U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
Or
For the transition period from __________ to __________
Commission
file number:
(Exact name of Company as specified in its charter)
| (State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Company’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Act:
| Title of Each Class | Name of Each Exchange On Which Registered | |
| Common Stock, $0.001 par value per share | N/A |
Indicate by check mark if the Company is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the Company is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the issuer (1) 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 Company was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate
by check mark whether the Company has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted 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 Company was required to submit and post such files). Yes ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Company’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| (Do not check if a smaller reporting company) | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate
by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of January 13, 2024, shares of the issuer’s common stock were issued and outstanding.
Documents Incorporated By Reference: None
FORM 10-Q
TABLE OF CONTENTS
| Page No. | ||
| PART I. - FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | |
| Balance Sheets as of November 30, 2023 (Unaudited) and May 31, 2023 | 3 | |
| Statements of Operations for the Six Months Ended November 30, 2023 and 2022 (Unaudited) | 4 | |
| Statements of Stockholders’ Equity | 5 | |
| Statements of Cash Flows for the Six Months Ended November 30, 2023 and 2022 (Unaudited) | 6 | |
| Notes to Financial Statements (Unaudited) | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 29 |
| Item 4. | Controls and Procedures | 29 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 29 |
| Item 1A | Risk Factors | 29 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |
| Item 3. | Defaults Upon Senior Securities | 29 |
| Item 4. | Mine Safety Disclosures | 29 |
| Item 5. | Other Information | 29 |
| Item 6. | Exhibits | 29 |
| 2 |
SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES
CONDENSED CONLIDATED BALANCE SHEETS
November 30, 2023 (Unaudited) | May 31, 2023 (Audited) | |||||||
| $ | $ | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Amount due from related parties | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total Assets | ||||||||
| Liabilities and Stockholders’ (Deficit) Equity | ||||||||
| Current liabilities | ||||||||
| Short-term loan | ||||||||
| Accounts payables | ||||||||
| Advances from customers | ||||||||
| Other current payables | ||||||||
| Taxes payable | ||||||||
| Amounts due to related parties | ||||||||
| Operating lease liabilities, current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Long-term loan | ||||||||
| Operating lease liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ (Deficit) Equity | ||||||||
| Common stock ($ par value, shares authorized, share issued and outstanding as of November 30, 2023 and May 31, 2023, respectively) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| Total (Deficit) Equity | ( | ) | ( | ) | ||||
| Total Liabilities and (Deficit) Equity | ||||||||
| 3 |
SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Three months ended November 30, 2023 | Three months ended November 30, 2022 | Six months ended November 30, 2023 | Six months ended November 30, 2022 | |||||||||||||
| Net revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment losses | ||||||||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Other income/(expense) | ( | ) | ( | ) | ||||||||||||
| Total other income/(expenses) | ( | ) | ( | ) | ||||||||||||
| Loss before tax from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation (loss)/income | ( | ) | ||||||||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to: | ||||||||||||||||
| Owners of the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Total comprehensive loss attributable to: | ||||||||||||||||
| Owners of the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Loss per common share: | ||||||||||||||||
| Basic and Diluted | $ | ) | ) | ) | ) | |||||||||||
| Weighted Average Number of Common Share Outstanding: | ||||||||||||||||
| Basic and Diluted | ||||||||||||||||
| 4 |
SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the six months ended November 30, 2023 and 2022
| Common Stock | Additional Paid In | Retained | Other Comprehensive | Total Shareholders’ | Non-controlling | Total | ||||||||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Income/(loss) | Equity | Interest | Equity | |||||||||||||||||||||||||
| Balance at, May 31, 2022 (Unaudited) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | |||||||||||||||||||||||||||||||
| Balance at, November 30, 2022 (Unaudited) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance at, May 31,2023 (Audited) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net income | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | ( | ) | |||||||||||||||||||||||||||||
| Disposal of subsidiaries | - | |||||||||||||||||||||||||||||||
| Balance at, November 30, 2023 (Unaudited) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| 5 |
SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended November 30, 2023 and 2022
| 2023 | 2022 | |||||||
| $ | $ | |||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Depreciation of right-of-use assets | ||||||||
| Bad debt expense | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other non-current assets | ||||||||
| Accounts payable and other current liabilities | ||||||||
| Net cash provided by/(used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities | ||||||||
| Repaid for right-of-use assets | ( | ) | ( | ) | ||||
| Proceeds from sale of property and equipment | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchase of intangible assets | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Amount due to related party | ||||||||
| Proceeds from short-term borrowings | ||||||||
| Proceeds from long-term borrowings | ||||||||
| Repayments of long-term borrowings | ( | ) | ||||||
| Net cash (used in)/provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net increase/(decrease) of cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents–beginning balances | ||||||||
| Cash and cash equivalents–ending balances | ||||||||
| Supplementary cash flow information: | ||||||||
| Interest received | ||||||||
| Interest paid | ||||||||
| 6 |
1. Organization and Principal Activities
On March 6, 2015, SavMobi Technology Inc. (“the Company”), was incorporated in the State of Nevada and established a fiscal year end of May 31. Initially the business platform was in providing application software to a global vendor platform to connect people to businesses and provide a new shopping experience.
On
May 18, 2017, Lakwinder Singh Sidhu, the Company’s former Director and CEO, completed a transaction with New Reap Global Ltd.,
by which New Reap Global Ltd. acquired shares of common stock, representing
On March 19, 2018 New Reap Global transferred restricted shares to Eng Wah Kung.
On May 10, 2018 and May 30, 2018, were transferred to Arden Wealth and Trust. shares are free trading from HongLing Shang, restricted shares from New Reap Global, LTD and each from Xuedong Zhang, Jingmei Jiang, Qianxian, Yulan Qi, Baoxin Song, Jianlong Wu. On June 15, 2018 New Reap Global transferred restricted shares to EMRD Global Holdings.
On June 26, 2018 New Reap Global transferred restricted shares to FORTRESS ADVISORS, LLC and to Baywall Inc.
