UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
COMMISSION FILE NO. 333-167130
FLYWHEEL ADVANCED TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
6770
(Primary Standard Industrial Classification Code Number)
27-2473958
(IRS Employer Identification No.)
123 West Nye Lane
Suite 455
Carson City, NV 89706
852-6686-0563
(Address and telephone number of registrant’s executive office)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| None | | N/A | | N/A |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ 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. Yes ☐ 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 Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’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. Yes ☒ 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of March 28, 2024, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $643,714 based on a closing price of $0.07 as of such date. Solely for purposes of this disclosure, shares of common stock held by executive officers, and beneficial holders of 10% or more of the outstanding common stock of the registrant as of such date have been excluded because such persons may be deemed to be affiliates.
As of January 14, 2025, the Registrant had 29,591,164 shares of common stock issued and outstanding.
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS
As used in this annual report, the terms “we”, “us”, “our”, “the Company”, mean Flywheel Advanced Technology, Inc. unless otherwise indicated.
Cautionary Note Regarding Forward Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our ability to locate and acquire an operating business and the resources and efforts we intend to dedicate to such an endeavor, our development of a viable business plan and commencement of operations, and our ability to locate sources of capital necessary to commence operations or otherwise meet our business needs and objectives. All statements other than statements of historical facts contained in this report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.
Corporate History
Flywheel Advanced Technology, Inc. (“FWFW” or the “Company”), formerly known as Pan Global Corp., was incorporated in Nevada on April 30, 2010, under the name Savvy Business Support, Inc. (“Savvy”). Initially, Savvy provided general business services and support to startups, small and medium-sized businesses, individuals, and other organizations but was categorized as a shell company.
On April 25, 2013, Savvy entered into a Stock Exchange Agreement (the “Pan Asia Exchange Agreement”) with Pan Asia Infratech Corp. (“Pan Asia”), a Nevada corporation incorporated on July 13, 2012. Upon consummation of the Pan Asia Exchange Agreement on April 26, 2013, Pan Asia became a wholly owned subsidiary of Savvy, and its business operations became those of the Company. Following this transaction, Savvy amended its articles of incorporation to change its name to Pan Global Corp.
On July 16, 2020, the Clark County, Nevada court appointed Custodian Ventures LLC as custodian of Pan Global Corp. (Case Number: A-20-816264-B). David Lazar was subsequently appointed as the Company’s CEO, President, Secretary, CFO, and Chairman of the Board. On October 8, 2020, the Company restructured its share capital, converting 7,100,000 shares of preferred stock into shares of common stock and canceling the original shares of preferred stock.
In November 2020, the Company designated 25,000,000 new preferred shares, including 10,000,000 Preferred A-1 Shares, convertible to 162 shares of common stock. These shares were awarded to Custodian Ventures for services rendered.
On May 5, 2021, the Nevada court (Case No. A-20-816264-B) terminated the custodianship, releasing the Company from unasserted claims and debts arising before the termination date.
On July 13, 2021, a Stock Purchase Agreement transferred control of the Company to Sparta Universal Industrial Ltd. (“Sparta”), making it the majority shareholder. Following the transfer, David Lazar resigned from all his positions, and the Company appointed new officers and directors, including Tang Siu Fung as President, Chief Executive Officer, and Chairman of the Board and Cheng Sin Yi as Secretary and Treasurer.
In November 2021, the Company’s name was changed to Flywheel Advanced Technology, Inc., with its trading symbol updated to FWFW. On July 14, 2022, the Company implemented a 1:100 reverse stock split reducing the issued and outstanding common stock to 1,551,550 shares.
On September 15, 2022, the Company filed an Amendment (the “Preferred Stock Amendment”) to the Certificate of Designation for its Preferred Stock with the Secretary of State of Nevada. This amendment, approved by the Board of Directors and Sparta, the sole holder of all 10,000,000 shares of issued and outstanding Preferred Stock, revised the conversion rate to allow each share of Preferred Stock to be convertible into 1.62 shares of common stock. This change ensured compliance with the Certificate of Designation, which stipulated that the conversion ratio would not be reduced by a stock split or other capitalization.
On the same date, Sparta converted all 10,000,000 shares of Preferred Stock into 16,200,000 shares of common stock, bringing its ownership interest to approximately 60.7% of the total issued and outstanding shares.
On November 30, 2022, FWFW incorporated Blue Print Global, Inc. (“Blue Print”) in the British Virgin Islands to establish operations for sourcing and selling warehouse patrol robots. FWFW holds 70% of Blue Print, with the remaining 30% held equally by two unrelated individuals. On December 7, 2022, Blue Print entered into an Agency Agreement with International Supply Chain Alliance Co., Ltd. of Hong Kong (“ISCA”), appointing ISCA as its authorized agent for distributing warehouse patrol robots in China. The agreement, valid for five years, renews automatically unless either party provides a written non-renewal notice at least 30 days before the expiration date.
On December 15, 2022, the Company executed a Share Exchange Agreement (the “Share Exchange Agreement”) with QBS System Limited (“QBS System”), a Hong Kong-based company, and its shareholder, QBS Flywheel Limited, an Australian company (“QBS Flywheel”). On March 22, 2023, QBS Flywheel transferred all QBS System shares to the Company in exchange for 8,939,600 newly issued shares of FWFW common stock. QBS System became a wholly owned subsidiary of the Company, with no changes to the Company’s officers or directors.
Following the QBS Acquisition, on March 22, 2023, Sparta sold 4,764,547 shares of its common stock to 29 investors under Regulation S of the Securities Act of 1933, as amended (the “Securities Act”) for $12,975,348.18, reducing its beneficial interest from 16,200,000 shares of common stock to 11,435,453 shares of common stock, representing 40.64% ownership of FWFW’s outstanding common stock.
On May 24, 2023, the Company issued 1,450,000 shares of common stock to each of Sau Ping Leung and So Ha Tsang, who collectively own 30% of Blue Print.
On September 18, 2023, Ho Yiu Chung resigned as a director of FWFW and Blue Print. On the same day, Blue Print appointed Tang Siu Fung as a director, replacing Ho Yiu Chung.
In July 2024, FWFW executed a Share Purchase Agreement with Mericone Company Limited, transferring its subsidiary, Mega Fortune Company Limited, in exchange for a 9.38% minority interest in Elison Virtus Company Limited (“Elison”). This decision was supported by a valuation reports from Wise Tech Consulting and Appraisal Services dated July 4, 2024, estimating the fair values of Flywheel Financial and QBS System as HKD601,000,000 and HKD56,360,000, respectively. Elison wholly owns Flywheel Financial Strategy (Hong Kong) Company Limited (“Flywheel Financial”), a wealth management services provider. Following QBS Acquisition, FWFW became a “shell company” under SEC Rule 405 due to the cessation of active business operations.
On July 30, 2024, Tang Siu Fung notified the Company of his resignation from all his positions with the Company, including sole director, Chief Executive Officer and President, effective as of the close of business on July 30, 2024.
On August 2, 2024, Cheng Sin Yi notified the Company of her resignation from all her positions with the Company, including Secretary and Treasurer, effective as of the close of business on August 2, 2024
On August 5, 2024, Luk Yuen Leung was appointed Chief Executive Officer, President, and sole director of the Company. As a result of his appointment as Chief Executive Officer and President, Mr. Leung was designated as the Company’s “Principal Executive Officer”, “Principal Financial Officer” and “Principal Accounting Officer” for SEC reporting purposes. In August 2024, Luk Yuen Leung also replaced Tang Siu Fung as the sole director and officer of Blue Print.
Shell Company
Under SEC Rule 405, the Company qualifies as a “shell company” due to its nominal assets and lack of significant operations. Management has no plans to develop a market for the Company’s securities, either debt or equity, until a successful business combination is completed or an operating business is developed. The Company will continue to comply with the periodic reporting requirements of the Act as long as it remains subject to them.
The Company’s primary objective for the next 12 months and beyond is to achieve long-term growth through a business combination or the successful development of its operating business. As of the date of this report, the Company has not entered into any definitive agreements or specific discussions with potential business combination candidates. The Company has unrestricted flexibility in seeking, analyzing, and participating in potential business opportunities.
Potential Acquisition Structure
Should the Company pursue an acquisition—for which no assurances can be given—the structure of the transaction will depend on the specific opportunity, the needs of the Company, and the negotiating strength of all parties involved. Possible structures include leases, purchase and sale agreements, licenses, joint ventures, and other contractual arrangements. The Company may participate directly or indirectly through partnerships, corporations, or other forms of organization. Implementing such structures could involve mergers, consolidations, or reorganizations, and the Company may not necessarily emerge as the surviving entity.
Following a reorganization, it is likely that the Company’s current management, board of directors, and stockholders will no longer hold a majority of voting shares. Existing management and directors may resign, and new management and directors may be appointed without a stockholder vote.
To facilitate an acquisition, the Company may issue common stock or other securities. While terms cannot be predicted, acquisitions structured as “tax-free” reorganizations under the Internal Revenue Code often require issuing controlling interest (80% or more) of the combined entity’s stock to the acquired company’s stockholders. This could significantly dilute the equity of current stockholders. Such issuances may coincide with the sale or transfer of controlling interest by principal stockholders. Disclosure to stockholders about a target company will only be provided if required by applicable law or regulation. The Company will file a current report on Form 8-K within four business days of a business combination that results in the Company ceasing to be a shell company. This report will include comprehensive details of the target company, including audited financial statements.
It is anticipated that any new securities issued in connection with a reorganization would rely on exemptions from registration under federal and state securities laws. In some cases, the Company may agree to register these securities at the time of the transaction or under specific conditions. The issuance of significant additional securities may depress any trading market that develops for the Company’s securities.
Stockholder and Management Considerations
Post-reorganization, the majority stockholder may no longer control the majority of voting securities. The sole director of the Company may resign, and new directors may be appointed by the majority stockholder. In cases involving statutory mergers or consolidations, stockholder approval may be required, potentially causing delays and additional costs. Management may seek to structure transactions to avoid the necessity of stockholder approval.
The Company will only proceed with a business opportunity after the negotiation and execution of a written agreement. Such agreements will typically include representations and warranties, default provisions, closing conditions, cost-sharing terms, remedies, and other customary provisions. Investigations, negotiations, and execution of agreements will likely incur substantial costs for legal, accounting, and other professional services. If an opportunity is abandoned, related costs may not be recoverable.
Search for Business Opportunities
The Company intends to identify potential business combinations by contacting affiliates, lenders, investment banks, private equity firms, consultants, and attorneys. The number of contacts made will depend on the opportunities presented. Management anticipates dedicating substantial time and resources to investigating and negotiating these opportunities. Failure to consummate a transaction may result in the loss of related costs.
Management Time and Resources
The Company’s sole officer and director is engaged in external business activities and anticipates devoting limited time to the Company until a suitable business opportunity is identified. The time spent on Company matters will vary based on need, but management intends to fulfill its fiduciary duties. No significant changes to the number of employees are expected, apart from those resulting from a business combination.
Competition and Market Conditions
We face significant competition in our efforts to identify and pursue a viable business venture. Our primary competitors are expected to include other organizations established and funded for similar purposes, such as small venture capital firms, blank check companies, and high-net-worth investors—many of which possess substantially greater financial and operational resources than we do.
Given our limited financial and human resources, we are at a competitive disadvantage relative to many of these entities in acquiring an operating business or assets essential to initiating operations in a new industry. Furthermore, the economic downturn resulting from the coronavirus pandemic has intensified competition, as many venture capital firms and individual investors are seeking to acquire businesses at discounted valuations. This heightened competition presents additional challenges to securing a business. We anticipate these conditions will persist until the economy fully recovers.
