UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________________ to ______________
Commission file number
333-171046
MEGA WORLD FOOD HOLDING COMPANY
((Exact name of registrant as specified in its charter)
| Nevada | | 2030 | | 27-4715504 |
(State or other jurisdiction of incorporation or organization) | | (Primary Standard Industrial Classification Code Number) | | IRS I.D. |
Room C1D, 6/F, Wing Hing Industrial Building, 14 Hing Yip Street Kwun Tong, Kowloon Hong Kong | | |
| (Address of principal executive offices) | | (Zip Code) |
Issuer’s telephone number: 852-21101865
N/A
(Former name, former address and former three months, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller reporting company | x |
| (Do not check if a smaller reporting company) | | | |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
As of August 20, 2012 there were 25,000,000 shares issued and outstanding of the registrant’s common stock.
TABLE OF CONTENTS
| PART I | | | |
| | | | |
Item 1. | Financial Statements | | | 3 | |
Item 2. | Management’s Discussion and Analysis or Plan of Operation. | | | 21 | |
Item 3. | Quantitative and Qualitative Disclosure about Market Risk | | | 27 | |
Item 4. | Controls and Procedures. | | | 27 | |
| | | | | |
| PART II | | | | |
| | | | | |
Item 1. | Legal Proceedings. | | | 28 | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | | | 28 | |
Item 3. | Defaults Upon Senior Securities | | | 28 | |
Item 4. | Mine Safety Disclosures. | | | 28 | |
Item 5. | Other Information. | | | 28 | |
Item 6. | Exhibits. | | | 29 | |
| | SIGNATURES | | | 30 | |
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
MEGA WORLD FOOD HOLDING COMPANY
(A Development Stage Enterprise)
Unaudited Financial Statements
AS OF June 30, 2012
AND FOR THE PERIOD FROM JUNE 24, 2010
(DATE OF INCEPTION) TO June 30, 2012
Table of Contents
| Balance Sheets | | | 5 | |
| Statement of Operation | | | 6 | |
| Shareholders Equity | | | 7 | |
| Statement of Cash Flows | | | 8 | |
| Notes to Financial Statements | | | 9 | |
| Exhibit A | | | 20 | |
MEGA WORLD FOOD HOLDING COMPANY(A Development Stage Enterprise)CONSOLIDATED BALANCE SHEETS
| | | June 30 | | | September 30 | |
| | | 2012 | | | 2011 | |
| | | (Unaudited) | | | | |
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 3,904 | | | $ | 3,956 | |
| Prepaid rent deposit, net | | $ | 836 | | | $ | 8,362 | |
| Prepaid deposit to supplier | | $ | 38,000 | | | $ | 38,000 | |
| Total Current Assets | | $ | 42,740 | | | $ | 50,318 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 42,740 | | | $ | 50,318 | |
| | | | | | | | | |
| LIABILITIES & EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Account payable | | $ | 21,500 | | | $ | - | |
| Total Current Liabilities | | $ | 21,500 | | | $ | - | |
| | | | | | | | | |
| Other current liabilities: | | | | | | | | |
| Loan from shareholders | | $ | 85,236 | | | $ | 29,655 | |
| Total Other Current Liabilities | | $ | 85,236 | | | $ | 29,655 | |
| | | | | | | | | |
| Total Liabilities | | $ | 106,736 | | | $ | 29,655 | |
| | | | | | | | | |
| Stockholders' Equity: | | | | | | | | |
| Preferred stock, $0.001 par value; 10,000,000 shares | | | | | | | | |
| authorized; no shares issued and outstanding. | | | | | | | | |
| Common stock, $0.001 par value; 100,000,000 shares | | | | | | | | |
| authorized; 25,000,000 shares issued and | | | | | | | | |
| outstanding at June 30, 2012. | | $ | 25,000 | | | $ | 25,000 | |
| Paid-in capital | | $ | 73,125 | | | $ | 73,125 | |
| Deficit accumulated during the development stage | | $ | (162,161 | ) | | $ | (77,502 | ) |
| Accumulated other comprehensive income (loss) | | $ | 40 | | | $ | 40 | |
| Total stockholders' equity | | $ | (63,996 | ) | | $ | 20,663 | |
| | | | | | | | | |
| TOTAL LIABILITIES & EQUITY | | $ | 42,740 | | | $ | 50,318 | |
MEGA WORLD FOOD HOLDING COMPANY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF LOSS
| | | | | | | | | | | | | | | Cumulative from | |
| | | Nine Month Ended | | | Nine Month Ended | | | Three Month Ended | | | Three Month Ended | | | June 24, 2010 | |
| | | June 30, | | | June 30, | | | June 30, | | | June 30, | | | (Date of Inception) | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | | | to June 30, 2012 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Revenues: | | $ | - | | | $ | 20,000 | | | $ | - | | | $ | - | | | $ | 20,000 | |
| Cost of Goods Sold | | $ | - | | | $ | 16,800 | | | $ | - | | | $ | - | | | $ | 16,800 | |
| Gross Profit | | $ | - | | | $ | 3,200 | | | $ | - | | | $ | - | | | $ | 3,200 | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | |
| General and administrative expenses | | $ | 73,409 | | | $ | 28,206 | | | $ | 35,889 | | | $ | 21,541 | | | $ | 165,361 | |
| Total Operating Expenses | | $ | 73,409 | | | $ | 28,206 | | | $ | 35,889 | | | $ | 21,541 | | | $ | 165,361 | |
| Operating Loss | | $ | (73,409 | ) | | $ | (25,006 | ) | | $ | (35,889 | ) | | $ | (21,541 | ) | | $ | (162,161 | ) |
