on a case-by-case basis. The tax rate for small and medium sized companies (generally companies incorporated in Malaysia with paid-in capital of MYR2,500,000 or less, and gross income of not more than MYR50 million) is 17% for the first MYR600,000 (or approximately $150,000), with the remaining balance being taxed at the 24% rate.
As of June 30, 2024, the operations in the Malaysia incurred cumulative net operating income which can be carried forward to offset future taxable income. Any net operating loss carry forwards begin to expire in 2038, if unutilized.
NOTE – 6 PURCHASE OF METAVERSE INNOVATION LABORATORY (THE “PROJECTS”)
On January 10, 2024, the Company issued
shares of common stock for a total compensation of $ calculated with the quoted market price on OTC Markets of $0.50 per share
as of the date of the agreement to Dr. Kin Fat CHAN, the major shareholder of Metaverse Innovation Laboratory (the “Projects”)
with Headquarters in Shenzhen, China, for the purchase and performance of the Projects. The Projects aim to add to the Company’s
metaverse prowess and to develop a highly competitive metaverse, and seamlessly amalgamate movies, games, music, online shows, and KOL
interaction. However, with the roll in of LWH Consulting on March 28, 2024, the Company expanded our operations to include listing consulting
services. The Company identifies potential synergy in a combination between the Projects and V1 Play Limited, a personal company of the
Company’s COO Lap Yan CHEUNG. V1 Play Limited is a limited liability company incorporated in Hong Kong that develop and create games
based on pixel art on multiple platforms such as mobile app, gaming consoles and augmented, virtual, and mixed reality. The Company expects
to commence the restructuring and the listing of the Projects and V1 Play Limited in the second quarter of 2024 and record income for
the listing consulting services provided. Therefore, the Company recorded the $
Dr. CHAN’s professional background includes serving as the assistant to the renowned Hong Kong entrepreneur, Sir Ka-shing LEE. Dr. CHAN has successfully developed a metaverse dedicated to Dunhuang Culture.
NOTE – 7 NEW PIXEL ART BUSINESS
Pixel Art is a form of digital art where images are created and edited at the pixel level, often characterized by its blocky, retro aesthetic reminiscent of early video games. This unique art style utilizes limited color palettes and intricate detailing, allowing artists to craft visually striking and nostalgic pieces that captivate audiences with their charm and simplicity. As a fusion of technology and creativity, Pixel Art has gained significant popularity in various digital media, from video games and animations to contemporary art exhibitions.
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NOTE – 8 RELATED PARTY TRANSACTIONS
As of June 30, 2024, the Company has no related party transactions.
NOTE – 9 COMMITMENTS AND CONTINGENCIES
As of June 30, 2024, the Company has no material commitments or contingencies.
NOTE – 10 SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the Pro-forma financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2024, up through the date the Company issued the unaudited pro-forma financial statements.
As of June 30, 2024, the Company has no subsequent events.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our Company’s financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in the report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors. See “Cautionary Note Concerning Forward-Looking Statements” on page 2.
The description of our business included in this quarterly report is summary in nature and only includes material developments that have occurred since the latest full description. The full discussion of the history and general development of our business is included in “Item 1. Description of Business” section of the Company’s Annual Report on Form 10-K filed with the SEC on April 04, 2024 (the “10-K”), which section is incorporated by reference.
Currency and exchange rate
Unless otherwise noted, all currency figures quoted as “U.S. dollars”, “dollars” or “US$” refer to the legal currency of the United States. References to “Hong Kong Dollar” are to the Hong Kong Dollar, the legal currency of the Hong Kong Special Administrative Region of the People’s Republic of China. Throughout this report, assets and liabilities of the Company’s subsidiaries are translated into U.S. dollars using the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Overview
We were incorporated under the laws of the State of Delaware on March 6, 2014, under the name “Jovanovic-Steele, Inc.” Our name was changed to Baja Custom Designs, Inc. on October 26, 2017. On May 8, 2020, we acquired Luduson Holding Company Limited, a limited liability company organized under the laws of British Virgin Islands (“LHCL”). the acquisition was originally for entering into the gaming technology business. However, we disposed LHCL in April 2023 due to the laborious due diligence process and time staking. On May 24, 2023, we entered into a Share Exchange Arrangement to acquire Glamourous Group Holding Limited, a limited liability company incorporated in the United Kingdom of England and Whales. The acquisition is completed on July 06, 2023.