Even if we successfully acquire a business or assets to commence operations, we expect to encounter heightened barriers to entry in the chosen marketplace. These challenges may stem from reduced demand, increased raw material costs, or other economic forces beyond our control.
Regulation
As of the date of this report, we are required to file reports with the Securities and Exchange Commission (“SEC”) in compliance with Section 13 of the Securities Exchange Act of 1934 (the “Exchange Act”).
The direction our management ultimately pursues, along with any future business acquisitions, may subject us to additional laws or regulations. These may include requirements that necessitate significant compliance expenditures, such as the increasing regulation of privacy at the state level. Such obligations could divert considerable human and financial resources toward compliance efforts, potentially adversely affecting our future operating results.
Employees
As of the date of this report, we do not have full time employees.
Available Information
Our principal executive offices and corporate headquarters are located at 123 West Nye Lane, Suite 455, Casron City, NV 89706.
We do not currently have a website. You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as other reports relating to us that are filed with, or furnished to, the SEC free of charge on the SEC’s website (www.sec.gov) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
ITEM 1A. RISK FACTORS
Risks Relating to Our Business and Financial Condition
We currently have no operations, and investors therefore have no basis on which to evaluate the Company’s future prospects.
We currently have no operations and will be reliant upon a merger with or acquisition of an operating business to commence operations and generate revenue. Because we have no operations and have not generated revenues, investors have no basis upon which to evaluate our ability to achieve our business objective of locating and completing a business combination with a target business. We have no current arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete a business combination in a reasonable timeframe, on reasonable terms or at all. If we fail to complete a business combination as planned, we will not generate any operating revenues.
We may face difficulties or delays in our search for a business combination, and we may not have access to sufficient capital to consummate a business combination.
We may face difficulty identifying a viable business opportunity or negotiating or paying for any resulting business combination. Economic factors that are beyond our control, including the COVID-19 pandemic and consequent economic downturn, as well as increased competition for acquisitions of operating entities that we expect to encounter as a result thereof, may hinder our efforts to locate and/or obtain a business that is suitable for our business goals at a price we can afford and on terms that will enable us to sufficiently grow our business to generate value to our shareholders. We have limited capital, and we may not be able to take advantage of any available business opportunities on favorable terms or at all due to the limited availability of capital. There can be no assurance that we will have sufficient capital to provide us with the necessary funds to successfully develop and implement our plan of operation or acquire a business we deem to be appropriate or necessary to accomplish our objectives, in which case we may be forced to terminate our business plan and your investment in the Company could become worthless.
If we are not successful in acquiring a new business and generating material revenues, investors will likely lose their investment.
If we are not successful in developing a viable business plan and acquiring a new business through which to implement it, our investors’ entire investment in the Company could become worthless. Even if we are successful in combining with or acquiring the assets of an operating entity, we can provide no assurances that the Company will be able to generate significant revenue therefrom in the short-term or at all or that investors will derive a profit from their investment. If we are not successful, our investors will likely lose their entire investment.
If we cannot manage our growth effectively, we may not become profitable.
Businesses, including development stage companies such as ours and/or any operating business or businesses we may acquire, often grow rapidly, and tend to have difficulty managing their growth. If we are able to acquire an operating business, we will likely need to expand our management team and other key personnel by recruiting and employing experienced executives and key employees and/or consultants capable of providing the necessary support.
We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could cause us to lose money, and your investment could be lost.
Because we have limited capital, we may need to raise additional capital in the future by issuing debt or equity securities, the terms of which may dilute our current investors and/or reduce or limit their liquidation or other rights.
We may require additional capital to acquire a business. We may not be able to obtain additional capital when required. Future business development activities, as well as administrative expenses such as salaries, insurance, general overhead, legal and compliance expenses, and accounting expenses will require a substantial amount of additional capital. The terms of securities we issue in future capital raising transactions may be more favorable to new investors, and may include liquidation preferences, superior voting rights or the issuance of other derivative securities, which could have a further dilutive effect on or subordinate the rights of our current investors. Any additional capital raised through the sale of equity securities will likely dilute the ownership percentage of our shareholders. Additionally, any debt securities we issue would likely create a liquidation preference superior that of our current investors and, if convertible into shares of Common Stock, would also pose the risk of dilution.
We may be unable to obtain necessary financing if and when required.
Our ability to obtain financing, if and when necessary, may be impaired by such factors as the capital markets (both in general and in the particular industry or industries in which we may choose to operate), our limited operating history and current lack of operations, the national and global economies, and the condition of the market for microcap securities. Further, economic downturns such as the current global depression caused by the COVID-19 pandemic may increase our requirements for capital, particularly if such economic downturn persists for an extended period of time or after we have acquired an operating entity, and may limit or hinder our ability to obtain the funding we require. If the amount of capital we are able to raise from financing activities, together with any revenues we may generate from future operations, is not sufficient to satisfy our capital needs, we may be required to discontinue our development or implementation of a business plan, cancel our search for business opportunities, cease our operations, divest our assets at unattractive prices or obtain financing on unattractive terms. If any of the foregoing should happen, our shareholders could lose some or all of their investment.
Because we are still developing our business plan, we do not have any agreement for a business combination.
We have no current arrangement, agreement or understanding with respect to engaging in a business combination with any specific entity. We may not be successful in identifying and evaluating a suitable acquisition candidate or in consummating a business combination. We are neutral as to what industry or segment for any target company. We have not established specific metrics and criteria we will look for in a target company, and if and when we do we may face difficulty reaching a mutual agreement with any such entity, including in light of market trends and forces beyond our control. Given our early-stage status, there is considerable uncertainty and therefore inherent risk to investors that we will not succeed in developing and implementing a viable business plan.
The COVID-19 pandemic could materially adversely affect our financial condition, future plans and results of operations.
This COVID-19 pandemic has had a significant adverse effect on the economy in the United States and on most businesses. The Company is not able to predict the ultimate impact that COVID -19 will have on its business; however, if the pandemic and government action in response thereto impose limitations on our operations or result in a prolonged economic recession or depression, the Company’s development and implementation of its business plan and our ability to commence and grow our operations, as well as our ability to generate material revenue therefrom, will be hindered, which would have a material negative impact on the Company’s financial condition and results of operations.
Because we are dependent upon Luk Yuen Leung, our Chief Executive Officer who oversees our Company, the loss of him could adversely affect our plan and results of operations.
Luk Yuen Lueng, manages the Company and is presently evaluating a viable plan for our future operations. We will rely on his judgment in connection with selecting a target company and the terms and structure of any resulting business combination. The loss of our Chief Executive Officer could delay or prevent the achievement of our business objectives, which could have a material adverse effect upon our results of operations and financial position.
In addition, although not likely, the officers and directors of an acquisition candidate may resign upon completion of a combination with their business. The departure of a target’s key personnel could negatively impact the operations and prospects of our post-combination business. The role of a target’s key personnel upon the completion of the transaction cannot be ascertained at this time. Although we contemplate that certain or all members of a target’s management team may remain associated with the target following a change of control thereof, there can be no assurance that all of such target’s management team will decide to remain in place. The loss of key personnel, either before or after a business combination and including management of either us or a combined entity could negatively impact the operations and profitability of our business.
We may be deemed to be an investment company under the Investment Company Act of 1940.
Currently, our only significant asset are the shares of Elison Virtus Company Limited. Accordingly, we may be deemed to be an investment company under the Investment Company Act and as such, we would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or modify our investments or organizational structure or our contract rights to fall outside the definition of an investment company. Registering as an investment company could, among other things, materially adversely affect our financial condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent of us and otherwise will subject us to additional regulation that will be costly and time-consuming.
Risks Related to a Potential Business Acquisition
We may encounter difficulty locating and consummating a business combination, including as a result of the competitive disadvantages we have.
We expect to face intense competition in our search for a revenue-producing business to combine with or acquire. Given the current economic climate, venture capital firms, larger companies, blank check companies such as special purpose acquisition companies and other investors are purchasing operating entities or the assets thereof in high volumes and at relatively discounted prices. These parties may have greater capital or human resources than we do and/or more experience in a particular industry within which we choose to search. Most of these competitors have a certain amount of liquid cash available to take advantage of favorable market conditions for prospective business purchaser such as those caused by the recent pandemic. Any delay or inability to locate, negotiate and enter into a business combination as a result of the relative illiquidity of our current asset or other disadvantages we have relative to our competitors could cause us to lose valuable business opportunities to our competitors, which would have a material adverse effect on our business.
We may expend significant time and capital on a prospective business combination that is not ultimately consummated.
The investigation of each specific target business and any subsequent negotiation and drafting of related agreements, SEC disclosure and other documents will require substantial amounts of management’s time and attention and material additional costs in connection with outsourced services from accountants, attorneys, and other professionals. We will likely expend significant time and resources searching for, conducting due diligence on, and negotiating transaction terms in connection with a proposed business combination that may not ultimately come to fruition. In such event, all of the time and capital resources expended by the Company in such a pursuit may be lost and unrecoverable by the Company or its shareholders. Unanticipated issues which may be beyond our control or that of the seller of the applicable business may arise that force us to terminate discussions with a target company, such as the target’s failure or inability to provide adequate documentation to assist in our investigation, a party’s failure to obtain required waivers or consents to consummate the transaction as required by the inability to obtain the required audits, applicable laws, charter documents and agreements, the appearance of a competitive bid from another prospective purchaser, or the seller’s inability to maintain its operations for a sufficient time to allow the transaction to close. Such risks are inherent in any search for a new business and investors should be aware of them before investing in an enterprise such as ours.
Conflicts of interest may arise between us and our shareholders, directors, or management, which may have a negative impact on our ability to consummate a business combination or favorable terms or generate revenue.
Our Chief Executive Officer, Mr. Lueng, is not required to commit his full time to our affairs, which may result in a conflict of interest in allocating his time between managing the Company and other businesses in which he is or may be involved. We do not intend to have any employees prior to the consummation of a business combination. Mr. Lueng is not obligated to contribute any specific number of hours to our affairs, and he may engage in other business endeavors while he provides consulting services to the Company. If any of his other business affairs require him to devote substantial amounts of time to such matters, it could materially limit his ability to devote his time and attention to our business which could have a negative impact on our ability to consummate a business combination or generate revenue.
It is possible that we obtain an operating company in which a director or officer of the Company has an ownership interest in or that he or she is an officer, director, or employee of. If we do obtain any business affiliated with an officer or director, such business combination may be on terms other than what would be arrived at in an arms-length transaction. If any conflict of interest arises, it could adversely affect a business combination or subsequent operations of the Company, in which case our shareholders may see diminished value relative to what would have been available through a transaction with an independent third party.
We may engage in a business combination that causes tax consequences to us and our shareholders.
Federal and state tax consequences will, in all likelihood, be a significant factor in considering any business combination that we may undertake. Under current federal law, such transactions may be subject to significant taxation to the buyer and its shareholders under applicable federal and state tax laws. While we intend to structure any business combination so as to minimize the federal and state tax consequences to the extent practicable in accordance with our business objectives, there can be no assurance that any business combination we undertake will meet the statutory or regulatory requirements of a tax-free reorganization or similar favorable treatment or that the parties to such a transaction will obtain the tax treatment intended or expected upon a transfer of equity interests or assets. A non-qualifying reorganization, combination or similar transaction could result in the imposition of significant taxation, both at the federal and state levels, which may have an adverse effect on both parties to the transaction, including our shareholders.
It is unlikely that our shareholders will be afforded any opportunity to evaluate or approve a business combination.
