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UNITED STATES

SECURITIES EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the fiscal year ended June 30, 2023

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

  

Commission File No. 333-207099

 

Arem Pacific Corporation
(Name of Small Business Issuer in its Charter)

 

Delaware   26-2124961
(State or other Jurisdiction of Incorporation or organization)   (I.R.S. Employer Identification No.)

 

271 Blackburn Road

Mount Waverley

Victoria, Australia 3149

(Address of Principal Executive Offices)

 

+(61) 393955324
(Registrant’s Telephone Number, including area code)

 

Securities Registered Pursuant to Section 12(b) of the Act: None

 

Securities Registered Pursuant to Section 12(g) of the Act: None.

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   o Yes x No

 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  o Yes x No

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

 

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). x Yes o No

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o Accelerated filer o
Non-accelerated filer x Smaller reporting company x
  Emerging Growth company o

 

1 

 

 

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. o

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

 

The aggregate market value of the Registrant’s common stock held by non-affiliates of the Registrant was approximately $3,090,107.54, based upon its last public quoted price ($0.0113) for its common stock on the OTC Markets Group, LLC (the “OTC Markets”) as of the last business day of the registrant’s most recently completed second quarter under the trading symbol “ARPC,” and 273,460,844 shares of the Registrant’s common stock being then owned by such persons.

 

As of October 5, 2023, the Registrant had 373,950,544 shares of its common stock, $0.000001 par value per share, issued and outstanding.

 

Our website is: www.aremzen.com.

 

REFERENCES

 

In this Annual Report, references to the “Registrant,” “Arem Pacific Corporation,” “Arem,” the “Company,” “we,” “our,” “us” and words of similar import, refer to Arem Pacific Corporation, a Delaware corporation, which is the Registrant, and our wholly-owned subsidiaries, Arem Pacific Corporation, an Arizona corporation (“Arem Pacific Arizona”) formed on July 11, 2007; and Sanyi Group Pty. Ltd., an entity organized on September 28, 2005, under the Corporations Act of 2001 of Australia (“Sanyi Group”).

 

FORWARD LOOKING STATEMENTS

 

This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Annual Report. We cannot assure you that the forward-looking statements in this Annual Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should carefully read this Annual Report completely, and it should be read and considered with all other historical reports and registration statements filed by us with the SEC. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

 

 

CAUTIONARY STATEMENT

 

Summaries of all agreements or other documents referenced herein and attached hereto as “Exhibits” in Part IV, Item 15 hereof, or otherwise, do not purport to be all inclusive of the terms, conditions and other provisions of such agreements or documents, and accordingly, all such summaries are modified in their entirety to the referenced or attached respective agreement or document in Part IV, Item 15 hereof.

 

 

 

2 

 

 

TABLE OF CONTENTS

 

PART I    
Item 1. Business 1
Item 1.A. Risk Factors 7
Item 1.B. Unresolved Staff Comments 14
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Mine Safety Disclosure 14
     
PART II    
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 14
Item 6. Selected Financial Data 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 16
Item 7.A. Quantitative and Qualitative Disclosures About Market Risk 20
Item 8. Consolidated financial statements and Supplementary Data 20
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 39
Item 9.A. Controls and Procedures 39
Item 9.B. Other Information 40
Item 9.C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspection 40
     
PART III    
Item 10. Directors, Executive Officers and Corporate Governance 41
Item 11. Executive Compensation 43
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 44
Item 13. Certain Relationships and Related Transactions, and Director Independence 45
Item 14. Principal Accounting Fees and Services 45
     
PART IV    
Item 15. Exhibit and Financial Statement Schedules 46
Item 16. Form 10-K Summary 46
     
Signatures   47

 

 

 

 

 

 

 

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PART I

ITEM 1.  BUSINESS

 

Corporate History and Business Development

 

We were incorporated in the State of Delaware on November 8, 2007, under the name “Aspen Global Corp.” On June 10, 2008, we changed our name to “Diversified Mortgage Workout Corp.”

 

On June 30, 2012, pursuant to an Acquisition Agreement with Sanyi Group, we acquired 100% of the equity interest in Sanyi Group from its sole owner, Mr. Xin Jin, our current sole director, CEO and CFO, in consideration of 10,000,000 “post-split” (as defined below) shares of our $0.000001 par value common stock comprised of “restricted securities” as defined in Rule 144 of the SEC, which were issued to Mr. Jin on August 30, 2013.  On the closing of this acquisition, we succeeded to the business operations of Sanyi Group, then consisting of the operation of two (2) wellness centers discussed below.

 

On June 19, 2013, Arem Pacific Arizona acquired voting control of the Company (then “Diversified Workout Corporation”). Subsequently, on August 8, 2013, we acquired all of the issued and outstanding shares of Arem Pacific Arizona from its then existing shareholders; and we retired and returned to our treasury all of the capital stock acquired in the Arem Pacific Arizona transaction, resulting in it becoming our wholly-owned subsidiary.

 

We changed our name in Delaware to “Arem Pacific Corporation” on July 23, 2013; and we effected a 388 to one (1) reverse stock split of our common stock on or about that date. Effective April 15, 2016, our Form S-1 Registration Statement registering shares of our common stock for public sale by certain “selling shareholders” of the Company was declared effective by the SEC. We became delinquent in our reports required to be filed under Section 15(d) of the Exchange Act on or about February 15, 2017, but filed a comprehensive Annual Report on Form 10-K on November 21, 2022 and have filed all quarterly reports required since that time.

 

Our current corporate structure is depicted below:

 

Arem Pacific Corporation

(a Delaware corporation)

100% owned

Arem Pacific Corporation

(an Arizona corporation)

100% owned

Sanyi Group Pty. Ltd.

an Australian corporation

 

For additional information about our corporate structure, please see the caption “References” and the heading “Corporate History and Business Development” above. All of our current principal operations are conducted through Sanyi Group in Victoria, Australia.

 

Business

 

Overview

 

Through Sanyi Group, we are engaged in providing wellness services that include acupressure/reflexology, massage therapy and cupping. We offer various types of massage therapy, such as Swedish, deep tissue and hot stone oil, among others, all as discussed below. 

 

Principal Products or Services and their Markets

 

Since 2017, we have operated one (1) wellness center in Victoria State, Australia. The wellness center is located Point Cook Shopping Center, Shop 109, Stockland Point Cook, Corner Murong and 20 Main Street, Point Cook, Victoria, 3030.

 

The Point Cook wellness center consists of approximately seventy-seven (77) square meters, and its layout is depicted below:

 

4 

 

 

 

The Point Cook location has one (1) full-time supervisor and two (2) part-time masseurs as at June 30, 2023. The size of any future planned locations, if any, are anticipated to range between fifty (50) to one hundred (100) square meters.

 

Services Provided at our Wellness Center.

 

We provide the following services at our wellness center:

 

· Acupressure/Reflexology;

· Neck, shoulder, back, legs and full body massages;

· Foot massages;

· Cupping; and

· Deep tissue and hot oil massages.

 

Acupressure/Reflexology – is considered acupuncture without needles. Similar to acupuncture, strategic body meridians are targeted by the practitioner using pressure from their fingers, elbows or special devices. Acupressure also is a component of traditional Chinese medicine. Reflexology is similar to acupressure and targets specific points on the feet and hands, which correspond to organs in the body.

 

Massage Therapy – involves the application of soft tissue manipulation techniques to the body designed to reduce muscle tension and increase circulation. There are many variations of massage therapy, including Swedish, deep tissue and hot stone oil, among others. It is believed that massage therapy was practiced in many ancient civilizations, including China, India and Greece.

 

Cupping – involves the warming of glass cups through a flammable substance, which eliminates oxygen, thus creating a vacuum.  The cup is then placed over a specific area. The lack of oxygen anchors the cup, and the suction draws the skin, which simulates blood flow to the area.  This process is considered the inverse of massage. Cupping is one of the oldest forms of Chinese medicine.   

 

These wellness services are provided by skilled practitioners trained in massage therapy, acupressure and cupping.  Sessions vary from fifteen (15) to ninety (90) minutes and prices vary according to the nature of the services and length of services session.

 

Our Revenue Model.

We generate revenues from the following methods:

 

Fees for services are charged to our customers dependent upon the treatment administered and length of time of the treatment. Computed on an hourly basis, these fees generally range from $60 to $85 per hour.

 

Revenue derived from an average customer is approximately $60 per visit. At our locations, each masseur averages eight (8) customers/day (eight [8] hours of operation) or forty eight (48) customers/week (six [6] working days) or 2,400 customers/year (fifty [50] weeks). An average of three (3) masseurs yields approximate sales revenue of $400,000-450,000 annualized. Although our average has been eight (8) customers a day per each masseur, we believe that each masseur is capable of serving up to ten (10) customers per day.

 

5 

 

 

Our Masseurs.

Our wellness center location is staffed with between three (3) to six (6) masseurs and one (1) supervisor. The supervisor is our most experienced masseur at the wellness center. The supervisor oversees the day-to-day operations of the wellness center and may serve customers during personnel shortages.  Our masseurs are employees and are paid a yearly salary of approximately $53,900, depending on experience. In addition, we are required by applicable law to pay our full and part-time employees “Public Liability Insurance,” which is approximately $446 yearly for each employee, including “Professional Indemnity Insurance” at a cost of (0.6%) of the employee’s salary. From time to time, we use independent contractors during personnel shortages, and they are paid a portion of the customer fee ranging between 45-55% of the fee.

 

Marketing.

The marketing promotional activities for our current market and year are similar to previous years, including year-round special promotional discounts to improve sales revenue in attracting more potential walk-in and regular customers and to compete primarily on the basis of product quality, brand recognition, brand loyalty and service-oriented marketing, with a competitive pricing, offering various special promotions year-round in our competitive environment.

 

Our Growth Strategy.

Other than the potential of expanding to the overseas market in China, if and when possible, we have no current plans to open additional wellness centers. Also, according to the Australian Bureau of Statistics, the Consumer Price Index (the “CPI”) in Australia increased by approximately 6% during the twelve (12) month period ended June 30, 2023, it was almost same to last year. Prices continued to rise across a range of services, with annual price growth for services the highest since the introduction of the GST over 20 years ago. Contributing to the prices rises are stronger wages growth and increased costs for utilities and rents, while insurance premiums rose across house, house contents and motor vehicle insurance.