| Interest income, net | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Other Income, net | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Interest Expense, net | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Loss before taxes | | $ | (73,409 | ) | | $ | (25,006 | ) | | $ | (35,889 | ) | | $ | (21,541 | ) | | $ | (162,161 | ) |
| Loss tax expense | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Net Loss | | $ | (73,409 | ) | | $ | (25,006 | ) | | $ | (35,889 | ) | | $ | (21,541 | ) | | $ | (162,161 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss per common share-Basic | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| Net Loss per common share-Diluted | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustments | | | - | | | | (4 | ) | | | - | | | | - | | | | 40 | |
| Other comprehensive income (loss) | | $ | - | | | $ | (4 | ) | | $ | - | | | $ | - | | | $ | 40 | |
| Comprehensive Income (Loss) | | $ | (73,409 | ) | | $ | (25,010 | ) | | $ | (35,889 | ) | | $ | (21,541 | ) | | $ | (162,121 | ) |
MEGA WORLD FOOD HOLDING COMPANY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (Unaudited)
FOR THE PERIOD ENDED JUNE 30, 2012
| | | | | | | | | | | | Deficit | | | | | | | |
| | | | | | | | | | | | Accumulated | | | Accumulated | | | | |
| | | | | | | | | Additional | | | During the | | | Other | | | Total | |
| | | Common Stock | | | Paid-in | | | Development | | | Comprehensive | | | Stockholders' | |
| | | Shares | | | Amount | | | Capital | | | Stage | | | Income (Loss) | | | Equity | |
| June 24, 2010 | | | - | | | $ | - | | | $ | - | | | $ | - | | | | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Issued common stocks to founder at $0.001 per | | | | | | | | | | | | | | | | | | | | | | | |
| share for organization expenses on 9/14/2010 | | | 20,875,000 | | | $ | 20,875 | | | | | | | | | | | | | | $ | 20,875 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Issued common stocks to Williams @$0.01 per | | | | | | | | | | | | | | | | | | | | | | | |
| share for services rendered on 9/20/2010 | | | 250,000 | | | $ | 250 | | | $ | 2,250 | | | | | | | | | | $ | 2,500 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Issued common stocks to Jian Di @$0.01 per | | | | | | | | | | | | | | | | | | | | | | | |
| share for services rendered on 9/20/2010 | | | 2,475,000 | | | $ | 2,475 | | | $ | 22,275 | | | | | | | | | | $ | 24,750 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Issued common stocks to Yuan Su and Guoyong | | | | | | | | | | | | | | | | | | | | | | | |
| Xu @$0.01 per share for cash on 9/20/2010 | | | 1,000,000 | | | $ | 1,000 | | | $ | 9,000 | | | | | | | | | | $ | 10,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Issued common stocks to 40 shareholders | | | | | | | | | | | | | | | | | | | | | | | |
| @$0.1 per share for cash on 9/30/2010 | | | 400,000 | | | $ | 400 | | | $ | 39,600 | | | | | | | | | | $ | 40,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Adjustment for currency rate exchange | | | | | | | | | | | | | | | | | | $ | 40 | | | $ | 40 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the year ended September 30, 2010 | | | | | | | | | | | $ | (39,053 | ) | | | | | $ | (39,053 | ) |
| Balance, September 30, 2010 | | | 25,000,000 | | | $ | 25,000 | | | $ | 73,125 | | | $ | (39,053 | ) | | $ | 40 | | | $ | 59,112 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjustment for currency rate exchange | | | | | | | | | | | | | | | | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the year ended September 30, 2011 | | | | | | | | | | | $ | (49,699 | ) | | | | | $ | (49,699 | ) |
| Balance, September 30, 2011 | | | 25,000,000 | | | $ | 25,000 | | | $ | 73,125 | | | $ | (88,752 | ) | | $ | 40 | | | $ | 9,413 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjustment for currency rate exchange | | | | | | | | | | | | | | | | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for the period ended June 30, 2012 | | | | | | | | | | | $ | (73,409 | ) | | | | | $ | (73,409 | ) |
| Balance, June 30, 2012 | | | 25,000,000 | | | $ | 25,000 | | | $ | 73,125 | | | $ | (162,161 | ) | | $ | 40 | | | $ | (63,996 | ) |
MEGA WORLD FOOD HOLDING COMPANY
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
| | | | | | | | | | | | | | | Cumulative from | |
| | | Nine Month Ended | | | Nine Month Ended | | | Three Month Ended | | | Three Month Ended | | | June 24, 2010 | |
| | | June 30, | | | June 30, | | | June 30, | | | June 30, | | | (Date of Inception) | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | | | to June 30, 2012 | |
| | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
| Operating Activities: | | | | | | | | | | | | | | | |
| Net loss | | $ | (73,409 | ) | | $ | (25,006 | ) | | $ | (35,889 | ) | | $ | (21,541 | ) | | $ | (162,162 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Adjustments to reconcile net income to net cash | | | | | | | | | | | | | | | | | | | | |
| provided by operating activities: | | | | | | | | | | | | | | | | | | | | |
Non-cash portion of share based legal fee expense | | | - | | | | - | | | | - | | | | - | | | | 2,500 | |