On
June 8, 2022, three (3) shareholders of the Company, including Ma Hongyu, Ye Caiyun, and Li Wenzhe entered into stock purchase agreements
with an aggregate of five (5) non-U.S. accredited investors (the “Purchase Agreements”) to sell an aggregate of
shares of common stock of the Company, which represents approximately
The
Purchase Agreements were fully executed and delivered on June 8, 2022. Zhang Yiping and Chen Xinxin acquired approximately
| Purchasers | Shares acquired | % | ||||||
| Zhang Yiping | % | |||||||
| Chen Xinxin | % | |||||||
| Wang Yanfang | % | |||||||
| Liu Chen | % | |||||||
| Liu Ying | % | |||||||
On
December 15, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Intellegence
Parking Group Limited (“Intellegence”), a Cayman Island company formed on June 29, 2022, Chen Xinxin (“Xinxin”),
the officer and director, and control shareholder of Intelligence and the shareholders of Intelligence (the “Shareholders”).
Under the Share Exchange Agreement, One Hundred Percent (
Immediately after completion of such share exchange, SVMB will hold a total of issued and outstanding shares of Intellegence. Zhang Guowei is the sole director of Intellegence Parking Group Limited.
Consequently, SVMB has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and Intellegence is now a wholly owned subsidiary.
| 7 |
Intellegence Parking Group Limited (“Intellegence Parking”) was incorporated on June 29, 2022 under the laws of Cayman Islands. It is controlled by Guowei Zhang, Xiujuan Chen, Hongwei Li and Chuchu Zhang. Intellegence Parking is an investment holding company.
Intellegence Parking (Hong Kong) Limited (“Intellegence HK”) was incorporated on July 20, 2022 under the laws of Hong Kong SAR. Intelligence HK is a wholly subsidiary of Intellegence Parking since incorporation and it is an investment holding company.
Huixin Zhiying (Hangzhou) Technology Co. (“Huixin”) was incorporated on October 24, 2022 under the laws of PRC. It is a wholly owned subsidiary of Intellegence HK since incorporation and it is an investment holding company.
Zhongxiang Huji Town Zhuyi Techonology Co. (“Huji”) was incorporated on August 14, 2023, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Pursuant to the Business Operation Agreement entered into among Huixin WFOE and Zhejiang Jingbo Ecological Technology Co. between November 15 and 11, 2022, the Company obtained control over these PRC domestic companies by entering into a series of contractual arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements include power of attorney, exclusive option agreement, exclusive business cooperation agreements, equity pledge agreements, and other operating agreements. These contractual agreements can be extended at the relevant PRC subsidiaries’ options prior to the expiration date. As a result, the Company maintains the ability to control these PRC domestic companies, is entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb all expected losses of these PRC domestic companies.
The Company consolidated its financial statements due to common control.
The Company’s major subsidiaries, VIEs and VIE’s subsidiaries are described as follows:
| Country/Place and date of | Percentage of direct or indirect economic benefits ownership | |||||||||
| Companies | incorporation/establishment | November 30, | ||||||||
| 2023 | 2022 | |||||||||
| Major Subsidiaries | ||||||||||
| Intellegence Parking Group Limited | Cayman | |||||||||
| Intellegence Parking (Hong Kong) Limited | Hong Kong | |||||||||
| Huixin Zhiying (Hangzhou) Technology Co. | PRC | |||||||||
| Major VIEs (Including VIE’s Subsidiaries) | ||||||||||
| Zhejiang Jingbo Ecological Technology Co. | PRC | |||||||||
| Hangzhou Zhuyi Technology Co. | PRC | |||||||||
2. Variable Interest Entities
Pursuant to the Business Operation Agreement entered into among Huixin WFOE and Zhejiang Jingbo Ecological Technology Co., the Company obtained control over these PRC domestic companies by entering into a series of contractual arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements include power of attorney, exclusive option agreement, exclusive business cooperation agreements, equity pledge agreements, and other operating agreements. These contractual agreements can be extended at the relevant PRC subsidiaries’ options prior to the expiration date. As a result, the Company maintains the ability to control these PRC domestic companies, is entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb all expected losses of these PRC domestic companies.
Zhejiang Jingbo Ecological Technology Co. is a PRC company which was formed on December 18, 2019 and is engaged in the business of smart parking application software and platform operations business. Zhang Guowei has been the Chairman of Zhejiang Jingbo Ecological Technology Co. since December 2019.
| 8 |
Hangzhou
Zhuyi Technology Co. (“Hangzhou Zhuyi”) was incorporated under the laws of the PRC on November 13, 2017 with a capital of
RMB
Zhejiang Linglingyi Network Technology Co. (“Linglingyi”) was incorporated on November 17, 2018. Its sole director is Guowei Zhang. Hangzhou Zhuyi acquired % of Linglingyi on April 29. 2022. Its main businesses are smart parking projects and smart parking mobile applications.
Liangshan Tongfu Technology Co. (“Liangshan”) was incorporated on November 13, 2018. On September 29, 2022, Hangzhou Zhuyi entered in a share agreement with Hangzhou Kaai Technology Co. to purchase % of Liangshan’s shares. As a result, Hangzhou Zhuyi holds % of Liangshan. Liangshan is into smart parking projects and smart parking mobile applications businesses.
Zhuyi Technology (Anping) Co. (“Anping”) was incorporated on May 12, 2022, which is % owned by Hangzhou Zhuyi and it mainly focuses on smart parking projects and smart parking mobile applications. Anping was deregistered on 27 June, 2023.
Haikou Zhuyi Technology Co. (“Haikou”) was incorporated on May 9, 2022 which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Yibin Huibo Technology Co. (“Yibin”) was incorporated on July 4, 2019, which is % owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Xide Zhuyi Technology Co. (“Xide”) was incorporated on October 14, 2021, which is % owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Hubei Tongpo Parking Management Co. (“Tongpo”) was incorporated on November 4, 2020, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Zhuyi Technology (Taining) Co. (“Taining”) was incorporated on May 18, 2021, which is % owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Zhongxiang Huji Town Zhuyi Techonology Co. (“Huji”) was incorporated on August 14, 2023, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Intellengence Parking Group Limited provides smart parking projects, smart parking mobile applications and cloud platform construction innovation through its consolidated subsidiaries, variable interest entities (“VIE”s) and VIE’s subsidiaries (Collectively, the “Group”).