It is unlikely that our shareholders will be afforded the opportunity to evaluate and approve a proposed business combination. In most cases, business combinations do not require shareholder approval under applicable law, and our Articles of Incorporation and Bylaws do not afford our shareholders with the right to approve such a transaction. Further, two shareholder sown 68.92% of our outstanding Common Stock. Accordingly, our shareholders will be relying almost exclusively on the judgement of our board of directors (“Board”) and Chief Executive Officer and any persons on whom they may rely with respect to a potential business combination. In order to develop and implement our business plan, may in the future hire lawyers, accountants, technical experts, appraisers, or other consultants to assist with determining the Company’s direction and consummating any transactions contemplated thereby. We may rely on such persons in making difficult decisions in connection with the Company’s future business and prospects. The selection of any such persons will be made by our Board, and any expenses incurred or decisions made based on any of the foregoing could prove to be adverse to the Company in hindsight, the result of which could be diminished value to our shareholders.
Because our search for a business combination is not presently limited to a particular industry, sector or any specific target businesses, prospective investors will be unable to evaluate the merits or risks of any particular target business’s operations until such time as they are identified and disclosed.
We are still determining the Company’s business plan, and we may seek to complete a business combination with an operating entity in any number of industries or sectors. Because we have not yet entered into any letter of intent or agreement to acquire a particular business, prospective investors currently have no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition, prospects or other metrics or qualities they deem appropriate in considering to invest in the Company. Further, if we complete a business combination, we may be affected by numerous risks inherent in the operations of the business we acquire. For example, if we acquire a financially unstable business or an entity lacking an established operating history, we may be affected by the risks inherent in the business and operations of a new business or a development stage entity. Although our management intends to evaluate and weigh the merits and risks inherent in a particular target business and make a decision based on the Company and its shareholders’ interests, there can be no assurance that we will properly ascertain or assess all the significant risks inherent in a target business, that we will have adequate time to complete due diligence or that we will ultimately acquire a viable business and generate material revenue therefrom. Furthermore, some of these risks may be outside of our control and leave us with no ability to reduce the likelihood that those risks will adversely impact a target business or mitigate any harm to the Company caused thereby. Should we select a course of action, or fail to select a course of action, that ultimately exposes us to unknown or unidentified risks, our business will be harmed and you could lose some or all of your investment.
Past performance by our management and their affiliates may not be indicative of future performance of an investment in us.
While our Chief Executive Officer has prior experience in advising businesses, his past performance, the performance of other entities or persons with which he is involved, or the performance of any other personnel we may retain in the future will not necessarily be an indication of either (i) that we will be able to locate a suitable candidate for our initial business combination or (ii) the future operating results of the Company including with respect to any business combination we may consummate. You should not rely on the historical record of him or any other of our personnel or their affiliates’ performance as indicative of our future performance or that an investment in us will be profitable. In addition, an investment in the Company is not an investment in any entities affiliated with our management or other personnel. While management intends to endeavor to locate a viable business opportunity and generate shareholder value, there can be no assurance that we will succeed in this endeavor.
We may seek business combination opportunities in industries or sectors that are outside of our management’s area of expertise.
We will consider a business combination outside of our management’s area of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive opportunity for the Company. Although management intends to endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all the significant risks, or that we will accurately determine the actual value of a prospective operating entity to acquire. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s ability to evaluate and make decisions on behalf of the Company may be limited, or we may make material expenditures on additional personnel or consultants to assist management in the Company’s operations. Investors should be aware that the information contained herein regarding the areas of our management’s expertise will not necessarily be relevant to an understanding of the business that we ultimately elect to acquire. As a result, our management may not be able to adequately ascertain or assess all the significant risks or strategic opportunities that may arise. Accordingly, any shareholders in the Company following a business combination could suffer a reduction in the value of their shares, and any resulting loss will likely not be recoverable.
We may attempt to complete a business combination with a private target company about which little information is available, and such target entity may not generate revenue as expected or otherwise by compatible with us as expected.
In pursuing our search for a business to acquire, we will likely seek to complete a business combination with a privately held company. Very little public information generally exists about private companies, and the only information available to us prior to making a decision may be from documents and information provided directly to us by the target company in connection with the transaction. Such documents or information or the conclusions we draw therefrom could prove to be inaccurate or misleading. As such, we may be required to make our decision on whether to pursue a potential business combination based on limited, incomplete, or faulty information, which may result in our subsequent operations generating less revenue than expected, which could materially harm our financial condition and results of operations.
Our ability to assess the management of a prospective target business may be limited and, as a result, we may acquire a target business whose management does not have the skills, qualifications, or abilities to enable a seamless transition, which could, in turn, negatively impact our results of operations.
When evaluating the desirability of a potential business combination, our ability to assess the target business’s management may be limited due to a lack of time, resources, or information. Our management’s assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities expected. Further, in most cases the target’s management may be expected to want to manage us and replace our Chief Executive Officer. Should the target’s management not possess the skills, qualifications, or abilities necessary to manage a public company or assist with their former entity’s merger or combination into ours, the operations and profitability of the post-acquisition business may be negatively impacted and our shareholders could suffer a reduction in the value of their shares.
Any business we acquire will likely lack diversity of operations or geographical reach, and in such case we will be subject to risks associated with dependence on a single industry or region.
Our search for a business will likely be focused on entities with a single or limited business activity and/or that operate in a limited geographic area. While larger companies have the ability to manage their risk by diversifying their operations among different industries and regions, smaller companies such as ours and the entities we anticipate reviewing for a potential business combination generally lack diversification, in terms of both the nature and geographic scope of their business. As a result, we will likely be impacted more acutely by risks affecting the industry or the region in which we operate than we would if our business were more diversified. In addition to general economic risks, we could be exposed to natural disasters, civil unrest, technological advances, and other uncontrollable developments that will threaten our viability if and to the extent our future operations are limited to a single industry or region. If we do not diversify our operations, our financial condition and results of operations will be at risk.
Changes in laws or regulations, or a failure to comply with the laws and regulations applicable to us, may adversely affect our business, ability to negotiate and complete a business combination, and results of operations.
We are subject to laws and regulations enacted by federal, state, and local governments. In addition to SEC regulations, any business we acquire in the future may be subject to substantial legal or regulatory oversight and restrictions, which could hinder our growth and expend material amounts on compliance. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application by courts and administrative judges may also change from time to time, and any such changes could be unfavorable to us and could have a material adverse effect on our business, investments, and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could result in material defense or remedial costs and/or damages have a material adverse effect on our financial condition.
Risks Related to Our Common Stock
Due to factors beyond our control, our stock price may be volatile.
There is currently a limited market for our Common Stock, and there can be no guarantee that an active market for our Common Stock will develop, even if we are successful in consummating a business combination. Recently, the price of our Common Stock has been volatile for no reason. Further, even if an active market for our Common Stock develops, it will likely be subject to significant price volatility when compared to more seasoned issuers. We expect that the price of our Common Stock will continue to be more volatile than more seasoned issuers for the foreseeable future. Fluctuations in the price of our Common Stock can be based on various factors in addition to those otherwise described in this Report, including:
| | ● | General speculative fever; |
| | | |
| | ● | A prospective business combination and the terms and conditions thereof; |
| | | |
| | ● | The operating performance of any business we acquire, including any failure to achieve material revenues therefrom; |
| | | |
| | ● | The performance of our competitors in the marketplace, both pre- and post-combination; |
| | | |
| | ● | The public’s reaction to our press releases, SEC filings, website content and other public announcements and information; |
| | | |
| | ● | Changes in earnings estimates of any business that we acquire or recommendations by any research analysts who may follow us or other companies in the industry of a business that we acquire; |
| | | |
| | ● | Variations in general economic conditions, including as may be caused by uncontrollable events such as the COVID-19 pandemic and the resulting decline in the economy; |
| | | |
| | ● | The public disclosure of the terms of any financing we disclose in the future; |
| | | |
| | ● | The number of shares of our Common Stock that are publicly traded in the future; |
| | | |
| | ● | Actions of our existing shareholders, including sales of Common Stock by our then directors and then executive officers or by significant investors; and |
| | | |
| | ● | The employment or termination of key personnel. |
Many of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of whether we can consummate a business combination and of our current or subsequent operating performance and financial condition. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.
Because trading in our Common Stock is so limited, investors who purchase our Common Stock may depress the market if they sell Common Stock.
Our Common Stock trades on the OTC Pink Market, the successor to the pink sheets. The OTC Pink Market generally is illiquid and most stocks traded there are of companies that are not required to file reports with the SEC under the Exchange Act. Our Common Stock itself infrequently trades.
The market price of our Common Stock may decline if a substantial number of shares of our Common Stock are sold at once or in large blocks.
Presently the market for our Common Stock is limited. If an active market for our shares develops in the future, some or all of our shareholders may sell their shares of our Common Stock which may depress the market price. Any sale of a substantial number of these shares in the public market, or the perception that such a sale could occur, could cause the market price of our Common Stock to decline, which could reduce the value of the shares held by our other shareholders.
Future issuance of our Common Stock could dilute the interests of our existing shareholders, particularly in connection with an acquisition and any resulting financing.
We may issue additional shares of our Common Stock in the future. The issuance of a substantial amount of our Common Stock could substantially dilute the interests of our shareholders. In addition, the sale of a substantial amount of Common Stock in the public market, either in the initial issuance or in a subsequent resale by the target company in a business combination which received our Common Stock as consideration or by investors who has previously acquired such Common Stock could have an adverse effect on the market price of our Common Stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None
ITEM 1C. CYBERSECURITY
Not applicable.
ITEM 2. PROPERTIES
The Company’s principal business and corporate address is 123 West Nye Lane Suite 455, Carson City, Nevada 89706.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings, and we are not aware of any pending or potential legal actions.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is not listed on any securities exchange and is quoted on the OTC Pink Market under the symbol “FWFW” Because our common stock is not listed on a securities exchange and its quotations on OTC Pink are limited and sporadic, there is currently no established public trading market for our common stock. Although we are current with our filing requirements, our common stock is not eligible for proprietary broker-dealer quotations and an initial review by a broker-dealer under SEC Rule 15c2-11 is required for brokers to publish competing quotes and provide continuous market making.
Holders
As of December 26, 2024, there were 64 shareholders of record of the Company’s common stock based upon the records of the shareholders provided by the Company’s transfer agent. The Company’s transfer agent is Vstock Transfer, 18 Lafayette Place, Woodmere, New York 11598, Telephone # 212-828-8436.
Dividends
We have never paid or declared any dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future.
Options and Warrants
We do not have any outstanding options or warrants.
Securities Authorized for Issuance Under Equity Compensation Plans
We currently do not have any equity compensation plans.
Unregistered Sales of Equity Securities
We have previously disclosed all sales of securities without registration under the Securities Act of 1933.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Actual results and timing of events could differ the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Flywheel Advanced Technology, Inc. (“FWFW”) (formerly known as Pan Global Corp.) was incorporated in the state of Nevada on April 30, 2010. On November 30, 2022, FWFW incorporated Blue Print Global, Inc. (“Blue Print”) in the British Virgin Islands to establish an operation to source the supply and sale of warehouse patrol robots. FWFW holds 70% of Blue Print, and the balance is held by two individuals unrelated to the Company, with each party holding 15%. On March 22, 2023, FWFW acquired QBS System Limited (“QBS System”), a limited company incorporated under the laws of Hong Kong (the “QBS Acquisition”). On January 30, 2024 and February 13, 2024, the Company incorporated Mega Fortune Company Limited (“Mega Fortune”) in the Cayman Islands and Ponte Fides Company Limited (“Ponte Fides”) in the British Virgin Islands, respectively. On April 29, 2024, the Company transferred all of the issued and outstanding shares of QBS System at HK$100 under a restructuring. On July 5, 2024, the Company entered into a Stock Purchase Agreement with Mericorn Company Limited (the “Buyer”), of all of the equity associated with the Company’s Mega Fortune Company Limited, which is comprised of the Company’s subsidiaries Pontes Fides Company Limited, QBS System Limited and QBS System Pty Ltd. Under the terms of the Share Purchase Agreement, the Buyer paid HK$56,360,000 (or approximately $7,230,000) by the transfer of 938 shares of the Buyer’s wholly owned subsidiary, Elison Virtus Company Limited (“Elison”) from the Buyer to the Company for the Mega Fortune Disposition.
