ITEM 1. BUSINESS.
Operation Overview
Business of the Issuer
Oakridge International Corporation was an environmental services company planning to engage in the business of waste management, trading and recovering raw materials from electronic printed circuit boards and other electronic products and components. Our plan was to own facilities in Australia and or Hong Kong for the waste management and recovering of raw materials from electronic printed circuit boards and other electronic products and components. However due to the capital requirement to roll out this business, the management of the Company has determined to focus on the sourcing, marketing and trading of consumer electronics products and the provision of consulting and design services specialized in 3D creation and 2D to 3D conversion solution services which requires less capital. The Company will review its environmental services business when the Company has adequate resources to pursue this business.
History
In March 2008, the Company entered into an agreement for a technology for recovering electronic components from electronic printed circuit boards. The Company evaluated the technology but could not raise the necessary funds to keep the technology and our rights to the technology expired in October 2009. From that date onwards, we have been evaluating other technologies in the recovery of raw materials from Printed Circuit Boards. However due to our limited resources available, we were not able to actively pursue alternative solutions as that would involve investment into test equipment or process.
In May 2011, the Group received a Letter of Authorization to appoint our then wholly owned subsidiary as an official reseller for a waste packing system in China for until the end of 2011. The Company intended to raise some capital in order to pursue the waste packing system and alternative technology for the recovery of raw materials from electronic printed circuit boards. However, we were not successful in the fund raising by the end of 2011.
For the year ended June 30, 2015, we earned revenue of $57,692 from 3D design services and consulting services. In the second half of 2014, the Company determined to focus on the growth products in the consumer electronics business by focusing on the 4K and high definition TVs. In order to enter this segment, the Company determined to develop and focus on providing 3D content design services and the conversion of 2D to 3D content and conversion solutions as the initial step prior to entering the sourcing, marketing and trading of television display and monitors in the consumer electronics business. Today we have 7 staff working in this business unit of content provisioning. Going forward, the Company will focus on its business scope in the 3D content provisioning and 2D to 3D conversion services. A summary of our future plans is described below.
General
The Company believes that there is a growing demand for high definition displays in the near future due to technology innovation and advancement. Today, users are not satisfied with ordinary displays but are more accustom to high definition. For example the high end smart phones are equipped with cameras that can take up to 16 mega pixel cameras and some with even 4K high definition capability. Soon these cameral specification will become the norm. As such there is a tremendous opportunity to enter this growing market.
The Company’s strategy is to start with the provisioning of contents and conversion services to build a name as a digital content provider for high definition displays. Then once we have recognition in the market place we will then migrate into the marketing and sale of 3D and high definition displays.
The Company intends to source, market, and sell a variety of consumer electronic display products to international markets under our own brand names or under our customers’ brand names. The intended products include 4K TVs, 3D TVs, high definition mobile devices, high definition and 3D computer monitors.
In the future, the Company intends to work with design house to secure innovative products for marketing and distribution in the international markets.
The Company further intends to try to secure by either acquisition or through licensing programs, international brands for our high end electronic display products.
During the financial year under review, the Group has started the consulting services for 3D display and solutions and earned a total revenue of $57,692.
Build Up of Future Operational Infrastructure
The Company believes it should build up its business operations so that it will possess an advantage over its competitors due to the combination of: i) having a content service that can drive the hardware sales, ii) having a recognition brand iii) having an infrastructure with experienced personnel in servicing and providing logistic support for mass merchant channels iv) sourcing of innovative display products from design house.
The Company intends to build up its core competencies in provisioning of 3D designing services and conversion services to drive our name in the market. In addition, the Company intends to source innovative designs and display products to offer a broad variety of current and new consumer electronic products to customers offering high definition displays. Furthermore, the Company intends to enter into brand licensing arrangements to use trade names and trademarks on products to earn higher profit margin on the high end display products.
The Company’s new core business will consist of first 3D content provisioning and then selling, distributing, and licensing various low to high priced consumer electronic products offering high definition displays and 3D auto-stereoscopic (glasses-free) displays. It is planned that a substantial portion of the Company’s marketing and sales efforts are concentrated in the Asia Pacific and Europe region, although we also sell our products and services in certain other international regions. We will now focus our business and plan to pursue one stop content solutions in the whole 3D business chain and to expand this business unit with a focus on provision of the most advanced 3D display technology and services for implementation of digital signage, education and consumer electronics initially in great Asia area and then to other regions.
