UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
☐ 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. 333-271858
DFP HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)
Nevada | 32-0672927 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1/F., No. 22, Lane 50, Section 3, Nangang Road
Nangang District, Taipei City 115607
Taiwan
(Address of principal executive offices, zip code)
Tel: (886) 2 8772 2001
(Registrant’s telephone number, including area code)
Indicate by check mark if 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 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the issuer (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 ☒. No ☐
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 ☒ No ☐
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. (check one):
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 Exchange Act Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒. No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
There is no public trading market for the shares of Common Stock of DFP Holdings Limited. As a result, the aggregate market value of the common units held by non-affiliates of DFP Holdings Limited cannot be determined.
As of August 9, 2024, there were shares of Common Stock, $ par value per share, outstanding.
DFP HOLDINGS LIMITED
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2024
INDEX
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of DFP Holdings Limited, a Nevada corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results.
Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions, and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward - looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
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PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
DFP HOLDINGS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2024 (UNAUDITED) AND SEPTEMBER 30, 2023
(Expressed in U.S. Dollars)
June 30, 2024 | September 30, 2023 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,138,243 | $ | 763,591 | ||||
Other current assets-deposits | 102,141 | 15,095 | ||||||
Prepaid expenses-related party | 10,101 | 25,357 | ||||||
Total current assets | 2,250,485 | 804,043 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 61,886 | 12,767 | ||||||
TOTAL ASSETS | $ | 2,312,371 | $ | 816,810 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 79,275 | $ | 73,325 | ||||
Deferred revenue | 131,876 | 28,698 | ||||||
Due to officer | 1,685 | 4,257 | ||||||
Total liabilities | 212,836 | 106,280 | ||||||
Stockholders’ equity: | ||||||||
Preferred Stock, $ | par value; shares authorized; shares issued and outstanding- | - | ||||||
Common Stock, $ | par value; shares authorized; and shares issued and outstanding at June 30, 2024 and September 30, 2023, respectively21,678 | 21,386 | ||||||
Additional paid in capital | 3,610,522 | 2,148,714 | ||||||
Accumulated other comprehensive loss | (14,265 | ) | (12,561 | ) | ||||
Accumulated deficit | (1,518,400 | ) | (1,447,009 | ) | ||||
Total stockholders’ equity | 2,099,535 | 710,530 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,312,371 | $ | 816,810 |
See accompanying notes to the condensed consolidated financial statements.
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DFP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 AND 2023
(Expressed in U.S. Dollars)
(Unaudited)
2024 | 2023 | 2024 | 2023 | |||||||||||||
Three months ended June 30, | Nine months ended June 30, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
REVENUES: | ||||||||||||||||
Service revenues | $ | 439,266 | $ | 272,461 | $ | 968,941 | $ | 765,866 | ||||||||
OPERATING COSTS AND EXPENSES: | ||||||||||||||||
Cost of service revenues | 45,891 | 54,823 | 115,071 | 155,643 | ||||||||||||
General and administrative expense | 338,170 | 232,748 | 873,054 | 585,962 | ||||||||||||
General and administrative expense-related party | 15,146 | 15,558 | 45,926 | 246,708 | ||||||||||||
Impairment of prepaid application development fee-related party | - | - | - | 450,000 | ||||||||||||
Total operating costs and expenses | 399,207 | 303,129 | 1,034,051 | 1,438,313 | ||||||||||||
INCOME (LOSS) FROM OPERATIONS | 40,059 | (30,668 | ) | (65,110 | ) | (672,447 | ) | |||||||||
OTHER INCOME: | ||||||||||||||||
Interest income | 12,813 | 4,256 | 17,994 | 7,722 | ||||||||||||
INCOME (LOSS) BEFPRE INCOME TAX | 52,872 | (26,412 | ) | (47,116 | ) | (664,725 | ) | |||||||||
Income taxes | (24,275 | ) | (22,944 | ) | (24,275 | ) | (22,944 | ) | ||||||||
NET INCOME (LOSS) | 28,597 | (49,356 | ) | (71,391 | ) | (687,669 | ) | |||||||||
Other comprehensive (loss) income: | ||||||||||||||||
-Foreign currency translation (loss) income | (4,732 | ) | (2,311 | ) | (1,704 | ) | 925 | |||||||||
COMPREHENSIVE INCOME (LOSS) | $ | 23,865 | $ | (51,667 | ) | $ | (73,095 | ) | $ | (686,744 | ) | |||||
NET INCOME (LOSS) PER SHARE | $ | $ | ) | $ | ) | $ | ) | |||||||||
WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUTSTANDING |
See accompanying notes to the condensed consolidated financial statements.