a. Contractual agreements with VIEs
Power of Attorney
Pursuant to the power of attorney agreements among the Wholly Foreign Owned Enterprises (“WFOE”s), the VIEs and their respective Nominee Shareholders, each Nominee Shareholder of the VIEs irrevocably undertakes to appoint the WFOE, as the attorney-in-fact to exercise all of the rights as a shareholder of the VIEs, including, but not limited to, the right to convene and attend shareholders’ meeting, vote on any resolution that requires a shareholder vote, such as appoint or remove directors and other senior management, and other voting rights pursuant to the articles of association (subject to the amendments) of the VIEs. Each power of attorney agreement is irrevocable and remains in effect as long as the Nominee Shareholder continues to be a shareholder of the VIEs. Unless otherwise required by PRC Laws, none of the VIEs or its shareholders can unilaterally terminate this agreement.
| 9 |
Exclusive Option Agreements
Pursuant to the exclusive option agreements among WFOEs, the VIEs and their respective Nominee Shareholders, the Nominee Shareholders granted WFOEs exclusive right to purchase, when and to the extent permitted under PRC law, all or part of the equity interests from shareholders of VIEs. The exercise price for the options to purchase all or part of the equity interests shall be the minimum amount of consideration permissible under then applicable PRC law. The agreement shall be valid until WFOEs or its designated party purchases all the shares from shareholders of VIEs. The terms of the exclusive option agreement are 10 years and can be automatically extended until such time WFOEs delivers a confirmation letter specifying the renewal term of this agreement. Unless otherwise required by PRC Laws, the VIEs or its shareholders shall not unilaterally terminate this agreement.
Exclusive Business Corporation Agreement
Pursuant to the exclusive business cooperation agreements among the WFOEs and the VIEs, respectively, the WFOEs have the exclusive right to provide the VIEs with services related to, among other things, comprehensive technical support, professional training, consulting services, trademark and copyright of system,. Without prior written consent of the WFOEs, the VIEs agree not to directly or indirectly accept the same or any similar services provided by any others regarding the matters ascribed by the exclusive business cooperation agreements. The VIEs agree to pay the WFOEs services fees, which shall be determined by the WFOEs. The WFOEs have the exclusive ownership of intellectual property rights created as a result of the performance of the agreements. The agreements shall remain effective except that the WFOEs are entitled to terminate the agreements in writing. Unless otherwise required by PRC Laws, the VIEs shall not unilaterally terminate this agreement.
Equity Pledge Agreement
Pursuant to the equity pledge agreements among the WFOEs, the VIEs and their respective Nominee Shareholders, the Nominee Shareholders of the VIEs pledged all of their respective equity interests in the VIEs to the WFOEs as collaterals for performance of the obligations of the VIEs and their Nominee Shareholders under the exclusive business cooperation agreements, the power of attorney agreements, and the exclusive option agreements. The Nominee Shareholders of the VIEs also undertake that, during the term of the equity pledge agreements, unless otherwise approved by the WFOEs in writing, they will not transfer the pledged equity interests or create or allow any new pledge or other encumbrance on the pledged equity interests. These equity pledge agreements remain in force until VIEs and their respective Nominee Shareholders discharge all their obligations under the contractual agreements.
Spousal Consent Letter
Pursuant to the spousal consent letters, the spouses of some of the individual Nominee Shareholders of the VIEs unconditionally and irrevocably agree that the equity interest in the VIEs held by and registered in the name of his or her respective spouse will be disposed of pursuant to the relevant exclusive business cooperation agreements, equity pledge agreements, the exclusive option agreements and the power of attorney agreements, without his or her consent. In addition, each of them agrees not to assert any rights over the equity interest in the VIEs held by their respective spouses. In addition, in the event that any of them obtains any equity interest in the VIEs held by their respective spouses for any reason, such spouses agree to be bound by similar obligations and agreed to enter into similar contractual arrangements.
b. Risks in relation to the VIE structure
On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020, together with their implementation rules and ancillary regulations. The Foreign Investment Law does not explicitly classify contractual arrangements as a form of foreign investment, but it contains a catch-all provision under the definition of “foreign investment”, which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. It is unclear whether the Group’s corporate structure will be seen as violating the foreign investment rules as the Group is currently leveraging the contractual arrangements to operate certain business in which foreign investors are prohibited from or restricted to investing. If variable interest entities fall within the definition of foreign investment entities, the Group’s ability to use the contractual arrangements with its VIEs and the Group’s ability to conduct business through the VIEs could be severely limited.
| 10 |
If the PRC government otherwise finds that the Group in violation of any existing or future PRC laws or regulations or lacks the necessary permits or licenses to operate the business, the Group’s relevant PRC regulatory authorities could:
● revoke the business licenses and/or operating licenses of the Group’s PRC entities;
● impose fines;
● confiscate any income that they deem to be obtained through illegal operations, or impose other requirements with which the Group may not be able to comply;
● discontinue or place restrictions or onerous conditions on the Group’s operations;
● place restrictions on the right to collect revenues;
● require the Group to restructure ownership structure or operations, including terminating the contractual agreements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect the ability to consolidate the financial results of and derive economic interests from the VIEs and their subsidiaries;
● restrict or prohibit the use of the proceeds from financing activities to finance the business and operations of the VIEs and their subsidiaries; or
● take other regulatory or enforcement actions that could be harmful to the Group’s business.
The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct the Group’s business. In addition, if the imposition of any of these penalties causes the Group to lose the rights to direct the activities of the VIEs or the right to receive its economic benefits, the Group would no longer be able to consolidate the VIEs. The management believes that the likelihood for the Group to lose such ability is remote based on current facts and circumstances. However, the interpretation and implementation of the laws and regulations in the PRC and their application to an effect on the legality, binding effect and enforceability of contracts are subject to the discretion of competent PRC authorities, and therefore there is no assurance that relevant PRC authorities will take the same position as the Group herein in respect of the legality, binding effect and enforceability of each of the contractual arrangements. Meanwhile, since the PRC legal system continues to rapidly evolve, it may lead to changes in PRC laws, regulations and policies or in the interpretation and application of existing laws, regulations and policies, which may limit legal protections available to the Group to enforce the contractual arrangements should the VIEs or the Nominee Shareholders of the VIEs fail to perform their obligations under those arrangements. The enforceability, and therefore the benefits, of the contractual agreements between the Company and the VIEs depend on Nominee Shareholders enforcing the contracts. There is a risk that Nominee shareholders of VIEs, who in some cases are also shareholders of the Company may have conflict of interests with the Company in the future or fail to perform their contractual obligations. Given the significance and importance of the VIEs, there would be a significant negative impact to the Company if these contracts were not enforced.
