Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - Atlas Technology International, Inc.ex32_2.htm
EX-32.1 - EXHIBIT 32.1 - Atlas Technology International, Inc.ex32_1.htm
EX-31.1 - EXHIBIT 31.1 - Atlas Technology International, Inc.ex31_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the eleven months ended June 30, 2016

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from August 1, 2015 to June 30, 2016

 

Commission file number 333-196583

 

ATLAS TECHNOLOGY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware 47-1391708
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
8444 Reseda Blvd. Suite B, Northridge, California 91324 
(Address of principal executive offices) (Zip Code)

 

 

818-272-5987

Registrant’s telephone number, including area code

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class: Name of each exchange on which registered:
None None
   
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $0.00001 per share

 

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 Section 15(d) of the Act.

Yes ☐  No ☒

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an 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 ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
(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 Act).

Yes ☐  No ☒

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter: $0.

 

As of September 27, 2016, the number of shares of common stock of the registrant issued and outstanding are 53,400,000.

1 
 

TABLE OF CONTENTS

 

 

     
Item Number and Caption Page
     
PART I 3
     
Item 1. Business 4
     
Item 1A. Risk Factors 5
     
Item 1B. Unresolved Staff Comments 5
     
Item 2. Properties 5
     
Item 3. Legal Proceedings 5
     
Item 4. Mine Safety Disclosures 5
     
PART II 5
     
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 5
     
Item 6. Selected Financial Data 6
     
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 6
     
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 10
     
Item 8. Financial Statements and Supplementary Data 10
     
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 11
     
Item 9A. Controls and Procedures 11
     
Item 9B. Other Information 12
     
PART III 12
     
Item 10. Directors, Executive Officers and Corporate Governance 12
     
Item 11. Executive Compensation 12
     
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 13
     
Item 13. Certain Relationships and Related Transactions, and Director Independence 14
     
Item 14. Principal Accountant Fees and Services 15
     
PART IV 16
     
Item 15. Exhibits, Financial Statement Schedules 16
     
SIGNATURES 17

 

 

2 
 

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Annual Report on Form 10-K and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

PART I

 

Item 1. Business.

 

Overview

 

We are a bakery based company in California, specializing in freshly-made cakes and cupcakes. On July 18, 2014, we completed a share exchange whereby we acquired all of the issued and outstanding shares of common stock of Sweets & Treats CA. Sweets & Treats CA became our wholly-owned subsidiary and we have operated our business through Sweets & Treats CA since the Share Exchange. On July 5, 2016, the major shareholder and sole officer and director sold all of her shareholdings of the Company to two new shareholders. The newly reformed Board of Directors believed it to be in the Company’s best interest to pursue a different business of the design and trading of touch screens.

 

We currently market our bakery products primarily through our website, social media and personal referrals and market our touchscreen related services via personal referrals. Our plan for the next twelve months calls for assessing the direction that should be taken with the bakery business and development of the touchscreen business by marketing to further potential customers. The review will consider whether the Company has been successful with its bakery business operations and whether to dispose of the bakery business and focus solely on the touchscreen business. In July 2016, we changed our Company name to “Atlas Technology International, Inc.” to indicate new ownership and a business under new leadership.

 

Despite our plan, we currently have no commitments for any financing and cannot provide assurance that we will realize this goal.

 

Since the period ending June 30, 2016, we:

 

changed our name to “Atlas Technology International, Inc.” effective upon approval from FINRA;

 

changed our fiscal year from July 31 to June 30;

 

elected Ming-Shu Tsai as a director and Ying-Chien Lin as a director and Chairman to the Board;

 

appointed Ming-Shu Tsai as a Co-CEO alongside Tiffany Aguayo;
   
 filed a Certificate of Designation with the Secretary State of Delaware and amended the Articles of Incorporation by designating a total of 510,000 shares of the 1,000,000 shares of authorized and undesignated preferred stock into the following classes: Series A, 10,000 shares; Series B, 250,000 shares; and Series C, 250,000 shares.
   
 created a wholly-owned Hong Kong limited company (“subsidiary”) under the name Atlas Tech Trading Limited on August 18, 2016

  

The principal changes to our Certificate of Incorporation made in our State of Delaware Certificate of Amendment of Certificate of Incorporation was the change of our name to Atlas Technology International, Inc.