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DFP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 AND 2023
(Expressed in U.S. Dollars)
Three months ended June 30, 2024 (Unaudited)
Number of Shares | Amount | Paid-in Capital | Comprehensive Loss | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Comprehensive Loss | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||
Balance as of March 31, 2024 (Unaudited) | 216,779,700 | $ | 21,678 | $ | 3,610,522 | $ | (9,533 | ) | $ | (1,546,997 | ) | $ | 2,075,670 | |||||||||||
Foreign currency translation | - | - | - | (4,732 | ) | - | (4,732 | ) | ||||||||||||||||
Net income | - | - | - | - | 28,597 | 28,597 | ||||||||||||||||||
Balance as of June 30, 2024 (Unaudited) | 216,779,700 | $ | 21,678 | $ | 3,610,522 | $ | (14,265 | ) | $ | (1,518,400 | ) | $ | 2,099,535 |
Nine months ended June 30, 2024 (Unaudited)
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Comprehensive Loss | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||
Balance as of September 30, 2023 | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (12,561 | ) | $ | (1,447,009 | ) | $ | 710,530 | |||||||||||
Common Stock issued for cash | 2,924,200 | 292 | 1,461,808 | - | - | 1,462,100 | ||||||||||||||||||
Foreign currency translation | - | - | - | (1,704 | ) | - | (1,704 | ) | ||||||||||||||||
Net loss | - | - | - | - | (71,391 | ) | (71,391 | ) | ||||||||||||||||
Balance as of June 30, 2024 (Unaudited) | 216,779,700 | $ | 21,678 | $ | 3,610,522 | $ | (14,265 | ) | $ | (1,518,400 | ) | $ | 2,099,535 |
Three months ended June 30, 2023 (Unaudited)
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Comprehensive Loss | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||
Balance as of March 31, 2023 (Unaudited) | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (1,379 | ) | $ | (1,370,990 | ) | $ | 797,731 | |||||||||||
Foreign currency translation | - | - | - | (2,311 | ) | - | (2,311 | ) | ||||||||||||||||
Net loss | - | - | - | - | (49,356 | ) | (49,356 | ) | ||||||||||||||||
Balance as of June 30, 2023 (Unaudited) | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (3,690 | ) | $ | (1,420,346 | ) | $ | 746,064 |
Nine months ended June 30, 2023 (Unaudited)
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||
Number of Shares | Amount | Paid-in Capital | Comprehensive Loss | Accumulated Deficit | Stockholders’ Equity | |||||||||||||||||||
Balance as of September 30, 2022 | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (4,615 | ) | $ | (732,677 | ) | $ | 1,432,808 | |||||||||||
Balance | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (4,615 | ) | $ | (732,677 | ) | $ | 1,432,808 | |||||||||||
Foreign currency translation | - | - | - | 925 | - | 925 | ||||||||||||||||||
Net loss | - | - | - | - | (687,669 | ) | (687,669 | ) | ||||||||||||||||
Net Income (loss) | - | - | - | - | (687,669 | ) | (687,669 | ) | ||||||||||||||||
Balance as of June 30, 2023 (Unaudited) | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (3,690 | ) | $ | (1,420,346 | ) | $ | 746,064 | |||||||||||
Balance | 213,855,500 | $ | 21,386 | $ | 2,148,714 | $ | (3,690 | ) | $ | (1,420,346 | ) | $ | 746,064 |
See accompanying notes to the condensed consolidated financial statements.