Non-cash portion of share based consulting expense | | | - | | | | - | | | | | | | | - | | | | 24,750 | |
Prepaid rent deposit | | | 7,526 | | | | 7,526 | | | | 2,509 | | | | 2,509 | | | | (835 | ) |
Prepaid deposit to supplier | | | - | | | | (38,000 | ) | | | - | | | | - | | | | (38,000 | ) |
Accounts Payable | | | 15,250 | | | | - | | | | (6,000 | ) | | | - | | | | 20,000 | |
Loan from shareholders | | | 50,581 | | | | 8,740 | | | | 39,380 | | | | 7,240 | | | | 86,736 | |
Net cash provided by operating activities | | $ | (52 | ) | | $ | (46,740 | ) | | $ | - | | | $ | (11,792 | ) | | $ | (67,011 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Investing Activities: | | | | | | | | | | | | | | | | | | | | |
Net cash provided by investing activities | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | | | | | | | | | | |
| Financing Activities: | | | | | | | | | | | | | | | | | | | | |
Proceeds from issuance of common stock | | | - | | | | - | | | | - | | | | - | | | | 70,875 | |
Net cash provided by financing activities | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 70,875 | |
| | | | | | | | | | | | | | | | | | | | | |
Effect of Exchange Rate on Cash | | $ | - | | | $ | (4 | ) | | $ | - | | | $ | - | | | $ | 40 | |
| Net increase (decrease) in cash and cash equivalents | | $ | (52 | ) | | $ | (46,744 | ) | | $ | - | | | $ | (11,792 | ) | | $ | 3,904 | |
| Cash and cash equivalents at beginning of the period | | $ | 3,956 | | | $ | 50,750 | | | $ | 3,904 | | | $ | 15,798 | | | $ | - | |
| Cash and cash equivalents at end of period | | $ | 3,904 | | | $ | 4,006 | | | $ | 3,904 | | | $ | 4,006 | | | $ | 3,904 | |
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE A- BUSINESS DESCRIPTION
Organization
Mega World Food Holding Company (the Company) is a Nevada corporation formed on September 14, 2010. At September 14, 2010, the Company acquired 100% ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, owned 100% by founder, chairman and director, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 to founder, chairman and director, Mr. Xiaozhong Wu, to acquire 100% ownership of Mega World Food Limited (HK). Mega World Food Limited (HK) is wholly-owned subsidiary of the Company. The purpose of this transaction was solely to form a U.S. holding company for the business, and this transaction is considered as a combination between entities under common control under the guidance of FASB ASC 805-50-25-2 and 805-50-45.
The principal executive office is located at ROOM C1D, 6/F, WING HING INDUSTRIAL BUILDING, 14 HING YIP STREET, KWUN TONG, KOWLOON, HONG KONG. The U.S. address is 1995 Baring Blvd., Sparks, NV 89434.
Business
Through wholly-owned subsidiary Mega World Food Limited (HK), referred to as Mega World HK, the Company’s business is the sale of frozen vegetables in all areas of the world except China.
The Company will sell the following types of frozen vegetables: frozen bamboo shoots, frozen mulberry, frozen white cauliflower, frozen lotus root, frozen green soy bean, frozen broccoli, frozen rape flower, frozen snow bean and frozen sward bean.
These food products are produced in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our shareholder. Lin’an Fengye is currently the primary supplier of the products we sell. Under the distribution agreement, we are not prohibited from distributing products produced and supplied by entities other than the Supplier.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
Business (Continue)
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has further agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
Going Concern and Plan of Operation
The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is in the development stage and has not earned any revenues from operations to date. These conditions raise substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) ASC 915, “Development Stage Entities”. The Company has devoted substantially all of its efforts to establishing a new business and for which either of the following conditions exists: planned principal operations have not commenced; or the planned principal operations have commenced, but there has been no significant revenue there from. Due to the Company’s primary efforts was on the formation of new company, and there were no sales activities incurred, accordingly, the Company is considered as development stage entity.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and disclosures. Accordingly, actual results could differ from those estimates.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basis of accounting
The financial statements reflect the assets, revenues and expenditures of the Company on the accrued basis of accounting. The Company’s fiscal year end is the last day of September 30.
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of Mega World Food Holding Company and Mega World Food Limited (HK). All significant intercompany balances and transactions have been eliminated in consolidation
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2012, the company had cash and cash equivalents of $3,904.