Marketing and Growth Strategy
The Company provides content design consulting services including content creation and conversion from 2D to 3D that enables the broadcasters, TV channels, movies, digital signage, healthcare, education and any industries using consumer electronic displays. The business mainly concentrates on providing one stop solutions in the whole 3D content production chain, including 3D multi-view multimedia production services, cloud based 2D to 3D multi-view conversion, implanted automatic 2D to 3D multi-view conversion. At the beginning, the Group intends to enter the 3D market as a 3D content provider by firstly establishing the brand image and accumulating reputation in this field. Later on, as our brand attains certain recognition in the market place, the Group plans to source, market, and sell a variety of consumer electronic displays products to international markets under our own brand names or obtained license to use other customers’ brand names. The particular future sourcing products include 4K displays, 3D displays, 3D auto-stereoscopic displays, or even 4K/8K 3D auto-stereoscopic display which is the most remarkable and trendy foci in the current 3D market.
We are able to generate two separate revenue streams namely; content consulting services, and selling of 3D and high definition displays. As we are providing both the software and hardware solutions in the entire 3D market, we plan to use our brand name to the end users and distributors in both sectors.
The Company believes growth opportunities exist through the implementation of the following:
• provide 3D content services including 2D to 3D conversion services to drive the demand for high definition displays;
• source innovative consumer electronic products by securing product designs;
• create distribution channels for customers offering branded products;
• expansion of the Company’s customer base in the Asia Pacific region through our contacts and relationship of our directors and outside sales representative organizations;
• development of the Company’s direct to consumer sales channel, primarily through the development of our website; and
• expansion through strategic mergers with and acquisitions of other businesses.
A principal component of the Company’s growth strategy is to build a global recognition of its sourcing services, and brand names and reputation for quality and cost competitive products to aggressively promote its products within its high end targeted markets. The Company believes that it will be able to compete more effectively by applying innovative approaches to its product lines and augmenting its product lines with complementary products. The Company intends to pursue such plans either independently or through relationships with other companies as well as licensing arrangements, distributorship agreements and joint ventures.
Summary of Our Plans
To implement our business plans, apart from additional financing, we will need to negotiate and secure contracts with acceptable terms for:
* Promote our name in the 3D content provisioning and 2D to 3D conversion services in the market place;
* Sourcing of innovative and competitive electronic products from design houses;
* Securing reliable and quality display manufacturers;
* Securing customers for our products;
* Securing and entering into brands and licensing arrangements.
Competition
The Company will compete in the all priced sector of the consumer electronics market that have displays such as TVs, smartphones, and tablet markets. We estimate that the Company has several dozen competitors that are manufacturers and/or distributors, many of which are much larger and have greater financial resources than the Company. The Company competes primarily on the basis of:
* reliability
* quality
* price
* design
* quality of service and support provided to retailers and their customers
Product Liabilities and Insurance
Due to the nature of the consumer electronic products we intend to sell, the Company will periodically subject to product liability claims resulting from personal injuries. The Company may also become involved in various lawsuits incidental to its business.
The Company intends to take out insurance coverage for its products and business operations, however, any claims substantially in excess of the Company’s insurance coverage, or any substantial claim not covered by insurance, would have a material adverse effect on the Company’s financial condition and results of operations.
Warranties
The Company intends to offer limited warranties for its consumer electronics products, comparable to those offered to consumers by the Company’s competitors and or offered from the manufacturer, depending on the products and terms of sales. Such warranties typically consist of a one year period, under which the Company pays for labor and parts, or offers a new or similar unit in exchange for a non-performing unit.
ITEM 1A.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the following factors and other information in this Form 10K filing before deciding to invest in our Company. If any of the following risks actually occur, our business, financial condition, results of operations and prospects for growth would likely suffer. As a result, you could lose all or part of your investment.
We have experienced net losses and have not made any significant sales and revenue to date. Therefore, you should not rely on our historical results of operations as an indication of our future performance.
During the period from inception on October 31, 2007 through June 30, 2015, we incurred net losses of approximately $588,958. In November 2008, the Company sold scrap PCBs for $11,295 for a net profit of $474. After that our business success was dependent on our ability to trade consumer electronics products and provision of 3D content creation and conversion service business. The success of these businesses will depend upon a number of factors including but not limited to, our skill technical experts who can provide the professional creativities to satisfy our target customers and our ability to deliver the 3D content conversion services. None of these factors is demonstrated by our historic performance to date and there is no assurance we will be able to accomplish them in order to sustain our operations. We may never develop profitable operations. As a result, there is no assurance of future successful performance of our business.
Our financial condition raises substantial doubt about our ability to continue as a going concern. You will be unable to determine whether we will ever become profitable.