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DFP HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2024 AND 2023
(Expressed in U.S. Dollars)
(Unaudited)
2024 | 2023 | |||||||
Nine months ended June 30, | ||||||||
2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (71,391 | ) | $ | (687,669 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 4,234 | 1,767 | ||||||
Impairment of prepaid application development fee-related party | - | 450,000 | ||||||
Changes in operating assets and liabilities: | ||||||||
Other current assets-deposits | (87,046 | ) | 6,370 | |||||
Prepaid expenses-related party | 15,256 | (107 | ) | |||||
Accounts payable and accrued liabilities | 5,950 | 14,921 | ||||||
Deferred revenue | 103,178 | 26,877 | ||||||
Net cash used in operating activities | (29,819 | ) | (187,841 | ) | ||||
Cash flows from investing activities: | ||||||||
Prepaid application development fee-related party | - | (450,000 | ) | |||||
Purchase of property and equipment | (50,607 | ) | (14,958 | ) | ||||
Net cash used in investing activities | (50,607 | ) | (464,958 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from sales of common stock | 1,462,100 | - | ||||||
Repayment to officer | (2,572 | ) | (13,042 | ) | ||||
Net cash provided by (used in) financing activities | 1,459,528 | (13,042 | ) | |||||
Effect of exchange rate changes in cash and cash equivalents | (4,450 | ) | 908 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 1,374,652 | (664,933 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 763,591 | 1,461,506 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 2,138,243 | $ | 796,573 | ||||
Supplemental information | ||||||||
Income taxes paid | $ | 24,209 | $ | 22,944 |
See accompanying notes to the condensed consolidated financial statements.
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DFP HOLDINGS LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2024 AND 2023
(Expressed in U.S. Dollars)
(Unaudited)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business
DFP Holdings Limited, a Nevada corporation (the “Company”), was incorporated in the State of Nevada on December 8, 2021. The Company provides online and offline educational services in Taiwan. The Company has a September 30 fiscal year end.
On March 8, 2022, the Company’s wholly owned subsidiary, DFP Holdings Limited, was formed in Seychelles (the “Seychelles Company”). The Seychelles Company is an intermediate holding company, and operates business through its wholly owned subsidiary, DFP Holdings Limited, a company incorporated in Taiwan (the “Taiwan Company”).
On May 24, 2022, the Company acquired 100% of Tide Holdings Limited (“TIDE”), a company incorporated in Seychelles from Mr. Hsu Shou Hung, the CEO of the Company, for $1.
Going concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements for the nine months ended June 30, 2024, the Company incurred a net loss of $71,391 and used cash in operations of $29,819. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that these financial statements are issued. The Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended September 30, 2023, has also expressed substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan to increase its customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
Risks & uncertainties resulting from inflation, COVID-19, and geopolitical instability
As a result of the COVID-19 pandemic and actions taken to slow its spread, the ongoing military conflict between Russia and Ukraine, and other geopolitical and macroeconomic factors beyond our control, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.
If equity and credit markets deteriorate, it may affect our ability to raise equity capital, borrow on our existing facilities, access our existing cash, or make any additional necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.
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Basis of presentation
The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Tide Holdings Limited (TIDE), DFP Holdings Limited (Seychelles) (the “Seychelles Company”), and DFP Holdings Limited (Taiwan) (the “Taiwan Company”). Intercompany accounts and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. Significant estimates include estimates for assumptions used in impairment testing of long-term assets, and the accrual of potential liabilities.