FWFW and its subsidiaries (collectively, “we,” “us,” “our,” “FWFW” or the “Company,” unless context requires or indicates otherwise) were formed to provide Internet of Things (“IoT”) solutions and services to assist its clients to build applications using available IoT devices, sensors, frameworks, and platforms, integrate hardware and software solutions with clients existing landscape, or implement new IoT solutions for enterprises.
Results of Operations:
Continuing Operations
During the years ended September 30, 2024 and 2023, we did not have any revenue.
Our financial statements report a net loss of $312,074 for the year ended September 30, 2024 due to operating expenses of $312,074 during the year.
Our financial statements report a net loss, all from operating expenses, of $1,319,063 for the year ended September 30, 2023.
During the year ended September 30, 2024, our operating expenses consisted primarily of professional fees of $304,010, filing and public fees of $4,269, stamp duty of $3,009 and sundry expenses of $786.
During the year ended September 30, 2023, our operation expenses consisted primarily of professional fees of $1,305,179 filing and public fees of $4,906, stamp duty of $8,089 and sundry expenses of $889. Decrease in operating expenses due to the professional expenses, including acquisition-related costs of US$1,015,000, incurred for and effects of acquisition of QBS System in 2023 and there was no such expenses in 2024.
Discontinued Operations
The following table provides the consolidated results of our discontinued operations:
| | | For the Year Ended September 30, | |
| | | 2024 | | | 2023 | |
| | | | | | | |
| Revenue, net | | $ | 2,979,793 | | | $ | 1,448,176 | |
| Cost of revenue | | | (1,526,853 | ) | | | (961,818 | ) |
| GROSS PROFIT | | | 1,452,940 | | | | 486,358 | |
| Operating expenses | | | (2,230,942 | ) | | | (581,436 | ) |
| LOSS FROM OPERATIONS | | | (778,002 | ) | | | (95,078 | ) |
| Other income | | | 244,259 | | | | 344,461 | |
| Interest expenses, net | | | (15,456 | ) | | | (10,752 | ) |
| (LOSS)/INCOME BEFORE INCOME TAXES | | | (549,199 | ) | | | 238,631 | |
| Income taxes | | | 151,185 | | | | (2,357 | ) |
| NET (LOSS)/INCOME | | | (398,014 | ) | | | 236,274 | |
| Foreign currency translation income/(loss) | | | 5,434 | | | | (2,691 | ) |
| COMPREHENSIVE (LOSS)/INCOME | | $ | (392,580 | ) | | $ | 233,583 | |
During the year ended September 30, 2024, the results of the discontinued business included operations through the date of the Mega Fortune Disposition (July 5, 2024). Upon the Mega Fortune Disposition, we recognized a gain on sale of $2.45 million in paid in capital.
Liquidity and Capital Resources
The following table presents selected financial information:
| | | For the Year Ended September 30, | |
| | | 2024 | | | 2023 | |
| | | | | | | |
| Current assets - continuing operations | | $ | 3,987 | | | $ | 3,667 | |
| Current assets - discontinued operations | | | - | | | | 4,630,124 | |
| Current assets | | $ | 3,987 | | | $ | 4,633,791 | |
| Current liabilities - continuing operations | | $ | 824,253 | | | $ | 511,860 | |
| Current liabilities - discontinued operations | | | - | | | | 1,257,681 | |
| Current liabilities | | $ | 824,253 | | | $ | 1,769,541 | |
| Working capital | | $ | (820,266 | ) | | $ | 2,864,250 | |
| Working capital - continuing operations | | $ | (820,266 | ) | | $ | (508,193 | ) |
| Working capital - discontinuing operations | | | - | | | | 3,372,443 | |
| Working capital | | $ | (820,266 | ) | | $ | 2,864,250 | |
As of September 30, 2024, we had investments at cost, including 938 shares of Elison common stock with an estimated fair value of $5.42 million at 5 July 2024. Our operations have primarily been financed through the issuance of our common stock and cash advances from a related company.
As of September 30, 2024 and 2023, our total current assets were $3,987 and $4,633,791, including discontinuing operations of $4.62 million, respectively.
As of September 30, 2024, our current liabilities were $824,253 and stockholders’ equity was $4.60 million compared to current liabilities of $1,769,541, including discontinuing operations of $1.26 million and stockholder ‘s equity of $2.85 million as of September 30, 2023.
The Company expects that its cash and cash equivalents as of September 30, 2024 will be insufficient to allow the Company to fund its current operating plan through at least the next twelve months from the issuance of these financial statements. These conditions may raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date these financial statements are issued. The Company is currently evaluating raising additional funds through private placements and or public equity financing. However, there can be no assurance that, in the event that the Company requires additional financing, such financing will be available on terms which are favorable to us, or at all. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern.
In the event we require additional capital, there can be no assurances that we will be able to raise such capital on acceptable terms, or at all. Failure to generate sufficient revenues or raise additional capital through debt or equity financings, or through collaboration agreements, strategic alliances or marketing and distribution arrangements, could have a material adverse effect on our ability to meet our long-term liquidity needs and achieve our intended long-term business plan. Our failure to obtain such funding when needed could create a negative impact on our stock price or could potentially lead to a reduction in our operations or the failure of our company. Accordingly, these factors raise substantial doubt about the Company’s ability to continue as a going concern.
Cash Flows
The following table presents the major components of the consolidated statements of cash flows:
| | | For the Year Ended September 30, | |
| | | 2024 | | | 2023 | |
| | | | | | | |
| Net cash used in operating activities - continuing operations | | $ | (286,296 | ) | | $ | (275,756 | ) |
| Net cash (used in) provided by operating activities - discontinued operations | | | (492,320 | ) | | | 109,361 | |
| Net cash used in operating activities | | $ | (778,616 | ) | | $ | (166,395 | ) |
| | | | | | | | | |
| Net cash used in investing activities - continuing operations | | $ | (228,084 | ) | | $ | - | |
| Net cash (used in) provided by investing activities - discontinued operations | | | (7,600 | ) | | | 565,449 | |
| Net cash (used in) provided by investing activities | | $ | (235,684 | ) | | $ | 565,449 | |
| | | | | | | | | |
| Net cash provided by financing activities - continuing operations | | $ | 284,025 | | | $ | 275,756 | |
| Net cash provided by financing activities - discontinued operations | | | 111,504 | | | | (53,189 | ) |
| Net cash provided by financing activities | | $ | 395,529 | | | $ | 222,567 | |
Operating Activities
Cash flows used in operating activities of our continuing operations for the year ended September 30, 2024 were $0.29 million. The adjustments to reconcile our net loss from continuing operations of $0.31 million to net cash used in operating activities included add-backs for the net positive change in our operating assets and liabilities of $0.02 million. Cash flows used in operating activities of our discontinued operations for the year ended September 30, 2024 were $0.49 million.
Cash flows used in operating activities of our continuing operations for the year ended September 30, 2023 were $0.28 million. The adjustments to reconcile our net loss from continuing operations of $1.32 million to net cash used in operating activities included add-backs for non-cash of stock-based compensation expenses of $1 million, and the net positive change in our operating assets and liabilities of $0.02 million. Cash flows provided by operating activities of our discontinued operations for the year ended September 30, 2023 were $0.11 million.
Investing Activities
Cash flows used in investing activities of our continuing operations for the year ended September 30, 2024 were $0.23 million which is attributed to the cash outflow from disposal of subsidiaries of 0.23 million. Cash flows used in investing activities of our discontinued operations for the year ended September 30, 2024 of $0.01 million were attributed to investing activities of Mega Fortune’s business.
Cash flows provided by investing activities of our continuing operations for the year ended September 30, 2023 were $0. Cash flows provided by investing activities of our discontinued operations for the year ended September 30, 2023 of $0.57 million were cash acquired from purchase of a subsidiary.
Financing Activities
Cash flows provided by financing activities of our continuing operations for the year ended September 30, 2024 were $0.28 million, which is attributed to advances from a related company of $0.28 million. Cash flows provided by financing activities of our discontinued operations for the year ended September 30, 2023 of $0.11 million were primarily attributed to repayment of bank borrowings of $0.08 million and advances from related parties of $0.19 million.
Cash flows provided by financing activities of our continuing operations for the year ended September 30, 2023 were $0.28 million, which is attributed to advances from a related company of $0.28 million. Cash flows used in financing activities of our discontinued operations for the year ended September 30, 2023 of $0.05 million were primarily attributed to repayment of bank borrowings of $0.05 million.
Critical Accounting Policies and Estimates
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an on-going basis, the Company evaluates all of these estimates and assumptions. Actual results could be different from these estimates.
The historical results of business activities of the three reportable segments, provision of IT maintenance and support services, IoT BPO services and IoT development services in Hong Kong and Australia have been presented in the accompanying consolidated statements of operations for the years ended September 30, 2024 and 2023 as discontinued operations. See Note 3 - Discontinued Operations in the accompanying Notes to the Consolidated Financial Statements. Following presentation of the business activities of the three reportable segments as discontinued operations, the Company has no operations or revenue.
We are currently in the process of developing a business plan. Management intends to explore and identify viable business opportunities including seeking to acquire a business and soliciting good and profitable investment opportunities. Our ability to effectively identify, develop and implement a viable plan for our business may be hindered by risks and uncertainties which are beyond our control.
Investments
The Company applies the cost method of accounting to investments when it does not have significant influence or a controlling interest in the investee and the fair value of the investment is not readily determinable. Dividends on cost method investments received are recorded as income.
The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investments during the year ended September 30, 2024 and determined that the Company’s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired.
Recently issued Accounting Pronouncements
For the impact of recently issued accounting pronouncements on the Company’s consolidated financial statements, see Note 2 (N) of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report, which is incorporated herein by reference, for a discussion of recent accounting pronouncements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2024 AND 2023
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Flywheel Advanced Technology, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Flywheel Advanced Technology, Inc. (the “Company”) as of September 30, 2024 and 2023, the related consolidated statement of operations, stockholders’ equity (deficit), and cash flows for the years then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. 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 Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. 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 audits 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 Company 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 Company’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 audits 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 audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| ● | Initial Valuation of Investments - Refer to Note 4, Investments |
Critical Audit Matter Description
On July 5, 2024, the Company entered into a share purchase agreement whereby the Company received 938 shares, 9.38% of total equity, of a privately held company, Elison, at an estimated fair value of approximately $5.4 million which is recorded as an investment in the consolidated balance sheets as of September 30, 2024. These investments without readily determinable market values, are valued using significant unobservable inputs that involve considerable judgment by management. The Company uses internal modeling techniques based on projected cash flows and certain other unobservable inputs to value its investments. The significant unobservable inputs may include discount rates, issue specific credit adjustments, material non-public financial information, estimation of future earnings and cash flows, default rate assumptions, and liquidity assumptions.