Our independent auditors have indicated in their audit report for the year ended June 30, 2015 that there is substantial doubt about our ability to continue as a going concern over the next twelve months. Our poor financial condition could inhibit our ability to achieve our business plans and therefore an investor cannot determine if we will ever become profitable.
If we do not obtain additional financing, our business will fail.
We have determined our current operating funds are not sufficient to complete our intended business objectives. As of June 30, 2015, we had cash on hand in the amount of $9,281. We will need to raise additional capital in order to cover the costs of implementing our business plans. We estimate that we will need to raise $1.0 million to fully execute our operating plans. For the next 12 months, we will require a minimum of $25,000 to pay for the ongoing corporate costs of annual filing fees, audit, accounting, and office related cost. We do not currently have any arrangements for financing and may not be able to find such financing if required to fund our business plans. We currently do not have any significant operations and we have had modest revenue. Our President, Mr. Lit Wai Sun, has indicated that he is prepared to support the Company to cover our operating costs over the next 12 months, but there are no formal arrangements in this regard. He is not legally obligated to loan funds to the Company. There is no guarantee that we will have his financial support.
If we are not able to obtain agreements with 3D content producing software for licensing, our business will fail.
We have not entered into formal agreements with any entity to purchase licensed 3D content producing software. Even if we are able to reach an agreement with a software company, we may not be able to obtain the financing necessary to purchase or license the products. If we are unable to purchase licensed 3D content producing software at a competitive market price, our business will fail.
If we cannot find customers to purchase the 3D content creation and conversion services from us on acceptable terms, we will not be able to establish our business and thus it will fail.
Even if we source licensed content producing software, we may not be able to secure customers on acceptable terms. Without customers purchasing our 3D content creation and conversion services, we will not be able to proceed with our business plans.
Our major shareholder owns 75.00% of our outstanding common stock, and it could exercise significant control over corporate decisions that may be disadvantageous to minority shareholders.
Our major shareholder Masterco International Limited, owns approximately 75.00% of the outstanding shares of our common stock. Accordingly, it will have a significant influence in determining the outcome of all corporate transactions, including mergers, consolidations, and the sale of all or substantially all of our assets. It will also have the power to influence a change in control. The interests of Masterco International Limited may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Because current management does not have any technical experience in the 3D content creation and conversion sector, our business has a higher risk of failure.
While management has experience in doing business in and with Australia, Hong Kong and China, management does not have experience in the field of 3D content total solution. As a result, we may not be able to recognize and take advantage of opportunities in the 3D content creation and conversion sector without the aid of additional employees or qualified consultants. In addition, management may not be fully aware of specific requirements necessary for the resale of the raw materials generated by our process. Therefore management's decisions and choices may adversely affect our operations and earnings, and our ultimate financial success may suffer irreparable harm as a result.
We will incur significant costs complying with our obligations as a reporting company, and our ability to attain profitable operations will be adversely impacted.
We are required to file periodic reports with the Securities & Exchange Commission, including financial statements and disclosure regarding changes in our operations. We anticipate that we will incur a minimum of $25,000 per year in order to comply with these reporting requirements. As our operations become more complex, it is anticipated that these costs will increase. These compliance costs will be charged to operations and will negatively impact our ability to attain profitable operations.
Our management team is currently not earning salary or receiving expenses, which may affect the implementation of our business plans.
Our President, Mr. Lit Wai Sun, anticipates that during the next 12 months he will devote approximately 15% of his time to our business, also in an unpaid capacity. Mr. Sun may not be able to devote the time necessary to our business to assure successful implementation of our business plans.
Our business may be adversely affected if we cannot retain our management.
The success of our business is dependent upon the expertise of management. We have not obtained any key person life insurance relating to the management. If we lose their services, we may not be able to hire and retain other management with comparable experience. As a result, the loss of their services could adversely affect our future revenues.
There is intense competition for qualified technical professionals and sales and marketing personnel, and our failure to attract and retain these people could affect our ability to respond to rapid technological changes and to increase our revenues.
Our future success depends upon our ability to attract and retain qualified technical experts, sales and marketing personnel. Competition for talented personnel, particularly technical professionals, is intense. This competition could increase the costs of hiring and retaining personnel. We may not be able to attract, retain, and adequately motivate our personnel or to integrate new personnel into our operations successfully.
Our shares will be "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000, or annual income exceeding $200,000 individually or $300,000 together with his or her spouse, is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:
* Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
* Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
* Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value and information regarding the limited market in penny stocks; and
* Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.
Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.
Sales of our common stock under Rule 144 could reduce the price of our stock.