Revenue recognition
The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, following the five-step model prescribed by ASC 606, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
The Company’s revenue consists of revenue from providing online and offline educational services (“service revenue”). Revenue is recognized in the period in which the services are delivered, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contract. The Company recognizes revenue from subscription services rateably over the subscription period. The Company recognizes deferred revenue at each period end for contracts that have been paid but which the related service has not been performed or delivered.
Cost of revenue
Cost of service revenue primarily consists of advertising and promotion fee, and facility rentals directly attributable to the services rendered.
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Cash and cash equivalents
Cash equivalents include demand deposits placed with banks or other financial institutions and all highly liquid investments with original maturities at purchase of three months or less, including money market funds.
SCHEDULE OF CASH AND CASH EQUIVALENTS
As of June 30, 2024 | As of September 30, 2023 | |||||||
(Unaudited) | ||||||||
Cash and cash equivalents | ||||||||
Denominated in United States Dollars | $ | 1,871,022 | $ | 480,406 | ||||
Denominated in New Taiwan Dollars | 267,221 | 283,185 | ||||||
Cash and cash equivalents | $ | 2,138,243 | $ | 763,591 |
Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash. As of June 30, 2024, substantially all the Company’s cash was held by two major financial institutions located in Taiwan, which management believes is of high credit quality. At June 30, 2024, none of the Company’s cash accounts are insured by the U.S. Federal Deposit Insurance Corporation (the “FDIC”).
Fair value measurements
The Company follows the guidance of ASC 820-10, “Fair Value Measurements and Disclosures”, with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company believes the carrying amount reported in the balance sheet for cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities, deferred revenue and due to officer, approximate their fair values because of the short-term nature of these financial instruments.
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Foreign currency translation
The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company’s operating subsidiary maintains its books and records in its functional currency, New Taiwan Dollars (“NT$”).
In general, for consolidation purposes, assets and liabilities of the Company’s subsidiaries whose functional currency is not the US$, are translated into US$ using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of a foreign subsidiary are recorded as a separate component of accumulated other comprehensive income or loss within stockholders’ equity.
Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:
SCHEDULE OF TRANSLATION OF AMOUNTS BETWEEN USD AND TWD
2024 | 2023 | |||||||
As of and for the nine months ended June 30, | ||||||||
2024 | 2023 | |||||||
Period-end NT$ : US$1 exchange rate | 32.54 | 31.16 | ||||||
Period-average NT$ : US$1 exchange rate | 31.89 | 30.86 |
The Company calculates net income (loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
At June 30, 2024 and September 30, 2023, the Company has potentially dilutive securities, such as options or warrants, outstanding.
Segment information
Operating segments are components of an enterprise for which separate financial information is available and are evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is conducting business as an educational service company.
Concentrations
For the three and nine months ended June 30, 2024 and 2023, no customer accounted for 10% or more of the Company’s revenue.
For the three and nine months ended June 30, 2024, and for the three months ended June 30, 2023, no service provider accounted for 10% or more of the Company’s operating costs and expenses. For the nine months ended June 30, 2023, one service provider, a related party, accounted for 17% of the Company’s operating costs and expenses.
Recent accounting pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related earnings per share guidance. This standard becomes effective for the Company beginning on October 1, 2024. Adoption is either a modified retrospective method or a fully retrospective method of transition. The Company adopted this guidance effective October 1, 2023, and the adoption of this standard did not have a material impact on its consolidated financial statements.
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Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
NOTE 2 - STOCKHOLDERS’ EQUITY
During the period from November 1, 2023, to March 5, 2024, the Company sold shares of its Common Stock, par value $ per share, to 77 shareholders for total proceeds of $ , or $ per share. For the nine months ended June 30, 2023, the Company did not issue any shares of Common Stock.
As of June 30, 2024, the Company has shares of Common Stock issued and outstanding.