The Group’s operations depend on the VIEs to honor their contractual agreements with the Group. The Company’s ability to direct activities of the VIEs that most significantly impact their economic performance and the Company’s right to receive the economic benefits that could potentially be significant to the VIEs depend on the authorization by the shareholders of the VIEs to exercise voting rights on all matters requiring shareholder approval in the VIEs. The Company believes that the agreements on authorization to exercise shareholder’s voting power are enforceable against each party thereto in accordance with their terms and applicable PRC laws or regulations currently in effect and the possibility that it will no longer be able to consolidate the VIEs as a result of the aforementioned risks and uncertainties is remote.
c. Summary of financial information of the Group’s VIEs (inclusive of VIE’s subsidiaries)
The following tables set forth the financial statement balances and amounts of the VIEs and their subsidiaries included in the condensed financial statements after the elimination of intercompany balances and transactions among VIEs and their subsidiaries within the Group.
| 11 |
The consolidated financial statements of the Group’s VIEs have been audited by filing the Form 10-K for the year ended May 31, 2023.
November 30, 2023 | May 31, 2023 (Audited) | |||||||
| $ | $ | |||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total Assets | ||||||||
| Short-term loan | ||||||||
| Accounts payables | ||||||||
| Advances from customers | ||||||||
| Other current payables | ||||||||
| Taxes payable | ||||||||
| Amounts due to related parties | ||||||||
| Operating lease liabilities, current | ||||||||
| Long-term loan | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total Liabilities | ||||||||
| Total (Deficit) Equity of VIEs | ( | ) | ( | ) | ||||
| Total Liabilities and (Deficit) Equity of VIEs | ||||||||
Six Months Ended November 30, 2023 | Six Months Ended November 30, 2022 | |||||||
| $ | $ | |||||||
| Net revenues | ||||||||
| Cost of revenues | ( | ) | ( | ) | ||||
| Gross loss | ( | ) | ( | ) | ||||
| Total costs and expenses | ( | ) | ( | ) | ||||
| Operating loss | ( | ) | ( | ) | ||||
| Total other income and (expenses) | ( | ) | ||||||
| Loss before taxes from operations | ( | ) | ( | ) | ||||
| Provision for income tax | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to VIEs | ( | ) | ( | ) | ||||
| Six Months Ended November 30, | ||||||||
| 2023 | 2022 | |||||||
| Net cash provided by/(used in) operating activities | ( | ) | ||||||
| Net cash (used in)/provided by investing activities | ( | ) | ||||||
| Net cash (used in)/provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at the beginning of period | ||||||||
| Cash and cash equivalents at the end of period | ||||||||
| 12 |
3. Summary of Significant Accounting Policies
The Company’s significant accounting policies have not changed from the year ended May 31, 2023.
The accompanying unaudited condensed interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United Statements of America. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in these unaudited condensed interim financial statements. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023, as filed with the SEC on October 2, 2023. Operating results for the three months ended November 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the year ending May 31, 2024.
Going Concern
The
Company incurred net loss of $
The ability to continue as a going concern is dependent upon long-term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on long term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Foreign currency translation
The accompanying financial statements are presented in United States dollars. The functional currencies of the Company are in Renminbi (RMB). The Company’s assets and liabilities are translated into United States dollars from RMB at year-end exchange rates, and its revenues and expenses are translated at the average exchange rate during the year. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.
| 11302023 | 05312023 | 11302022 | ||||||||||
| Period/Year end RMB: US$ exchange rate | ||||||||||||
| Annual average RMB: US$ exchange rate |
The RMB is not freely convertible into foreign currencies and all foreign exchange transactions must be conducted through authorized financial institutions.
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis from the potential conversion of convertible securities or the exercise of options and or warrants; the dilutive effects of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warrants are calculated using the treasury stock method. Securities that are potentially an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
| 13 |
4. Trade Receivables
The Company does not provide any credit terms to its customers for smart parking. Cash will be collected by the exit of parking lots. The Company provides one to three months credits term for customers purchasing parking equipment.
5. Prepaid Expenses and Other Current Assets
| November 30, 2023 | May 31, 2023 | |||||||
| Prepayment | ||||||||
| Prepayment for rental (a) | ||||||||
| Deposit | ||||||||
| Loan receivable (b) | ||||||||
| Advances to employees | ||||||||
| Other | ||||||||
| VAT | ||||||||
| (a) |
| (b) |
6. Property and Equipment
| Furniture, fixtures and office equipment | Building (a) | Vehicles | Project Facilities | Construction in progress (b) | Total | |||||||||||||||||||
| Cost | ||||||||||||||||||||||||
| At May 31,2023 | ||||||||||||||||||||||||
| Additions during the year | ||||||||||||||||||||||||
| Disposals during the year | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Effects of currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| At November 30,2023 | ||||||||||||||||||||||||
| Accumulated depreciation | ||||||||||||||||||||||||
| At May 31,2023 | ||||||||||||||||||||||||
| Depreciation during the year | ||||||||||||||||||||||||
| Disposals during the year | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Effects of currency translation | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| At November 30,2023 | ||||||||||||||||||||||||
| Net book value | ||||||||||||||||||||||||
| At May 31,2023 | ||||||||||||||||||||||||
| At November 30,2023 | ||||||||||||||||||||||||
| (a) |
| (b) |
| 14 |
7. Intangible Assets
| Cost | $ | |||
| At May 31,2023 | ||||
| Additions during the period | ||||
| Disposals during the period | ||||
| Effects of currency translation | ( | ) | ||
| At November 30,2023 | ||||
| Accumulated depreciation | ||||
| At May 31,2023 | ||||
| Depreciation during the period | ||||
| Disposals during the period | ||||
| Effects of currency translation | ( | ) | ||
| At November 30,2023 | ||||
| Net book value | ||||
| At May 31,2023 | ||||
| At November 30,2023 |
8. Right-of-use Assets
| $ | ||||
| Cost | ||||
| At May 31, 2023 | ||||
| Additions during the period | ||||
| Write-off during the period | ( | ) | ||
| Effects of currency translation | ( | ) | ||
| At November 30, 2023 | ||||
| Accumulated depreciation | ||||
| At May 31,2023 | ||||
| Depreciation during the period | ||||
| Write-off during the period | ||||
| Effects of currency translation | ( | ) | ||
| At November 30, 2023 | ||||
| Net book value | ||||
| At May 31, 2023 | ||||
| At November 30, 2023 | ||||
Right of use assets consisted of 6 contracts renting offices, warehouses and parking lots. Contracted terms ranged between two and five years with the earliest start date being January 1, 2020.