Stock-Based Compensation
The Company accounts for stock issued for services using the fair value method. In accordance with FASB ASC 718, Stock-Based Compensation, the measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
The Company incurred legal fee of $2,500 and consulting fee of $24,750 by issuing common stocks after the service completed.
Basics and Diluted Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of Financial Accounting Standards (SFAS) ASC 260, Earnings per Share (EPS). ASC 260 requires presentation of basis and diluted EPS. Basic EPS is computed by dividing the income (loss) available to Common Shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.
As of June 30, 2012, the Company only issued one type of shares, i.e., common shares only. There are no other types securities were issued. Accordingly, the diluted and basics net loss per common share are the same.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant, and Equipment Depreciation
Property, plant, and equipment are stated at cost. Depreciation is being provided principally by straight line methods over the estimated useful lives of the assets. As of June 30, 2012, there were no fixed assets in the Company’s balance sheets.
Operating Expense
For the nine months ended June 30, 2012 and 2011, there was a total of $73,409 and $ 28,206 operating expenses respectively.
For the fiscal quarter ended June 30, 2012 and 2011, there was a total of $35,889 and $ 21,541 operating expenses respectively. Detail was showed in Exhibit A.
Operating Leases
The Company entered into a lease for its corporate offices in under terms of non-cancelable operating leases in Hong Kong. The lease term is from August 01, 2011 through July 31, 2012 and requires a HKD 6,500 monthly lease payment, and this office is located at Wing Hing Industrial Building, 14 Hing Yip Street, Kwun Tong, Kowloon, Hong Kong.
Comprehensive Income
The company’s comprehensive income is comprised of net income, unrealized gains and losses on marketable securities classified foreign currency translation adjustments, and unrealized gains and losses on derivative financial instruments related to foreign currency hedging.
Recent Accounting Pronouncements
The following pronouncements have become effective during the period covered by these financial statements or will become effective after the end of the period covered by these financial statements:
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
Recent Accounting Pronouncements ( Continue)
| Pronouncement | | Issued | | Title |
| ASC 605 | | October 2009 | | Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements – a consensus of the FASB Emerging Issues Task Force |
| ASC 860 | | December 2009 | | Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets |
| ASC 505 | | January 2010 | | Accounting for Distributions to Shareholders with Components of Stock and Cash – a consensus of the FASB Emerging Issues Task Force |
| ASC 810 | | January 2010 | | Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification |
| ASC 718 | | January 2010 | | Compensation – Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation |
| ASC 820 | | January 2010 | | Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements |
| ASC 810 | | February 2010 | | Consolidation (Topic 810): Amendments for Certain Investment Funds |
| ASC 815 | | March 2010 | | Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives |
| ASC-310 Receivables | | July 2010 | | For public entities, the disclosure as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. For nonpublic entities, the disclosures are effective for annual reporting period ending on or after December 15, 2011. |
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE C – RELATED PARTY TRANSACTIONS
Loans from Shareholders/Officers
Since the date of Company’s inception on June 24, 2010, the officers and directors of the Company have advanced the amount of $85,236 to the Company for incorporation and operation as of June 30, 2012. The outstanding balance is due on demand and no agreement was signed.
Cost of Goods Sold
These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our shareholder. Lin’an Fengye is currently the main supplier of the Company. Under the distribution agreement, we are not prohibited from distributing products produced and supplied by entities other than the Supplier.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers.
Prepaid Deposit to Supplier
In March 2011, the Company prepaid $ 38,000 deposit to supplier, Lin’an Fengye Food Co., Ltd, for ensuring timely delivery for later purchases.
Therefore, as of June 30, 2012, the Company had $ 38,000 prepaid deposit to supplier.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE D – SHAREHOLDERS’ EQUITY
Common Stock
Under the Company’s Articles of Incorporation of the Company, the Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.001; and 10,000,000 shares of preferred stocks with par value of $0.001.
Mega World Food Holding Company (the Company) is a Nevada corporation formed on September 14, 2010. On September 14, 2010, the Company acquired 100% of ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, and owned 100% by founder, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 for the total amount of $14,972.12 to Mr. Xiaozhong Wu to exchange the ownership of the Mega World Food Limited (HK), for the same amount of value of Mega World Food Limited (HK). After the acquisition, Mega World Food Limited (HK) is wholly-owned subsidiary of the Company.
The Company issued shares as listed as follows:
| | | Common Stock | |
| | | Shares | |
| | | | |
| Issued common stocks to founder at $0.001 per share | | | |
| for organization expenses on 9/14/2010 | | | 14,972,120 | |
| | | | | |
| Issued common stocks to founder at $0.001 per share | | | | |
| for consulting expenses paid by cash on 9/14/2010 | | | 5,902,880 | |
| | | | | |
| Issued common stocks to Williams @$0.01 per share | | | | |
| for services rendered on 9/20/2010 | | | 250,000 | |
| | | | | |
| Issued common stocks to Jian Di @$0.01 per share | | | | |
| for services rendered on 9/20/2010 | | | 2,475,000 | |
| | | | | |
| Issued common stocks to Yuan Su and Guoyong Xu | | | | |
| @$0.01 per share for cash on 9/20/2010 | | | 1,000,000 | |
| | | | | |
| Issued common stocks to 40 shareholders | | | | |
| @$0.1 per share for cash on 9/30/2010 | | | 400,000 | |
| | | | | |
| Balance, December 31, 2010 | | | 25,000,000 | |
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE D – SHAREHOLDERS’ EQUITY (Continued)
On September 30, 2010, the Company issued 25,000,000 shares of its common stock to total 45 shareholders, including restricted shares issued to Founder, Xiaozhong Wu, consultant JianDi & Yuan Su; and non-affiliated other 42 shareholders, equal to the equity value of $59,112.