 

Global massage services project that the market for wellness services like those we provide are on the rise, and medical spas have and are expected to register increased growth in the coming years. We believe that the Chinese market is the most promising area driven by a hectic lifestyle in urban areas. Rising demand from emerging markets is expected to propel the demand for spa treatments in the future with increased focus on personal health.

 

As outlined above, we have identified future partners from strategic cities in China to help us exploit the Chinese market in the major cities of China, including Guangzhou, Shenzhen, Fujian, Sichuan, Beijing, Shanghai for fiscal 2023, who would be compensated under the above referenced Company Representative Agreement that is Exhibit 99.1 of this Annual Report, in Part IV, Item 15, if and when we are able to expand our wellness services to China, as to which no assurance can be given. According to the National Bureau of Statistics of China, the consumer price index (“CPI”) in China rose approximately 2.4% during the twelve (12) month period ended June 30, 2023 which the urban and rural shown growth rate approximately as 0%. These were much lower than those experienced in Australia.

 

Seasonality.

There is no discernible seasonality in our business, although we expect that the first calendar year quarter is typically our lowest as a percentage of total annual gross revenue.  Revenue and operating income will vary by quarter and are hard to predict from quarter to quarter.   In addition, the volatility in the local economy will impact our quarterly revenue and operating income.

 

Sources and Availability of Raw Materials

 

Our equipment needs are minimal, consisting of massage benches and various office equipment and computers. We purchase our equipment from local suppliers on an “as needed” basis and presently do not believe the loss of any one supplier will have an adverse effect on our business, so long as our needs are not adversely affected by the current issues being experienced in world-wide supply chain. See Part I, Item 1A. Risk Factors, below.

 

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts

 

Currently, we have not entered into any written employment agreement with any of our directors or officers, and we do any not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future.   Management does not plan to hire any additional employees at this time.  

 

6 

 

 

Competition

 

We plan to compete primarily on the basis of product quality, brand recognition, brand loyalty, service, marketing, advertising and price. We are subject to highly competitive conditions in all aspects of our business operations. The competitive environment and our competitive position can be significantly influenced by weak economic conditions, erosion of consumer confidence and the competitors’ introduction of low-priced wellness services, as well as personal independent contractors who provide massage and related wellness services.

 

Need for any Governmental Approval of Principal Products or Services

 

There are no licensing requirements for masseurs in Australia. Many of our masseurs have received a “Certificate IV in Massage Therapy Practice” from Melbourne College of Professional Therapists. Potential recruitment of masseurs without these qualifications will require additional training and close supervision by our senior supervisor. The remainder of our masseurs have been trained internally by our senior supervisor.  Trainees undergo a three (3) months training program with our supervisor.  In addition, we require each masseur to have a first-aid certificate, a certificate of insurance and two (2) written character references from the staff of a college or from a member of the Australian Association of Massage Therapists.

 

Existing and Probable Government Regulation to Our Current and Intended Business

 

We are unaware of and do not anticipate having to expend significant resources to comply with any governmental regulations. We are subject to the laws and regulations of those jurisdictions in which we do and where we plan to conduct our wellness services operations and sell advertising, which are generally applicable to most businesses, such as business licensing requirements, income taxes and payroll taxes. In general, the development and operation of our business is not subject to any special regulatory and/or supervisory requirements.

 

Smaller Reporting Company

 

We are subject to the reporting requirements of Section 15(d) of the Exchange Act, and we are subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.”  That designation will relieve us of some of the informational requirements of Regulation S-K of the SEC.

 

Sarbanes/Oxley Act

 

We are also subject to the Sarbanes-Oxley Act of 2002.  The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence.  It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by publicly-held companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work of public companies’ auditors; management assessment of our internal controls; auditor attestation to management’s conclusions about internal controls; prohibits certain insider trading during pension fund black-out periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the Sarbanes/Oxley Act could substantially increase our legal and accounting costs.

 

Exchange Act Reporting Requirements

 

Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to our shareholders at a special or annual meeting thereof or pursuant to a written consent do not require us to provide our shareholders with the information outlined in Schedules 14A or 14C of Regulation 14 because we file our reports with the SEC under Section 15(d) of the Exchange Act, resulting from the large number of shareholders we have. However, if we register our securities under Section 12(g) of the Exchange Act, we will become subject to Section 14(a).

 

We are required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC on a regular basis, primarily because we have in excess of 500 shareholders of record, and we are required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and changes in resignations of engagements of auditors and bankruptcy, among other events) in a Current Report on Form 8-K.

 

7 

 

 

 

Number of Total Employees and Number of Full-Time Employees

 

As of October 5, 2023, we had one (1) full-time employee and four (4) part-time employees, including our sole director. Our employees are not represented by any collective bargaining agreement, and we have never experienced a work stoppage. We believe we have good relations with our employees.

 

Subsidiaries

 

For information about our subsidiaries and their formation dates, see the caption “References” at the forepart of this Annual Report and the heading “Corporate History and Business Development” of Part I, Item 1, above, and Exhibit 21 in Part IV, Item 15 hereof.

 

Additional Information

 

You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.  You may also find all the reports or registration statements that we have previously filed or file in the future in the “Edgar Archives” of the SEC at its Internet site at www.sec.gov.

 

ITEM 1A.  RISK FACTORS

 

The enumeration of “risk factors” about us, our business operations, our management, consolidated financial statements and our common stock, among other issues that may disclose risks of investments in our common stock is not required of smaller reporting companies like us in our annual or quarterly reports filed with the SEC; however, we believe the following risk factors may be of value to our shareholders or potential investors in our Company. These risk factors should be considered in light of the caption “Forward-Looking Statements” at the forepart of this Annual Report. We reserve the right not to provide risk factors in our future filings, unless required to do so. We view the following as our primary risk factors, which should not be considered to be “all inclusive”:

 

Risks Related to Our Business

 

We are a small company that owns and operates one (1) wellness center in Victoria, Australia, that has had limited, if any, growth during the fiscal years presented in this Annual Report.

 

We acquired our wellness center as part of our acquisition of Sanyi Group, our wholly-owned subsidiary, in 2012, and with our limited growth over these periods, it is difficult to evaluate our future prospects. During the fiscal years ended June 30, 2023, we had gross revenues of US$343,479, with respective net loss of US$53,666 during this fiscal years. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small operating company trying to expand its business enterprise and the highly competitive environment in which we operate; our business strategy may be unsuccessful; and we may be unable to address the risks we face in a cost-effective manner, if at all. If we are unable to successfully accomplish these tasks, our business will be harmed, and we may fail. Therefore, there can be no assurance that the business of the Company will continue or grow in the future.

 

In conducting our business, we face many risks that may interfere with our business objectives. Some of these risks could materially and adversely affect our business, financial condition and results of operations. In particular, we are subject to various risks resulting from changing economic, political, industry, business and financial conditions. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business operations.

 

You should carefully consider the following factors and other information in this Annual Report before you decide to invest in our Company. If any of the risks referred to below occur, our business, financial condition and results of operations could suffer. In any such case, the trading price of our shares could decline, and you may lose all or part of your investment.

 

Our Auditor’s Report on our consolidated financial statements for the fiscal years ended June 30, 2023, which is contained in this Annual Report, has been prepared assuming that we will continue as a “going concern” by reason of our losses, net current liabilities and our negative stockholders’ deficit, and there is no assurance that we will not continue to experience losses in our business.  As a result, we may be unable to continue as a going concern.

 

8 

 

 

 

We incurred net losses of US$53,666 during the year ended June 30 2023. We had net current liabilities at June 30, 2023 of US$76,323, and we had at June 30, 2023 a negative net stockholders’ deficit of US$45,092. These events or conditions indicate that a material uncertainty exist that may cast significant doubt on our ability to continue as a going concern.

 

The consolidated financial statements have been prepared on a going concern basis in view of the Company being able to obtain continued financial support from its sole director, CEO and CFO or its ability to obtain external financing, as to which no assurance can be given.

The validity of the going concern basis on which the consolidated financial statements have been prepared depends on our ability to operate as a going concern and assumptions are premised on future events, the outcome of which are inherently uncertain. Management’s plans in regard to these matters are described in Note 1.3 of our consolidated financial statements, though our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We had material weaknesses in our internal controls in financial reporting as of June 30, 2023, and such material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.

 

Our management identified material weaknesses in our internal controls and concluded that our internal control over financial reporting were not effective as of June 30, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

The specific material weaknesses we identified in our internal control over financial reporting for the fiscal years ended June 30, 2023, related to:

 

·lack of sufficient accounting personnel qualified in US GAAP and SEC reporting; and

 

Although we have provided additional training to our accounting personnel relating to US GAAP and SEC reporting requirements to partially address the foregoing material weaknesses, we do not believe such weaknesses have been remediated, and we can provide no assurance that they will be remediated in a timely manner.

 

Any failure to maintain effective internal controls could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis as required by the SEC, we could face severe consequences from those authorities.

 

9 

 

 

Our industry is highly competitive with limited barriers to entry, which could limit our ability to maintain or increase market share. 

 

Our industry is highly competitive with limited barriers to entry. We provide our services in local markets and compete with companies providing similar services. The barriers to entry in this industry are limited, which makes it easy for competitors to open new shops near our current location or any future locations. Many of our competitors have greater marketing, financial and other resources than us that, among other things, could enable them to attempt to maintain or increase their market share by reducing prices or utilizing other strategies. In order to be competitive, we may have to similarly reduce our prices or modify our plan of operations, which in turn may affect our results of operations.

 

We will need additional financing in order to grow our business, and there in no assurance that we will be successful in obtaining the required resources to expand our business or that any potential expansion will result in profitable operations.