9. Other non-current assets
Other non-current assets mainly consisted of a rental agreement of parking lot with a third party. The contract became effective on January 1, 2021 and will end on December 31, 2030. The Company has paid full rent as of November 30, 2023.
| 15 |
10. Short-term borrowings
| November 30, 2023 | May 31, 2023 | |||||||
| $ | $ | |||||||
| Short-term loan (a) | ||||||||
11. Other payables and Accruals
| November 30, 2023 | May 31, 2023 | |||||||
| $ | $ | |||||||
| Accrued payroll and welfare payables | ||||||||
| Deposit | ||||||||
| Loans payable | ||||||||
| Advanced to employees | ||||||||
| Other (a) | ||||||||
| (a) |
12. Related Party Transactions
(a) The Company had the following balances due to and due from related parties:
At November 30, 2023 and May 31, 2023, the Company owned funds from the following related parties:
| November 30, 2023 | May 31, 2023 | Relationship | ||||||||
| Intellegence Triumph Holdings Limited | ||||||||||
| Virtue Victory Holdings Limited | ||||||||||
| Strength Union Holdings Limited | ||||||||||
| Total amount due from related parties | ||||||||||
At November 30, 2023 and May 31, 2023, owed funds to the following related parties:
| November 30, 2023 | May 31.2023 | Relationship | ||||||||
| Current liabilities: | ||||||||||
| Guowei Zhang | ||||||||||
| Xinxin Chen | ||||||||||
| Total amount due to related parties | ||||||||||
| Non-current liabilities: | ||||||||||
| Shaoxing Keqiao Zhuyi Technology Co., Ltd | ||||||||||
| Total long-term loans | ||||||||||
Advances from Guowei Zhang were unsecured, non-interest bearing and due on demand.
| 16 |
During
the three months ended November 30, 2023, the Company borrowed from related parties of $
As
of May 31, 2022, the outstanding balance of long-term loans was RMB
Due to business restructure, Zhibo was deregistered at the beginning of 2023. Before deregistration, on January 15, 2023, Zhibo transferred the debts to a number of companies/partnerships with the clauses unchanged.
Furthermore, in order to help the Company consolidate debts and providing financial support to the Company, Shaoxin Keqiao Zhuyi Technology Co., Ltd., whose sole shareholder is Xiujuan Chen, took over the debts from the businesses Loan transfer agreements were executed on March 16 and 17, 2023 with the original clauses unchanged. Xiujuan Chen is also one of the shareholders of the Company. After the loans transferred to Shaoxin Keqiao Zhuyi Technology Co., Ltd., outstanding balances were offset in part or in full if the transferees were our current debtors.
During
the six months ended November 30, 2023, the Company did not borrow extra funds and made repayments of RMB
13. Income Taxes
PRC
The
Company’s subsidiaries incorporated in the PRC are subject to a profits tax rate of
The full realization of the tax benefit associated with the carry forward losses depends predominantly upon the Company’s ability to generate taxable income during the carry forward period.
Income tax expense (benefits)
| November 30, 2023 | November 30, 2022 | |||||||
| $ | $ | |||||||
| Loss before tax | ( | ) | ( | ) | ||||
| Tax credit calculated at statutory tax rate | ( | ) | ( | ) | ||||
| Effect of different tax rates | ||||||||
| Deferred tax asset not recognized during the period/year | ||||||||
The Company accounts for income taxes using the asset/liability method prescribed by ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Company can utilise the benefits.
Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets.
| 17 |
14. Long-term Borrowings
As
of May 31, 2022, the outstanding balance of long-term loans was RMB
Due to business restructure, Zhibo was deregistered at the beginning of 2023. Before deregistration, on January 15, 2023, Zhibo transferred the debts to a number of companies/partnerships with the clauses unchanged.
Furthermore, in order to help the Company consolidate debts and providing financial support to the Company, Shaoxin Keqiao Zhuyi Technology Co., Ltd., whose sole shareholder is Xiujuan Chen, took over the debts from the businesses . Loan transfer agreements were executed on March 16 and 17, 2023 with the original clauses unchanged. Xiujuan Chen is also one of the shareholders of the Company. After the loans transferred to Shaoxin Keqiao Zhuyi Technology Co., Ltd., outstanding balances were offset in part or in full if the transferees were our current debtors.
During
the six months ended November 30, 2023, the Company did not borrow extra funds and made repayments of RMB
15. Leases
Right-of-use
(“ROU”) assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation
to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the
estimated present value of lease payments over the lease term. The Company entered into 6 agreements for renting offices, warehouses
and parking lots. As of November 30, 2023, the Company has $
Significant assumptions and judgments made as part of the adoption of this new lease standard include determining (i) whether a contract contains a lease, (ii) whether a contract involves an identified asset, and (iii) which party to the contract directs the use of the asset. The discount rates used to calculate the present value of lease payments were determined based on hypothetical borrowing rates available to the Company over terms similar to the lease terms.
The Company’s future minimum payments under long-term non-cancellable operating leases are as follows:
As of November 30, 2023 | As of May 31, 2023 | |||||||
| $ | $ | |||||||
| Within 1 year | ||||||||
| After 1 year but within 5 years | ||||||||
| Total lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Total lease obligations | ||||||||
| Less: current obligations | ( | ) | ( | ) | ||||
| Long-term lease obligations | ||||||||
16. Non-controlling interests (NCI)
Non-controlling interests (“NCI”) represent the portion of net assets in consolidated entities that are not owned by the Company.
Anping was deregistered on 27 June, 2023.