All of 5,798,000 shares of our common stock held by affiliates are restricted securities under Rule 144 of the Securities Act of 1933. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. These restrictions do not apply to release under Rule 144(k). The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
We will be required to remain current in our filings with the SEC and our securities will not be eligible for quotation if we are not current in our filings with the SEC.
Our shares are quoted on the over-the-counter bulletin board. We will be required to remain current in our filings with the SEC in order for shares of our common stock to be eligible for quotation on the over-the-counter bulletin board. In the event that we become delinquent in our required filings with the SEC, quotation of our common stock will be terminated following a 30 day grace period if we do not make our required filing during that time. If our shares are not eligible for quotation on the over-the-counter bulletin board, investors in our common stock may find it difficult to sell their shares.
Because we currently do not have an audit or compensation committee, shareholders will have to rely on the entire Board of Directors, all of which are not independent, to perform these functions.
We currently do not have an audit or compensation committee comprised of independent directors. The Board of Directors as a whole performs these functions. Thus, there is a potential conflict in that board members who are management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
Risks associated with doing business in the PRC.
A portion of our revenue will be derived from our operations in China. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal developments in China, which have rapidly changed.
The PRC's economic, political and social conditions, as well as government policies, could affect our business. The PRC economy differs from the economies of most developed countries in many respects.
Our ability to find attractive manufacturers and customers for our products is based on the assumption that the Chinese economy will continue to grow. The PRC's economic growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall PRC economy, but may also have a negative effect on us, depending on the industry in which we engage in a business combination. For example, our financial condition and results of operations may be adversely affected by PRC government control over capital investments or changes in tax regulations that are applicable to potential target businesses and business combinations.
The PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the PRC government has implemented measures emphasizing the use of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over PRC economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. We cannot assure you that China's economic, political or legal systems will not develop in a way that becomes detrimental to our business, results of operations and prospects.
If political relations between the U.S. and the PRC weaken, it could make sale of our products less attractive to customers outside of the PRC.
The relationship between the United States and the PRC is subject to sudden fluctuation and periodic tension. Changes in political conditions in the PRC and changes in the state of Sino-U.S. relations are difficult to predict and could adversely affect our sourcing operations in China or cause our consumer electronic products to become less attractive to customers outside of the PRC. This could lead to a decline in our profitability and our stock price. Any weakening of relations between the U.S. and the PRC could have a material adverse effect on our operations.
If the PRC imposes restrictions to reduce inflation, future economic growth in the PRC could be severely curtailed which could lead to a significant decrease in our profitability.
While the economy of the PRC has experienced rapid growth, this growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in supply of money and rising inflation. In order to control inflation in the past, the PRC has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. If similar restrictions are imposed, it may lead to a slowing of economic growth and increase in cost structure for our manufacturers, leading to a decline in our profitability.
Because Chinese law may govern some of our licensing agreements for acquisition and sale of our services, we may not be able to enforce our rights within the PRC or elsewhere, which could result in a significant loss of business, business opportunities or capital.
Chinese law may govern some of our material agreements for acquisition and sale of our consumer electronic products, some or many of which could be with Chinese governmental agencies. We cannot assure you that we will be able to enforce any of our material agreements or that remedies will be available outside of the PRC. The Chinese legal system is similar to a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. Although legislation in China over the past 25 years has significantly improved the protection afforded to various forms of foreign investment and contractual arrangements in China, these laws, regulations and legal requirements are relatively new and their interpretation and enforcement involve uncertainties, which could limit the legal protection available to us, and foreign investors, including you. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital and could have a material adverse impact on our operations.
Uncertainties with respect to the Chinese legal system could have a material adverse effect on us.
China's legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Laws and regulations relating to foreign investments in China are relatively new, and China's legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES.
Our principal office address is 7/F., Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong.
We are not subject to competitive conditions for property and currently have no property in insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
There are no legal actions pending against us nor are any legal actions contemplated by us at this time.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
A registrant that qualifies as a smaller reporting company is not required to provide the performance graph required in paragraph (e) of Item 201.
We have one class of securities, Common Voting Equity Shares ("Common Stock"). Our Common Stock is quoted on the Over The Counter Bulletin Board.
Issuer's Repurchase Of Equity Securities
None.
Holders
On September 30, 2015, the Company had 48 holders of record of our Common Stock.
Dividends
We have not declared or paid dividends on our Common Stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our Board of Directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the Board of Directors. There are no contractual restrictions on our ability to declare or pay dividends.