 

We do not have significant assets with which to expand our business. To the extent we intend to expand our business in the future through the opening of additional locations, substantial additional capital will be required. These capital expenditures are intended to be funded from third party sources, including the incurring of debt and/or the sale of additional equity securities. In addition to requiring additional financing to fund expansion, we may require additional financing to fund working capital and operating losses in the future should the need arise. The incurrence of debt creates additional financial leverage, and therefore, an increase in the financial risk to our business operations. The sale of additional equity securities will be dilutive to the interests of current shareholders. In addition, there can be no assurance that such additional financing, whether debt or equity, will be available to us or that it will be available on commercially acceptable terms. Any inability to secure such additional financing on appropriate terms could have a materially adverse impact on any plans for expansion, and our business, financial condition and operating results. Factors affecting the availability and price of capital may include the following:

 

  · the availability and cost of capital generally;

 

  · our financial results;

 

  · the experience and reputation of our management team;

 

  · market interest, or lack of interest, in our business industry and our business plan;

 

  · the trading volume of, and volatility in, the market for our common stock, assuming there is a trading market for our common stock;

 

  · our ongoing success, or failure, in executing our business plan;

 

  · the amount of our capital needs; and

 

  · the amount of our debt, options, warrants and convertible securities that may be outstanding in our Company at any time and our authorized capital stock.

 

Our business will be subject to compliance with current and future government regulation that may increase the anticipated cost of any potential expansion program.

 

Currently, there are no governmental regulations that materially restrict the wellness business in Australia. We are subject to the laws of Victoria, Australia, as administered by Victoria’s Business Licensing Authority (“BLA”) as we carry out our business. We may be required to obtain additional work permits in the event that we do not have enough local personnel for any operations in which we engage, and to negotiate with shopping malls or others prospective lessors on lease or rental terms, recruitment and training, shop fittings and refurbishment to comply with rules and regulations of any shopping mall or other lessors, including but not limited to operational hours, signage, promotions and cleanliness.

 

There is a risk that new regulations could increase our costs of doing business and prevent us from carrying out any expansion or franchising program we may undertake. We may also have to sustain the cost of renovation or improvement on any outlet once every five (5) years as is customarily required by shopping malls. If renovation costs exceed our cash reserves, we may be unable to complete any expansion program and have to abandon the related outlet(s).

 

10 

 

 

Our shareholders and prospective investors’ ownership in the Company may be diluted in the future.

 

In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present shareholders or potential investors. We expect to need to issue a substantial number of shares of our common stock or other securities convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, raising additional capital in the future to fund our operations and other business purposes.

 

Our fees are based on numerous factors outside of our control. 

 

Numerous factors beyond our control may affect the marketability of our services and our fee structure. These factors include the local and regional economies, the competition, shortage of human resources, government regulations, supply chain issues and the current inflation in many economies related to our supply chain. The exact effect of these factors cannot be accurately predicted, but the combination of any these factors may result in our failure to achieve an adequate return on invested capital and our business may fail, thereby resulting in the loss of any shareholders entire investment in our Company.

 

Compliance with the reporting requirements of federal securities laws can be expensive.

 

We are a public “reporting company” in the United States, and accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, rules and regulations, including compliance obligations under the Sarbanes-Oxley Act of 2002. The costs of preparing and filing annual and quarterly reports and other information with the SEC and furnishing audited and reviewed financial statements in reports filed with the SEC, along with required communications with our shareholders, are substantial. We have incurred and expect to continue to incur costs associated with continuing as a public company, including, but not limited to, legal, accounting, filing and other related costs and expenses. Failure to comply with applicable securities laws, rules and regulations could result in private or governmental legal action against us or our officers and directors, which could have a detrimental impact on our business and financial condition, the value of our common stock or other equity securities we may issue and the ability of our shareholders to resell these securities.

 

The Covid-19 pandemic presents ongoing risks to our business.

 

In response to the Covid-19 pandemic, governments and other authorities around the world have implemented significant measures intended to control the spread of the virus. While many of these restrictions have been lifted as the rates of Covid-19 infection have decreased or stabilized and as various vaccines have become more widely available, a resurgence of Covid-19 and the impact of variants of the virus that causes Covid-19 may result in the reinstatement of social distancing measures; business closures; lockdowns; restrictions on operations; and quarantines and travel bans. In addition, any governmental mandates that require Covid-19 vaccination or other employee behaviors may result in employee attrition at the Company or its suppliers or customers and may create difficulties in satisfying future employment and supply requirements.

 

Rising inflation may negatively affect our operating results.

 

Since 2021, global economic conditions have deteriorated, with significantly increased inflation and the risks of further inflation and recession in 2023 and beyond. These unfavorable economic conditions may lead to decreased demand for our services, less disposable income of our customers and higher prices for our customers. To the extent that we are unable to increase the prices of our services in response to increased costs resulting from inflation, our operating margins will be compressed.

 

Supply chain disruptions could adversely affect our business.

 

Supply chain dislocations resulting from global geopolitical and public health issues such as the Russian invasion of Ukraine, the Covid-19 pandemic and other causes may have a material adverse impact on our business and results of operations. Such disruptions may increase our costs of doing business, including through significant increases in the price the products and equipment required for our business operations and the related costs of shipment. Supply chain disruptions may also adversely affect our access to suppliers, manufacturers, customers and vendors and may impair our ability to perform wellness services. Delays in our ability to meet our obligations as a result of supply chain issues may negatively affect our reputation, our relationships with customers and results of operations.

 

11 

 

 

Risks Related to Our Common Stock

 

There is no active trading market for our shares of common stock.

 

Small trading volumes are generally understood to depress market prices. As a result, you may not always be able to resell shares of our common stock publicly at the time and prices that you feel are fair or appropriate, even if we are successful in obtaining public quotations of our common stock on a qualified quotation medium.

 

If an active market for our common stock develops, there is a significant risk that the Company’s common stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our control, including, but not limited to:

 

  · variations in our quarterly operating results;

 

  · announcements that our revenue or income are below analysts’ expectations;

 

  · general economic slowdowns; and

 

  · sales of large blocks of our common stock by insiders and others.

 

We do not intend to pay dividends on our common stock for the foreseeable future.

 

All future revenues are anticipated to be utilized in the furtherance of our business plan, and accordingly, it is highly unlikely that you will receive any dividends from us in the near future, if ever.

 

Our common stock is subject to the “penny stock” rules of the SEC, which may make it more difficult for shareholders to sell our common stock.

 

The SEC has adopted Rule 15g-9, which established the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of the Company’s common stock if and when such shares are eligible for sale and may cause a decline in the market value of its stock.

 

12 

 

 

Because of increased regulatory efforts of governmental and quasi-governmental agencies regarding the trading of securities that are deemed to be penny stocks, the cost and expense of depositing and inducing a broker-dealer to effect sales of these shares is very costly, which can be in excess of value of the shares sought to be sold, and often includes requirements of legal opinions of both the selling shareholder’s counsel and the broker-dealer’s counsel, both at the expense of the selling shareholder.

 

Currently, broker-dealers require legal opinions of shareholders of almost all over-the-counter stocks to deposit and sell these shares, and all of these legal opinions are required to be paid for by the shareholder; and often, two (2) legal opinions are required, one (1) from the shareholder’s legal counsel and one (1) from the broker-dealer’s legal counsel. This policy has been required of mostly all low-priced over-the-counter shares, regardless of whether the shares have been registered with the SEC, or whether there is no legend on the stock certificate representing the shares and always if the shares are designated as “restricted securities.” Larger, national broker-dealers will generally not even trade these securities. The high cost of these types of legal opinions is often more than the value of the shares sought to be sold, and the process can take two (2) to three (3) weeks or more. Accordingly, shareholders with limited shares of low-priced stocks will be unable to economically sell their shares, regardless of whether an “established trading market” for the shares exists, and if they could sell their shares, the required selling process will inhibit their ability to sell the shares when they desire to sell their shares.

 

Our sole director and executive officer, Mr. Xin Jin, and our former President, Mr. Thomas Tang, and Mr. Yew Nic Kien Cheon, a business consultant to the Company, own a significant percentage of our capital stock, and they may be in a position to control decisions of the Company that our other shareholders do not consider to be in their best interests.

 

As of the date of this Annual Report, the foregoing persons beneficially own in the aggregate approximately 26.87% of our issued and outstanding shares of common voting stock. See the caption “Security Ownership of Certain Beneficial Owners and Management” in Part III, Item 12 hereof. As a result, they may have the ability to substantially control elections to our board of directors, the outcome of issues requiring approval by our shareholders and other corporate actions. This concentration of ownership may also have the effect of delaying or preventing a change in control of our Company that may be favored by other shareholders; and could prevent transactions in which shareholders might otherwise recover a premium for their shares over current market prices. This concentration of ownership and influence in management and board decision making could also harm the price of our capital stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock, whether by making a tender offer or attempting to obtain control of our Company. 

 

We have established a “Series” of 10,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock shares has superiority voting rights equal to 1,000 votes per share. In the event that such votes do not total 51% of all votes, than regardless of the provisions of this Series, in any such case, the votes cast by Series A Preferred stock shall be equal to 51% of all votes cast at any meeting of shareholders, or any issue put to the shareholders for voting, and the Company may state that any such action was had by majority vote of all shareholders. Furthermore, the holders of Series A Preferred Stock have the right to the majority of the directors to the Board of the Company and to further amend the Certificate of Incorporation to ensure the furtherance of the Company and its operations as such holders determine. Management could issue one (1) share of this Series to control the approval on these and other matters affecting the Company and its shareholders without any vote of the shareholders. See Exhibit 4 in Part IV, Item 15, for a description of the Company’s securities and this Series.

 

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in Australia based on United States or other foreign laws against us, our management or any experts named in this Annual Report.

 

We conduct substantially all of our operations in Australia and substantially all of our assets are located in Australia. In addition, all of our senior executive officers reside within Australia. As a result, it may not be possible to affect service of process within the United States or elsewhere outside Australia upon our senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws.

 

Australia does not have treaties with the United States providing for the reciprocal recognition and enforcement of court judgments, it is uncertain with regard to whether courts of Australia would recognize or enforce judgments of U.S. courts against us or our directors or officers pursuant to civil liability provisions of the securities laws of the United States or any state in the United States; or exercise jurisdiction over actions brought against us or our directors or officers pursuant to the securities laws of the United States or any state in the United States. 