We are a Delaware holding company principally engaged in the business of building and fostering relationships between leading influencers and brands. We focus on identifying and partnering with top influencers across a range of industries and social media platforms, through partnering with movie studios and online ecosystems and production companies to promote their films through our influencer network, with the aim of eventually producing such movies in-house. We are principally engaged in influencer management, commercial film production and online ecosystem development company. Our target is to provide a unified entertainment universe for China market, Asia market and all overseas Chinese around the world.
Our goal is to supercharge influencers through Influencer Content Centers, Cinema for movies and special content, Game Halls (including VR, AR, MR games), Comic and Animation Museum, Online Live Concert Stadium and Travel Sharing Center projects. Our target is to build an online and offline ecosystem with great content. In addition, we plan to build a Movie Set Studio and a partner with well-known multimedia franchises to open Theme Parks in Penang, Malaysia. The Studio will have a Hong Kong Style Street environment and an ancient China Town area for our filming. It will also get profit from tourist visit and rent to other company for movie shooting. The theme park will include many attractions and games in collaboration with partnered live action or animated series for fans across the movie and animation sector. Through this operation, the Company will explore the animation market with a large number of fans around the world.
We are a group of Creators, experienced KOL managers, movie producers, directors, screenwriters, and a group of classic game developers, born in Hong Kong from 1970s to 1990s. Our team has deep experience in game production and platform development. We are familiar with developing VR, AR and MR experiences for our valuable fans, as well as the trendiest online ecosystem solutions. Our principal executive and registered offices are located at 35/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, telephone number +852-2824 8560.
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We are not a Chinese operating company but a Delaware holding company. Our operations will be conducted through our wholly owned subsidiaries based in Asia, including but not limited to Malaysia and Hong Kong. Our to be holding company structure presents unique risks as our investors may never directly hold equity interests in our Malaysia and Hong Kong subsidiaries and will be dependent upon contributions from our subsidiaries to finance our cash flow needs. Our Hong Kong subsidiaries will not require to obtain permission from the Chinese authorities including the China Securities Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to operate or to issue securities to foreign investors. The business of our subsidiaries will not be subjected to cybersecurity review with the Cyberspace Administration of China, or CAC, given that: (i) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities; (ii) we do not possess a large amount of personal information in our business operations. In addition, we are not subject to merger control review by China’s anti-monopoly enforcement agency due to the level of our revenues which are provided by us and audited by our auditor, and the fact that we currently do not expect to propose or implement any acquisition of control of, or decisive influence over, any company with revenues within China of more than RMB400 million. Currently, these statements and regulatory actions have had no impact on our daily business operations, or the ability to accept foreign investments and list our securities on a U.S. or other foreign exchange. However, since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation-making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list our securities on a U.S. or other foreign exchange.
Further, in light of the recent statements and regulatory actions by the PRC government, such as those related to Hong Kong’s national security, the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns, we may be subject to the risks of the uncertainty of any future actions of the PRC government in this regard, including the risk that we inadvertently conclude that such approvals are not required, that applicable laws, regulations or interpretations change such that we are required to obtain approvals in the future, which may result in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current business, accept foreign investments, and offer or continue to offer securities to our investors, and the resulting adverse change in value to our common stock. We may also be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the Chinese Securities Regulatory Commission, if we fail to comply with such rules and regulations, which could adversely affect the ability of the Company’s securities to continue to trade on the Over-the-Counter Bulletin Board, which may cause the value of our securities to significantly decline or become worthless. For a detailed description of the risks facing the Company and the offering associated with our operations in Hong Kong, please refer to “Risk Factors – Risk Factors Relating to Doing Business in Hong Kong.” set forth in the 10-K.
Results of Operations
Comparison of the three months ended June 30, 2024 and 2023
We recorded revenues of $12,500,000 (three months ended June 30, 2023: nil) and incurred no cost of goods sold in the unaudited pro-forma financial statements for the three months ended June 30, 2024 (“2Q2024”) (three months ended June 30, 2023 (“2Q2023”): nil). We recorded gross profit of $12,500,000 in 2Q2024 (no gross profit or loss in 2Q2023).
We recorded operating expenses of $7,400 in 2Q2024 (2Q2023: $3,325) which comprised of general and administrative expenses.