The following table represent the non-controlling ownership interests and non-controlling interest balances reported in stockholder’s equity as of November 30, 2023 and May 31, 2023 respectively.
| 18 |
| Liangshan | Yibin | Xide | Taining | Anping | Total | |||||||||||||||||||||||||||||||||||||||||||
| 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | |||||||||||||||||||||||||||||||||||||
| NCI ownership interest | % | % | % | % | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||||||||
| NCI balances | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
The summarized financial information for subsidiary that has non-controlling interest which are material to the Company is provided below. This information is based on amounts before inter-company elimination.
Summarized statement of financial position as at
| Liangshan | Yibin | Xide | Taining | Anping | Total | |||||||||||||||||||||||||||||||||||||||||||
| 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | |||||||||||||||||||||||||||||||||||||
| Non-current assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||||||||||||||||||||||||
| Current liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Non-current liabilities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net assets | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| 19 |
| Liangshan | Yibin | Xide | Taining | Anping | Total | |||||||||||||||||||||||||||||||||||||||||||
| 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | 113023 | 053123 | |||||||||||||||||||||||||||||||||||||
| Net Assets | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Less: Zhuyi capital and additional paid-in capital | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Less: OCI | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Accumulated Deficits | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Accumulated Deficits attributable to NCI | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Plus: OCI attributable to NCI | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| NCI balances | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| 20 |
17. Reserves
Statutory reserve
| Foreign currency translation reserve |
The foreign currency translation reserve represents translation differences arising from translation of foreign currency financial statements into the Company’s reporting currency.
18. Quantitative and Qualitative Disclosure about Market Risks
| A. | Credit risk | |
| The Company’s deposits are with banks located in the PRC. They do not carry federal deposit insurance and may be subject to loss if the banks become insolvent. | ||
Accounts receivable are typically unsecured and are derived from revenues earned from customers in the PRC. The credit risk with respect to account receivables is mitigated by credit control policies we carry out with respect to our customers and our ongoing monitoring process of outstanding balances. | ||
| B. | Economic and political risks | |
| The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in the PRC. | ||
| The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things. | ||
| C. | Interest risk | |
| The Company is subject to interest rate risk when long term loans become due and require refinancing. |
19. Subsequent Events
The Company submitted Form DEF 14C for changing the Company’s name to Jingbo Technology, Inc. on December 14, 2023. To date, the Company is still awaiting approval from FINRA.
The Company has performed an evaluation of subsequent events through January 16, 2024, which was the date of the issuance of the consolidated financial statements, and determined that no events would have required adjustment or disclosure in the consolidated financial statements other than that discussed above.
| 21 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward looking statement notice
This section of this Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
Special Note Regarding Forward Looking Statements
In addition to historical information, this report contains forward-looking statements. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
Overview
On March 6, 2015, SavMobi Technology Inc. (“the Company”, was incorporated in the State of Nevada and established a fiscal year end of May 31. Initially the business platform was in providing application software to a global vendor platform to connect people to businesses and provide a new shopping experience.
On May 18, 2017, Lakwinder Singh Sidhu, the Company’s former Director and CEO, completed a transaction with New Reap Global Ltd., by which New Reap Global Ltd. acquired 32,500,000 shares of common stock, representing 68.4% ownership of the Company.
On March 19, 2018 New Reap Global transferred 250,000 restricted shares to Eng Wah Kung.
On May 10, 2018 and May 30, 2018, 16,959,684 were transferred to Arden Wealth and Trust. 2,000,000 shares are free trading from HongLing Shang, 559,684 restricted shares from New Reap Global, LTD and 2,400,000 each from Xuedong Zhang, Jingmei Jiang, Qianxian, Yulan Qi, Baoxin Song, Jianlong Wu.
On June 15, 2018 New Reap Global transferred 690,316 restricted shares to EMRD Global Holdings.
On June 26, 2018 New Reap Global transferred 3,000,000 restricted shares to FORTRESS ADVISORS, LLC and 3,000,000 to Baywall Inc.
On November 10, 2020, ten (10) shareholders of the Company, including affiliates Arden Wealth & Trust (Switzerland) AG and New Reap Global Limited, entered into stock purchase agreements with an aggregate of nineteen (19) non-U.S. accredited investors to sell an aggregate of 42,440,316 shares of common stock of the “Company, which represents approximately 68.6% of the issued and outstanding shares of common stock of the Company.
| 22 |
On June 8, 2022, three (3) shareholders of the Company, including Ma Hongyu, Ye Caiyun, and Li Wenzhe entered into stock purchase agreements with an aggregate of five (5) non-U.S. accredited investors (the “Purchase Agreements”) to sell an aggregate of 25,095,788 shares of common stock of the Company, which represents approximately 40.54% of the issued and outstanding shares of common stock of the Company, for consideration of $250,958.
The Purchase Agreements were fully executed and delivered on June 8, 2022. Zhang Yiping and Chen Xinxin acquired approximately 24.54% and 6.46% of the issued and outstanding shares of the Company, respectively, and the remaining purchasers each acquired less than 4.99% of the issued and outstanding shares. After the change of ownership, the Company’s current principal offices is located in Building B8, China Zhigu, Yinhu Street, Fuyang District, Hangzhou, Zhejiang, China.
| Purchasers | Shares acquired | % | ||||||
| Zhang Yiping | 15,189,500 | 24.54 | % | |||||
| Chen Xinxin | 4,000,000 | 6.46 | % | |||||
| Wang Yanfang | 2,000,000 | 3.23 | % | |||||
| Liu Chen | 2,000,000 | 3.23 | % | |||||
| Liu Ying | 1,906,288 | 3.08 | % | |||||
On December 15, 2022, Savmobi Technology, Inc. (“SVMB,”) entered into a share exchange agreement (the “Share Exchange Agreement”) with Intellegence Parking Group Limited (“Intellegence”), a Cayman Island company formed on June 29, 2022, Chen Xinxin (“Xinxin”), the officer and director, and control shareholder of Intelligence and the shareholders of Intelligence (the “Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of Intellegence was exchanged for 1,000,000,000 shares of common stock of SVMB issued to the Shareholders, in accordance with the Share Exchange Agreement. The former stockholders of Intellegence will acquire a majority of the issued and outstanding common stock as a result of the share exchange transaction. The transaction has been accounted for as a recapitalization of the Company, whereby Intellegence is the accounting acquirer.