Stock Options
Currently, there are no stock options outstanding.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
A registrant that qualifies, as a smaller reporting company is not required to provide the information required by this item.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion of our financial condition and our subsidiary and our results of operations should be read together with the consolidated financial statements and related notes that are included later in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Risk Factors or in other parts of this Annual Report on Form 10-K.
Twelve Months Operating Plan
Over the next twelve months, our operating plan will be focused on developing our operations in the provision of 3D content creation and conversion services, and the sourcing of consumer electronic display products. Over the next twelve months we will focus on developing and building our 3D content creation and conversion services to get our reputation in the market as a total design and conversion solution provider. After we have built up our reputation in the market place, we will extend our sales to include the 3D TV displays. We will recruit a sales and marketing team to source popular consumer electronic products and to identify suitable manufacturers for these products. Our marketing team will then try to match these products and services to our customers.
Our financial plan is to obtain sufficient funding for the trading and marketing services for consumer electronic products. The trading of the consumer electronic products requires funding of about US$1,000,000 to buy consumer electronics and selling to our customers. The working capital funding is expected to be US$350,000. We will seek to raise development and operation funds for the next twelve months by equity offering to support these plans. In addition, management is seeking strategic investors and partners to support our business.
Research and Development
Since incorporation, the Company has not embarked on any research and development program and has not incurred or is expecting to incur any such costs.
Costs and Effects of Compliance with Environmental Laws
We currently do not expect there will be any additional costs and effects of compliance with environmental laws in our current plan of operation.
Employees
As of September 30, 2015, we have 7 staff, including our director, in the Company. Subject to financing, in the next twelve months, we plan to hire additional staff and consultants in Hong Kong and China to undertake and implement the operating plan
Results of Operations
FOR THE YEAR ENDED JUNE 30, 2015 AND 2014
REVENUES
For the year ended June 30, 2015, the Company has recorded revenue of $57,692 and incurred $13,526 in costs of revenue. In the prior year the Company had recorded revenue of $30,449 and did not incur any costs of revenue since all the costs related to services which are set out in the general and administrative expenses.
OPERATING EXPENSES
For the years ended June 30, 2015 and 2014, the Company had earned a gross profit of $44,166 and $30,449 respectively and our total operating expenses were $220,108 and $155,212 respectively. Our net loss to our shareholders for the years ended June 30, 2015 and 2014 was $175,942 and $124,763 respectively.
Liquidity and Capital Resources
We do not have sufficient resources to accomplish our business plans. As of June 30, 2015, we had $9,281 in cash.
We will have to raise funds to pay for our expenses and accomplish our business plans. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans or lines of credit. Our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.
Going Concern Consideration
The Company had $57,692 revenue and incurred a net loss of $175,942 for the year ended June 30, 2015 and an accumulated net loss of $588,958 as at June 30, 2015. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in emerging markets and the competitive environment in which the Company operates. The Company is pursuing financing for its operations. Failure to secure such financing, to raise additional equity capital and to earn revenue may result in the Company depleting its available funds and not being able to pay its obligations. These consolidated financial statements do not include any adjustment to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Off-Balance Sheet Arrangement
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A smaller reporting company is not required to provide the information required by this Item.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements
Please see page through of this Form 10-K.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There are no such reportable events.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of a date (the "Evaluation Date") within ninety (90) days prior to the filing of our June 30, 2015 Form 10-K
Based upon that evaluation, our Management has concluded that, as of June 30, 2015, our disclosure controls and procedures were not effective in timely alerting management to the material information relating to us (or our consolidated subsidiaries) required to be included in our periodic filings with the SEC.
Internal Control over Financial Reporting
(a)Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed 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.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis.
Our management, with the participation of its CEO and President, assessed the effectiveness of our internal control over financial reporting as of June 30, 2015. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment under such criteria, management concluded that our internal controls over financial reporting were not effective as of June 30, 2015 due to control deficiencies that constituted material weaknesses. A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified material weaknesses in our internal control over financial reporting. The material weaknesses consisted of inadequate staffing within the accounting operations of our Company. The small number of employees who are responsible for accounting functions (more specifically, one) prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. The limited personnel also does not allow for multiple levels of supervision and review.
Management has identified specific remedial actions to address the material weaknesses described above:
* Improve the effectiveness of the accounting group by continuing to augment our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions and preparation of tax disclosures. We plan to mitigate the segregation of duties issues by hiring additional personnel in the accounting department once we have achieved positive cash flow from operations, and/or have raised significant additional working capital.
