NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2020 AND 2019
NOTE 1 - ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN
Med Spa Vacations, Inc, (the “Company”), was incorporated in the State of Nevada on October 5, 2015. The Company’s office address is 610 Jones Ferry Road, Suite 207 Carrboro, NC.
Description of Business
The Company’s original plan was to develop a business that specialized in marketing health and wellness vacations to both individuals and corporate groups looking to revitalize and develop a fuller day-to-day life. The Company was not successful in its efforts and discontinued that line of business. Since that time, the Company has been a shell company, as that term is defined in Rule 12b-2 of the Exchange Act of 1934, as amended (the “Exchange Act”)
Going forward, the Company intends to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for the Company’s shareholders. No specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or that any transactions will be consummated.
Changes in Control of Registrant
On August 22, 2017, each of Blaine Redfern and Morgan Powell, who were the controlling stockholders of the Company at that time, entered into and closed stock purchase and sale transactions pursuant to which they each sold 5,000,000 restricted shares of the common stock, $0.001 par value per share (the “Common Stock”), of the Company, or, in the aggregate, 10,000,000 shares of the Common Stock being all of the outstanding restricted Common Stock of the Company, to Mr. Chao Ma. These transactions were completed at a price per share of $0.030320, for an aggregate amount of $303,200, pursuant to the terms of a securities purchase agreement.
In connection with the closing of the stock purchase transactions discussed above, on August 22, 2017, Mr. Redfern and Mr. Powell submitted their resignation letters, pursuant to which they each resigned from all positions they held as directors and officers of the Company, effective as of the closing of the stock purchase transactions. Effective as of August 22, 2017, upon resignation of Mr. Redfern and Mr. Powell, Mr. Ma was appointed to the board of the directors (the “Board”). Mr. Ma was also appointed as the President, Treasurer and Secretary of the Company.
On June 20, 2019, Mr. Ma, closed stock purchase and sale transactions pursuant to which he sold an aggregate of 10,000,000 restricted shares of the Company’s Common Stock, to certain purchasers at a purchase price of $0.035 per share, or an aggregate purchase price of $350,000. In connection with the closing of the stock purchase transactions, Mr. Ma resigned from all of the positions he held with the Company, effective as of the closing of the stock purchase transactions. One of the purchasers of restricted shares, Kynson Health Limited, a BVI entity (Kynson”), purchased 9,985,329 restricted shares for an aggregate purchase price of approximately $349,486. Kynson is owned 100% by OuYang XingYing, who was appointed as the Company’s President, Secretary and Treasurer and director on June 20, 2019, upon the closing of the stock purchase and sale transactions and resignation of Mr. Ma. In connection with her officer appointments, Ms. Yang was designated as the “Principal Executive Officer” and “Principal Financial and Accounting Officer” of the Company for Securities and Exchange Commission (“SEC”) reporting purposes.
On February 4, 2021, Kynson closed stock purchase and sale transactions pursuant to which Kynson sold an aggregate of 9,985,329 restricted shares of the Company’s Common Stock to eleven purchasers at a purchase price of $0.030044 per share, or an aggregate purchase price of $299,998.60 (the “Kynson Share Sale Transaction”). Upon the closing of the Kynson Share Sale Transaction, Ms. Yang resigned from all positions she held with the Company and, in connection with her resignation, she relinquished her roles as the Company’s “Principal Executive Officer” and “Principal Financial and Accounting Officer.” Effective immediately upon Ms. Yang’s resignation, John D. Rollo was appointed as the Company’s President, Secretary and Treasurer, and as the sole member of the Company’s board of the directors. In connection with his appointments, Mr. Rollo was designated as the “Principal Executive Officer” and “Principal Financial and Accounting Officer” of the Company for SEC reporting purposes. In connection with and as a condition to, the consummation of the Kynson Share Sale Transaction, eleven shareholders of the Company returned an aggregate of 4,345,000 shares of the Company’s Common Stock to the Company for cancellation, in consideration for $0.001 per share. As a result of the Kynson Share Sale Transaction and simultaneous cancellation of 4,345,000 shares by eleven stockholders, there was a change in control of the Company.
Going concern and Liquidity Considerations
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of December 31, 2020, the Company has reoccurring losses from operations, an accumulated deficit of $367,781 and has earned no revenues. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2021.
The ability of the Company to emerge from the early stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company had $0 and $8,842 and $ in cash as of December 31, 2020 and 2019, respectively.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash, accounts payable and related party loans. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Concentrations of Credit Risks
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Share-Based Expense
ASC 718, "Compensation - Stock Compensation," prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, "Equity - Based Payments to Non-Employees." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of December 31, 2020 and 2019, the Company did not have any amounts recorded pertaining to uncertain tax positions.