 

3 
 

Our Product & Services

 

We engage in the business of selling a wide variety of cupcakes and other baked goods under the brand name “Sweets & Treats”. We cater our products to customers in urban, suburban, commercial, and residential markets.

 

Touchscreen Services

 

We design capacitive touchscreen based on our customer’s requirements for rear view mirrors, watches, cell phones, electronic tablets, GPS and other electronic products. A quality assured manufacturer with the technical know-how is then engaged for the production of these newly designed products for our customers.

 

Brand

 

The Company has yet to establish “Atlas” as a renowned brand but intends to develop it so that it too will stand for quality, innovation and service. The Company’s services surround the design and selling of customized touchscreens. We operate in a competitive market but we believe that our designs to customer requirements give us a competitive advantage over some of our competitors.

 

Marketing and Promotion

 

Our marketing efforts are comprised primarily of online social media and word of mouth advertising geared toward building brand recognition and brand differentiation. We aim to build ourselves to be a leader in the gourmet cupcake market, and attempt to reinforce on a consistent basis that it should be a destination of choice for especially creative and delicious cupcakes. We also aim to be a leader in the design and selling of touchscreens industry, and attempt to establish, expand and maintain customers for our touchscreen services.

 

Competition

 

The industry in which the Company conducts its bakery business is intensely competitive. We expect to compete with well-established national, regional and locally- owned traditional bakeries, cupcake specific bakeries, cafés and other companies providing baked goods and coffee. Additionally, the Company expects to compete with certain quick-service restaurants, delicatessens, specialty food stores, take-out food service companies, supermarkets and convenience stores. The principal factors on which the Company competes are taste, quality, price of products offered, customer service, atmosphere, convenience and overall customer experience. Many competitors or potential competitors have substantially greater financial and other resources, which may allow them to react more quickly to changes in pricing, marketing and other changing tastes of consumers. Because of relative low barriers of entry of the industry, we will continue to encounter additional competitors.

 

The industry in which the Company conducts its touchscreen business is intensely competitive. We expect to compete with well-established national, regional and locally- owned traditional touchscreen companies providing designs and related services. The principal factors on which the Company competes are design, quality, price of products offered, customer service, convenience and overall customer experience. Many competitors or potential competitors have substantially greater financial and other resources, which may allow them to react more quickly to changes in pricing, marketing and other changing tastes of consumers. Because of relative low barriers of entry of the industry, we will continue to encounter additional competitors.

 

Employees

 

We presently have no employees apart from our officers.

 

Seasonality

 

We do not have a seasonal business cycle.

 

Environmental Matters

 

Our business currently does not implicate any environmental regulation.

 

Intellectual Property

 

We do not hold any patents, trademarks or other registered intellectual property on products relating to our business. However, in addition to our domain name, from time to time, we may apply for patents, trademarks or other registered intellectual property essential to the protection of our brand and success of our business.

 

Domain Names

 

We currently operate our business under the domain name of www.sweetstreatsinc.com.

 

Item 1A. Risk Factors

 

Smaller reporting companies are not required to provide the information required by this item.

 

4 
 

 

Item 1B. Unresolved Staff Comments

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 2. Properties.

 

The Company’s principal executive office and mailing address is 8444 Reseda Blvd. Suite B, Northridge, California 91324. Our telephone number is (818) 272-5987. As we are not generating sufficient revenue at this time to justify a separate corporate office, the principal executive office is provided by one of our Co-Chief Executive Officers and director, Tiffany Aguayo. The Company has been provided the office space by Ms. Aguayo at no cost. Once our business grows and generates sufficient revenue, we will look for a more suitable office space in a separate corporate office.

 

Item 3. Legal Proceedings

 

Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, as of the date of this registration statement, we are currently not involved with any such legal proceedings or claims.

 

Item 4. Mine Safety Disclosures.

 

Not Applicable.

 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Our common stock is currently quoted on OTC Markets under the symbol “SWTS.” There has been no established public trading market for our common stock. The Company’s shares of common stock are now listed with the OTCQB of the OTC Markets under the symbol “SWTS”; however, management does not expect any established trading market to develop in our shares of common stock unless and until we have material operations. In any event, no assurance can be given that any market for our common stock will develop or be maintained. If a public market ever develops in the future, the sale of shares of our common stock that are deemed to be “restricted securities” pursuant to Rule 144 of the SEC by members of management or others may have a substantial adverse impact on any such market. With the exception of the shares outlined below under the heading “Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities,” all current holders of shares of our common stock have satisfied the six-month holding period requirement of Rule 144; these listed persons’ shares are subject to the resale limitations outlined below under the heading “Rule 144.”