NOTE 3 - RELATED PARTY TRANSACTIONS
Mr. Hsu Shou Hung (“Mr. Hsu”), a founder of the Company, is currently the Company’s Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer, and sole director. As of June 30, 2024, Mr. Hsu collectively owns 44.40%, of the Company’s restricted Common Stock. At June 30, 2024 and September 30, 2023, $1,685 and $4,257, respectively, are due to Mr. Hsu for advances to the Company for operations. The advances are due on demand, are unsecured, and are non-interest bearing. shares, or
Mr. Lin Yi Hsiu (“Mr. Jeff Lin”) is Chief Executive Officer and a director of Leader Capital Holdings Corp. (“LCHC”), a 6.92% shareholder in the Company. In addition, CPN Investment Limited (“CPN”), a company wholly owned by Mr. Jeff Lin, is also a 6.92% shareholder of the Company. Leader Financial Asset Management Limited (“LFAML”), another company wholly owned by Mr. Jeff Lin, provides consulting services to the Company.
LCHC and its wholly owned subsidiary, LOC Weibo Co., Limited (“LOC”) (collectively, “Leader”) provide IT and maintenance services to the Company, respectively.
For the three months ended June 30, 2024 and 2023, the Company incurred the following fees to Leader:
SCHEDULE OF RELATED PARTIED INCURRED FEES TO LCHC AND LFAML
Paid to: | Description | 2024 | 2023 | |||||||
For the three months ended June 30, | ||||||||||
Paid to: | Description | 2024 | 2023 | |||||||
LCHC | IT services | $ | 7,500 | $ | 7,500 | |||||
LOC | IT services | 7,646 | 8,058 | |||||||
Total | $ | 15,146 | $ | 15,558 |
For the nine months ended June 30, 2024 and 2023, the Company incurred the following fees to Leader and LFAML:
Paid to: | Description | 2024 | 2023 | |||||||
For the nine months ended June 30, | ||||||||||
Paid to: | Description | 2024 | 2023 | |||||||
LCHC | IT services | $ | 22,500 | $ | 22,500 | |||||
LOC | IT services | 23,426 | 24,208 | |||||||
LFAML | Consulting services | - | 200,000 | |||||||
Subtotal | 45,926 | 246,708 | ||||||||
LCHC | Prepaid application development fees | - | 450,000 | |||||||
Total | $ | 45,926 | $ | 696,708 |
At June 30, 2024 and September 30, 2023, $10,101 and $25,357, respectively, were prepaid expenses to Leader for IT and maintenance expenses.
During the nine months ended June 30, 2023, the Company prepaid $450,000 to LCHC for the development of two mobile applications. Management determined that it was more likely than not that the application developments would not be utilized as originally intended and performed an impairment analysis. As a result, an impairment loss of $450,000 was recorded for the nine months ended June 30, 2023, for the prepaid app development fees.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
OVERVIEW
DFP Holdings Limited (the “Company” or “we”) was incorporated in the State of Nevada on December 8, 2021, and has a fiscal year end of September 30.
GOING CONCERN
For the nine months ended June 30, 2024, the Company incurred a net loss of $71,391 and accumulated deficit of $1,518,400. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that its financial statements are issued. In addition, the Company’s independent registered public accounting firm, in their report on the Company’s September 30, 2023, audited financial statements, raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s financial statements included elsewhere in this Quarterly Report do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon its ability to continue to implement its business plan to increase its customer base and realize increased revenues. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates for assumptions used in impairment testing of long-term assets and the accrual of potential liabilities.
REVENUE RECOGNITION
The Company recognizes revenue in accordance with Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, following the five-step model prescribed by ASC 606, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
RECENT DEVELOPMENTS
The effective date of the Company’s registration statement on Form S-1 (Commission File No. 333-271858) was September 8, 2023. During the period from November 1, 2023, to March 5, 2024, the Company sold an aggregate of 2,924,200 shares of its Common Stock, par value $0.0001 per share. to 77 shareholders for total proceeds of $1,462,100 or $0.50 per share, representing approximately 29% of the number of shares registered under the prospectus on the Form S-1.