* Improve segregation procedures by strengthening cross approval of various functions including cash disbursements and quarterly internal audit procedures where appropriate.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Changes in Controls and Procedures
There were no significant changes made in our internal controls over financial reporting during the year ended June 30, 2015 that have materially affected or are reasonably likely to materially affect these controls. Thus, no corrective actions with regard to significant deficiencies or material weaknesses were necessary.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management's report in this annual report.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
On June 29, 2015, Dr. Herbert, Ying Chiu Lee tendered his resignation to resign from all his positions as Chief Executive Officer, President and Director in the Company, and Dr. Man Chung Chan also resigned from his position as member of the Board of Directors, Treasurer, Chief Financial Officer and Secretary of the Company on the same date.
The director and executive officer of the Company as at the date of this Annual Report is as follows:
Name Age Position
Lit Wai Sun President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary and Director
Mr. Sun has worked in the banking industry in Hong Kong for over 20 years in various capacities in the bank including commercial lending, administration and operations. In the most 5 years, Mr. Sun has been working mainly as a consultant to businesses in various industries including media and advertising.
No director or officer of the Company has been affiliated with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which any of the Company's officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company's subsidiary or has a material interest adverse to it or any of its subsidiary.
Auditors; Code of Ethics; Financial Expert
Our principal independent accountant is MaloneBailey, LLP.
We do not currently have a Code of Ethics because we have limited business operations and only two officers/directors on the Board. We believe a code of ethics would have limited utility at this stage. We intend to adopt such a code of ethics as our business operations expand and have more directors, officers and employees. As at today, we do not have a "financial expert" on the board or an audit committee or nominating committee.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation
Since our incorporation on October 31, 2007, we have not paid any compensation to our directors or officers in consideration for their services rendered to our Company in their capacity as such. We have no employment agreements with any of our directors. We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.
1. Dr. Herbert, Ying Chiu Lee was appointed as our CEO, President and Director of the Company on July 18, 2012. On June 29, 2015, Dr. Herbert, Ying Chiu Lee resigned from all his positions in the Company.
2. Mr. Con Unerkov was appointed as our Director on May 4, 2012, as our CFO on May 18, 2012 and as our Treasurer and Secretary on July 18, 2012. On April 22, 2014, Mr. Con Unerkov resigned from his position as member of the Board of Directors, and as the Chief Financial Officer, Treasurer and Secretary of the Company.
3. Dr. Man Chung Chan was appointed as Director and Chief Financial Officer, Treasurer and Secretary of the Company on April 22, 2014. On June 29, 2015, Dr. Man Chung Chan resigned from all his positions in the Company.
4. Mr. Lit Wai Sun was appointed as our President, CEO, Treasurer, CFO, Secretary and Director of the Company on June 29, 2015.
Outstanding Equity Awards
The following table sets forth certain information concerning stock option awards granted to our executive officers and our director.
1. Dr. Herbert, Ying Chiu Lee was appointed as our CEO, President and Director of the Company on July 18, 2012. On June 29, 2015, Dr. Herbert, Ying Chiu Lee resigned from all his positions in the Company.
2. Mr. Con Unerkov was appointed as our Director on May 4, 2012, as our CFO on May 18, 2012 and as our Treasurer and Secretary on July 18, 2012. On April 22, 2014, Mr. Con Unerkov resigned from his position as member of the Board of Directors, and as the Chief Financial Officer, Treasurer and Secretary of the Company.
3. Dr. Man Chung Chan was appointed as Director and Chief Financial Officer, Treasurer and Secretary of the Company on April 22, 2014. On June 29, 2015, Dr. Man Chung Chan resigned from all his positions in the Company.
4. Mr. Lit Wai Sun was appointed as our President, CEO, Treasurer, CFO, Secretary and Director of the Company on June 29, 2015.
Since October 31, 2007, none of our director or executive officer has held unexercised options, stock that had not vested, or equity incentive plan awards.
Compensation of Director
Since our incorporation on October 31, 2007, no compensation has been paid to any of our director in consideration for his services rendered in their capacity as director.
1. Dr. Herbert, Ying Chiu Lee was appointed as our CEO, President and Director of the Company on July 18, 2012. On June 29, 2015, Dr. Herbert, Ying Chiu Lee resigned from all his positions in the Company.
2. Mr. Con Unerkov was appointed as our Director on May 4, 2012, as our CFO on May 18, 2012 and as our Treasurer and Secretary on July 18, 2012. On April 22, 2014, Mr. Con Unerkov resigned from his position as member of the Board of Directors, and as the Chief Financial Officer, Treasurer and Secretary of the Company.