 

Our common stock is quoted on the OTCQB tier of the OTC Markets Group under the symbol “SWTS”. The OTCQB is an inter-dealer quotation and trading system and only market makers can apply to quote securities on the OTCQB. Trading in our common stock on the OTCQB has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions.

 

Holders of Capital Stock

 

As of the date of this Annual Report, we had 38 holders of our common stock.

Stock Option Grants

 

We do not have a stock option plan in place and have not granted any stock options at this time.

 

Dividends

 

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors has the discretion to declare and pay dividends in the future.

 

Payment of dividends in the future will depend upon our earnings, capital requirements, and any other factors that our Board of Directors deems relevant.

 

Recent Sales of Unregistered Securities

 

On June 24, 2016, the Company entered into a consulting agreement with Bright Light Marketing for the term of twelve months. Under the Agreement, the Company issued 100,000 shares of its common stock in exchange for services valued at $25,000 in consulting support and advisory services to include public relations, advertising, business advice, crisis communications and corporate publicity.

 

5 
 

 

On July 10, 2016, the Company issued 15,000,000 shares of its common stock to Mr. Ying-Chien Lin for services of being a Director and Chairman of the Board valued at $15,000.

 

On July 10, 2016, the Company issued 10,000,000 shares of its common stock to Mr. Ming-Shu Tsai for services of being a Director of the Board valued at $10,000.

 

On July 14, 2016, the Company entered into a consulting agreement with Chronos Investments Ltd for the term of twelve months. Under the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 to make better strategic decisions in corporate performance, value creating, macro economical forces and global & local markets.

 

On July 14, 2016, the Company entered into a consulting agreement with Cygnus Management Ltd for the term of twelve months. Under the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 in assisting clients to best benefit from M&A or improving operating and financial efficiency.

 

On July 15, 2016, the Company entered into a consulting agreement with Silverciti Group Ltd for the term of twelve months. Under the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 in asset management.

 

The securities issued above were offered and issued in private transactions in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended and Regulation D promulgated thereunder.

 

Item 6. Selected Financial Data.

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

 

You should read the following discussion together with our financial statements and the related notes included elsewhere in this annual report on Form 10-K. This discussion contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements.

 

Business Overview

 

We are a bakery based company in California, specializing in freshly-made cakes and cupcakes and also offering other baked goods, as well as hot and cold beverages. The Company has entered the touchscreen industry through its Hong Kong subsidiary, incorporated on August 18, 2016, specializing in the design and trading of touchscreen products and services. On July 18, 2014, we completed a share exchange whereby we acquired all of the issued and outstanding shares of common stock of Sweets & Treats CA. Sweets & Treats CA became our wholly-owned subsidiary and we have operated our business through Sweets & Treats CA since the Share Exchange.

 

We currently market our baking products primarily through our website, social media and personal referrals, and the touchscreen products primarily through personal referrals. Our plan for the next twelve months calls for reviewing the company’s bakery business and development of the touchscreen business. We anticipate that the cost for developing our touchscreen business will be approximately $250,000. Despite our plan, we currently have no commitments for any financing and cannot provide assurance that we will realize this goal.

 

Plan of Operations

 

Our goal is to maintain the quality of our products and to build a sufficient customer base for the design and selling of touchscreen products. We anticipate the cost for developing our touchscreen business will be approximately $500,000 within the next 12 months. We have not commitments for any financing and cannot provide assurance that we will realize this goal.

 

If we are unable to build a sustainable customer base, we will cease our development and/or marketing operations until we raise money. Attempting to raise capital after failing in any phase of our development plan could be difficult. As such, if we cannot secure additional proceeds we will have to cease operations and investors would lose their entire investment. We intend to raise additional capital through private placements, but there is no assurance that we will be able to achieve any capital-raising. If we need additional cash but are unable to raise it, we will either suspend marketing operations until we do raise the cash, or cease operations entirely. Other than as described in this paragraph, we have no other financing plans.

 

Critical Accounting Policies and Estimates

 

While our significant accounting policies are more fully described in Note 2 to our financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.