 

13 

 

 

ITEM 1B.   UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2.  PROPERTIES

 

Our corporate offices are located at 271 Blackburn Road, Mount Waverley, Victoria, Australia 3149; and our telephone number is (61) 393955324. These premises are owned by Mr. Xin Jin, our sole director CEO and CFO. We occupy the space on a month-to-month basis, rent free. The office space consists of approximately one hundred (100) square meters.

 

As of June 30, 2023, and currently, we have one (1) Company wholly-owned and operating wellness center. Relevant information with respect to this location is as follows:  

 

Location Size of Premises (Sq. Meters) Lease Term Commencement Date Annual Rent
Point Cook Outlet  Seventy-seven (77) Seven (7) years Renewable for an additional five (5) years 8/21/2019 $55,996

 

 

ITEM 3.  LEGAL PROCEEDINGS

 

There are presently no pending legal proceedings to which we or any of our property is subject, or any material proceedings to which any director, officer or “affiliate” of the Company, any owner of record beneficially of more than 5% of any class of our voting securities is a party or has a material interest adverse to us, and no such proceedings are known to us to be threatened or contemplated against us.

 

ITEM 4.  MINE SAFETY DISCLOSURES

 

None; not applicable.

 

PART II

 

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our common stock is quoted on the “OTC Pink Tier” of the OTC Markets under the symbol “ARPC”.

 

For any market that may develop for our common stock, the sale of shares of our common stock comprised of restricted securities pursuant to Rule 144 of the SEC, any other available exemption from registration under the Securities Act or by registration under the Securities Act by members of management or others, including any person to whom any such securities may be issued in the future, may have a substantial adverse impact on any such public market. For general information regarding the requirements of resales of restricted securities under Rule 144, see the heading “Rule 144” of this Item below. Presently, and based upon advice of our legal counsel, we believe Rule 144 will become available for the resale of our shares of common stock by our shareholders so long as we become and remain current in our required reporting obligations under the Exchange Act, regardless of whether we were a former shell company. We have not been a shell company since the filing and subsequent effectiveness of our S-1 Registration Statement on April 15, 2016. The Prospectus of our S-1 Registration Statement contained the “Form 10 Information” required by subparagraph (i) of Rule 144 for the availability of Rule 144 for former shell companies, and such subparagraph indicates that the “issuer may provide the Form 10 Information in any filing of the issuer with the Commission.” The availability of Rule 144 and Section 4(a)(1) of the Securities Act for the resale of our shares of common stock by our shareholders will be reviewed the Company on a case by case basis at the time of the intended sale and before any sale thereof.

 

14 

 

 

With 373,950,544 outstanding shares of our common stock as of the date of the filing of this Annual Report, the sale of any number of these outstanding shares could have an adverse effect on any market that may develop in the future for our shares of common stock. 273,460,844 of our shares of common stock are held by non-affiliates who have held their respective shares for in excess of two (2) years, and all of these shares could be considered to be a part of the public float of our shares; approximately 2,750,340 of these shares are held in “street name” at broker-dealers or in the Depository Trust Company (“DTC”).

 

Rule 144

 

The following is a summary of the current requirements of Rule 144, excluding issues related to companies that are or have ever been a “shell company”:

 

  Securities   Affiliate or Person Selling on Behalf of an Affiliate     Non-Affiliate (and has not been an Affiliate During the Prior Three Months)  
  Restricted Securities of Reporting Issuers  

During six-month holding period – no resales under Rule 144 Permitted.

 

After six-month holding period – may resell in accordance with all Rule 144 requirements including:

Current public information,

Volume limitations,

Manner of sale requirements for equity securities, and

Filing of Form 144.

 

    

During six-month holding period – no resales under Rule 144 permitted.

 

After six-month holding period but before one year – unlimited public resales under Rule 144 except that the current public information requirement still applies.

 

After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.

  
  Restricted Securities of Non-Reporting Issuers  

During one-year holding period – no resales under Rule 144 permitted.

 

After one-year holding period – may resell in accordance with all Rule 144 requirements including:

Current public information,

Volume limitations,

Manner of sale requirements for equity securities, and

Filing of Form 144.

    

During one-year holding period – no resales under Rule 144 permitted.

 

After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.

  

 

The following table sets forth, for the periods indicated during the fiscal years, the high and low closing bid quotations, as reported by the OTC Markets, and represents prices between broker-dealers and does not include retail markups, markdowns or commissions, and may not represent actual transactions:

 

    For the Years Ended June 30,
    2023
    High   Low
First Quarter   0.0208   0.0208
Second Quarter   0.0300   0.0113
Third Quarter   0.0225   0.0011
Fourth Quarter   0.0225   0.0011

 

We currently have approximately 1,540 shareholders of record as of October 5, 2023, not including an indeterminate number of shareholders who may hold their shares in street name at broker-dealers or in the DTC. Approximately 345 of our record shareholders own less than 500 shares.

 

15 

 

 

Dividends

 

The Company has not declared or paid any cash dividends on its common stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

Fiscal Year Ended June 30, 2023

 

None.

 

Fiscal Year Ended June 30, 2022

 

None.

 

Fiscal Year Ended June 30, 2021

 

None.

 

Fiscal Year Ended June 30, 2020

 

17,537,000 shares of our common stock were issued in one (1) tranche to thirty (30) persons for consulting services provided to us and valued at par value or $0.000001 per share on October 9, 2019; and an aggregate total of 21,861,309 shares of our common stock were issued in a separate tranche to approximately two-hundred and forty-one (241) persons located in various cities in China on January 20, 2020, pursuant to our Company Representative Agreement. These shares were also valued at par value or $0.000001 per share.

 

Use of Proceeds of Registered Securities

 

None; not applicable.

 

Purchases of Equity Securities by us and Affiliated Purchasers

 

None; not applicable.

 

ITEM 6:  SELECTED FINANCIAL DATA

 

Not required for smaller reporting companies.

 

ITEM 7:  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

When used in this Annual Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act and Section 21e of the Exchange Act regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. Persons reviewing this Annual Report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed further below under “Trends and Uncertainties,” and also include general economic factors and conditions that may directly or indirectly impact our financial condition or results of operations. See the caption “Forward-Looking Statements” at the forepart of this Annual Report.

 

16 

 

 

Overview of Current and Planned Business Operations

 

Through Sanyi Group, we are engaged in providing wellness services that include acupressure/reflexology, massage therapy and cupping. We offer various types of massage therapy, such as Swedish, deep tissue and hot stone oil, among others, all as discussed in Part I, Item 1. Business, above. We primarily rely on our promotional activities and our shopping center location in attracting new customers and maintaining our current customers.

 

We have identified future partners from strategic cities in China to help us exploit and expand to the Chinese market for our wellness services in the major cities of China, including Guangzhou, Shenzhen, Fujian, Sichuan, Beijing, Shanghai for fiscal 2023, though these plans are subject to the uncertainties related to the Covid-19 pandemic and other factors, including but not limited to obtaining the required funding for expand.

 

  

June, 30,

2023

  

June, 30,

2022

 
   US$   US$ 
         
Revenue   343,479    262,537 
Operating expenses:          
Payroll and employee related expense   (104,317)   (94,196)
Amortization on right-of-use assets   (60,199)   (64,884)
Finance cost   (8,580)   (11,378)
General and administrative expenses   (202,564)   (110,253)
Total Operating expenses   (375,660)   (280,711)
Loss from operations   (32,181)   (18,174)
Other income   —      60,206 
Interest income   117    79 
(Loss)/income from continuing operations before income tax expenses   (32,064)   42,111 
Income tax expense   (21,602)   —   
Net (loss)/income after income tax expense for the year   (53,666)   42,111 
Exchange differences arising on translation of foreign operations   (1,878)   (3,765)
Total comprehensive (loss)/income for the year   (55,544)   38,346 

 

Results of Operations

 

Comparison of the Fiscal Year Ended June 30, 2023, to the Fiscal Year Ended June 30, 2022

 

Revenue

 

For the fiscal year ended June 30, 2023, we had $343,479 in revenue compared to $262,537 for the fiscal year ended June 30, 2022, which is an increase of $80,942, approximately 1,350 customers from the previous year. The revenue increase is mainly due to the Australian Government Authority starting to allow occasional people movement and the removal of border restriction. The opening of our business operation and the cessation of the lockdown supported a higher revenue.

 

Payroll and employee related expense

 

For the fiscal year ended June 30, 2023, our payroll and employee related expense increased by US$10,121 to US$104,317 as compared to the fiscal year ended June 30, 2022, of US$94,196. As employees are employed on an hourly basis, the cessation of the lockdown led to staff having longer working hour, approximately 450 hours compared to last year.

 

17 

 

 

Amortization on right-of-use asset

 

Amortization charges was US$60,199 for the fiscal year ended June 30, 2023, as compared to fiscal year ended June 30, 2022, of US$64,884, a decrease of US$4,685, arising from foreign exchange translation.

 

General and Administrative Expenses

 

For the fiscal year ended June 30, 2023, general and administrative expense increased by US$92,311 to US$202,564, compared to the fiscal year ended June 30, 2022, of US$110,253. The increase in expense resulted from high professional fees paid to lawyer, auditor and consultant amounting to US$93,850 for the compliance report.

 

Net Income/(loss) after tax

 

Even though our revenue has slowly recovered from the pandemic, our net income still decreased by US$95,777, mainly due to the high compliance cost of US$93,850 been paid and the subsidized arises due to Covid-19.

 

Liquidity and Capital Resources

 

At June 30, 2023, we had a net current liabilities of US$76,323 (June 30, 2022 net current liabilities of US$17,497) and accumulated losses of US$193,286 (June 30, 2022 accumulated losses US$139,620), and of that date, the Group shown capital deficiency of US$45,092 (June 30, 2022 total equity of US$10,452). We reported an after-tax loss of US$53,666 for the fiscal year ended June 30, 2023 (June 30, 2022 after tax income of US$42,111). The net tangible asset mainly due to high professional fee paid to lawyer, auditor and consultant amounting to US$93,850 for the compliance report.

 

Summary of Significant Accounting Policies

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in U.S. dollars. The Company’s fiscal year end is June 30.

 

Use of Estimates and Assumptions

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 periods discussed. Actual results could differ from those estimates.