Immediately after completion of such share exchange, SVMB will hold a total of 200,000,000 issued and outstanding shares of Intellegence. Zhang Guowei is the sole director of Intellegence Parking Group Limited.
Consequently, SVMB has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and Intellegence is now a wholly owned subsidiary.
Intellegence Parking Group Limited (“Intellegence Parking”) was incorporated on June 29, 2022 under the laws of Cayman Islands. It is controlled by Guowei Zhang, Xiujuan Chen, Hongwei Li and Chuchu Zhang. Intellegence Parking is an investment holding company.
Intellegence Parking (Hong Kong) Limited (“Intellegence HK”) was incorporated on July 20, 2022 under the laws of Hong Kong SAR. Intelligence HK is a wholly subsidiary of Intellegence Parking since incorporation and it is an investment holding company.
Huixin Zhiying (Hangzhou) Technology Co. (“Huixin”) was incorporated on October 24, 2022 under the laws of PRC. It is a wholly owned subsidiary of Intellegence HK since incorporation and it is an investment holding company.
Pursuant to the Business Operation Agreement entered into among Huixin WFOE and Zhejiang Jingbo Ecological Technology Co. The Company obtained control over these PRC domestic companies by entering into a series of contractual arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements include power of attorney, exclusive option agreement, exclusive business cooperation agreements, equity pledge agreements, and other operating agreements. These contractual agreements can be extended at the relevant PRC subsidiaries’ options prior to the expiration date. As a result, the Company maintains the ability to control these PRC domestic companies, is entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb all expected losses of these PRC domestic companies.
| 23 |
Zhejiang Jingbo Ecological Technology Co. is a PRC company which was formed on December 18, 2019 and is engaged in the business of smart parking application software and platform operations business. Zhang Guowei has been the Chairman of Zhejiang Jingbo Ecological Technology Co. since December 2019.
Hangzhou Zhuyi Technology Co. (“Hangzhou Zhuyi”) was incorporated under the laws of the PRC on November 13, 2017 with a capital of RMB 60,000,000. The majority shareholder at the time of establishment was Guowei Zhang. On April 1, 2020, Zhejiang Jingbo Ecological Technology became the sole shareholder of Hangzhou Zhuyi. Hangzhou Zhuyi is specialized in smart parking projects, smart parking mobile applications and cloud platform construction innovation.
Zhejiang Linglingyi Network Technology Co. (“Linglingyi”) was incorporated on November 17, 2018. Its sole director is Guowei Zhang. Hangzhou Zhuyi acquired 100% of Linglingyi on April 29. 2022. Its main businesses are smart parking projects and smart parking mobile applications.
Liangshan Tongfu Technology Co. (“Liangshan”) was incorporated on November 13, 2018. On September 29, 2022, Hangzhou Zhuyi entered in a share agreement with Hangzhou Kaai Technology Co. to purchase 26% of Liangshan’s shares. As a result, Hangzhou Zhuyi holds 67% of Liangshan. Liangshan is into smart parking projects and smart parking mobile applications businesses.
Zhuyi Technology (Anping) Co. (“Anping”) was incorporated on May 12, 2022, which is 90% owned by Hangzhou Zhuyi and it mainly focuses on smart parking projects and smart parking mobile applications. Anping was deregistered on 27 June, 2023.
Haikou Zhuyi Technology Co. (“Haikou”) was incorporated on May 9, 2022 which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Yibin Huibo Technology Co. (“Yibin”) was incorporated on July 4, 2019, which is 80% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Xide Zhuyi Technology Co. (“Xide”) was incorporated on October 14, 2021, which is 67% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Hubei Tongpo Parking Management Co. (“Tongpo”) was incorporated on November 4, 2020, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Zhuyi Technology (Taining) Co. (“Taining”) was incorporated on May 18, 2021, which is 72% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Zhongxiang Huji Town Zhuyi Techonology Co. (“Huji”) was incorporated on August 14, 2023, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.
Intellengence Parking Group Limited provides smart parking projects, smart parking mobile applications and cloud platform construction innovation through its consolidated subsidiaries, variable interest entities (“VIE”s) and VIE’s subsidiaries.
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Corporate Structure
Result of Operations
For the three months ended November 30, 2023 and 2022
Revenue
The Company generated $386,855 for the three months ended November 30, 2023 compared to $691,489 for the three months ended November 30, 2022. Revenue mainly comprised of parking fee and sales of parking equipment. The decrease in revenue for the three months ended November 30, 2023 was mainly due to a decline in parking fee revenue as we were unable to renew some of our contracts with landlords.
Cost of Revenues
During the three months ended November 30, 2023, the Company incurred $523,272 in cost of revenue compared to $887,865 during the three months ended November 30, 2022. Cost of revenues mainly consisted of rent, depreciation and salary expenses. The decrease in costs of revenues was primarily contributed by a decrease in rent and salary expenses.
Gross loss
Gross loss was $136,417 for the three months ended November 30, 2023 compared to gross loss of $196,376 for the three months ended November 30, 2022. The gross profit for the three months ended November 30, 2023 was generated due to the decrease in cost of revenues.
Selling and marketing expenses
During the three months ended November 30, 2023, we incurred selling and marketing expenses of $62,368 compared to $117,136 during the three months ended November 30, 2022. Selling and marketing expenses mainly included salary expenses, travelling expenses and advertisement expenses. The decrease in selling and marketing expenses was primarily caused by a decrease in salary expenses and travelling expenses.
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General and administrative expenses
During the three months ended November 30, 2023, we incurred general and administrative expenses of $1,040,838 compared to $720,663 during the three months ended November 30, 2022. General and administrative expenses mainly consisted of salary expenses and professional fees. The increase in general and administrative expenses was mainly contributed by an increase in professional fees.
Research and development expenses
During the three months ended November 30, 2023, we incurred research and development expenses of $100,313 compared to $261,258 for the three months ended November 30, 2022. R&D expenses mainly comprised of salary expenses. The decrease in R&D expenses was primarily due to a decrease in salary expenses.
Net loss
As a result of foregoing, the net loss for the three months ended November 30, 2023 and 2022 was $1,141,283 and $1,297,545, respectively.