 

6 
 

 

Use of Estimates

 

The preparation of the financial statements in conformity with US 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 periods. Estimates may include those pertaining to accruals and going concern assumption assessment. Actual results could materially differ from those estimates.

 

Fair value measurements and Fair value of Financial Instruments

 

We follow paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35- 37 establishes a framework for measuring fair value in generally accepted accounting principles (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of our financial assets and liabilities, such as cash, prepaid professional fees, and accrued expenses, approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by our company as of the specified effective date. Unless otherwise discussed, we believe that recently issued accounting pronouncements adopted do not have a material impact on its financial position or results of operations.

 

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).

 

This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

To achieve that core principle, an entity should apply the following steps:

 

1.Identify the contract(s) with the customer
2.Identify the performance obligations in the contract
3.Determine the transaction price
4.Allocate the transaction price to the performance obligations in the contract
5.Recognize revenue when (or as) the entity satisfies performance obligations.

 

7 
 

 

The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:

 

1.Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)
2.Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations
3.Assets recognized from the costs to obtain or fulfill a contract.

 

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.

 

In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

 

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

 

a. Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)

b. Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

 

a. Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

b. Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c. Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

 

In August 2015, the FASB issued the FASB Accounting Standards Update No. 2015-14 “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”).

 

The amendments in this Update defer the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

 

8 
 

 

Results of Operations

 

Eleven Months Ended June 30, 2016 Compared to Twelve Months Ended July 31, 2015

 

We generated revenue of $0 and $0 for the eleven months ended June 30, 2016 and twelve months ended July 31, 2015, respectively. We incurred operating expenses of $26,404 and $63,845 for the eleven months ended June 30, 2016 and twelve months July 31, 2015, respectively. The decrease of operating expenses is mainly attributable to the decrease in professional fees, which decreased from $61,538 for the twelve months ended July 31, 2015 to $15,633 for the eleven months ended June 30, 2016, in addition to the decrease of salary and wages to our officer. We had a net loss of, $26,404 for the eleven months ended June 30, 2016 compared to net income of $63,845 for the twelve months ended July 31, 2015.

 

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should our company be unable to continue as a going concern.

 

Liquidity and Capital Resources

 

As of June 30, 2016, the Company had cash, of $228. The Company’s liabilities as of June 30, 2016 were $63,854, which comprised of $8,610 in accounts payable, $444 in accrued liabilities, and $54,800 as advances from a shareholder and a related party. As of June 30, 2016, the Company had a working capital deficit of $33,848.

 

As of July 31, 2015, the Company had cash, of $531. The Company’s liabilities as of July 31, 2015 were $33,048, which comprised of $22,525 in accounts payable,$371 in accrued liabilities, and $10,152 as advances from a shareholder and a related party. As of July 31, 2015, the Company had a working capital deficit of $32,444.

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the eleven months ended June 30, 2016:

 

   For the eleven months ended June 30, 2016  For the twelve months ended July 31, 2015
Net Cash (Used in) Operating Activities  $(44,951)  $(30,627)
Net Cash used in Investing Activities   —      —   
Net Cash Provided by Financing Activities   44,648    30,202 
Net (Decrease) Increase in Cash and Cash Equivalents  $(303)  $(425)

 

For the eleven months ended June 30, 2016, the net cash used for operating activities was $44,951. The Company participated in no investing activities for the eleven months ended June 30, 2016. The net cash provided by financing activities was $44,648 for the eleven months ended June 30, 2016. The Company had a net decrease in cash and cash equivalents of $303 for the eleven months ended June 30, 2016.

 

For the twelve months ended July 31, 2015, the net cash used for operating activities was $30,627. The Company participated in no investing activities for the eleven months ended July 31, 2015. The net cash provided by financing activities was $30,202 for the twelve months ended July 31, 2015. The Company had a net decrease in cash and cash equivalents of $425 for the twelve months ended July 31, 2015.

 

We have nominal assets and have generated little revenues since inception. We currently have no material commitments for capital expenditures. We may be required to raise additional funds, particularly if we are unable to continue generating positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our available cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. In addition, our company may, from time to time, receive continued funding and capital resources from related parties. However, as of the date of this Annual Report, such related parties do not have any existing obligation to advance funds or working capital to support our business, nor can our company rely on any advance funds from such related parties. Other than working capital, we presently have no other alternative source of working capital. We may not have sufficient working capital to fund the expansion of our operations and to provide working capital necessary for our ongoing operations and obligations. We may need to raise significant additional capital to fund our operating expenses, pay our obligations, and grow our company. We do not anticipate we will be profitable in 2017. Therefore our future operations may be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our Common Stock. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our marketing and development plans and possibly cease our operations.