 

Foreign Currency Translation

The functional currency of our foreign subsidiary is its local currency. Assets and liabilities of the foreign subsidiary are translated into U.S. dollars at period-end exchange rates, stockholders’ equity is translated at the historical rates and the consolidated statement of operations and cash flows are translated at average exchange rates during the reporting periods. Resulting translation adjustments are recorded in accumulated other comprehensive income, a separate component of stockholders’ equity. A component of accumulated other comprehensive income will be released into income when the Company executes a partial or complete sale of an investment in a foreign subsidiary or a group of assets of a foreign subsidiary considered a business and/or when the Company no longer holds a controlling financial interest in a foreign subsidiary or group of assets of a foreign subsidiary considered a business.

 

Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in foreign currency transaction gains and losses that are reflected in results of operations as unrealized (based on period end translation) and realized (upon settlement of the transactions) and reported under other general expenses in the consolidated statement of operations.

 

Fair Value of Financial Instrument

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are held in several Australian bank accounts and time deposit accounts. We regularly assess the level of credit risk we are exposed to and whether there are better ways of managing credit risk. We invest our cash and cash equivalents with reputable financial institutions. The Company has not incurred any losses related to these deposits.

 

18 

 

 

Income Taxes  

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740-10-50 “Accounting for Income Taxes” as of its inception. Pursuant to the standard, the Company is required to compute tax asset benefits for initial years of operating losses carried forward.

 

Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260-10-4-5, “Earnings per Share.” The standard 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 common shares outstanding (denominator) during the periods discussed. Diluted EPS gives effect to all dilutive potential common shares outstanding during the periods discussed, including stock options, 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 common shares if their effect is anti-dilutive.

  

Recent accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and issued subsequent amendments within ASU 2021-01 and ASU 2022-06 (collectively, including ASU 2020-04, “ASC 848”) in January 2021 and December 2022 respectively. ASC 848 provides optional expedients and exceptions for applying U.S. GAAP on contract modifications and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, if certain criteria are met. These optional expedients and exceptions provided in ASC 848 are effective for us from January 1, 2020 through December 31, 2024. We have elected the optional expedients for certain existing interest rate swaps that are designated as cash flow hedges, which did not have a material impact on the financial position, results of operations and cash flows. We are evaluating the effects, the adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

 

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which provides guidance on the acquirer’s accounting for acquired revenue contracts with customers in a business combination. The amendments require an acquirer recognizes and measures contract assets and contract liabilities acquired in a business combination at the acquisition date in accordance with ASC 606 as if it had originated the contracts. This guidance also provides certain practical expedients for acquirers when recognizing and measuring acquired contract assets and contract liabilities from revenue contracts in a business combination. The new guidance is required to be applied prospectively to business combinations occurring on or after the date of adoption. This guidance is effective for us for the year ending June 30, 2024 and interim reporting periods during the year ending June 30, 2024. Early adoption is permitted. We are evaluating the effects, the adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

 

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for us for the year ending June 30, 2025 and interim reporting periods during the year ending June 30, 2025. Early adoption is permitted. We are evaluating the effects, the adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

 

In September 2022, the FASB issued ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”, which require a buyer in a supplier finance program disclose qualitative and quantitative information about the supplier finance program. The amendments do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The new guidance is required to be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively. This guidance is effective for us for the year ending June 30, 2024 and interim reporting periods during the year ending June 30, 2024. Early adoption is permitted. We are evaluating the effects, the adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

 

 

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ITEM 7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Item 305 of SEC Regulation S-K provides that certain registrants are required to categorize market risk sensitive instruments into instruments entered into for trading purposes and instruments entered into for purposes other than trading purposes. Within both the trading and other than trading portfolios, separate quantitative information shall be presented, to the extent material, for each market risk exposure category (i.e., interest rate risk, foreign currency exchange rate risk, commodity price risk, and other relevant market risks, such as equity price risk). These requirements are not applicable to smaller reporting companies under subsection (e) thereof.

 

ITEM 8:  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Audited financial statements of the Company for the fiscal years ended June 30, 2023 begin on the following page of this Annual Report.

 

 

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Report of Independent Registered Public Accounting Firm [PCAOB ID 3487]

 

To the Shareholder and Board of Director

Arem Pacific Corporation

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying consolidated balance sheets of Arem Pacific Corporation (the “Company”) and its subsidiaries (the “Group”) as of June 30, 2023, the related consolidated statements of operation and other comprehensive loss, changes in stockholder’s (deficit)/equity, and cash flows for the year ended June 30, 2023, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of June 30, 2023 and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted in the United States of America (U.S. GAAP).

 

Material Uncertainty Related to Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Group will continue as a going concern. As discussed in Note 1.3 to the consolidated financial statements, the Group incurred net losses of US$53,666 during the year ended June 30, 2023. The Group had net current liabilities as of 30 June, 2023 of US$76,323. Besides the Group as of 30 June, 2023 its negative net stockholders’ deficit of US$45,092. These events or conditions indicate that a material uncertainty exist that may cast significant doubt on the Group’s ability to continue as a going concern.

 

The consolidated financial statements have been prepared on a going concern basis in view of the Group will be able to obtain continued financial support from its shareholder or its ability to obtain external financing.

The validity of the going concern basis on which the consolidated financial statements are prepared depends on the Group’s ability to operate as a going concern as set forth above. The assumptions are premised on future events, the outcome of which are inherently uncertain. Management’s plans in regard to these matters are also described in Note 1.3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (‘‘PCAOB’’) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

21 

 

 

 

/s/ Audit Alliance LLP

 

We have served as the Company’s auditor since 2019.

Singapore

Date: 13 October 2023

 

 

 

 

 

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AREM PACIFIC CORPORATION

CONSOLIDATED BALANCE SHEETS

 

   Note   2023   2022 
       US$   US$ 
             
Assets               
Cash and cash equivalents   4    43,394    116,963 
Other assets   5    19,988    20,395 
Other receivables   6    13,685    207 
Total current assets        77,067    137,565 
                
Plant and equipment, net   7    —      —   
Right-of-use asset   8    182,744    251,466 
Total non-current asset        182,744    251,466 
Total assets        259,811    389,031 
                
Liabilities and Stockholders’(Deficit)Equity               
Liabilities               
Accrued and other liabilities   9    80,486    85,025 
Borrowings   10    9,303    9,625 
Lease liability   8    63,601    60,412 
Total current liabilities        153,390    155,062 
                
Lease liability   8    151,513    223,517 
Total non-current liability        151,513    223,517 
Total liabilities        304,903    378,579 
                
Stockholders’(deficit)/equity               
Common stock, $0.000001 par value, 500,000,000 shares authorized and 373,950,544 (2022: 373,950,544) shares issued and outstanding, respectively   11    356    356 
Additional paid in capital        157,150    157,150 
Other comprehensive loss   12    (9,312)   (7,434)
Accumulated losses        (193,286)   (139,620)
Total stockholders’ (deficit)/equity        (45,092)   10,452 
Total liabilities and stockholders’ (deficit)/equity        259,811    389,031 

 

The accompanying notes are an integral part of these condensed audited consolidated financial statements.

 

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AREM PACIFC CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND OTHER COMPREHENSIVE INCOME

 

   Note   2023   2022 
       US$   US$ 
Revenue        343,479    262,537 
                
Operating expenses               
Payroll and employee related expense        104,317    94,196 
Amortization on right-of-use asset        60,199    64,884 
General and administrative expenses        202,564    110,253 
Total operating expenses        367,080    269,333 
                
(Loss)/Income from operations        (23,601)   71,204 
                
Interest expenses        (8,580)   (11,378)
Other income        —      60,206 
Interest income        117    79 
Total other (expense)/income        (8,463)   48,907 
                
(Loss)/Income from continuing operations before income tax expenses        (32,064)   42,111 
                
Income tax expense   13    (21,602)   —   
Net (loss)/income after income tax expense for the year        (53,666)   42,111 
                
Other comprehensive loss               
Exchange differences arising on translation of foreign operations        (1,878)   (3,765)
Other comprehensive loss        (1,878)   (3,765)
Total comprehensive (loss)/income for the year        (55,544)   38,346 
                
Net (loss)/income per share               
Basic and diluted        (0.0001485)   0.0001025 
                
Weighted average number of common stock outstanding               
Basic and diluted        373,950,544    373,950,544 

 

The accompanying notes are an integral part of these condensed audited consolidated financial statements.

 

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AREM PACIFIC CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY/DEFICIT

 

                                                 
       Additional   Other         
   Common Stock   Paid in   Comprehensive   Accumulated   Total 
   Shares   Amount   Capital   Loss   Losses   (Deficit)/Equity 

Balance as of July 1, 2021

   373,950,544    356    157,150    (3,669)   (181,731)   (27,894)
Income for the year   —      —      —      —      42,111    42,111 
Other comprehensive loss   —      —      —      (3,765)   —      (3,765)
Total comprehensive (loss)/income for the year   —      —      —      (3,765)   42,111    38,346 

Balance as of June 30, 2022

   373,950,544    356    157,150    (7,434)   (139,620)   10,452 
Loss for the year   —      —      —      —      (53,666)   (53,666)
Other comprehensive loss   —      —      —      (1,878)   —      (1,878)
Total comprehensive loss for the year   —      —      —      (1,878)   (53,666)   (55,544)

Balance as of June 30, 2023

   373,950,544    356    157,150    (9,312)   (193,286)   (45,092)

 

 

The accompanying notes are an integral part of these condensed audited consolidated financial statement.

 

 

 

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AREM PACIFIC CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

 

   2023   2022 
   US$   US$ 
Cash flows from operating activities:          
(Loss)/Income before tax   (32,064)   42,111 
Adjustments to reconcile net income to net cash provided by operating activities:          
Amortization on right-of-use asset   60,199    64,884 
Net changes in operating assets and liabilities          
(Increase)/Decrease in other receivables   (13,071)   1,881 
Decrease in accrued and other liabilities   (4,861)   (67,515)
Cash generated from operating activities   10,203    41,361 
Income tax paid   (21,602)   —   
Principal payment of lease liability   (68,815)   (55,097)
Net cash used in operating activities   (80,214)   (13,736)
Net decrease in cash and cash equivalents   (80,214)   (13,736)
Cash and cash equivalents at the beginning of year   116,963    140,136 
Exchange difference on translation of foreign operations   6,645   (9,437)
Cash and cash equivalents at the end of year   43,394    116,963 
           
Supplemental cash flow information          
Interest income received   117    79 
Supplemental non-cash flows information          
Lease liability arising from obtaining right-of-use asset   (8,580)  (11,378)

 

The accompanying notes are an integral part of these condensed audited consolidated financial statements.

