The information required by this Item is incorporated herein by reference to the consolidated financial statements and supplementary data set forth in Item 15. Exhibits, Financial Statement Schedules of Part IV of this Annual Report.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
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 500 W. 5th Street, Suite 800, PMB #59, Winston Salem, NC 27101.
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 February 4, 2021, Kynson Health Limited, a BVI entity (Kynson”), which was our majority stockholder, 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, OuYang XingYing, who controlled Kynson, and was our President, Secretary and Treasurer and sole member of the Company’s board of the directors, 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.
On May 21, 2021, John D. Rollo, the President, Treasurer and Secretary and the sole member of the Company’s board of directors (the “Board”), resigned from all positions he held with the Company. Effective immediately upon Mr. Rollo’s resignation, Irwin Schneidmill 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. Schneidmill was designated as the “Principal Executive Officer” and “Principal Financial and Accounting Officer” of the Company for SEC reporting purposes.
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, 2022, the Company has reoccurring losses from operations, an accumulated deficit of $655,965 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, 2023.
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 $8,302 and $2,266 in cash as of December 31, 2022 and 2021, 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, 2022, and 2021, 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, 2022, and 2021, 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.
Reclassification
Certain accounts from prior periods have been reclassified to conform to the current period presentation.
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.
As of December 31, 2022, and 2021, no shares of Preferred Stock issued and outstanding.
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.
On February 4, 2021, eleven (11) 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 $4,345 ($0.001per share). The Cancelled Shares were returned to the Company’s number of authorized and unissued shares of Common Stock.
On June 30, 2022, the Company’s Board of Directors approved the issuance of 50,000 shares of common stock to the Company’s sole officer and director as compensation. On July 11, 2022, the 50,000 shares of common stock were issued. The Company evaluated 50,000 shares issued at last the Company’s stock transaction of $0.03 per share for amount of $1,500.
As of December 31, 2022, and 2021, there are 10,055,000 and 10,005,000 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, 2022, and 2021 are as follows:
| | December 31, | | | December 31, | |
| | 2022 | | | 2021 | |
Net operating loss carry forward | | $ | (655,965 | ) | | $ | (532,987 | ) |
Effective Tax rate | | | 21 | % | | | 21 | % |
Deferred tax assets | | | 137,753 | | | | 111,927 | |
Valuation allowance | | | (137,753 | ) | | | (111,927 | ) |
Net deferred tax assets | | $ | - | | | $ | - | |
As of December 31, 2022, the Company had approximately $655,000 in net operating losses (“NOLs”) that may be available to offset future taxable income, which begin to expire 2040. 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, 2016, to December 31, 2022.
NOTE 5 - RELATED PARTY TRANSACTIONS
During the years ended December 31, 2022 and 2021,
| · | the Company’s controlling shareholder advanced to the Company an amount of $0 and $74,184, respectively, to pay certain expenses on behalf of the Company. |
| | |
| · | the Company paid $2,000 management fees to the former officer and director of the Company who resigned on May 21, 2021. |
| | |
| · | the Company paid $12,000 and $7,000, respectively, management fees to the sole officer and director of the Company. |
| | |
| · | On June 30, 2022, the Company’s Board of Directors approved the issuance of 50,000 shares of common stock to the Company’s sole officer and director as compensation. On July 11, 2022, the 50,000 shares of common stock were issued. |
| | |
| · | During the years ended December 31,2022 and 2021, the Company paid consulting fees of $30,000, lease expenses of $3,600 and consulting fees of $27,500, lease expenses of $2,750 to Benchmark Capital, LLC. and Tryon Capital, LLC. affiliated with the Company’s shareholder, respectively. |
Notes payable – Related Parties
The components of notes payable to related parties as of December 31,2022 and 2021 were as follows:
Issuance date | | Principal Amount | | Maturity date | | Interest rate | | December 31, 2022 | | December 31, 2021 |
May 10, 2021 | | $ | 100,000 | | May 9, 2022 | | 6% | | $ | - | | $ | 100,000 |
September 28, 2021 | | $ | 15,000 | | September 27, 2022 | | 6% | | | - | | | 15,000 |
October 27, 2021 | | $ | 5,250 | | October 26, 2022 | | 6% | | | - | | | 5,250 |
November 29, 2021 | | $ | 8,500 | | November 29, 2022 | | 6% | | | - | | | 8,500 |
May 2, 2022 | | $ | 215,000 | | May 1, 2023 | | 6% | | | 215,000 | | | - |
September 1, 2022 | | $ | 20,000 | | August 31, 2023 | | 6% | | | 20,000 | | | - |
October 24, 2022 | | $ | 20,000 | | October 23, 2023 | | 6% | | | 20,000 | | | - |
Total notes payable - related party | | | 255,000 | | | 128,750 |
Current portion | | | (255,000) | | | (128,750) |
Long-term portion | | $ | - | | $ | - |
During the years ended December 31, 2022, and 2021, the Company received $309,500 and $128,750 loans and repaid the outstanding promissory notes of $183,250 and $0, respectively.
During the year ended December 31, 2022, the Company recorded interest expense of $12,366 and repaid $11,103 of interest. During the year ended December 31, 2021, the Company recorded interest expense of $4,196 and repaid $3,000 of interest.
As of December 31, 2022, the outstanding balances of promissory notes and accrued interest was $255,000 and $2,460, respectively. As of December 31, 2021, the outstanding balances of promissory notes and accrued interest was $128,750 and $1,196, respectively.
NOTE 6 - NOTE PAYABLE
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. On May 12, 2021, the Company repaid in full all outstanding principal note of $150,000 and interest of $2,250. The Company did not incur any early termination penalties as a result of the repayment of indebtedness and termination of the loan.
NOTE 7 – COMMITMENTS
On June 18, 2021, the Company entered into a consulting agreement (the “Benchmark Consulting Agreement”) with Benchmark Capital, LLC, a New Jersey limited liability company (“Benchmark”), effective as of July 1, 2021, pursuant to which Benchmark will assist the Company in connection with all filling required by the Company to be made with the SEC, for a consulting fee of $2,500 per month. The Benchmark Consulting Agreement can be terminated by either party, at any time, upon 30 days’ written notice. During the year ended December 31, 2022, the Company incurred consulting fees of $30,000.
NOTE 8 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure, except as follows:
On January 2, 2023, the Company received a loan of 25,000 from Global Equity Limited, a North Carolina corporation (“Global”). To evidence said loan, the Company issued to Global a promissory note in the principal amount of $25,000 (in this case, the “Note”), with a maturity date of December 31, 2023. Interest on the Note accrues on the principal amount at the rate of six percent (6%) per annum, and shall be paid on a quarterly basis, in the amount of $375 per quarter, on the following dates: April 1,2023, July 1, 2023, October 1, 2023, and December 31, 2023. The Company may prepay any amounts due under the Note without penalty or premium.