 

9 
 

 

We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

 

Our liquidity may be negatively impacted by the significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly.

 

Going Concern

 

Our financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As reflected in the financial statements, we had an accumulated deficit at June 30, 2016, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt from our auditor about our ability to continue as a going concern.

 

We are attempting to commence operations and generate sufficient revenue; however, our cash position may not be sufficient to support its daily operations. While we believe in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of our company to continue as a going concern is dependent upon our ability to further implement our business plan and generate sufficient revenue and in our ability to raise additional funds.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Contractual Obligations

 

We do not have any contractual obligations at this time.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 8. Financial Statements and Supplementary Data

10 
 

 

Atlas Technology International, Inc.

(fka Sweets & Treats, Inc.)

June 30, 2016

Index to the Consolidated Financial Statements

 

 

Contents Page
Report of Independent Registered Public Accounting Firm F-2
   
Consolidated Balance Sheets at June 30, 2016 and July 31, 2015  
   
Consolidated Statements of Operations for the Eleven and Twelve Months Ended June 30, 2016 and July 31, 2015  
   
Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for the Reporting Period Ended June 30, 2016 and July 31, 2015  
   
Consolidated Statements of Cash Flows for the Eleven and Twelve Months Ended June 30, 2016 and July 31, 2015  
   
Notes to the Consolidated Financial Statements  

 

 

F-1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

To the Board of Directors and Stockholders of

Atlas Technology International, Inc.

Sylmar, CA

 

We have audited the accompanying consolidated balance sheets of Atlas Technology International, Inc. and its subsidiaries (formerly Sweets & Treats, Inc.) (collectively the “Company”) as of June 30, 2016 and July 31, 2015, and the related consolidated statements of operations, stockholders’ equity and cash flows for the 11month period ended June 30, 2016 and for the year ended July 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Atlas Technology International, Inc. and its subsidiaries as of June 30, 2016 and July 31, 2015 and the results of their operations and their cash flows for 11month period ended June 30, 2016 and for the year ended July 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has accumulated losses from operations since inception and has a working capital deficit as of June 30, 2016. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in this regard are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ MaloneBailey, LLP

 

MALONEBAILEY, LLP

www.malonebailey.com

Houston, Texas

September 27, 2016

 

F-2
 

 

 

Atlas Technology International, Inc.
(fka Sweets & Treats, Inc.)
Consolidated Balance Sheets
       
       
       
  

June 30,

2016

 

July 31,

2015

ASSETS  
 CURRENT ASSETS:          
 Cash  $228   $531 
 Accounts receivable   25    73 
 Prepaid expenses   29,753    —   
           
 Total Current Assets   30,006    604 
           
Total Assets  $30,006   $604 
           
 LIABILITIES AND STOCKHOLDERS' DEFICIT          
 CURRENT LIABILITIES:          
 Accounts payable  $8,610   $22,525 
 Accrued expenses   444    371 
 Advances from stockholder   54,800    10,152 
           
 Total Current Liabilities   63,854    33,048 
           
Total Liabilities   63,854    33,048 
           
 STOCKHOLDERS' DEFICIT:          
Preferred stock par value $0.00001: 1,000,000 shares authorized; none issued or outstanding   —      —   
Common stock par value $0.00001: 100,000,000 shares authorized; 20,900,000 and 244,800,000 shares issued or outstanding   209    2,448 
 Additional paid-in capital   55,883    28,644 
 Accumulated deficit   (89,940)   (63,536)
           
 Total Stockholders' Deficit   (33,848)   (32,444)
           
 Total Liabilities and Stockholders' Deficit  $30,006   $604 
           
See accompanying notes to the consolidated financial statements.