There was a net income of $12,477,904 in 2Q2024 (2Q2023: net loss of $3,325).
Our total assets as of June 30, 2024 were $23,572,085 (December 31, 2023: $7,091,416).
Our total liabilities as of June 30, 2024 were $1,254,153 (December 31, 2023: $1,245,310).
As of June 30, 2024 the Company had authorized 1,000,000,000 shares of common stock with a par value of $0.0001 per share. 563,466,410 shares were issued and outstanding (December 31, 2023: 503,466,410 common shares issued and outstanding), and 2,500,000 warrants to acquire common shares were issued and exercisable (December 31, 2023: 2,500,000 warrants).
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We reported an accumulated loss of $,179 as of June 30, 2024 (December 31, 2023: $14,342,505). We had cash and cash equivalent of $155,671 as of June 30, 2024 (December 31, 2023: $175,002).
Cost of Revenue. There was no cost of revenue as reported in 2Q2024 and 2Q2023.
Gross Profit. There was gross profit of $12,500,000 as reported in 2Q2024 (2Q2023: nil).
General and Administrative Expenses (“G&A”). We incurred G&A expenses of $7,400 in 2Q2024 (2Q2023: $3,325).
Income Tax Expense. There were no income tax expenses in 2Q2024 and 2Q2023.
Net Income. We recorded a net income of $12,502,904 in 2Q2024 (2Q2023: net loss of $3,325).
Liquidity and Capital Resources
As of June 30, 2024, the Company has assets of $23,572,085 (December 31, 2023: $7,091,416).
In the six months ended June 30, 2024, the Company used net cash of $19,331 from operating activities, financing and investing activities (six months ended June 30,2023: nil).
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Summary of significant accounting policies
Refer to Note 3 of the financial statements in ITEM 1 above.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, as defined by Item 10 (f)(1) of Regulation S-K, we are not required to provide the information required by this item.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of June 30, 2024, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), who concluded, that (i) there continues to be material weaknesses in the Company’s internal controls over financial reporting, that the weaknesses constitute a “deficiency” and that this deficiency could result in misstatements of the foregoing accounts and disclosures that could result in a material misstatement to the financial statements for the period covered by this report that would not be detected, and (ii) accordingly, our disclosure controls and procedures were not effective as of June 30, 2024.
However, it should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our fiscal quarter ended June 30, 2024, that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
ITEM 1A. RISK FACTORS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no sales of unregistered equity securities during the covered time period.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
During the quarter ended June 30, 2024, no director
or officer of the Company
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits are included with this quarterly report:
|
Exhibit Number |
Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Chief Financial Officer pursuant Section 906 Certifications under Sarbanes-Oxley Act of 2002 | |
| 32.1* | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.2* | Certification of Chief Financial Officer pursuant Section 906 Certifications under Sarbanes-Oxley Act of 2002 | |
| 101* | Interactive data files pursuant to Rule 405 of Regulation S-T |
__________
* Filed herewith
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SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Pursuant to the requirements of Section 13 or 15(d) 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.
|
Luduson G Inc. Registrant |
|||
| Date: August 9, 2024 | By: | /s/ Man Fai Cheng | |
| Man Fai Cheng | |||
| (Director and Chief Executive Officer) | |||
|
Luduson G Inc. Registrant |
|||
| Date: August 9, 2024 | By: | /s/ Eng Wah Kung | |
| Eng Wah Kung | |||
| (Director and Chief Financial Officer) | |||
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EXHIBIT 31.1
CERTIFICATION
I, Man Fai Cheng, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Luduson G Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: August 9, 2024 |
/s/ Man Fai Cheng Man Fai Cheng Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Eng Wah Kung, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Luduson G Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: August 9, 2024 | /s/ Eng Wah Kung |
|
Eng Wah Kung Director and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Luduson G Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2024 (the “Report”), I, Man Fai Cheng, Chief Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification.
| Date. August 9, 2024 | By: | /s/ Man Fai Cheng | |
| Man Fai Cheng | |||
| Director and Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Luduson G Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2024 (the “Report”), I, Eng Wah Kung, Chief Financial Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
| (3) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (4) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification.
| Date: August 9, 2024 | By: | /s/ Eng Wah Kung | |
| Eng Wah Kung | |||
| Director and Chief Financial Officer |