The restricted common shares were issued as follows:
| | | Total Shares | | | % | |
| | | | | | | |
| Xiaozhong Wu, Chairman & CEO | | | 20,875,000.00 | | | | 83.50 | % |
| Jian Di* | | | 2,475,000.00 | | | | 9.90 | % |
| Yuan Su* | | | 500,000.00 | | | | 2.00 | % |
| | | | | | | | | |
| Total | | | 23,850,000.00 | | | | 95.40 | % |
_______
* Jian Di and Yuan Su are husband and wife.
The percentage calculation is based on the total outstanding 25,000, 000 shares
There were no any shares issued for the period from October 1 to March 31, 2012.
On May 25, 2012, Mr. Wu resigned as Chairman, CEO and Director, and transferred the following shares to the following individuals who were the same date elected new officers and directors with the title, age and percentage ownership as set forth below:
| Name | Title | Age | Number of Shares of Common Stock | Percentage |
| Lingling Wang | CEO and Director | 37 | 11,000,000 | 44.00% |
| Lin Xiang Wang | General Manager and Director | 33 | 500,000 | 2.00% |
| Guangqing Chen | Vice General Manager and Director | 44 | 500,000 | 2.00% |
| Hanjun Shi | Vice Manager | 34 | 30,000 | 0.12% |
| Ke Wu | CFO/Principal Accounting Officer | 21 | 20,000 | 0.08% |
| Shaoyun Zhou | Manager | 30 | 50,000 | 0.20% |
| Total | | | 12,100,000 | 48.40% |
Therefore, as of June 30, 2012, there was total share of 25,000,000 outstanding.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE E – Acquisition of Mega World Food Limited (HK)
On September 14, 2010, the Mega World Food Holding Company (the Company) acquired the 100% ownership of a Hong Kong company, Mega World Food Limited (HK) owned by Mr. Xiaozhong Wu. Mega World Food Limited (HK) was incorporated on June 24, 2010, and incurred setting up, formation or organization activities since June 24, 2010. Mega World Food Limited (HK) is wholly-owned subsidiary of the Company. The purpose of this transaction was solely to form a U.S. holding company for the business, and this transaction is considered as a combination between entities under common control under the guidance of FASB ASC 805-50-25-2 and 805-50-45.
Under the guidance of FASB ASC 805-50-25-2 and 805-50-45, the accounting of the two entities combination was recorded as combined two entities’ book value, or pooling of interest accounting.
The Company incurred registration fee, travel expense, and rent expense for setting up Mega World Food Limited in Hong Kong from June 24, 2010 to September 14, 2010. The total expense incurred in Hong Kong prior September 14, 2010, the inception date of Mega World Food Holding Company incorporated in the State of Nevada, was fully expensed and listed as follows:
| Mega World Food Limited (HK) Expense Prior 9/14/201 | | | |
| Bank Service Charges | | | 61.75 | |
| Registration Fee | | | 2,947.05 | |
| Rent Expense | | | 1,226.44 | |
| Travel Expense | | | 1,218.69 | |
| Total Expense Prior 9/14/2010 | | | 5,453.93 | |
The following table summarizes the amounts recognized for assets and liabilities assumed as of the acquisition date, September 14, 2010.
As of September 14, 2010:
| HSBC Bank Balance | | $ | 710.15 | |
| Prepaid Rent Deposit | | $ | 8,808.04 | |
| Loan from Mr. Xiaozhong Wu | | $ | 14,972.12 | |
At September 14, 2010, total consideration of $14,972.12 (common shares of 14,972,120 at $0.001) was transferred to Mr. Xiaozhong Wu.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE F– GOING CONCERN
The Company is currently in the development stage and their activities consist solely of corporate formation, raising capital, and attempting to sell products to generate revenues.
There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations and carry out its business plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern
The financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.
The Company’s lack of operating history and financial resources raise substantial doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations.
NOTE G – INCOME TAXES
The Company has incurred net losses since inception. The Company has not reflected any benefit of such net operating loss carry forward in the accompanying financial statements. The net operating loss can be carried forward for 15 years.
The income tax benefit differed from the amount computed by applying the estimated US federal income tax rate of 15% to net loss as a result of the following:
| | | 2010 | |
| Computed expected tax benefit | | | (15.00 | ) % |
| State income tax, net of federal benefit | | | (7.30 | ) |
| Valuation allowance | | | 22.30 | |
| | | | | |
| Income tax benefit | | | - | % |
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets as of December 31, 2010 is presented below:
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE G – INCOME TAXES (Continued)
Deferred Tax Assets:
| | | 2010 | |
| Valuation allowance | | $ | 2,947 | |
| Registration Fee for start-up costs | | | (2,947 | ) |
| Net deferred tax assets | | $ | - | |
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.