 

F-3
 

 

Atlas Technology International, Inc.
(fka Sweets & Treats, Inc.)
Consolidated Statements of Operations
       
       
   For the Eleven Months  For the Year
   Ended  Ended
   June 30, 2016  July 31, 2015
 Operating Expenses          
 Professional fees   15,633    61,538 
 Salary and wages - officer   700    868 
 General and administrative expenses   10,071    1,439 
           
 Total operating expenses   26,404    63,845 
           
 Loss before Income Tax Provision   (26,404)   (63,845)
           
           
 Net Loss  $(26,404)  $(63,845)
           
 Earnings per share - basic and diluted   (0.00)   (0.00)
           
Weighted average common shares outstanding - basic and diluted   169,912,239    243,830,795 
           
 See accompanying notes to the consolidated financial statements.

 

 

 

F-4
 

 

Atlas Technology International, Inc

(fka Sweets & Treats, Inc)

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the reporting period ending June 30, 2016 and July 31, 2015 

 

 

   Common Stock, $0.00001 Par Value     
   Number of Shares  Amount  Additional Paid-in Capital  Retained Earnings (Accumulated Deficit)  Total Stockholders’ Equity (Deficit)
 Balance, July 31, 2014   240,000,000    2,400    (1,358)   309    1,351 
                          
 Capital contribution             50         50 
                          
Common stock issue for cash   4,800,000    48    29,952         30,000 
                          
 Net loss                  (63,845)   (63,845)
                          
 Balance, July 31, 2015   244,800,000    2,448    28,644    (63,536)   (32,444)
                          
 Cancellation of Shares   (224,000,000)   (2,240)   2,240    —      —   
                          
Common stock issue for services   100,000    1    24,999    —      25,000 
                          
 Net loss                  (26,404)   (26,404)
                          
 Balance, June 30, 2016   20,900,000   $209   $55,883   $(89,940)  $(33,848)

 

See accompanying notes to the consolidated financial statements.

 

F-5
 

Atlas Technology International, Inc  
Consolidated Statements of Cash Flows  
   
   
   
  

For the Eleven Months ended

June 30, 2016

 

For the Twelve Months ended

July 31, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(26,404)  $(63,845)
Adjustments to reconcile net loss to net cash used in operating activities          
Stock base compensation   414    —   
Changes in operating assets and liabilities:          
Accounts receivable   48    (73)
Prepaid expenses   (5,167)   10,450 
Accounts payable   (13,915)   22,525 
Accrued expenses   73    316 
           
Net cash used in operating activities   (44,951)   (30,627)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Advances from stockholder   44,739    1,811 
Repayments to stockholder   (91)   (1,659)
Proceeds from sale of common shares   —      30,000 
Capital contribution   —      50 
           
Net cash provided by financing activities   44,648    30,202 
           
Net change in cash   (303)   (425)
           
Cash at beginning of the reporting period   531    956 
           
Cash at end of the reporting period  $228   $531 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:          
           
Interest paid  $—     $—   
           
Income tax paid  $—     $—   
           
NON CASH FINANCING AND INVESTING ACTIVITIES:          
Shares issued to consulting services not provided yet  $25,000   $—   
           
See accompanying notes to the consolidated financial statements.

F-6
 

 

Atlas Technology International, Inc

(fka Sweets & Treats, Inc.)

 

June 30, 2016

Notes to the Consolidated Financial Statements

 

Note 1 - Organization and Operations

 

Sweets & Treats, Inc. (“CA Corp”)

 

Sweets & Treats, Inc. (“Predecessor”) was incorporated on April 13, 2011 under the laws of the State of California. The Predecessor is a bakery shop specializing in freshly-made cakes, cupcakes, desserts and special events catering.

 

Atlas Technology International, Inc. (fka Sweets & Treats, Inc.) (“DE Corp”)

 

Atlas Technology International, Inc. (fka Sweets & Treats, Inc.) (the “Company”) was incorporated on July 7, 2014 under the laws of the State of Delaware for the sole purpose of acquiring all of the issued and outstanding capital stock of the Predecessor. Upon formation, the Company issued 10,000,000 shares of its common stock to the President of the Company as founder’s shares valued at par value of $0.00001 and recorded as compensation of $100.

 

On July 18, 2014, the Company issued 5,000,000 shares of the newly formed corporation’s common stock to the President of the Predecessor for all of the Predecessor’s issued and outstanding capital stock. No value was given to the common stock issued by the newly formed corporation. Therefore, the shares were recorded to reflect the $0.00001 par value and paid in capital was recorded as a negative amount of ($50). The acquisition process utilizes the capital structure of the Company and the assets and liabilities of Predecessor, which are recorded at historical cost.