3. Dr. Man Chung Chan was appointed as Director and Chief Financial Officer, Treasurer and Secretary of the Company on April 22, 2014. On June 29, 2015, Dr. Man Chung Chan resigned from all his positions in the Company.
4. Mr. Lit Wai Sun was appointed as our President, CEO, Treasurer, CFO, Secretary and Director of the Company on June 29, 2015.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following tables set forth the ownership, as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock. There are not any pending or anticipated arrangements that may cause a change in control.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable common share property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.
This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 6,510,000 shares of common stock outstanding as of June 30, 2015.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
During the year ended June 30, 2015, the Company paid consulting service fees of $13,525 to a related entity controlled by the ex-President, Dr. Herbert, Ying Chiu Lee. There are no other related transactions during the period from July 1, 2014 to June 30, 2015.
None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock; or
* Any member of the immediate family of any of the foregoing persons.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
AUDIT FEES. The aggregate fees billed in each of the fiscal years ended June 30, 2015 and 2014 for professional services rendered by the principal accountant for the audit of our annual consolidated financial statements and review of the consolidated financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements as well as registration statement filings for those fiscal years were $8,500 and $8,500, respectively.
AUDIT-RELATED FEES. The aggregate fees billed for services reasonably related to the performance of the audit or review of the consolidated financial statements outside of those fees disclosed above under "Audit Fees" for fiscal years 2015 and 2014 was nil.
TAX FEES. For the fiscal years ended June 30, 2015 and 2014, our principal accountants did not render any services for tax compliance, tax advice, and tax planning work.
ALL OTHER FEES. None
PRE-APPROVAL POLICIES AND PROCEDURES. Prior to engaging its accountants to perform a particular service, our Board of Directors obtains an estimate for the service to be performed. All of the services described above were approved by the Board of Directors in accordance with its procedures.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Index to Financial Statements and Financial Statement Schedules
Report of Independent Registered Public Accounting Firm - MaloneBailey, LLP.
Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 2015 and 2014
Consolidated Statements of Operations and Comprehensive Income for the years ended June 30, 2015 and 2014
Consolidated Statements of Stockholders' Deficit for the years ended June 30, 2015 and 2014.
Consolidated Statements of Cash Flows for the years ended June 30, 2015 and 2014
Notes to Consolidated Financial Statements
(c) Exhibits.
Exhibit No.
Description
3.1
Articles of Incorporation (1)
3.2
Bylaws (1)
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 to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
(1)
Incorporated by reference to our Registration Statement on Form S-1 filed with the SEC on July 14, 2008
* Filed herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 34, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Oakridge International Corporation
a Nevada corporation
/s/ Lit Wai Sun
---------------------------------------
Lit Wai Sun
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:
/s/ Lit Wai Sun
November 3, 2015
--------------------------------------------
Lit Wai Sun
Its: Chief Executive Officer, President,
Chief Financial Officer and Secretary
Oakridge International Corporation and Subsidiary
Consolidated Financial Statements
For the Years Ended June 30, 2015 and 2014
Page
Report of Independent Registered Public Accounting Firm - MaloneBailey, LLP
Consolidated Balance Sheets as of June 30, 2015 and 2014
Consolidated Statements of Operations and Comprehensive Income for the years ended June 30, 2015 and 2014
Consolidated Statements of Stockholders' Deficit for the year ended June 30, 2015 and 2014
Consolidated Statements of Cash Flows for the years ended June 30, 2015 and 2014
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Oakridge International Corporation
Adelaide, Australia
We have audited the accompanying consolidated balance sheets of Oakridge International Corporation and its subsidiary (collectively, the “Company”) as of June 30, 2015 and 2014, and the related consolidated statements of operations and comprehensive income, stockholders’ deficit, and cash flows for each of the years ended June 30, 2015 and 2014. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oakridge International Corporation and its subsidiary as of June 30, 2015 and 2014 and the results of their operations and their cash flows for each of the years ended June 30, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has a working capital deficit and has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
November 3, 2015
OAKRIDGE INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
See accompanying notes to the consolidated financial statements.
OAKRIDGE INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
See accompanying notes to the consolidated financial statements.
OAKRIDGE INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
	YEARS ENDED JUNE 30, 2015 AND
See accompanying notes to the consolidated financial statements.
OAKRIDGE INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
See accompanying notes to the consolidated financial statements.
OAKRIDGE INTERNATIONAL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
Oakridge International Corporation (the "Company") is a Nevada corporation, incorporated on October 31, 2007. The Company's office is located in Hong Kong and its principal business was trading of electronic components, recycling scrap and electronic Printed Circuit Boards ("PCB"), and the establishment of recycling operations in Asia and Australia. The Company also provides consulting services on product design and marketing promotion utilizing 3D imagery.