Based upon the lack of historical taxable income and uncertain projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes that it is more likely than not that the Company will not realize the benefits of these deductible differences. Accordingly, the Company has provided a valuation allowance against the net deferred tax assets aggregating $2,947 as of December 31, 2010.
Exhibit A
| | | | | | | | | | | | | | | Cumulative from | |
| | | Nine Month Ended | | | Nine Month Ended | | | Three Month Ended | | | Three Month Ended | | | June 24, 2010 | |
| | | June 30, | | | June 30, | | | June 30, | | | June 30, | | | (Date of Inception) | |
| Expense | | 2012 | | | 2011 | | | 2012 | | | 2011 | | | to June 30, 2012 | |
| Bank Service Charges | | | 116 | | | | 129 | | | | 20 | | | | - | | | | 382 | |
| Postage and Delivery | | | - | | | | 19 | | | | - | | | | - | | | | 19 | |
| Registration fee | | | 2,117 | | | | 990 | | | | 310 | | | | 990 | | | | 7,164 | |
| Professional Fees | | | | | | | | | | | | | | | | | | | | |
| Auditing/Accounting Fee | | | 22,500 | | | | - | | | | 5,000 | | | | - | | | | 27,500 | |
| Consulting Expense | | | 21,750 | | | | | | | | 21,750 | | | | | | | | 52,403 | |
| SEC filling Fee | | | - | | | | - | | | | - | | | | - | | | | 3,500 | |
| Legal fee | | | 18,000 | | | | 6,250 | | | | 5,500 | | | | 6,250 | | | | 39,250 | |
| Total Professional Fees | | | 62,250 | | | | 6,250 | | | | 32,250 | | | | 6,250 | | | | 122,653 | |
| Rent Expense | | | 7,526 | | | | 7,526 | | | | 2,509 | | | | 2,509 | | | | 19,233 | |
| Travel Expense | | | - | | | | - | | | | - | | | | - | | | | 1,219 | |
| SEC Edgarzation Fee | | | - | | | | 1,500 | | | | - | | | | - | | | | 1,500 | |
| Transfer Agent Service | | | 1,400 | | | | 11,792 | | | | 800 | | | | 11,792 | | | | 13,192 | |
| Total Expense | | | 73,409 | | | | 28,206 | | | | 35,889 | | | | 21,541 | | | | 165,361 | |
Item 2. Management’s Discussion and Analysis or Plan of Operation.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form 10-Q.
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
We will continue to sell frozen vegetable products through our wholly-owned subsidiary Mega World Food Limited, referred to as Mega World Limited, our business is the sale of frozen vegetables in all areas of the world except China.
We sell the following types of frozen vegetables: frozen bamboo shoots, frozen mulberry, frozen white cauliflower, frozen lotus root, frozen green soy bean, frozen broccoli, frozen rape flower, frozen snow bean and frozen sward bean.
These food products are produced in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our shareholder. Lin’an Fengye is currently the primary supplier of the products we sell. Under the distribution agreement, we are not prohibited from distributing products produced and supplied by entities other than the Supplier.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has further agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
Since inception, we have generated an aggregate of $20,000 of revenues from the sale of frozen vegetables.
We are currently assessing all possible alternatives to increase the Company’s revenues in future periods which may result in modification to our current business plan. However, we currently have no binding contract, agreement or commitment in that respect.
Results of Operations
For the three months ended June 30, 2012 vs. June 30, 2011:
Revenue
Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.
For the three months ended June 30, 2012 and June 30, 2011, the Company incurred $ 0.00 revenue, respectively.
Cost of Revenue
Our food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our shareholder. Lin’an Fengye is currently the main supplier of the Company. The management believes that the purchase price from Lin’an Fengye will be market price.
For the three months period ended June 30, 2012 and June 30, 2011, the total cost of goods sold was $0 respectively.
Expense
Our operating expenses consist of selling, general and administrative expenses.
For three month period ending June 30, 2012 and 2011, there was a total of $35,889 and $21,541 operating expenses respectively.
| | | Three Month Ended | | | Three Month Ended | |
| | | June 30, | | | June 30, | |
| Expense | | 2012 | | | 2011 | |
| Bank Service Charges | | | 20 | | | | - | |
| Postage and Delivery | | | - | | | | - | |
| Registration fee | | | 310 | | | | 990 | |
| Professional Fees | | | | | | | | |
| Auditing/Accounting Fee | | | 5,000 | | | | - | |
| Consulting Expense | | | 21,750 | | | | | |
| SEC filling Fee | | | - | | | | - | |
| Legal fee | | | 5,500 | | | | 6,250 | |
| Total Professional Fees | | | 32,250 | | | | 6,250 | |
| Rent Expense | | | 2,509 | | | | 2,509 | |
| Travel Expense | | | - | | | | - | |
| SEC Edgarzation Fee | | | - | | | | - | |
| Transfer Agent Service | | | 800 | | | | 11,792 | |
| Total Expense | | | 35,889 | | | | 21,541 | |
We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
Income Taxes
We are subject to income taxes in the U.S., while the subsidiary in Hong Kong is subject to the income tax laws of Hong Kong. Due to the accumulative net loss, we would not subject to both US and Hong Kong’s income taxes yet.