 

The Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (“SAB”) (“SAB Topic 4B”) issued by the United States Securities and Exchange Commission (the “SEC”), by reclassifying the Predecessor’s undistributed retained earnings of $942 at July 17, 2014 to additional paid-in capital.

 

The accompanying consolidated financial statements have been prepared as if the Company had its corporate capital structure as of the date of the incorporation of the Predecessor.

 

On March 11, 2016, the Company entered into certain Spin-Off Agreement with Tiffany Aguayo, the majority shareholder, pursuant to which the Shareholder agreed to cancel 14,000,000 pre-split shares of Company's Common stock in exchange for the consummation and execution of the Spin Off agreement and sale of Sweets & Treats, Inc., a CA Corporation and a wholly-owned subsidiary of the Company to Ms. Aguayo. The transaction has not been consummated as of the date hereof but Ms. Aguayo still agreed to the cancellation of her shares.

 

On July 19, 2016, the Company filed with the Secretary of State of Delaware, amending its Articles of Incorporation by changing the name of the Company to “Atlas Technology International, Inc.”

 

On August 23, 2016, the Company filed with the Secretary of State of Delaware an Amended and Restated Certificate of Incorporation in which the Company confirmed its name change to Atlas Technology International, Inc. and set forth therein the designations for the Series A, B and C Preferred Stock.

 

Note 2 - Significant and Critical Accounting Policies and Practices

 

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Fiscal Year End

 

The Company elected to amend its fiscal year ending date July 31st to June 30th.

 

Basis of Presentation

 

The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior year amounts have been combined and reclassified to conform to the current year presentation.

 

F-7
 

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

 

(i)Allowance for doubtful accounts: Management’s estimate of the allowance for doubtful accounts is based on historical sales, historical loss levels, and an analysis of the collectability of individual accounts; and general economic conditions that may affect a client’s ability to pay. The Company evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole.
(ii)Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
(iii)Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Principles of Consolidation

 

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification ("ASC") to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

 

The Company consolidates the following entities:

 

Name of consolidated subsidiary or entity State or other jurisdiction of incorporation or organization

Date of incorporation or formation

(date of acquisition, if applicable)

Attributable interest
Sweets & Treats, Inc. The State of Delaware July 7, 2014 100%
       
Sweets & Treats, Inc. The State of California April 13, 2011 100%

 

The consolidated financial statements include all accounts of the Company and the subsidiary as of reporting period dates and for the reporting periods then ended.

 

F-8
 

 

All inter-company balances and transactions have been eliminated.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in generally accepted accounting principles (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, customer deposits and sales tax payable approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the related parties include a. affiliates of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 405 under the Securities Act); b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

 

F-9
 

 

Commitment and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

 

Deferred Tax Assets and Income Tax Provision

 

The Company was a Subchapter S corporation, until July 17, 2014 during which time the Company was treated as a pass through entity for federal income tax purposes. Under Subchapter S of the Internal Revenue Code stockholder of an S corporation are taxed separately on their distributive share of the S corporation’s income whether or not that income is actually distributed.

 

Effective July 18, 2014, the Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

 

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

 

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

 

F-10
 

 

Earnings per Share

 

Earnings per share ("EPS") is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.

 

There were no potentially dilutive common shares outstanding for the reporting period ended June 30, 2016 and July 31, 2015.

 

Cash Flows Reporting

 

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

 

Subsequent Events

 

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

 

Recently Issued Accounting Pronouncements

 

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company's financial statements.

 

F-11
 

 

Note 3 – Going Concern

 

The Company has elected to adopt early application of Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at June 30, 2016, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company is attempting to generate sufficient revenue; however, its cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate sufficient revenue and in its ability to raise additional funds.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 4 – Stockholders' Equity (Deficit)

 

Shares Authorized

 

Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is One Hundred and one Million (101,000,000) shares of which One Million (1,000,000) shares shall be Preferred Stock, par value $0.00001 per share, and One Hundred Million (100,000,000) shares shall be Common Stock, par value $0.00001 per share.

 

Common Stock

 

From August 25, 2014 to October 23, 2014, the Company issued 4,800,000 shares of its common stock in aggregate at $0.0006 per share, or $30,000 in cash.