 

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AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2023

 

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

1.1          Nature of Operations

 

Our current corporate structure is depicted below:

 

Arem Pacific Corporation

(a Delaware corporation)

100% owned

Arem Pacific Corporation

(an Arizona corporation)

100% owned

Sanyi Group Pty. Ltd.

an Australian corporation

 

Arem Pacific Corporation (Delaware), sometimes referred to as the “Company” below, has been focusing of its business to operation of Oriental holistic health wellness center located in Australia (Victoria) through its wholly-owned subsidiary Sanyi Group Pty. Ltd. (“Sanyi Group”). Sanyi Group operates one wellness center in Victoria, Australia.

 

Unless the context indicates otherwise, the term “Group” as used herein includes the Company and Sanyi Group.

 

1.2          Basis of Accounting

 

The accompanying consolidated financial statements include the accounts its wholly owned subsidiary Sanyi Group Pty Ltd which is a company domiciled in Australia. These consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States (“GAAP”) and Regulation S-X published by the U.S. Securities and Exchange Commission (the “SEC”). All intercompany accounts and transactions have been eliminated. The Group has evaluated events or transactions through the date of issuance of this report in conjunction with the preparation of these consolidated financial statements. All amounts presented are in US dollars, unless otherwise noted.

 

The consolidated financial statements, except for cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the consolidated financial statements have been rounded to the nearest dollar.

 

1.3          Going Concern Basis

 

These consolidated financial statements have been prepared on a going concern basis, which assumes the Group will continue its operations in the foreseeable future and that the Group will be able to realize its assets and discharge its liabilities in the normal course of operations. The Group incurred net losses of US$53,666 during the year ended June 30, 2023. The Group had net current liabilities as of June 30, 2023 of US$76,323. Besides the Group as of June 30, 2023 had a negative net stockholders’ deficit of US$45,092.

 

The Group believes that there are reasonable grounds to support the fact that it will be able to pay its debts as and when they become due and payable. In forming this opinion, the Group has considered the following factors:

 

(i)As at June 30, 2023, US$9,303 of the borrowings was owed to Xin Jin, a significant shareholder and an officer of the Company and the sole Director of the Company.

 

(ii)The Company has received a Letter of Support from Xin Jin, in which he offers to provide continuing financial support to Sanyi Group to enable it to meet its liabilities as and when they become due and payable for a period of not less than twelve (12) months from the date of the financial statements. The loan of $9,303 as of June 30, 2023, to Sanyi Group, will not be called upon without giving at least thirteen (13) months’ notice.

 

27 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

  

If the Group is unable to continue as a going concern, it may be required to realize its assets and extinguish its liabilities other than in the ordinary course of business at amounts different from those stated in the consolidated financial statements. The consolidated financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

 

1.4          Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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.

 

1.5          Foreign Currency Translation

 

The functional currency of our foreign subsidiary is its local currency. Assets and liabilities of the foreign subsidiary are translated into U.S. dollars at period-end exchange rates, stockholders’ equity is translated at the historical rates and the consolidated statement of operations and cash flows are translated at average exchange rates during the reporting periods. Resulting translation adjustments are recorded in accumulated other comprehensive income, a separate component of stockholders’ equity. A component of accumulated other comprehensive income will be released into income when the Group executes a partial or complete sale of an investment in a foreign subsidiary or a group of assets of a foreign subsidiary considered a business and/or when the Group no longer holds a controlling financial interest in a foreign subsidiary or group of assets of a foreign subsidiary considered a business.

 

Transactions denominated in currencies other than the local currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in foreign currency transaction gains and losses that are reflected in results of operations as unrealized (based on period end translation) and realized (upon settlement of the transactions) and reported under other general expenses in the consolidated statements of comprehensive income and other comprehensive income.

 

1.6          Cash and Cash Equivalents and Concentration of Credit Risk

 

The Group considers all highly liquid short-term investments with original maturities of three months or less at the date of acquisition to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.

 

The Group's financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are held in several Australian bank accounts and time deposit accounts. The Group regularly assesses the level of credit risk we are exposed to and whether there are better ways of managing credit risk. The Group invests its cash and cash equivalents with reputable financial institutions. The Group has not incurred any losses related to these deposits.

 

1.7          Other Receivables

 

Other receivables represent amounts that the Company has paid in advance of receiving benefits or services. Other receivables include tax recoverable from Australian Taxation Office and prepayment. Prepayment is recognized as an expense over the general contractual period.

 

1.8          Plant and Equipment

 

Plant and equipment are recorded at cost. Costs of renewal and improvements that substantially extend the useful lives of assets are capitalized. Maintenance and repair costs are expensed when incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as below:

 

  Furniture and fittings 5 years
  Office equipment 10 years
  Computers 2 years
  Motor vehicles 5 years
  Plant and equipment 3 years
  Lease improvements 3 years

 

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AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

Derecognition

An item of plant and equipment is derecognized upon disposal or when no further economic benefits are expected from its use or disposal.

 

1.9          Leases

 

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

 

As lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities representing the obligations to make lease payments and right-of-use assets representing the right to use the underlying leased assets.

 

Right-of-use asset

The Company recognizes right-of-use asset at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use asset are measured at cost, less any accumulated amortization and impairment losses, and adjusted for any remeasurement of lease liability. The cost of right-of-use asset includes the amount of lease liability recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use asset is depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

 

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. The accounting policy for impairment is disclosed in key judgement.

 

Lease liability

At the commencement date of the lease, the Company recognizes lease liability measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

 

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

 

1.10      Payables

 

Other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. They are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Otherwise they are presented as non-current liabilities.

 

Other payable are initially recognized at fair value and subsequently carried at amortized cost using the effective interest method.

 

29 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

1.11      Provisions

 

Provisions are recognized when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

 

1.12      Loans and Borrowings

 

All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.

 

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

 

The Group’s current liabilities include a loan from a significant shareholder which is not interest bearing. The shareholder has provided a letter of support to Sanyi Group, which states that the loan to the Group will not be recalled without giving at least thirteen (13) months’ notice. This loan is not evidenced by a promissory note.

 

Loans are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve (12) months after the reporting date.

 

1.13      Revenue Recognition

 

Revenue is measured at the fair value of the consideration received or receivable after taking into account any discounts.

 

The Group derives revenue primarily through the provision of therapeutic health services from its Oriental holistic health centers. Revenue is recognized when persuasive evidence of an arrangement exists, the services have been rendered to customers, the pricing is fixed or determinable and collection is reasonably assured. This is generally based on the completion of services provided to the customers at the Oriental holistic health centers and settlement of the transactions either by cash or credit card payments.

 

Interest revenue is recognized using the effective interest method, which for floating rate financial assets is the rate inherent in the instrument. Dividend revenue is recognized when the right to receive a dividend has been established.

 

All revenue is stated net of the amount of goods and services tax.

 

1.14      Income Tax

 

Taxes payable is based on taxable profit for the period which excludes items of income or expense that are taxable or deductible in other periods. Taxable profit also excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted as of the balance sheet date.

 

Deferred income tax expense is calculated using the liability method in accordance with ASC 740 Income Taxes. Deferred tax assets and liabilities are classified as non-current in the balance sheet and are measured based on the difference between the carrying value of assets and liabilities for financial reporting and their tax basis when such differences are considered temporary in nature. Temporary differences related to intercompany profits are deferred using the buyer’s tax rate. Deferred tax assets are reviewed for recoverability every balance sheet date, and the amount probable of recovery is recognized.

 

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AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

1.14      Income Tax (Continued)

 

Deferred income tax expense represents the change in deferred tax asset and liability balances during the periods discussed except for the deferred tax related to items recognized in other comprehensive income or resulting from a business combination or disposal. Changes resulting from amendments and revisions in tax laws and tax rates are recognized when the new tax laws or rates become effective or are substantively enacted. Uncertain tax positions are recognized in the consolidated financial statements based on management’s expectations.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities, when they related to income taxes levied by the same taxation authority, and when the Group intends to settle its current tax assets and liabilities on a net basis.

 

Deferred taxes are not provided on undistributed earnings of subsidiaries when the timing of the reversal of this temporary difference is controlled by Group and is not expected to happen in the foreseeable future. This is applicable for the majority of Group’s subsidiaries.

 

1.15      Goods and Services Tax (“GST”)

 

Revenues, expenses and assets are recognized net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (“ATO”).

 

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

 

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are recoverable from or payable to the ATO, are presented as operating cash flows included in receipts from customers or payments to suppliers.

 

1.16      Earnings (Loss) per Common Share

 

Basic earnings (loss) per common share is computed by dividing income or losses available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is computed similar to basic net income or losses per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and of the additional common shares were dilutive. Diluted earnings (loss) per common share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the periods discussed. Under if–converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

 

1.17      Accumulated Other Comprehensive Income (Loss)

 

Comprehensive income (loss) is presented net of applicable income taxes in the accompanying consolidated statements of stockholders' equity and comprehensive income (loss). Other comprehensive income (loss) is comprised of revenues, expenses, gains, and losses that under GAAP are reported as separate components of stockholders' equity instead of net income (loss).

 

31 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

2.      Critical Accounting Estimates and Judgements

 

The sole Director evaluates estimates and judgements incorporated into the consolidated financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

 

Key Estimates

 

(i)Useful lives

 

The Group determines the estimated useful lives and related depreciation and amortization charges for its plant and equipment. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortization charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

 

(ii)Income tax

 

The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

 

(iii)Fair value measure of shares issued

 

The calculation of the fair value of shares issued requires significant estimate to be made in regard to several variables. The estimations made are subject to variability that may alter the overall fair value determined.