On March 25, 2008, the Company commenced its operations in the recycling business by entering into a non-exclusive contract to license a proprietary PCB recycling license technology and has begun the evaluation of this technology. In October 2009, the technology agreement expired. The Company is now focusing on the sourcing, marketing and trading of consumer electronic products, and the provision of consulting services on 3D design.
2. GOING CONCERN
The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has generated modest revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future.
The Company has experienced net losses of $175,942 and $124,763 for the years ended June 30, 2015 and 2014, respectively, and as at June 30, 2015 and June 30, 2014, the Company has stockholders’ deficit totaling $588,958 and $413,016, respectively; and its current liabilities for the relevant fiscal year ended 2015 and 2014 exceed its current assets by $551,560 and $375,695, respectively. These factors noted above raise substantial doubt regarding the Company's ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary debt or equity financing to continue operations and the attainment of profitable operations. In addition, the Company is seeking strategic investors and partners to support our business. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, and believes that the actions being taken by the Company provide the opportunity for it to continue as a going concern, there can be no assurances to that effect. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company's fiscal year end is June 30.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements for the years ended June 30, 2015 and 2014 include the financial statements of the Company and its wholly owned subsidiary Oakridge (Hong Kong) Corporation Limited. The results of subsidiary acquired or sold during the period are consolidated from their effective dates of acquisition or through their effective dates of disposition, respectively.
All significant inter-company transactions and balances have been eliminated in consolidation.
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260 "Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Fair Value of Financial Instruments
FASB ASC 820 “Fair Value Measurements” establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
- Level 1 	- defined as observable inputs such as quoted prices in active markets;
- Level 2	- defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
- Level 3 	- defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, deposit, accrued expenses and other payables, and amounts due to related parties, approximate their fair values because of the short maturity of these instruments.
Cash and Cash Equivalents
The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequence attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
The Company follow FASB ASC 740 which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under FASB ASC 740, we 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 taxation authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FASB ASC 740 also provides guidance on recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At June 30, 2015 and 2014, the Company did not have a liability for unrecognized tax benefits.
Foreign Currency Translation
The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830 "Foreign Currency Translation" using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Hong Kong dollars. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Revenue Recognition
The Company recognizes its revenue in accordance with ASC 605 “Revenue Recognition”.
Revenue from consulting services is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the services are performed, and collectability of the resulting receivable is reasonably assured.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations or cash flows.
4. RELATED PARTY TRANSACTIONS
As of June 30, 2015 and 2014, there was $Nil and $22,008, respectively due to the ex-President, Dr. Herbert, Ying Chiu Lee, and this amount is unsecured, non-interest bearing, and due on demand.
As of June 30, 2015 and 2014, there was $555,174 and $402,336, respectively, due to a related entity controlled by the ex-President, Dr. Herbert, Ying Chiu Lee, and this amount is unsecured, non-interest bearing, and due on demand.
During the year ended June 30, 2015, the Company paid consulting service fees of $13,525 to a related entity controlled by the ex-President, Dr. Herbert, Ying Chiu Lee.
5. STOCKHOLDERS’ EQUITY
As of June 30, 2015, the Company has 75,000,000 shares authorized and 6,510,000 shares issued and outstanding.
6. INCOME TAXES
No provision was made for income tax for the years ended June 30, 2015 and 2014 as the Company and its subsidiary had operating losses. For the year ended June 30, 2015, the Company and its subsidiary incurred net operating losses for tax purposes of approximately $175,942 (2014: $124,763). The total net operating loss carry-forward of the Company and its subsidiary was $588,958 (2014: $413,016) as of June 30, 2015. The net operating loss carry-forward of the Company may be used to reduce taxable income through the year 2026. The availability of the Company's net operating loss carry-forwards is subject to limitation if there is a 50% or more change in the ownership of the Company's stock.
There was no significant difference between reportable income tax and statutory income tax. The gross deferred tax asset balance as of June 30, 2015 was approximately $160,000 (2014: $126,000). A 100% valuation allowance has been established against the deferred tax asset, as the utilization of the loss carry-forwards cannot reasonably be assured.
As reconciliation between the income taxes computed at the United States and Hong Kong statutory rate and the Group's provision for income taxes is as follows:
7. SUBSEQUENT EVENTS
There were certain share transfer transactions between the shareholders of the Company subsequent to the year end, and as a result Masterco International Limited owning 4,882,500 shares as at date of this report has become the majority and controlling shareholder of the Company.