Net Income (Loss)
As a result of the foregoing, we incurred net loss of $35,889 for the three month period ended June 30, 2012, and net loss of $21,541 for the three month period ended June 30, 2011, respectively.
Income Taxes
We are subject to income taxes in the U.S., while the subsidiary in Hong Kong is subject to the income tax laws of Hong Kong. Due to the accumulative net loss, we would not subject to both US and Hong Kong’s income taxes yet.
For the Nine months ended June 30, 2012 vs. June 30, 2011:
Revenue
Revenues are recognized from product sales upon shipment, which is the point in time when risk of loss is transferred to the customer, net of estimated returns and allowances.
For the nine months ended June 30, 2012 and June 30, 2011, the Company incurred $ 0 and $ 20,000 revenue, respectively.
Cost of Revenue
Our food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our shareholder. Lin’an Fengye is currently the main supplier of the Company. The management believes that the purchase price from Lin’an Fengye will be market price.
For the nine months period ended June 30, 2012 and June 30, 2011, the total cost of goods sold was $0 and $ 16,800 respectively.
Expense
Our operating expenses consist of selling, general and administrative expenses.
For nine month period ending June 30, 2012 and 2011, there was a total of $ 73,409 and $ 28,206 operating expenses.
| | | | | | | | | Cumulative from | |
| | | Nine Month Ended | | | Nine Month Ended | | | June 24, 2010 | |
| | | June 30, | | | June 30, | | | (Date of Inception) | |
| Expense | | 2012 | | | 2011 | | | to June 30, 2012 | |
| Bank Service Charges | | | 116 | | | | 129 | | | | 382 | |
| Postage and Delivery | | | - | | | | 19 | | | | 19 | |
| Registration fee | | | 2,117 | | | | 990 | | | | 7,164 | |
| Professional Fees | | | | | | | | | | | | |
| Auditing/Accounting Fee | | | 22,500 | | | | - | | | | 27,500 | |
| Consulting Expense | | | 21,750 | | | | | | | | 52,403 | |
| SEC filling Fee | | | - | | | | - | | | | 3,500 | |
| Legal fee | | | 18,000 | | | | 6,250 | | | | 39,250 | |
| Total Professional Fees | | | 62,250 | | | | 6,250 | | | | 122,653 | |
| Rent Expense | | | 7,526 | | | | 7,526 | | | | 19,233 | |
| Travel Expense | | | - | | | | - | | | | 1,219 | |
| SEC Edgarzation Fee | | | - | | | | 1,500 | | | | 1,500 | |
| Transfer Agent Service | | | 1,400 | | | | 11,792 | | | | 13,192 | |
| Total Expense | | | 73,409 | | | | 28,206 | | | | 165,361 | |
We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
Income Taxes
We are subject to income taxes in the U.S., while the subsidiary in Hong Kong is subject to the income tax laws of Hong Kong. Due to the accumulative net loss, we would not subject to both US and Hong Kong’s income taxes yet.
Net Income (Loss)
As a result of the foregoing, we incurred net loss of $73,409 for the nine month period ended June 30, 2012, and net loss of $25,006 for the nine month period ended June 30, 2011, respectively.
Commitments and Contingencies
Our food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our shareholder. Lin’an Fengye is currently the primary supplier of the products we sell.
Foreign Currency Translation
The Company has determined the United States dollars to be its functional currency for Mega World Food Holding Company; Hong Kong dollars to be its functional currency in Hong Kong’s Mega World Food Limited (Hong Kong). Assets and liabilities were translated to U.S. dollars at the period-end exchange rate. The exchange rate of issuance of common stocks to shareholders was used as one U.S. dollar to 7.773 Hong Kong dollar. Statement of operations amounts were translated to U.S. dollars using the historic rate, i.e., the rate at first date of each month during the year. Gains and losses resulting from translating foreign currency financial statements are accumulated in other comprehensive income (loss), a separate component of shareholders’ equity.
Liquidity and Capital Resources
| | | At June 30 | | | At June 30 | | | At September 30 | |
| | | 2012 | | | 2011 | | | 2011 | |
| | | | | | | | | | |
| Current Ratio* | | | 0.40 | | | | 4.90 | | | | 1.70 | |
| Cash | | $ | 3,904 | | | $ | 4,006 | | | $ | 3,956 | |
| Working Capital | | $ | (63,996 | ) | | $ | 34,102 | | | $ | 20,663 | |
| Total Assets | | $ | 42,740 | | | $ | 42,842 | | | $ | 50,318 | |
| Total Liabilities | | $ | 106,736 | | | $ | 8,740 | | | $ | 29,655 | |
| | | | | | | | | | | | | |
| Total Equity | | $ | (63,996 | ) | | $ | 34,102 | | | $ | 20,663 | |
| | | | | | | | | | | | | |
| Total Debt/Equity** | | | -1.67 | | | | 0.26 | | | | 1.44 | |
___________
*Current Ratio = Current Assets /Current Liabilities
** Total Debt / Equity = Total Liabilities / Total Shareholders Equity.
The Company had cash and cash equivalents of $3,904 at June 30, 2012 and the negative working capital of ($ 63,996).