 

Key Judgements

 

(i)Provision for impairment of receivables

 

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors’ financial position.

 

(ii)Impairment

 

The Group assessed that no indicators of impairment existed at the reporting date and as such no impairment testing was performed.

 

3.      Segment Information

 

The consolidated entity operates predominantly in one industry and one geographical segment, those being Oriental holistic health services and Australia, respectively.

 

32 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

4.      Cash and Cash Equivalents

 

Cash at the end of the financial periods as shown in the statement of cash flows is reconciled to items in the consolidated balance sheets as follows:

 

   2023   2022 
   US$   US$ 
         
Cash at bank   23,614    106,942 
Petty Cash   19,780    10,021 
Cash and Cash Equivalents   43,394    116,963 

 

5.      Other Assets

 

   2023   2022 
   US$   US$ 
Current        
Deposits paid   19,988    20,395 

 

6.      Other Receivables

 

   2023   2022 
   US$   US$ 
Current        
Prepayment   7,626    —   
Refundable from the Australian Taxation Office   6,059    207 
Other Receivables, Current   13,685    207 

 

33 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

7.      Plant and Equipment

 

   Furniture and fittings   Office equipment   Computers   Motor vehicles   Plant and equipment   Lease improvements   Total 
At cost                                   
Balance as of July 1, 2021   37,064    662    10,327    36,062    14,804    81,771    180,690 
Effect of foreign currency exchange difference   (3,101)   (55)   (864)   (3,017)   (1,238)   (6,842)   (15,117)
Balance as of June 30, 2022   33,963    607    9,463    33,045    13,566    74,929    165,573 
Effect of foreign currency exchange difference   (1,277)   (23)   (356)   (1,242)   (510)   (2,817)   (6,225)
Balance as of June 30, 2023   32,686    584    9,107    31,803    13,056    72,112    159,348 
                                    
Accumulated depreciation                                   
Balance as of July 1, 2021   37,064    662    10,327    36,062    14,804    81,771    180,690 
Effect of foreign currency exchange difference   (3,101)   (55)   (864)   (3,017)   (1,238)   (6,842)   (15,117)
Balance as of June 30, 2022   33,963    607    9,463    33,045    13,566    74,929    165,573 
Effect of foreign currency exchange difference   (1,277)   (23)   (356)   (1,242)   (510)   (2,817)   (6,225)
Balance as of June 30, 2022   32,686    584    9,107    31,803    13,056    72,112    159,348 
                                    
Net carrying amount                                   
As of June 30, 2022   —      —      —      —      —      —      —   
As of June 30, 2023   —      —      —      —      —      —      —   

 

8.      LEASES

 

Company as a lessee

 

The Company has lease contract for land and building. The Company’s obligations under these leases are secured by the lessor’s title to the leased assets. The Company is restricted from assigning and subleasing the leased assets.

 

34 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

(a)Right-of-use asset

 

 

   Shop lot 
   US$ 
Cost    
At 1 July 2021   463,401 
Effect of foreign currency exchange difference   (25,282)
At 30 June 2022   438,119 
Effect of foreign currency exchange difference   (8,523)
At 30 June 2023   429,596 
      
Accumulated Amortization     
At 1 July 2021   121,769 
Amortization   64,884 
At 30 June 2022   186,653 
Amortization   60,199 
At 30 June 2023   246,852 
      
Net carrying amount     
As of 30 June 2022   251,466 
As of 30 June 2023   182,744 

 

(b)Lease liability

 

The carrying amounts of lease liability is as follows:

 

   2023   2022 
   US$   US$ 
Current        
Lease liability   63,601    60,412 
           
Non-Current          
Lease liability   151,513    223,517 
 Operating Lease Liability   215,114    283,929 

 

35 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

9.      Accrued and Other Liabilities

 

   2023   2022 
   US$   US$ 
Current        
Payroll liabilities   5,694    3,054 
Other payables   74,792    81,971 
 Accrued and Other Liabilities   80,486    85,025 

 

10.     Borrowings

 

   2023   2022 
   US$   US$ 
Loan from Director          
Current          
Balance as of 1 July   9,625    123,274 
Repayment   41    (103,335)
Forex exchange   (363)   (10,314)
Balance as of 30 June   9,303    9,625 

 

The loan balance above is an unsecured loan from Xin Jin, a significant shareholder and an officer of the Company and its sole Director. The loan is non-trade in nature, non-interest bearing and repayable on demand.

 

11.      Share capital        

 

   2023   2022 
   US$   US$ 
Issued and fully paid ordinary shares:          
At beginning / end of year   356    356 

 

40,000,000 shares of common stock were issued at $0.000001 per share, on April 26, 2019. In year 2020. The company had issued 39,398,309 shares of common stock in tranches, valued at $0.000001 per share.

 

The holders of ordinary shares are entitled to receive dividends as and when declared by the Group. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value.

 

12.     Other Comprehensive Loss

 

   2023   2022 
   US$   US$ 
           
Foreign currency translation reserve   (9,312)   (7,434)

 

36 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

13.     Income Tax Expense

 

 

   2023   2022 
   US$   US$ 
(a)       The components of tax expense comprise:          
Income tax          
Under provision of income tax in prior years          
- Australia   21,602    —   
- US   —      —   
Total   21,602    —   

 

   2023   2022 
   US$   US$ 
(b)      The following is a reconciliation of the Company’s total income tax expense to the (loss)/income before income taxes for the years ended June 30, 2023 and 2022, respectively:          
(Loss)/income before income tax provision   (32,064)   42,111 
Income tax computed at statutory tax rate   (9,619)   12,633 
Recoupment of prior year tax losses at previously brought to account:   —    (12,633)
Change in valuation allowance    9,619    —   
Under provision of income tax in prior year   21,602    —   
Consolidated income tax expense   21,602    —   

 

   2023   2022 
   US$   US$ 
(c)      Deferred tax asset do not recognized as follows:          
 Operating loss carryforward   32,064    —  
 Less: valuation allowance   (32,064)    — 
 Deferred tax assets, net of valuation allowance   —    —  

 

Deferred tax assets are recognized in the consolidated financial statements only to the extent that it is probable that future taxable profits will be available against which the Company can utilize the benefits. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the group companies operate.

 

14.     Capital Commitments

 

There was no capital expenditure as of June 30, 2023.

 

15.     Contingencies

 

From time to time, the Group is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Group is a party for which management believes the ultimate outcome would have a material adverse effect on the Group’s financial position.

 

37 

 

 

AREM PACIFIC CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED JUNE 30, 2023

 

16.     Related Party Transactions

 

(a)Parent entity

 

The ultimate parent entity which exercises control over the Group is Arem Pacific Corporation.

 

(b)Subsidiary

 

Sanyi Group is a wholly owned subsidiary of the Company and is incorporated in Australia.

 

(c)Outstanding balances with related parties

 

The following balances are outstanding at reporting date in relation to transactions with related parties:

 

   2023   2022 
   US$   US$ 
Loan from director and shareholder   9,303    9,625 

 

The loan balance above is an unsecured loan from Xin Jin, a significant shareholder and an officer of the Company and the Director of its wholly owned subsidiary Sanyi Group.

 

17.    Subsequent Events

 

No subsequent event which had a material impact on the Group was identified through the date of issuance of the consolidated financial statements.

 

38 

 

 

ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A:  CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness, as of June 30, 2023, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2023.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of our Chief Executive Officer and our Chief Financial Officer, 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. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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.

 

As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the SEC, our management assessed the effectiveness of our internal control over the financial reporting as of June 30, 2023, using criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our management concluded that our internal control over financial reporting was not effective as of June 30, 2023 due to the following material weaknesses:

 

·lack of sufficient accounting personnel qualified in US GAAP and SEC reporting; and

 

·insufficient accounting staff, which results in a failure to segregate duties sufficiently to ensure a timely and proper preparation and review of the financial statements.

 

 

39 

 

 

We plan to take steps to remediate the material weaknesses in our internal control over financial reporting as soon as practicable by:

 

·hiring additional internal staff familiar with US GAAP and SEC reporting. In the past couple of years, we have made offers to hire accounting personnel familiar with US GAAP and SEC reporting experience but has as of yet been unable to hire a suitable candidate. We now plan to hire a professional recruitment agency to assist us in the identification and selection of appropriate candidates.

 

·Enhance staff awareness of laws and regulations by conducting more trainings.

 

·hiring sufficient staff to adequately segregate responsibilities and insure timely preparation of financial statements; and providing training to our accounting personnel on US GAAP, SEC reporting and other regulatory requirements regarding the preparation of financial statements. Our financial personnel attended US GAAP and SEC reporting training sessions organized by an international accounting firm. We plan to hold similar US GAAP and SEC reporting training on a regular basis.

 

Although we increased the training provided to accounting personnel relating to US GAAP and SEC reporting to partially address the foregoing material weaknesses, we do not believe such weaknesses have been remediated and we can provide no assurance that they will be remediated in a timely manner.

 

We believe that we are taking the steps necessary for remediation of the material weaknesses identified above, and we will continue to monitor the effectiveness of these steps and to make any changes that our management deems appropriate.

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report is not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to satisfy these requirements by providing the management’s report only.

 

Changes in Internal Control Over Financial Reporting

 

With the exception of commencing the process of implementing the foregoing steps to resolve the weaknesses in our internal controls, there have been no changes in internal control over financial reporting during the last fiscal quarter of our fiscal year ended June 30, 2023.

 

Limitations on the Effectiveness of Controls

 

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on 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.  Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

ITEM 9B:  OTHER INFORMATION

 

None.

 

ITEM 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 

None, not applicable.

 

40 

 

 

PART III

 

ITEM 10:  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Identification of Directors and Executive Officers

 

Our executive officers and directors and their respective ages, positions and biographical information are set forth below.

 

Name Age Position and Offices Held Dates in Position or Office
Xin Jin 45 President and Director December 2020 - Present
    Chief Financial Officer January 2022 - Present
    Vice President June 2013 - February 2017
    President and Director - Arem Arizona July 2010 - Present
Jianji Jin 40 Sole Director - Sanyi Group September 2013 - Present

 

Background and Business Experience

 

Xin Jin is 45 years of age and founded Sanyi Group in 2012, as a therapeutic health center that uses traditional Chinese massage and alternative approaches to personal wellbeing, including reflexology, acupuncture and cupping, all aimed at easing a client’s muscular tension, to stimulate organ function and restore and promote a healthy body. Mr Xin serves as the President and Managing Director of Sanyi Group, which was acquired by us on June 30, 2012.