Given that the Company utilizes valuation models and significant unobservable inputs to estimate the fair value for its investments, performing audit procedures to evaluate these inputs required a high degree of auditor judgment and an increased extent of effort, including the involvement of our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the valuation models and significant unobservable inputs utilized by the Company to estimate the fair value of investments included the following, among others:
| ● | We involved experienced audit team members in the performance of our audit procedures. |
| ● | With the assistance of our fair value specialists, we: |
| | ○ | Evaluated the valuation models and unobservable inputs used by the Company to estimate fair value of these investments. |
| | ○ | Developed independent fair value estimates and compared our estimates to the Company’s estimates of these investments. |
| ● | Our audit procedures related to investment valuations using significant unobservable inputs included, among others, assessing whether the valuation methodologies used were appropriate and testing the mathematical accuracy of the valuation models. We obtained management’s valuation models and compared objective inputs used in the models to agreements or underlying source documents provided by the Company. We assessed the appropriateness of certain unobservable inputs and assumptions used in the valuation models by comparing them to underlying support or available market data and evaluating the appropriateness of adjustments. |
/s/ BCRG Group
BCRG Group (PCAOB ID 7158)
We have served as the Company’s auditor since 2024.
Irvine, CA
January 14, 2025
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
| | | September 30, 2024 | | | September 30, 2023 | |
| ASSETS | | | | | | | | |
| CURRENT ASSETS | | | | | | | | |
| Prepaid expenses and other current assets | | $ | 3,987 | | | $ | 3,667 | |
| Assets held for sale | | | - | | | | 4,620,124 | |
| Total Current Assets | | | 3,987 | | | | 4,623,791 | |
| | | | | | | | | |
| INVESTMENTS | | | 5,422,500 | | | | - | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 5,426,487 | | | $ | 4,623,791 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Accrued expenses and other current liabilities | | $ | 80,992 | | | $ | 54,894 | |
| Due to a related party | | | 743,261 | | | | 456,966 | |
| Liabilities held for sale | | | - | | | | 1,257,681 | |
| Total current liabilities | | | 824,253 | | | | 1,769,541 | |
| Total Liabilities | | | 824,253 | | | | 1,769,541 | |
| | | | | | | | | |
| COMMITMENTS AND CONTINGENCIES | | | - | | | | - | |
| | | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock, $0.0001 par value 550,000,000, shares authorized, 29,662,164 shares issued and outstanding as of September 30, 2024 and 2023 | | | 2,966 | | | | 2,966 | |
| Paid in Capital | | | 9,129,860 | | | | 6,677,222 | |
| Accumulated other comprehensive income/(loss) | | | 2,743 | | | | (2,691 | ) |
| Accumulated deficit | | | (4,533,335 | ) | | | (3,823,247 | ) |
| Total Stockholders’ Equity | | | 4,602,234 | | | | 2,854,250 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 5,426,487 | | | $ | 4,623,791 | |
The accompanying notes are an integral part of these consolidated financial statements
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
| | | Year Ended
September 30, 2024 | | | Year Ended
September 30, 2023 | |
| REVENUE, NET | | $ | - | | | $ | - | |
| | | | | | | | | |
| OPERATING EXPENSES | | | | | | | | |
| Professional fees | | | 304,010 | | | | 1,305,179 | |
| General and administrative | | | 8,064 | | | | 13,884 | |
| | | | | | | | | |
| Total Operating Expenses | | | 312,074 | | | | 1,319,063 | |
| | | | | | | | | |
| OPERATING LOSS | | | (312,074 | ) | | | (1,319,063 | ) |
| | | | | | | | | |
| Income taxes | | | - | | | | - | |
| | | | | | | | | |
| NET LOSS FROM CONTINUING OPERATIONS | | | (312,074 | ) | | | (1,319,063 | ) |
| | | | | | | | | |
| Discontinued operations, net of tax | | | (398,014 | ) | | | 236,274 | |
| | | | | | | | | |
| NET LOSS | | | (710,088 | ) | | | (1,082,789 | ) |
| | | | | | | | | |
| OTHER COMPREHENSIVE INCOME (LOSS) | | | | | | | | |
| | | | | | | | | |
| Foreign currency translation gain/(loss) | | | 5,434 | | | | (2,691 | ) |
| | | | | | | | | |
| COMPREHENSIVE LOSS | | $ | (704,654 | ) | | $ | (1,085,480 | ) |
| | | | | | | | | |
| Net income (loss) from continuing operations per share - basic and diluted: | | $ | 0.12 | | | $ | (0.06 | ) |
| Net income (loss) - basic and diluted: | | $ | 0.12 | | | $ | (0.05 | ) |
| Weighted average number of shares outstanding | | | 29,662,164 | | | | 23,549,970 | |
The accompanying notes are an integral part of these consolidated financial statements
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CHANGE IN STOCKHOLDERS’ EQUITY
| | | | | | | | | | | | | | | | | | | |
| | | Common Stock | | | Paid | | | Accumulated other Comprehensive | | | Accumulated | | | | |
| | | Shares | | | Value | | | in Capital | | | (loss)/income | | | Deficit | | | Total | |
| Balance at September 30, 2022 | | | 17,822,564 | | | $ | 1,782 | | | $ | 2,534,546 | | | $ | - | | | $ | (2,740,458 | ) | | $ | (204,130 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for acquisition | | | 8,939,600 | | | | 894 | | | | 3,127,966 | | | | - | | | | - | | | | 3,128,860 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock-based compensation | | | 2,900,000 | | | | 290 | | | | 1,014,710 | | | | - | | | | - | | | | 1,015,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exchange difference on | | | - | | | | - | | | | - | | | | (2,691 | ) | | | - | | | | (2,691 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | - | | | | - | | | | - | | | | - | | | | (1,082,789 | ) | | | (1,082,789 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at September 30, 2023 | | $ | 29,662,164 | | | $ | 2,966 | | | $ | 6,677,222 | | | $ | (2,691 | ) | | $ | (3,823,247 | ) | | $ | 2,854,250 | |
| Balance | | $ | 29,662,164 | | | $ | 2,966 | | | $ | 6,677,222 | | | $ | (2,691 | ) | | $ | (3,823,247 | ) | | $ | 2,854,250 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exchange difference on translation | | | - | | | | - | | | | - | | | | 5,434 | | | | - | | | | 5,434 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain on Sale of Mega Fortune | | | - | | | | - | | | | 2,452,638 | | | | - | | | | - | | | | 2,452,638 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | - | | | | - | | | | - | | | | - | | | | (710,088 | ) | | | (710,088 | ) |
| Net income (loss) | | | - | | | | - | | | | - | | | | - | | | | (710,088 | ) | | | (710,088 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance at September 30, | | | 29,662,164 | | | $ | 2,966 | | | $ | 9,129,860 | | | $ | 2,743 | | | $ | (4,533,335 | ) | | $ | 4,602,234 | |
| Balance | | | 29,662,164 | | | $ | 2,966 | | | $ | 9,129,860 | | | $ | 2,743 | | | $ | (4,533,335 | ) | | $ | 4,602,234 | |
The accompanying notes are an integral part of these consolidated financial statements
FLYWHEEL ADVANCED TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | 2024 | | | 2023 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
| Net loss | | $ | (710,088 | ) | | $ | (1,082,789 | ) |
| Adjusted to reconcile net loss to cash provided by (used in) operating activities: | | | | | | | | |
| Stock-based compensation expenses | | | - | | | | 1,015,000 | |
| Amortization | | | 51,653 | | | | 40,244 | |
| Depreciation | | | 3,779 | | | | 10,592 | |
| Lease amortization | | | 35,026 | | | | 23,802 | |
| Allowance of expected credit losses | | | 1,402,732 | | | | 206,140 | |
| Reversal of allowance of expected credit losses | | | (165,477 | ) | | | (308,856 | ) |
| Deferred income taxes | | | (212,059 | ) | | | (20,977 | ) |
| Changes in operating assets and liabilities | | | | | | | | |
| (Increase)/decrease in: | | | | | | | | |
| Prepaid expenses and other current assets | | | (320 | ) | | | (3,667 | ) |
| Assets held for sale | | | (1,117,182 | ) | | | (53,699 | ) |
| Increase/(decrease) in: | | | | | | | | |
| Accrued expenses and other current liabilities | | | 26,098 | | | | 31,974 | |
| Liabilities held for sale | | | (92,778 | ) | | | (24,159 | ) |
| Net cash used in operating activities | | | (778,616 | ) | | | (166,395 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| Cash acquired from purchase of subsidiaries | | | - | | | | 565,449 | |
| Cash outflow from disposal of subsidiaries | | | (228,084 | ) | | | - | |
| Purchase of property, plant and equipment | | | (7,600 | ) | | | - | |
| Net cash (used in)/provided by investing activities | | | (235,684 | ) | | | 565,449 | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Repayment of borrowings | | | (83,876 | ) | | | (53,189 | ) |
| Advances from related parties | | | 479,405 | | | | 275,756 | |
| Net cash provided by financing activities | | | 395,529 | | | | 222,567 | |
| NET (DECREASE)/INCREASE IN CASH AND EQUIVALENTS | | | (618,771 | ) | | | 621,621 | |
| EFFECT OF EXCHANGE RATES ON CASH | | | (2,230 | ) | | | (620 | ) |
| AT BEGINNING OF PERIOD | | | 621,001 | | | | - | |
| | | | | | | | | |
| CASH AND EQUIVALENTS AT END OF PERIOD | | $ | - | | | $ | 621,001 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | | | | | | |
Cash paid for income taxes | | $ | 3,374 | | | $ | 33,492 | |
| Cash paid for interest | | $ | 15,456 | | | $ | 10,869 | |
| SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | | | | | | | | |
| Investment obtained from sales of Mega Fortune | | $ | 5,422,500 | | | | - | |
The accompanying notes are an integral part of these consolidated financial statements
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2024 and 2023
(Unaudited)
NOTE- 1 ORGANIZATION AND BUSINESS BACKGROUND
Flywheel Advanced Technology, Inc. (formerly known as Pan Global Corp.) (“the Company”) was incorporated in the state of Nevada on April 30, 2010.