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Set forth below is a listing of the sale of shares of restricted Common Stock under the prospectus on Form S-1 for the nine months ended June 30, 2024:
Name | Number of Shares | |||
Lin Yueh Feng | 60,000 | |||
Hsu Tsui Lien | 60,000 | |||
Chou Yu Ju | 60,000 | |||
Chen Pei Ru | 60,000 | |||
Lu Po Wei | 40,000 | |||
Lim Yee Ching | 6,000 | |||
Liu Chia Ling | 60,000 | |||
Lee Shih Pin | 60,000 | |||
Chen Yu Ching | 40,000 | |||
Chang Che Chih | 40,000 | |||
Lai Tung Ning | 60,000 | |||
Chen Jie Yu | 60,000 | |||
Lee Huai Ku | 40,000 | |||
Chang Po Hsuan | 20,000 | |||
Yang Ke Yu | 80,000 | |||
Lin Yi Ying | 90,000 | |||
Chen Yung Sheng | 40,000 | |||
Liu Jui Hsin | 40,000 | |||
Chan Chih Chieh | 80,000 | |||
Digital Content Culture Sdn. Bhd. | 22,000 | |||
Yang Hsin Hua | 20,000 | |||
Yang Hui Chun | 30,000 | |||
Lin Fang Yu | 80,000 | |||
Chen Yu Huei | 40,000 | |||
Hsieh Meng Hua | 30,000 | |||
Lai Nyok Pek | 4,400 | |||
Huang Wei Chin | 60,000 | |||
Chen Hsi Chen | 60,000 | |||
Tsan Jui Chin | 30,000 | |||
Liu Chun O | 15,000 | |||
Chen Chun Chieh | 20,000 | |||
Chen Hsiao Wei | 60,000 | |||
Hung Yuan Hung | 60,000 | |||
Chang Kai Chia | 70,000 | |||
Wu Yu Ti | 30,000 | |||
Yang Hui Chao | 30,000 | |||
Liao Yu Chen | 30,000 | |||
Lu Shu Ju | 60,000 | |||
Lin Xuan Zhen | 30,000 | |||
Hu Shu Ning | 30,000 | |||
Lai Wen Hui | 30,000 | |||
Chiu Shih Jung | 30,000 | |||
Fang Yun Hsuan | 60,000 | |||
Hsiang Ming Hung | 22,000 | |||
Liao Bo Cheng | 30,000 | |||
How Sok Sin | 4,400 | |||
Lin Geng Ru | 16,000 | |||
Yi Jen Yu | 80,000 | |||
Chang Chun Kai | 40,000 | |||
Chiu Huai Yi | 30,000 | |||
Chang Shu Ting | 30,000 | |||
Gao Wei Qing | 30,000 | |||
Chang Te Yi | 30,000 | |||
Kao Hao Shen | 60,000 | |||
Shao Hui Ling | 60,000 | |||
Hsu Shu Yuak | 30,000 | |||
Cheng Cheng Han | 12,000 | |||
Chien Fu Ching | 30,000 | |||
Lin Hui Ru | 60,000 | |||
Chen Pin Chen | 30,000 | |||
Ho Yu Ling | 30,000 | |||
Hsu Kai Chia | 30,000 | |||
Hsu Chen Yu | 30,000 | |||
Huang Pi Wen | 20,000 | |||
Zhang Han Sheng | 30,000 | |||
Hsu Yan Ling | 30,000 | |||
Liao Ling Hsin | 40,000 | |||
Liao Kuo Yu | 40,000 | |||
Ho Hung Ying | 40,000 | |||
Yeh Yin Hsuan | 30,000 | |||
Tan Wy Yee | 22,000 | |||
Ng Sae Lim | 22,000 | |||
Cindy Chan Yin Wan | 22,000 | |||
Lau Yoke Chan | 4,000 | |||
Lee Phay Ying | 4,000 | |||
Jazamine Foo Lee Wei | 4,000 | |||
Lai Chin Hong | 4,400 | |||
Total | 2,924,200 |
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RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 to the Condensed Consolidated Financial Statements.