The total debt of $ 106,736 as of June 30, 2012 that is included loans from shareholder and professional fee payable.
Until we generate additional operating revenues or receive other financing, all our costs, which we will incur irrespective of our business development activities, including bank service fees and those costs associated with SEC requirements associated with staying public, estimated to be less than $75,000 annually will be funded by our former President under the Funding Agreement. There is no dollar limit to the amount he has agreed to provide. If we fail to meet these requirements, we may lose our qualification and our securities would no longer trade on the over the counter bulletin board. Further, if we fail to meet these obligations and as a consequence we fail to satisfy our SEC reporting obligations, investors will then own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting.
In addition, we will need to secure a minimum of $212,000 in funds to finance our currently anticipated business plan to focus on frozen vegetable production and sales in overseas market in the next 12 months, in addition to the funds which will be used to stay public and for business development and sales and marketing. However in order to become profitable we may still need to secure additional debt or equity funding. We hope to be able to raise additional funds from an offering of our stock in the future. However, this offering may not occur, or if it occurs, may not raise the required funding. We do not have any plans or specific agreements for new sources of funding, except for the anticipated loans from management as described below, or any planned material acquisitions.
On March 22, 2011, we entered into a Funding Agreement with Xiaozhong Wu, our former president and Director (Lender) to provide operational and going and staying public funding for us as follows:
1. FUNDING
The Company requires and will continue to require funding for the Company for its operations and for the Company’s going and staying public in the U.S., including but not limited to legal, accounting, EDGAR, filing, corporate and other fees and expenses (the “Funding”). Lender agrees to provide all Funding needed by the Company for its operations and for the Company’s going and staying public in the U.S. on the terms and conditions set forth in the Agreement.
2. TERM
The term of the Agreement began as of the date of this Agreement and terminates when the Company generates operating revenues or receives other financing in amounts necessary to fund its operations and for the Company’s going and staying public in the U.S., including but not limited to legal, accounting, EDGAR, filing, corporate and other fees and expenses.
3. FUNDING TERMS
The Funding will be provided by Lender on a non-interest bearing basis due upon demand. There is no limit on the amount of Funding which must be provided under the Agreement, and Lender agrees to provide all needed Funding. Lender further represents that he has sufficient liquid assets to meet all of Funding obligations under the Agreement.
Our lack of revenues raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company has established disclosure controls and procedures to ensure that information required to be disclosed in this quarterly report on Form 10-Q was properly recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. The Company’s controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers to allow timely decisions regarding required disclosure.
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) at June 30, 2012 based on the evaluation of these controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, at June 30, 2012, our disclosure controls and procedures are not effective.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Unregistered Sales of Equity Securities.
The Registrant did not sell any unregistered securities during the three months ended June 30, 2012.
(b) Use of Proceeds.
The Registrant did not sell any unregistered securities during the three months ended June 30, 2012.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Not applicable.
(a) Exhibits.
| Exhibit No. | | Document Description |
| | | |
| 31.1 | | CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. |
| | | |
| 31.2 | | CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. |
| | | |
| 32.1 * | | CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002 |
| | | |
| 32.2 * | | CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002 |
| | | |
| Exhibit 101 | | Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.** |
| | | |
| 101.INS | | XBRL Instance Document** |
| | | |
| 101.SCH | | XBRL Taxonomy Extension Schema Document** |
| | | |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document** |
| | | |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document** |
| | | |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document** |
| | | |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document** |
_________
* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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.
MEGA WORLD FOOD HOLDING COMPANY, a Nevada corporation
| Title | | Name | | Date | | Signature |
| Principal Executive Officer | | Lingling Wang | | August 20, 2012 | | /s/ Lingling Wang |
In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| SIGNATURE | | NAME | | TITLE | | DATE |
| | | | | | | |
| /s/ Lingling Wang | | Lingling Wang | | Principal Executive Officer and Director | | August 20, 2012 |
| | | | | | | |
| /s/ Ke Wu | | Ke Wu | | Principal Financial Officer and Principal Accounting Officer | | August 20, 2012 |
EXHIBIT INDEX
| Exhibit No. | | Document Description |
| | | |
| 31.1 | | CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. |
| | | |
| 31.2 | | CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. |
| | | |
| 32.1 * | | CERTIFICATION of CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002 |
| | | |
| 32.2 * | | CERTIFICATION of CFO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002 |
| | | |
| Exhibit 101 | | Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.** |
| | | |
| 101.INS | | XBRL Instance Document** |
| | | |
| 101.SCH | | XBRL Taxonomy Extension Schema Document** |
| | | |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document** |
| | | |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document** |
| | | |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document** |
| | | |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document** |
_________
* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
31