The Company had the following significant events:
| | ● | Stock Purchase Agreement (July 13, 2021) – In July 2021, the Company entered into a Stock Purchase Agreement between NYJJ Hong Kong Limited (Seller) and Sparta Universal Industrial Ltd. (Purchaser), wherein the Purchaser purchased 10,000,000 shares of Series A-1 Preferred Stock, par value $0.0001 per share (the “Shares”) of the Company. As a result, the Purchaser became approximately 90% holder of the voting rights of the issued and outstanding shares of the Company, on a fully diluted basis and became the controlling shareholder. At the effective date of transfer, David Lazar ceased to be the Company ‘ s Chief Executive Officer, President, Secretary, Chief Financial Officer and Chairman of the Board of as Directors, and the Company appointed Tang Siu Fung as President, Chief Executive Officer, and Chairman of the Board of Directors; Cheng Sin Yi as Secretary, and Treasurer; Tin Sze Wai as Director; Ip Tsz Ying as Director; Ho Yiu Chung as Director; and Lai Chi Chuen as Director. |
| | | |
| | ● | Name Change (November 21, 2021) – On November 21, 2021, Board of directors and majority shareholder approved the change of the Company’s name to “Flywheel Advanced Technology, Inc.”. |
| | | |
| | ● | Reverse Stock Split (July 13, 2022) – On July 13, 2022, the Company completed a 1:100 reverse stock split of the Company’s common stock which became effective on July 14, 2022. As of July 14, 2022, the 1:100 reverse stock split of the Company’s common stock became effective. Following the effectiveness of the reverse stock split, there are currently 1,551,550 shares of common stock issued and outstanding as compared to 155,155,000 shares of the Company’s common stock issued and outstanding prior to the reverse stock split. |
| | | |
| | ● | Ticker Symbol Change (August 5, 2022) – On August 5, 2022, the Company was informed by the FINRA that the new ticker symbol of the Company is “FWFW”. |
| | | |
| | ● | Issuance of Preferred Stock A-1 (September 15, 2022) – On September 15, 2022, the Company filed with the Secretary of State of the State of Nevada an Amendment (the “ Amendment ” ) to the Certificate of Designation for the Series A-1 Preferred Stock (the “Preferred Stock”). The Amendment was approved by the Board of Directors of the Company and Sparta Universal Industrial Ltd. (“Sparta”), the sole holder of all the 10,000,000 issued and outstanding shares of Preferred Stock. Pursuant to the Amendment, the conversion rate of the Preferred Stock was changed to provide that each share of Preferred Stock shall be convertible, at the option of the holder, into 1.62 fully paid and nonassessable shares of the Company’s common stock. The Amendment was necessary as the terms of the Certificate of Designation for the Preferred Stock expressly provided that the conversion ratio of 162 shares of common stock for each share of Preferred Stock would not be reduced in the event of a stock split or other capitalization of the Company. |
| | | |
| | ● | The Company’s outstanding 10,000,000 shares of Preferred Stock were converted on a one for 1.62 basis into 16,200,000 common shares. Concurrently these Preferred Stock were cancelled. |
| | | |
| | ● | Formation of Blue Print Global, Inc. (November 30, 2022) – On November 30, 2022, the Company incorporated Blue Print Global, Inc. ( “ Blue Print ” ) in the British Virgin Islands to establish an operation to source the supply and sale of warehouse patrol robots. The Company holds 70% of Blue Print, and the balance is held by two individuals unrelated to the Company, with each party holding 15%. |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | ● | Blue Print Agency Agreement (December 7, 2022) – On December 7, 2022, Blue Print entered into an Agency Agreement (the “ Agency Agreement ” ) with International Supply Chain Alliance Co., Ltd. of Hong Kong ( “ ISCA”). Pursuant to the Agency Agreement, Blue Print appointed ISCA as its authorized agent to distribute warehouse patrol robots in the People’ s Republic of China ( “China”). The Agency Agreement is valid for five years and will be automatically renewed for another five years unless a written non-renewal notice is provided by either party at least 30 days before the expiration date. However, there is no early termination option in the Agency Agreement. |
| | | |
| | ● | Share Exchange with QBS System Limited (December 15, 2022) – On December 15, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with QBS System Limited, a limited company incorporated under the laws of Hong Kong ( “ QBS System ” ), and its shareholder, QBS Flywheel Limited, a company incorporated under the laws of Australia (the “Seller”). On March 22, 2023, the Seller transferred and assigned to the Company all of the issued and outstanding shares of QBS System in exchange for 8,939,600 newly issued shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”). Following the closing of the share exchange, there will be no change in the officers and directors of the Company, and QBS System will continue its business as a wholly owned subsidiary of the Company. |
| | | |
| | ● | Common Stock Issuances (May 24, 2023) – On May 24, 2023, the Company issued 1,450,000 shares of common stock to each of Sau Ping Leung and So Ha Tsang. Such shares were issued on May 24, 2023. These two individuals collectively hold 30% of Blue Print. |
| | | |
| | ● | Formation of Mega Fortune Company Limited and Ponte Fides Company Limited (January 30, 2024 and February 13, 2024) – On January 30, 2024 and February 13, 2024, the Company incorporated Mega Fortune Company Limited ( “ Mega Fortune ” ) in the Cayman Islands and Ponte Fides Company Limited (“Ponte Fides”) in the British Virgin Islands, respectively. |
| | | |
| | ● | Transfer of QBS System Shares to Ponte Fides Company Limited (April 29, 2024) – On April 29, 2024, the Company transferred all of the issued and outstanding shares of QBS System at HK$100 under a restructuring. Following the closing of the share transfer, there will be no change in the officers and directors of the Company, and QBS System will continue its business as a wholly owned subsidiary of the Company. |
QBS System was incorporated in Hong Kong on April 14, 2011 with limited liability and its principal activities are providing Internet of Things (“IoT”) solutions and services across industries. Its IoT solutions help clients to build applications using available IoT device, sensors, framework and platform, to integrate the available hardware and software solution with clients’ existing landscape or implement a new IoT solution for enterprises.
QBS System provides a full-range IoT services comprising consulting development and implementation, analytics, support, and evolution. It has a business portfolio providing IoT integration solution services, IoT maintenance, support services, IoT projects and ventures Business Process Outsourcing (“BPO”) services, and approximately years of experience in Hong Kong providing IoT software and hardware engineering services. Clients range across various industries, such as logistics and supply chain management, food and beverage, automation and smart building. The applications of QBS System’s IoT Solution include connected equipment in the enterprise (“Enterprise IoT”) and industrial assets such as machines, robots, or even workers in smart factories and industrial facilities (“Industrial IoT”, the essential component of Industry 4.0).
QBS System formed a wholly owned subsidiary, QBS System Pty Ltd (“QBS System Pty”) in Australia on May 8, 2020 and its principal activities are providing computer network systems design and integration services.
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company’s subsidiaries are as follows as of September 30, 2024:
SCHEDULE OF COMPANY SUBSIDIARIES
| Name of Corporation | | Date of Formation | | Ownership | | Description of Business |
| | | | | | | |
Flywheel Advanced Technology, Inc. (Nevada Corporation) | | April 30, 2010 | | 100% | | Parent Company |
| | | | | | | |
Blue Print Global, Inc. (British Virgin Islands Corporation) | | November 30, 2022 | | 70% | | Establish an operation to source the supply and sale of warehouse patrol robots. |
We use the terms “Company”, “we” and “us” to refer to both Flywheel Advanced Technology, Inc. and its subsidiaries.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going Concern
Pursuant to the guidance in ASC 205-40 Going Concern, for each annual and interim reporting period an entity’s management must evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. To that extent, the Company incurred a net operating loss of approximately $0.3 million, had negative cash flows from operating activities of $0.8 million during the year ended September 30, 2024 and had minimum cash balance as of its fiscal year end. With that said, the Company is currently in process of entering into certain arrangements to raise additional capital, which it believes to be probable of occurring as of the date of the filing. As such, the Company believes that the substantial doubt about our ability to continue as a going concern has been alleviated as a result of consideration of management’s plans.
(A) Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
The historical results of our IoT services business, primarily consisting of Mega Fortune Company Limited and its subsidiaries, Pontes Fides Company Limited, QBS System Limited and QBS System Pty Ltd ,and related activity have been presented in the accompanying consolidated statements of operations and cash flows for the years ended September 30, 2024 and 2023 as discontinued operations. See Note 3 - Discontinued Operations. Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only.
Certain prior year amounts have been reclassified to conform to current year presentation.
(B) Principles of Consolidation
The accompanying consolidated financial statements are presented using the accrual basis of accounting and include the Company and its wholly owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(C) Use of estimates
The preparation of consolidated financial statements in accordance with the U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Significant items subject to such estimates and assumptions include the useful lives of property, plant and equipment, revenue recognition, allowance for credit losses, the measurement of lease liabilities and right-of-use (“ROU”) assets, measurements of assets and obligations related to employee benefits, the nature and timing of the satisfaction of performance obligations, the standalone selling price of performance obligations, variable consideration, other obligations for revenue recognition, and other contingencies. Management believes the estimates used in the preparation of the consolidated financial statements are reasonable. Although these estimates and assumptions are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates. Any changes in estimates are adjusted prospectively in the Company’s consolidated financial statements
(D) Financial instruments and concentration of credit risk
Financial instruments that potentially subject the Company to concentration of credit risk are reflected principally in cash and equivalents and accounts receivable. The Company places its cash and cash equivalents with banks with high investment grade ratings, limits the amount of credit exposure with any one bank and conducts ongoing evaluations of the creditworthiness of the banks with which it does business. To reduce its credit risk on accounts receivable, the Company conducts ongoing credit evaluations of its customers.
(E) Cash and cash equivalents
For purpose of the statements of cash flows, cash and cash equivalents include cash on hand and demand deposits with a bank with an initial maturity of less than three months.
(F) Investments
The Company applies the cost method of accounting to investments when it does not have significant influence or a controlling interest in the investee and the fair value of the investment is not readily determinable. Dividends on cost method investments received are recorded as income.
The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Management reviewed the underlying net assets of the investments during the year ended September 30, 2024 and determined that the Company’ s proportionate economic interest in the investments indicate that the investments were not other than temporarily impaired. The carrying value of our cost method investments is reported as “investments” on the consolidated balance sheets. Note 4 contains additional information on our cost method investments.
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(G) Fair value of financial instruments
FASB Codification Topic 825 (ASC Topic 825), “Disclosure about Fair Value of Financial Instruments,” requires certain disclosures regarding the fair value (“FV”) of financial instruments. The carrying amounts of accounts receivable, other current assets and prepaid expenses, accounts payable, other payables and accrued liabilities and due to Company companies approximate their FVs because of the short-term nature of the instruments. The management of the Company is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial statements.
(H) Foreign currency translation
The Company’s consolidated financial statements are reported in United States dollars (“US$”), the Company’s reporting currency, also the functional currency. The functional currency for the Company’s subsidiary organized in Hong Kong is Hong Kong dollars (“HK$”). The functional currency for the Company’s subsidiary organized in Australian is Australian dollars (“A$”). The translation of the functional currencies of the Company’s subsidiaries into US$ is performed for balance sheet accounts using the exchange rates in effect as of the balance sheet date and for revenues and expense accounts using a monthly average exchange rate prevailing during the respective period. The gains or losses resulting from such translation are reported as currency translation adjustments under other comprehensive income (loss), net, under accumulated other comprehensive income (loss) as a separate component of equity.
Monetary assets and liabilities of the Company and its subsidiary denominated in currencies other than the functional currency of the Company and subsidiary are translated into their respective functional currency at the rates of exchange prevailing on the balance sheet date.
Transactions of the Company and its subsidiary in currencies other than the Company’s and the Subsidiary’s functional currencies are translated into the respective functional currencies at the average monthly exchange rate prevailing during the period of the transaction. The gains or losses resulting from foreign currency transactions are included in the consolidated statements of income.
The exchange rates used to translate amounts in HK$ and AU$ into US$ for the purposes of preparing the consolidated financial statements were as follows:
SCHEDULE OF EXCHANGE RATES
| | | July 5 2024 | | September 30, 2023 |
| Balance sheet items, except for common stock, additional paid-in capital and retained earnings, as of period end | | US$1=HK$7.789466 | | US$1=HK$7.82996 |
| | | US$1=AUD1.483845 | | US$1=AUD1.55615 |
| | For the Period Ended
July 5, 2024 | | For the Year Ended
September 30, 2023 |
| Amounts included in the statements of operations and cash flows for the year | | US$1=HK$7.81742 | | US$1=HK$7.84901 |
| | | US$1=AUD1.52416 | | US$1=AUD1.49816 |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(I) Other comprehensive (loss)/income
The foreign currency translation gain or loss resulting from translation of the financial statements expressed in HK$ and AU$ to US$ is reported as other comprehensive income or loss in the statements of operations and stockholders’ equity.
(J) Employee benefit plans
Contributions to defined contribution plans are expensed in the period in which services are rendered by the covered employees. The Company recognizes its liabilities for compensated absences dependent on whether the obligation is attributable to employee services already rendered, relates to rights that vest or accumulate and payment is probable and estimable. Refer to Note 14.
(K) Income taxes
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period included the enactment date.