Earnings (Loss) per Share
The Company computes loss per share in accordance with ASC 260, “Earnings per Share,” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. During the year ended December 31, 2020 and 2019, the Company had no potential dilutive instruments and accordingly basic loss and diluted loss per share are the same.
Recently Issued Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.
NOTE 3 - STOCKHOLDERS' EQUITY
Preferred Stock
The Company has authorized 25,000,000 preferred shares with a par value of $0.001 per share (“Preferred Stock”). The Board is authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes.
Common Stock
The Company has authorized 100,000,000 shares of Common Stock. Each share of Common Stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
As of December 31, 2020, and 2019, there are 14,350,000 shares of Common Stock issued and outstanding.
NOTE 4 - INCOME TAXES
The Company did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. Accounting for Uncertainty in Income Taxes when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit.
The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that the Company will not earn income sufficient to realize the deferred tax assets during the carry forward period.
The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of December 31, 2020 and 2019 are as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net operating loss carry forward
|
|
$
|
(367,781
|
)
|
|
$
|
(321,123
|
)
|
Effective Tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
Deferred tax assets
|
|
|
77,234
|
|
|
|
67,436
|
|
Valuation allowance
|
|
|
(77,234
|
)
|
|
|
(67,436
|
)
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
As of December 31, 2020, the Company had approximately $367,000 in net operating losses (“NOLs”) that may be available to offset future taxable income, which begin to expire 2038. NOLs generated in tax years prior to July 31, 2018, can be carryforward for twenty years, whereas NOLs generated after July 31, 2018 can be carryforward indefinitely. In accordance with Section 382 of the U.S. Internal Revenue Code, the usage of the Company’s net operating loss carry forwards are subject to annual limitations following greater than 50% ownership changes.
The Company’s tax returns are subject to examination by tax authorities for the years ended December 31, 2014 to December 31, 2020.
NOTE 5 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 2020 and 2019, the Company’s majority shareholder advanced an amount of $10,875 and $207,737, respectively by paying for expenses on behalf of the Company, respectively.
In accordance with the change of control described in Note 1, during the year ended December 31,2019, the former sole director and officer, and majority shareholder, of the Company, canceled and forgave his loan in amount of $212,190. As a result, the Company recorded $212,190 as additional paid in capital.
As of December 31, 2020 and December 31, 2019, there were $44,322 and $33,447 due to related parties, respectively. The loans are non-interest bearing and due on demand.
NOTE 6 - SUBSEQUENT EVENTS
On February 4, 2021, the former majority shareholder of the Company, which was controlled by the Company’s former sole officer and director, canceled and released all amounts due from the Company.
On February 4, 2021, in connection with, and as a condition to, the consummation of the Kynson Share Sale Transaction described in Note 1, eleven shareholders of the Company returned an aggregate of 4,345,000 shares (the “Cancelled Shares”) of the Company’s Common Stock to the Company for cancellation, in consideration for $0.001 per share. The Cancelled Shares were returned to the Company’s number of authorized and unissued shares of Common Stock.
On February 4, 2021, the Company entered into a one-year lease agreement (the “Lease”) with Tryon Capital LLC, a North Carolina limited liability company (“Tryon”), for the Company’s office space located at 610 Jones Ferry Road, Suite 207, Carrboro, NC 27510, at a monthly rate of $250.00. As discussed below, Tryon is currently a consultant to the Company. The Lease can be terminated by either party at any time, with 30 days written notice.
On February 5, 2021, the Company entered into a one-year consulting agreement (the “Tryon Consulting Agreement”) with Tryon, pursuant to which Tryon will provide the Company with financial and strategic consulting services in consideration for a consulting fee of $2,500 per month. The Tryon Consulting Agreement can be terminated by either party at any time, upon 30 days’ written notice.
On February 12, 2021, the Board, authorized and approved the Company’s entry into a one-year consulting agreement (the “Benzions Consulting Agreement”) with Benzions LLC, a Delaware limited liability company (“Benzions”), to be effective as of March 1, 2021, pursuant to which Benzions will provide certain strategic advisory and investor relations services to the Company in consideration for a consulting fee of $4,000 per month. The Benzions Consulting Agreement can be terminated by either party, at any time, upon 30 days’ written notice.
On February 12, 2021, the Company received a loan in the amount of $150,000 (the “Loan”) from Hometown International Inc., a Nevada corporation (“Hometown”). To evidence the Loan, the Company issued a promissory note in the principal amount of $150,000 (the “Note”) to Hometown, with a maturity date of February 11, 2022. Interest accrues on the principal amount of the Note at the rate of six percent (6%) per annum, and shall be paid on a quarterly basis, in the amount of $2,250 per quarter, on the following dates: May 12, 2021; August 12, 2021, November 12, 2021 and February 11, 2022. The Company may prepay any amounts due under the Note without penalty or premium.
The foregoing summary of the Note does not purport to be complete and is qualified in its entirety by reference to the Note.