RESULTS OF OPERATIONS
2024:
For the three and nine months ended June 30, 2024, we generated revenue of $439,266 and $968,941, respectively.
For the three months ended June 30, 2024, operating costs and expenses were $399,207, including cost of revenue of $45,891, general and administrative expenses of $338,170, and general and administrative expenses to related party of $15,146, respectively.
For the nine months ended June 30, 2024, operating costs and expenses were $1,034,051, including cost of revenue of $115,071, general and administrative expenses of $873,054, and general and administrative expenses to related party of $45,926, respectively.
2023:
For the three and nine months ended June 30, 2023, we generated revenue of $272,461 and $765,866, respectively.
For the three months ended June 30, 2023, operating costs and expenses were $303,129, including cost of revenue of $54,823, general and administrative expenses of $232,748, and general and administrative expenses to related party of $15,558, respectively.
For the nine months ended June 30, 2023, operating costs and expenses were $1,438,313, including cost of revenue of $155,643, general and administrative expenses of $585,962, general and administrative expenses to related party of $264,708 and impairment of prepaid application development fee to related party of $450,000, respectively.
Liquidity and Capital Resources
During the nine months ended June 30, 2024, the Company sold 2,924,200 shares of restricted Common Stock to 77 individuals at a price of $0.50 per share, for total proceeds of $1,462,100. At June 30, 2024, our cash balance was $2,138,243, as compared to $763,591 on September 30, 2023, an increase of $1,374,652. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months.
The Company’s ability to continue as a going concern is dependent upon the Company’s ability to implement its business plans and continue receiving financial support from its officers and shareholders. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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Item 4. Controls and Procedures.
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including our principal executive and financial officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal period covered by this Report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this Report was being prepared. Based on this evaluation, our principal executive and financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as of June 30, 2024 due to material weaknesses in our internal control over financial reporting as described below.
MANAGEMENT’S QUARTERLY REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15. Internal control over financial reporting is defined in Rule 13a-15(f) and 15(d)-15(f) under the Exchange Act as a process designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements. Management assessed the Company’s internal control over financial reporting as of June 30, 2024, based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) (COSO). Based on the assessment, management concluded that, as of June 30, 2024, the Company’s internal controls over financial reporting was not effective.
We identified material weaknesses in our internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified include (i) the Company did not maintain a functioning independent audit committee and did not maintain an independent board; (ii) the Company had inadequate segregation of duties; and (iii) the Company had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements.
Notwithstanding the identified material weaknesses, management has concluded that the Financial Statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP.
Planned remediation of material weaknesses
Management is actively engaged in developing and implementing remediation plans to address the material weaknesses described above. These remediation efforts are ongoing and include or are expected to include preparation of written documentation of our internal control policies and procedures, and to increase personnel and technical accounting expertise within the accounting function.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any threatened or pending legal proceedings.
Item 1A. Risk Factors.
Not required by smaller reporting companies. We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Default upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
The following exhibits are filed or “furnished” herewith:
Number | Description | |
3.1 | Certificate of Incorporation (1) | |
3.2 | By-laws (1) | |
31.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
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)* |
(1) | Previously filed and incorporated in the Company’s Registration Statement, Amendment No.3 to Form S-1 (File No. 333-271858) with the Securities and Exchange Commission on September 6, 2023. |
* Filed herewith.
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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
DFP HOLDINGS LIMITED | ||
(Name of Registrant) | ||
Date: August 9, 2024 | By: | /s/ Hsu Shou Hung |
Name: | Hsu Shou Hung | |
Title: | Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
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