 

Mr Xin graduated from Shandong University, China, in 2001 with a Bachelor of Commerce, where he majored in Accounting. He then attended Deakin University, Australia, and graduated with a Master’s Degree in Professional Accounting in 2004.

 

On April 20, 2021, we increased the size of our Board of Directors to three members and elected and designated ZhiYu Qian and GuoYan Zhao to serve on the Board of Directors until the next annual meeting of the stockholders or until their respective successors shall be elected and qualify. Each resigned as a member of the Board of Directors of the Company in February, 2022.

 

Jianji Jin is 40 years of age and has been the sole director of Sanyi Group since September of 2013, managing and supervising its entire business operations.  In this capacity, he is responsible for overseeing all employees, the engagement of employees and independent personnel, compliance with applicable laws, advertising and promotions and customer relations and all other aspects of Sanyi Group’s business.  Mr. Jin graduated from Dalian Medical University in China with a Medicine Degree in 2005. He holds a Diploma in Remedial Massage in Melbourne College of Professional Therapists earned in Australia in 2014; and a Certificate IV of Property Sales from the Holmesglen Institute of TAFE (“Technical and Further Education”), also earned in Australia, in 2010. He speaks Chinese and English.

 

Significant Employees

 

There are no employees who are not executive officers who are expected to make a significant contribution to our Company’s business.

 

Family Relationships

 

Jianji Jin is a cousin of Xin Jin, our President, CFO and sole director.

 

Involvement in Other Public Companies

 

None of our officers or directors are an “affiliate” of any other publicly held companies.

 

Involvement in Certain Legal Proceedings

 

During the past ten (10) years, none of our present or former directors, executive officers or persons nominated to become directors or executive officers:

 

41 

 

 

(1) A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two (2) years before the time of such filing;

 

(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

 

(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

 

(ii) Engaging in any type of business practice; or

 

(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

 

(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than sixty (60) days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

 

(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

 

(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

 

(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

 

(i) Any Federal or State securities or commodities law or regulation; or

 

(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

 

(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

 

(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Compliance with Section 16(a) of the Exchange Act

 

The common stock of the Company is not registered under Section 12(g) of the Exchange Act, and therefore, the officers, directors and holders of more than 10% of our outstanding shares are not subject to the provisions of Section 16(a) of the Exchange Act, which would require them to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities.

 

42 

 

 

 

Code of Conduct

 

We have adopted a Code of Conduct for our principal executive and financial officers.  See Exhibit 14 in Part IV, Item 15.

 

Corporate Governance

 

Nominating Committee

 

We have not established a Nominating Committee because we believed that we were able to effectively manage the issues normally considered by a Nominating Committee and currently believe we can do so without a Nominating Committee.  

 

If we do establish a Nominating Committee, we will disclose our procedures in recommending nominees by our Board of Directors.

  

Audit Committee

 

We have not established an Audit Committee for the same reasons why we have not established a Nominating Committee, and a further review of this issue will no doubt be necessitated and undertaken by our management in the future.

 

ITEM 11:  EXECUTIVE COMPENSATION

 

The following table sets forth the aggregate compensation paid by us for services rendered during the periods indicated:

 

SUMMARY COMPENSATION TABLE

 

Name and Principal Position

Year

 

 

 

Salary

($)

 

 

Bonus

($)

 

 

Stock Awards

($)

 

Option Awards

($)

 

 Non-Equity Incentive Plan Com- pensation($)

Nonqualified Deferred Compensation

($)

 All  Other Compensation($)

Total

($)

 

 

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
Xin Jin 2023 $0 $0 $0 $0 $0 $0 $0 $0
President                  
and                  
Director                  
                   
Jianji Jin 2023 $0 $0 $0 $0 $0 $0 $0 $0
Director                  
Sanyi                  

 

Securities Authorized for Issuance under Equity Compensation Plans

 

At June 30, 2023, we have no outstanding equity awards.

 

Compensation of Directors

 

Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($)
None None None None None None None None

 

Transactions with Related Persons

 

During the fiscal years ended June 30, 2023, there were no related party transactions other than disclosed in Note 16 to the consolidated financial statements.

 

43 

 

 

 

Promoters and Certain Control Persons

 

There were no material transactions, or series of similar transactions, during our Company’s last five (5) fiscal years, or any currently proposed transactions, or series of similar transactions, to which we or any of our subsidiaries was or is to be a party and in which any promoter or founder of ours or any member of the immediate family of any of the foregoing persons, had an interest.

 

Parents of the Smaller Reporting Company

 

See the heading “References” at the forepart of this Annual Report. The Company has no parents.

 

ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

Security Ownership of Certain Beneficial Owners

 

The following table sets forth, as of October 5, 2023, the names, addresses and number of shares of common stock beneficially owned by all persons known to the management of the Company to be beneficial owners of more than 5% of the outstanding shares of common stock, and the names and number of shares beneficially owned by all directors of the Company and all executive officers and directors of the Company as a group (except as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned).

 

For purposes of this table, information as to the beneficial ownership of shares of common stock is determined in accordance with the rules of the SEC and includes general voting power and/or investment power with respect to securities. Except as otherwise indicated, all shares of our common stock are beneficially owned, and sole investment and voting power is held by the person named. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock, which such person has the right to acquire within sixty (60) days after the date hereof. The inclusion herein of such shares listed beneficially owned does not constitute an admission of beneficial ownership.

 

All percentages are calculated based upon a total number of 373,950,544 shares of common stock outstanding as of October 5, 2023, plus, in the case of the individual or entity for which the calculation is made, that number of options or warrants owned by such individual or entity that are currently exercisable or exercisable within sixty (60) days.

 

Security Ownership of Beneficial Owners

 

Name and Address* of Beneficial Owner   Title of Class   Amount and Nature of Beneficial Ownership   Percent of Class  
Zhuo Fan Tang   Common   60,579,700   16.2 %
Yew Nic Kien Cheong   Common   20,000,000   5.4 %
Xin Jin   Common   19,910,000   5.3 %

 

Security Ownership of Officers and Directors

 

Name and Address* of Officer or Director   Title of Class   Amount and Nature of Beneficial Ownership   Percent of Class  
Xin Jin   Common   19,910,000   5.3 %
All Officers and Directors as a Group   Common   19,910,000   5.3 %

*The Company’s principal executive office address on the cover page.

 

Changes in Control

 

There are no current or planned transactions that would or are expected to result in a change of control of our Company.

 

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ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Transactions with Related Persons

 

During the fiscal years ended June 30, 2023, there were no related party transactions other than disclosed in Note 16 to the consolidated financial statements.

 

Promoters and Certain Control Persons

 

There were no material transactions, or series of similar transactions, during our Company’s last five fiscal years, or any currently proposed transactions, or series of similar transactions, to which we or any of our subsidiaries was or is to be a party and in which any promoter or founder of ours or any member of the immediate family of any of the foregoing persons, had an interest.

 

Parents of the Smaller Reporting Company

 

See the heading “References” at the forepart of this Annual Report.

 

Director Independence

 

Our Board of Directors is currently composed of one (1) member, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market (the Company has no plans to list on the NASDAQ Global Market). The NASDAQ independence definition includes a series of objective tests, such as that the directors are not, and have not been for at least three (3) years, one (1) of our employees and that neither the director, nor any of their family members have engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to our director that no relationship exists which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by our director and us with regard to our director’s business and personal activities and relationships as they may relate to us and our management.

 

ITEM 14:  PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The following is a summary of the fees billed to us by our principal accountants, Audit Alliance LLP during the fiscal year ended below:

 

Fee Category  2023   2022 
Audit Fees  US$17,500   US$78,000 
Other Fees  $—     $—   
Total Fees  US$17,500   US$78,000 

 

Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual consolidated financial statements for our 10-K Annual Reports and review of the consolidated financial statements included in our 10-Q Quarterly Reports or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements.

 

Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit Fees” above.

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

 

We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.

 

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PART IV

 

ITEM 15:  EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

 

(a)(1)(2)

Financial Statements.  See the audited consolidated financial statements of the Company contained in Part II, Item 8 above, of this Annual Report, which are incorporated herein by this reference.

 

(a)(3)

Exhibits.  The following exhibits are filed as part of this Annual Report:

 

(a) Exhibits.

 

Exhibit

Number

   Description of Exhibit   Filing
3(i)   Restated Certificate of Incorporation   Incorporated by reference to the Annual Report on Form 10-K filed on November 21, 2022.
3(ii)   Amended and Restated Bylaws   Incorporated by reference to the Annual Report on Form 10-K filed on November 21, 2022.
4   Description of Securities   Incorporated by reference to the Annual Report on Form 10-K filed on November 21, 2022.
14   Code of Conduct   Incorporated by reference to the Annual Report on Form 10-K filed on November 21, 2022.
21   Subsidiaries   Filed herewith
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   Filed herewith.
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   Filed herewith
32   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   Filed herewith
99.1   Form of Company Representative Agreement   Incorporated by reference to the Annual Report on Form 10-K filed on November 21, 2022.
101.INS   XBRL Instance Document    
101.SCH   XBRL Taxonomy Extension Schema    
101.CAL   XBRL Taxonomy Extension Calculation Linkbase    
101.DEF   XBRL Taxonomy Extension Definition Linkbase    
101.LAB   XBRL Taxonomy Extension Label Linkbase    
101.PRE   XBRL Taxonomy Extension Presentation Linkbase    

 

 

ITEM 16. FORM 10-K SUMMARY

 

None.

 

 

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SIGNATURES

 

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.

 

Arem Pacific Corporation

 

Date: October 13, 2023   By: /s/ Xin Jin
        Xin Jin
        President, Chief Financial Officer and Sole Director

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Date: October 13, 2023   By: /s/ Xin Jin
        Xin Jin
       

President, Chief Financial Officer and Sole Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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