For the six months ended November 30, 2023 and 2022
Revenue
The Company generated $788,759 for the six months ended November 30, 2023 compared to $1,487,868 for the six months ended November 30, 2022. Revenue mainly comprised of parking fee and sales of parking equipment. The decrease in revenue for the six months ended November 30, 2023 was mainly due to a decline in parking fee revenue as we were unable to renew some of our contracts with landlords.
Cost of Revenues
During the six months ended November 30, 2023, the Company incurred $1,146,680 in cost of revenue compared to $2,084,574 during the six months ended November 30, 2022. Cost of revenues mainly consisted of rent, depreciation and salary expenses. The decrease in costs of revenues was primarily contributed by a decrease in rent and salary expenses.
Gross loss
Gross loss was $357,921 for the six months ended November 30, 2023 compared to $596,706 for the six months ended November 30, 2022. The decrease in gross loss for the six months ended November 30, 2023 was due to the significant decrease in cost of revenues.
Selling and marketing expenses
During the six months ended November 30, 2023, we incurred selling and marketing expenses of $160,853 compared to $300,585 during the six months ended November 30, 2022. Selling and marketing expenses mainly included salary expenses, travelling expenses and advertisement expenses. The decrease in selling and marketing expenses was primarily caused by a decrease in salary expenses and travelling expenses.
General and administrative expenses
During the six months ended November 30, 2023, we incurred general and administrative expenses of $2,119,238 compared to $2,323,961 during the six months ended November 30, 2022. General and administrative expenses mainly consisted of salary expenses and professional fees. The decrease in general and administrative expenses was mainly contributed by a decrease in salary expenses.
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Research and development expenses
During the six months ended November 30, 2023, we incurred research and development expenses of $198,219 compared to $267,779 for the six months ended November 30, 2022. R&D expenses mainly comprised of salary expenses. The decrease in R&D expenses was primarily due to a decrease in salary expenses.
Net loss
As a result of foregoing, the net loss for the six months ended November 30, 2023 and 2022 was $2,673,338 and $3,554,684, respectively.
Capital Resources and Liquidity
| Working capital | November 30, 2023 | May 31, 2023 | ||||||
| Total current assets | $ | 3,407,538 | $ | 3,117,996 | ||||
| Total current liabilities | 9,767,680 | 3,902,103 | ||||||
| Working capital deficit | $ | (6,360,142 | ) | $ | (784,107 | ) | ||
Total deficit for the six months ended November 30, 2023 was $6,360,142 compared to $784,107 for the year ended May 31, 2023. To date, we have financed our operations primarily from long-term loans.
Six months ended November 30, 2023 and 2022
| Six Months Ended November 30, | ||||||||
| 2023 | 2022 | |||||||
| Net cash provided by/(used in) operating activities | $ | 1,188,385 | $ | (947,514 | ) | |||
| Net cash used in investing activities | (95,558 | ) | (988,231 | ) | ||||
| Net cash (used in)/provided by financing activities | (1,519,554 | ) | 2,000,563 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (4,500 | ) | (7,952 | ) | ||||
| Net increase/(decrease) in cash and cash equivalents | (431,227 | ) | 56,866 | |||||
| Cash and cash equivalents at the beginning balances | 493,978 | 108,787 | ||||||
| Cash and cash equivalents at the ending balances | $ | 62,751 | $ | 165,653 | ||||
Cash Provided by/(Used in) Operating Activities
For the six months ended November 30, 2023, net cash provided by operating activities was $1,188,385, primarily consisting of a net loss of $2,673,338, an increase in prepaid expenses and other current assets of $602,210 and an increase in accounts payable and other current liabilities of $3,897,562, compared to net cash used in operating activities of $947,514 for the six months ended November 30, 2022, mainly comprised of a net loss of $3,554,684 and depreciation and amortization expenses of $947,123 and an increase in accounts payable and other current liabilities of $2,206,691.
Cash Used in Investing Activities
For the six-month periods ended November 30, 2023, net cash used in investing activities was $95,558 mainly including proceeds from sale of property and equipment of $134,547 and a purchase of property and equipment of $198,902, compared to net cash used in investing activities was $988,231 for the six months ended November 30, 2022, mainly consisted of a purchase of property and equipment of $1,049,086.
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Cash (Used in)/Provided by Financing Activities
For the six months ended November 30, 2023, net cash used in financing activities was $1,519,554 mainly comprising repayments of long-term loans of $3,472,271 and proceeds from short-term borrowings of $1,389,275. Net cash provided by financing activities was $2,000,563 for the six months ended November 30, 2022, consisting of advanced from related parties and long-term loans.
Going Concern Consideration
The ability to continue as a going concern is dependent upon long-term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on long term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-balance sheet arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with U.S. GAAP actual results could differ from our estimates and such differences could be material
Foreign Currency Exchange Rates
We are not materially affected by foreign currency exchange rates. However, it is difficult to predict how market forces, or PRC or U.S. government policy, might affect our operations. There remains significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result in a further and more significant change in the value of the RMB against the U.S. dollar. Limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. So far, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we potentially may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited, and we may not be able to successfully hedge our exposure at all. Furthermore, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a- 15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, to allow timely decisions regarding required disclosure as a result of continuing weaknesses in our internal control over financial reporting.
As disclosed in our Annual Report on Form 10-K for the year ended May 31, 2023, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of November 30, 2023, due to: ( 1) lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of director; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. Management believes the above weakness constitute material weaknesses in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a- 15(f) or 15d- 15(f)) during the period covered by this report, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Currently we are not involved in any pending litigation or legal proceeding.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2. Unregistered Sales of Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
None
Item 5. Other Information.
None
Item 6. Exhibits.
| 31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer | |
| 31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer | |
| 32.1 | Section 1350 Certification of Chief Executive Officer | |
| 32.2 | Section 1350 Certification of Chief Financial Officer | |
| 101 | Interactive data files pursuant to Rule 405 of Regulation S-T. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SavMobi Technology Inc. | ||
| (Registrant) | ||
| Date: January 16, 2024 | By: | /s/ Zhang Guowei |
| Zhang Guowei | ||
| Chief Executive Officer | ||
| Chief Financial Officer | ||
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