(L) Earning per share
Basic earnings(loss) per share are computed by dividing income available to stockholders by the weighted average number of shares outstanding during the year. Diluted income per share is computed like basic income per share except that the denominator is increased to include the number of additional shares that would have been outstanding if the potential shares had been issued and if the additional shares were diluted. There were no potentially dilutive securities for 2024 and 2023.
(M) Commitments and contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with such liabilities are expensed as incurred.
(N) Recently Issued Accounting Standards
There are no recently announced, but not yet effective accounting pronouncements that are expected to have a material impact to the Company as of September 30, 2024 and 2023.
(O) Fair Value of Financial Instruments
The assets and liabilities are valued using a fair market basis as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) ASC 820, Fair Value Measurement. Fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company uses a three-level hierarchy established by the FASB that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the fair value hierarchy are described below:
| | Level 1: | Quoted prices in active markets for identical assets or liabilities. |
| | | |
| | Level 2: | Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
| | | |
| | Level 3: | Unobservable inputs with little or no market data available, which require the reporting entity to develop its own assumptions. |
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Financial assets and liabilities are classified in their entirety based on the most conservative level of input that is significant to the fair value measurement.
As of September 30, 2024, the following table represents the Company’s fair value hierarchy for items that are required to be measured at fair value on a recurring basis:
SCHEDULE OF FAIR VALUE HIERARCHY FOR ITEMS THAT ARE REQUIRED AT FAIR VALUE ON A RECURRING BASIS
| | | | | | | | | | | | | |
| | | Fair value measurements at reporting date using: | |
| | | Fair value | | | Quoted prices in active markets for identical liabilities (Level 1) | | | Significant other
observable inputs
(Level 2) | | | Significant unobservable inputs
(Level 3) | |
| Assets: | | | | | | | | | | | | | | | | |
| Investments at September 30, 2024 | | $ | 5,422,500 | | | $ | - | | | $ | - | | | $ | 5,422,500 | |
(O) Impairment of Long-lived Assets
The Company reviews long-lived assets to be held and used in operations for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may be impaired. These evaluations may result from significant decreases in the overall market outlook for the Company’s technology or the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used in its physical condition, a significant adverse change in legal factors or in the business climate that could affect the value of an asset, as well as economic or operational analyses. If the Company concludes that the carrying value of certain assets will not be recovered based on expected undiscounted future cash flows, an impairment write-down is recorded to reduce the assets to their estimated fair value. Fair value is determined via market, cost and income-based valuation techniques, as appropriate. The fair value is measured on a non-recurring basis using a combination of quoted prices for similar assets in active markets and other unobservable adjustments to historical cost (Level 3) inputs. No such charges were recorded for the years ended December 31, 2023 and December 31, 2022.
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – DISCONTINUED OPERATIONS
On July 5, 2024, the Company and Mega Fortune Company Limited, its wholly-owned subsidiary, completed the sale (the “Mega Fortune Disposition”) to Mericorn Company Limited (the “Buyer”), of all of the equity associated with the Company ’ s Mega Fortune Company Limited, which is composed of the Company ’ s subsidiaries, Pontes Fides Company Limited, QBS System Limited and QBS System Pty Ltd, pursuant to a Share Purchase Agreement, dated as of July 5, 2024. The Mega Fortune Company Limited and its subsidiaries are engaged in the business of provision of IoT maintenance and support services, IoT BPO services and IoT development services in Hong Kong and Australia. Under the terms of the Share Purchase Agreement, the Buyer paid HK$56,360,000 (or approximately $7,230,000) by the transfer of 938 shares of the Buyer’s wholly owned subsidiary, Elison Virtus Company Limited (“Elison”) from the Buyer to the Company for the Mega Fortune Disposition. As of July 5, 2024, the Company determined that the estimated fair value of 938 shares of Elison was $5,422,500 and the share transfer had been completed. the share transfer had been completed. The Company recognized a pre-tax gain on such sale of $2,452,638. The activities of the three reportable segments, provision of IT maintenance and support services, IoT BPO services and IoT development services in Hong Kong and Australia have been segregated and reported as discontinued operations for all periods presented.
The following table shows calculation of the gain on Sale of Mega Fortune:
SCHEDULE OF DISCONTINUED OPERATIONS GAIN ON SALE
| | | July 5, 2024 | |
| Fair value of shares of Eilson | | $ | 5,422,500 | |
| Less: Carrying value of net assets disposed | | | 2,969,862 | |
| Gain on Sales of Mega Fortune | | $ | 2,452,638 | |
The following table shows the carrying value of net assets disposed:
SCHEDULE OF CARRYING VALUE OF NET ASSETS DISPOSED
| | July 5, 2024 | |
| Cash and cash equivalents | | $ | 230,232 | |
| Other current assets | | | 1,831,334 | |
| Non-current assets | | | 2,335,812 | |
| Bank loans | | | (507,441 | ) |
| Other liabilities | | | (920,075 | ) |
| Carrying value of net assets disposed | | $ | 2,969,862 | |
The carrying amounts of the assets and liabilities of the three reportable segments were classified as held for sale in our consolidated balance sheets as of September 30, 2023. The asset and liability balances as of September 30, 2023 were classified as current as we anticipated the sale of these assets and liabilities within a one year period. The carrying amounts were as follows:
SCHEDULE OF DISCLOSURE OF LONG LIVED ASSETS HELD FOR SALE
| | | 2023 | |
| Cash and cash equivalents | | $ | 621,001 | |
| Accounts receivable, net of allowances | | | 1,431,201 | |
| Due from related parties | | | 116,419 | |
| Prepaid expenses and other current assets | | | 389,075 | |
| Deferred tax assets | | | 22,481 | |
| Total current assets held for sale | | | 2,580,177 | |
| | | | | |
| Property and equipment, net | | | 6,783 | |
| Goodwill | | | 1,840,202 | |
| Acquisition-related intangibles | | | 159,481 | |
| Right-of-use assets | | | 33,481 | |
| Total assets held for sale | | $ | 4,620,124 | |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| | | 2023 | |
| Bank loans - current portion | | $ | 104,608 | |
| Accounts payable | | | 78,064 | |
| Accrued expenses and other current liabilities | | | 115,195 | |
| Due to related parties | | | 365,061 | |
| Operating lease liabilities | | | 37,789 | |
| Income tax payable | | | 46,699 | |
| Total current liabilities for sale | | | 747,416 | |
| | | | | |
| Bank loans | | | 483,950 | |
| Operating lease liabilities | | | - | |
| Deferred tax liabilities – arise from fair value gain | | | 26,315 | |
| Total liabilities for sale | | $ | 1,257,681 | |
Summarized results of discontinued operations for the three reportable segments are as follows:
SCHEDULE OF DISCONTINUED OPERATIONS
| | | | | | | |
| | | For the Year Ended September 30, | |
| | | 2024 | | | 2023 | |
| Revenue, net | | $ | 2,979,793 | $ | | | 1,448,176 | |
| Cost of revenue | | | (1,526,853 | ) | | | (961,818 | ) |
| Operating expenses | | | (2,230,942 | ) | | | (581,436 | ) |
| Other income | | | 244,259 | | | | 344,461 | |
| Interest (expenses) income, net | | | (15,456 | ) | | | (10,752 | ) |
| Income from discontinued operations before taxes | | | (549,199 | ) | | | 238,631 | |
| Income taxes | | | 151,185 | | | | (2,357 | ) |
| Income from discontinued operations, net of tax | | $ | (398,014 | ) | | $ | 236,274 | |
FLYWHEEL ADVANCED TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized cash flow information for the three reportable segments discontinued operations are as follows:
SCHEDULE OF CASH FLOW INFORMATION
| | | | | | | |
| | | Year Ended September 30, | |
| | | 2024 | | | 2023 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
| Amortization | | $ | 51,653 | | | $ | 40,244 | |
| Depreciation | | | 3,779 | | | | 10,592 | |
| Lease amortization | | | 35,026 | | | | 23,802 | |
| Allowance of expected credit losses | | | 1,402,732 | | | | 206,140 | |
| Reversal of allowance of expected credit losses | | | (165,477 | ) | | | (308,856 | ) |
| Deferred income taxes | | | (212,059 | ) | | | (20,977 | ) |
| | | | | | | | | |
| Increase in accounts receivable | | | (1,116,593 | ) | | | (52,747 | ) |
| Increase in prepaid expenses and other current assets | | | (589 | ) | | | (952 | ) |
| Cash used in assets held for sale | | | (1,117,182 | ) | | | (53,699 | ) |
| | | | | | | | | |
| Decrease in accounts payable | | | (51,181 | ) | | | (137,369 | ) |
| Decrease in operating lease liabilities | | | (39,622 | ) | | | (23,793 | ) |
| (Decrease)/Increase in accrued expenses and other current liabilities | | | (60,487 | ) | | | 80,176 | |
| Increase in income tax payable | | | 58,512 | | | | 56,827 | |
| Cash used in liabilities held for sale | | $ | (92,778 | ) | | $ | (24,159 | ) |
| | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
| Cash acquired from purchase of a subsidiary | | $ | - | | | $ | 565,449 | |
| Purchase of property, plant and equipment | | $ | (7,600 | ) | | $ | - | |
| | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
| Repayment of borrowings | | $ | (81,605 | ) | | $ | (53,189 | ) |
| Advances from related party | | $ | 193,109 | | | $ | - | |
NOTE 4 - INVESTMENTS
SCHEDULE OF INVESTMENTS
| | | 2024 | | | 2023 | |
| Cost Method Investment | | | | | | | | |
| Elison Virtus Company Limited | | $ | 5,422,500 | | | $ | - | |
On July 5, 2024, the Company entered into a Share Purchase Agreement. As consideration for entering into this agreement, the Company received 938 shares, 9.38% of total equity, of Elison at estimated fair value of $5,422,500 which were determined using generally accepted valuation techniques based on estimates and assumptions made by management.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company owed a related company, Flywheel Financial Strategy (Hong Kong) Company Limited of $743,261 and $456,966 as of September 30, 2024 and 2023, respectively for advances from the related company, which was repayable on demand and interest free.
NOTE 6 – SUBSEQUENT EVENTS
The Company follows the guidance in FASB ASC Topic 855, Subsequent Events (“ASC 855”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. ASC 855 sets forth (i) the period after the balance sheet date during which management of a reporting entity evaluates events or transactions that may occur for potential recognition or disclosure in the consolidated financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its consolidated financial statements, and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. Accordingly, the Company did not have any subsequent events that require disclosure.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Our management is responsible for establishing and maintaining a system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Commission’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 the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:
| | ● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; |
| | | |
| | ● | 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 only in accordance with authorizations of our management; and |
| | | |
| | ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the 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 policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting based on the parameters set forth above and has concluded that as of September 30, 2024, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of the following material weaknesses:
The Company does not have sufficient segregation of duties within accounting functions due to only having one officer and limited resources.
| | ● | The Company does not have an independent board of directors or an audit committee. |
| | | |
| | ● | The Company does not have written documentation of our internal control policies and procedures. |
| | | |
| | ● | All of the Company’s financial reporting is carried out by a financial consultant. |
We plan to rectify these weaknesses by implementing an independent board of directors, establishing written policies and procedures for our internal control of financial reporting, and hiring additional accounting personnel at such time as we complete a reverse merger or similar business acquisition.
Changes in Internal Control over Financial Reporting.
There have been no changes in our internal control over financial reporting during the year ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and positions of our executive officers and directors. Directors will be elected at our annual meeting of stockholders and serve for one year or until their successors are elected and qualify. Officers are elected by the Board and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board.
| Name | | Age | | Positions |
| Luk Yuen Leung | | 78 | | President, Chief Executive Officer, and Chairman of the Board of Directors |
Luk Yuen Leung has exclusive experience in management and business development in the Garment and Textile Industry. From 1996 to present, Mr. Luk served as director of Polytex Alliance Ltd., a Hong Kong company, where he is responsible for business development strategy and the department’s management.
Election of Directors and Officers
Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board following the next annual meeting of stockholders and until their successors have been elected and qualified.
Director Independence
The Board currently consists of one (1) member. Our sole director is not independent. We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board comprised of a majority of “independent directors.
Audit Committee
We do not presently have an audit committee. The Board currently acts as our audit committee.
Compensation Committee
We do not presently have a compensation committee. The Board currently acts as our compensation committee.
Nominating Committee
We do not presently have a nominating committee. The Board currently acts as our nominating committee.
Code of Ethics
Our Board has not adopted a Code of Ethics due to the Company’s size and lack of employees.
Board Leadership Structure
We have chosen to combine the Chief Executive Officer and Board Chairman positions.
Delinquent Section 16(a) Reports
Not Applicable
Involvement in Certain Legal Proceedings
Our sole director, who is also our sole executive officer, has not been involved in any of the following events during the past ten years:
| | ● | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
| | | |
| | ● | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
| | | |
| | ● | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or |
| | | |
| | ● | being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
Board Diversity
The Board reviews, on an annual basis, the appropriate characteristics, skills and experience required for the Board as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the Board, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:
| | ● | personal and professional integrity; |
| | | |
| | ● | ethics and values; |
| | | |
| | ● | experience in the industries in which we compete; |
| | | |
| | ● | experience as a director or executive officer of another publicly held company; |
| | | |
| | ● | diversity of expertise and experience in substantive matters pertaining to our business relative to other board members; |
| | | |
| | ● | conflicts of interest; and |
| | | |
| | ● | practical business judgment. |
Family Relationships
There are no family relationships among our executive officers or members of our board of directors.
Significant Employees
While the Company has engaged various consultants, other than management, we currently have no significant employees.
The Company currently has no compensation plans or arrangements.
ITEM 11. EXECUTIVE COMPENSATION
The following information is related to the compensation paid, distributed, or accrued by us for the fiscal years ended September 30, 2024, and September 30, 2023, to our Chief Executive Officer (principal executive officer) during the last fiscal year and the two other most highly compensated executive officers serving as of the end of the last fiscal year whose compensation exceeded $100,000 (the “Named Executive Officers”):
For the last two fiscal years ended September 30, 2024, and 2023, the Company has not paid any compensation to its executive officers.
Named Executive Officer Employment Agreements
None.
Termination Provisions
As of the date of this Annual Report, we have no contract, agreement, plan, or arrangement, whether written or unwritten, that provides for payments to a Named Executive Officer at, following, or in connection with any termination, including without limitation resignation, severance, retirement or a constructive termination of a Named Executive Officer, or a change in control of the Company or a change in the Named Executive Officer’s responsibilities, with respect to each Named Executive Officer.
Outstanding Equity Awards at Fiscal Year End
As of September 30, 2024, none of our Named Executive Officers held any unexercised options, stock that have not vested, or other equity incentive plan awards.
Director Compensation
To date, we have not paid our directors any compensation for services on the Board.
Equity Compensation Plan Information
The Company does not have any securities authorized for issuance or outstanding under an equity compensation plan or equity compensation grants made outside of such a plan.
Compensation of Directors
To date, we have not paid our directors any compensation for services on the Board.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
There are no arrangements for officers, employees or consultants that would result from a change-in-control.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
No director, executive officer, associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial ownership of the Company’s common stock as of December 27, 2024, by (i) each person who is known by the Company to own beneficially more than 5% of any classes of outstanding common stock, (ii) director of the Company, (iii) each of the Chief Executive Officers and the executive officers (collectively, the “Named Executive Officers”) and (iv) all directors and executive officers of the Company as a group based upon 29,591,164 shares outstanding as of December 27, 2024.
| Name and Address of Beneficial Owners of common stock1 | | Title of Class | | Amount and Nature of Beneficial Ownership | | | % of Common Stock | |
| Luk Yuen Leung | | - | | | - | | | | - | % |
| | | | | | | | | | | |
DIRECTORS AND OFFICERS – TOTAL
(1 person) | | - | | | - | | | | - | % |
| 5% SHAREHOLDERS | | | | | | | | | | |
| Sparta Universal Industrial Ltd.2 | | common stock | | | 11,455,645 | | | | 38.71 | % |
| QBS Flywheel Limited | | common stock | | | 8,939,600 | | | | 30.21 | % |
* Less than 1%.
1 Unless otherwise indicated, the business address of each individual or entity listed in the table is c/o: Flywheel Advanced Technology, Inc., 123 West Nye Lane, Suite 455, Carson City, Nevada 83702.
2 Tang Siu Fung, is the controlling shareholder of Sparta Universal Industrial Ltd., which holds 11,455,645 shares of the Company’s common stock.
The business address for QBS Flywheel Limited is “GATEWAY” L36, 1 Macquarie PI, Sydney, NSW 2000, Australia.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
SEC rules require us to disclose any transaction or currently proposed transaction in which the Company is a participant and in which any related person has or will have a direct or indirect material interest involving the lesser of $120,000.00 or one percent (1%) of the average of the Company’s total assets as of the end of last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s common stock, or an immediate family member of any of those persons.
Except as disclosed below, since the beginning of the fiscal year preceding the last fiscal year none of the following persons has had any direct or indirect material interest in any transaction to which our Company was or is a party, or in any proposed transaction to which our Company proposes to be a party:
| | ● | any Director or officer of our Company; |
| | | |
| | ● | any proposed Director or officer of our Company; |
| | | |
| | ● | any person who beneficially owns, directly or indirectly, shares carrying more than 5 percent of the voting rights attached to our Common Stock; or |
| | | |
| | ● | any member of the immediate family of any of the foregoing persons (including a spouse, parents, children, siblings, and in-laws). |
On September 15, 2022, Sparta provided notice to the Company to convert all of the issued and outstanding A-1 Preferred Shares into 16,200,000 shares of common stock. The board of directors of the Company approved the conversion and agreed that the Company would not charge any fee or expense for such conversion.
As of March 22, 2023, Sparta, our majority stockholder, entered into subscription agreements with 29 investors pursuant to which Sparta sold 4,764,547 shares of common stock of the Company for an aggregate purchase price of $12,975,348.18. The sale was made pursuant to an exemption from securities registration provided under Regulation S of the Securities Act. Accordingly, as of the date of this Annual Report on Form 10-K, Sparta is currently the holder of 11,455,645 shares of common, or approximately 38.71% of 29,591,164 stock issued and outstanding.
On July 5, 2024, the Company entered into a share purchase agreement with Mericorn Company, which is 25% held by Ms. Tin Sze Wai, the spouse of Tang Siu Fung, a significant shareholder of FWFW, for the sale of all of the equity in the Company’s wholly owned subsidiary, Mega Fortune, which is comprised of the Company’s subsidiaries Ponte Fides, QBS System and QBS System at consideration of HK$56,360,000 (or approximately $7,230,000). Mericone Company transferred 938 shares of Elison, or 9.38%, held in the name of Mericone Company to FWFW.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the fees paid or accrued for the audit and other services provided by our independent auditors for the years ended:
| | | September 30, 2024 | | | September 30, 2023 | |
| Audit and Quarterly Review Fees | | $ | 90,500 | | | $ | 145,550 | |
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| Exhibit Number | | Description |
| 3.1.1 | | Articles of Incorporation, filed as Exhibit 3.1 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on May 27, 2010. |
| | | |
| 3.1.2 | | Certificate of Amendment, effective April 26, 2013, filed as Exhibit 3.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 1, 2013. |
| | | |
| 3.1.3 | | Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of Nevada, filed as Exhibit 3.10 to Quarterly Report on Form 10-Q, for the period ended March 31, 2022, filed with the Securities and Exchange Commission on May 13, 2022. |
| | | |
| 3.2 | | Bylaws, filed as Exhibit 3.2 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on May 27, 2010. |
| | | |
| 3.4.1 | | Series A Convertible Preferred Stock Certificate of Designations, effective September 24, 2012, filed as Exhibit 3.1 to Registration Statement on Form S-1, filed with the Securities and Exchange Commission on September 26, 2012. |
| | | |
| 3.4.2 | | Amendment to the Certificate of Designation of the Series A-1 Preferred Stock as filed with the Secretary of State of the State of Nevada on September 15, 2022, filed as Exhibit 3.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on September 22, 2022. |
| | | |
| 3.4.3 | | Series B Non-Convertible Preferred Stock Certificate of Designations, effective November 8, 2012, filed as Exhibit 3.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 9, 2012. |
| | | |
| 3.4.4 | | Amended and Restated Series C Preferred Stock Certificate of Designation, effective October 18, 2013, filed as Exhibit 3.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 18, 2013. |
| | | |
| 3.4.5 | | Series D Convertible Preferred Stock Certificate of Designations, filed on October 16, 2012, filed as Exhibit 3.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 17, 2013. |
| | | |
| 10.1 | | Shareholder Agreement dated December 7, 2022, by and among Flywheel Advance Technology, Inc., So Ha Tsang, and Sau Ping Leung, filed as Exhibit 10.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 12, 2022. |
| | | |
| 10.2 | | Agency Agreement, dated December 7, 2022, by and between International Supply Chain Alliance Co., Ltd. and Blue Print Global, Inc., filed as Exhibit 10.2 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 12, 2022. |
| 10.3 | | Share Exchange Agreement, dated December 15, 2022, by and among Flywheel Advance Technology, Inc., QBS System Limited, and QBS Flywheel Limited., filed as Exhibit 10.3 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 16, 2022 |
| | | |
| 10.4 | | Form of Lock-Up Agreement, filed as Exhibit 10.4 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 10.5 | | Form of Non-Disclosure and Non-Compete Agreement, filed as Exhibit 10.5 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 10.6 | | Engagement Letters, dated April 1, 2022, between QBS System Limited and [redacted] for System IoT Business Process Outsourcing Services, filed as Exhibit 10.6 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 10.7 | | Engagement Letter, dated December 11, 2020, between QBS System Limited and [redacted] Security and Monitoring Services, filed as Exhibit 10.7 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 10.8 | | Facility Letter, dated April 27, 2020, from the Bank of China (Hong Kong) Limited to QBS System, filed as Exhibit 10.8 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 10.9 | | Facility Letter, dated October 10, 2020, from the Bank of China (Hong Kong) Limited to QBS System, filed as Exhibit 10.9 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 10.10 | | Facility Letter, dated June 28, 2021, from the Bank of China (Hong Kong) Limited to QBS System, filed as Exhibit 10.10 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 24, 2023 |
| | | |
| 99.1 | | Notice of Entry of Order Barring Claims and Terminating Custodianship, filed as Exhibit 99.1 to Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 16, 2020. |
| | | |
| 31.1 | | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302(a) of the Sarbanes-Oxley Act. |
| | | |
| 32.1 | | Certification of Chief Executive Officer and Chief Financial Officer Under Section 1350 as Adopted Pursuant Section 906 of the Sarbanes-Oxley Act |
| | | |
| 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) |
The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.
ITEM 16. FORM 10-K SUMMARY
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | FLYWHEEL ADVANCED TECHNOLOGY, INC. |
| | | |
| Dated: January 14, 2025 | By: | /s/ Luk Yuen Leung |
| | | Luk Yuen Leung Chief Executive Officer (Principal Executive Officer and Principal Financial Officer) |