 

On March 10, 2016, as a condition to a certain transaction involving the sale of controlling interest by Tiffany Aguayo, Company’s majority shareholder and officer, Ms. Aguayo agreed to cancel 224,000,000 post-split shares. Upon completion of the share cancellation, Ms. Aguayo beneficially held 16,000,000 shares of 20,800,000 total outstanding shares as of March 10, 2016, representing 76.92%. Also as a condition to the consummation of the transaction, the Company approved a 1 for 16 forward split. The transaction has not been consummated as of the date hereof. As a result of the share cancellation and the forward split, the Company currently has 20,900,000 shares of common stock outstanding, 16,000,000 of which were beneficially held by Ms. Aguayo.

 

On June 24, 2016, the Company entered into a consulting agreement with Bright Light Marketing and issued 100,000 post-split shares of its common stock in exchange for services valued at $25,000.

 

Capital Contribution

 

 

For the reporting period ending July 31, 2015, the President, CEO and significant stockholder contributed $50 as capital.

 

Note 5 – Related Party Transactions

 

Related Parties

 

Related parties with whom the Company had transactions are:

 

Related Parties Relationship Related Party Transactions Business Purpose of transactions
       
Management and significant stockholders      
Tiffany Aguayo President, CEO and Significant shareholder

(i) Advances to the Company,

(ii) Office space at no cost

(i) Working capital,

(ii) Cost is nominal.

 

F-12
 

 

Advances from President, CEO and Significant Stockholder

 

From time to time, the stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

 

The president, Co-CEO and significant stockholder of the Company had advanced $54,800 and $10,152 as of June 30, 2016 and July 31, 2015, respectively, none of which has been repaid.

 

Free Office Space

 

The Company has been provided office space by one of our Co-Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statement.

 

Sale of Common Shares from President, CEO and Significant Stockholder

 

Ahmad Haris Tajyar assisted the President, CEO and Significant Stockholder with the sale of her shareholdings in SWTS. Mr. Tajyar was not compensated by the Company nor will be compensated by the Company in the future for this transaction.

 

Note 6 – Commitments and Contingencies

 

Business Advisory Agreements

 

On June 24, 2016, the Company entered into consulting agreements with Bright Light Marketing (“the Consultants”) with the following terms and conditions:

 

Services

 

The Consultants will provide consulting support and advisory services to include public relations, advertising, business advise, crisis communications and corporate publicity.

 

Terms

 

The Agreement shall commence on the date above and shall continue for a period of twelve (12) months.

 

Consideration

 

Upon signing of the Agreements, the Consultants will be granted 100,000 shares of the Company's common stock.

 

Accounting Treatment of the Consideration

 

The Company valued 100,000 common shares issued to the Consultants for obtaining services at $0.25 per share, the most recent market trading price, or $25,000 in aggregate, and booked the fair value of the equity instruments issued as prepaid consulting fees on the date of grant. The expenses of the consulting services are recognized as those services are received.

 

The Company recognized $414 in consulting fees for the reporting period ended June 30, 2016.

 

Note 7 – Deferred Tax Assets and Income Tax Provision

 

Deferred Tax Assets

 

At June 30, 2016, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of approximately $90,000 that may be offset against future taxable income through 2035. No tax benefit has been reported with respect to these net operating loss carry-forwards because the Company believes that the realization of the Company’s net deferred tax assets of approximately $30,580 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance.

 

F-13
 

 

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding the probability of its realization.  The valuation allowance increased approximately $8,978 and $21,602 for the reporting period ended June 30, 2016 and July 31, 2015, respectively.

 

Components of deferred tax assets in the consolidated balance sheets are as follows:

 

   June 30, 2016  July 31, 2015
Net deferred tax assets – non-current:          
           
Expected income tax benefit from NOL carry-forwards  $30,580   $21,602 
           
Less valuation allowance   (30,580)   (21,602)
           
Deferred tax assets, net of valuation allowance  $—     $—   

 

Income Tax Provision in the Consolidated Statements of Operations

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income tax provision is as follows:

 

   For the reporting period ended June 30, 2016  For the reporting period ended July 31, 2015
       
Federal statutory income tax rate   34.0%   34.0%
           
Change in valuation allowance on net operating loss carry-forwards   (34.0)   (34.0)
           
Effective income tax rate   0.0%   0.0%

 

Note 8 – Subsequent Events

 

The Company has evaluated all events that occur after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that the following reportable subsequent event(s) had to be disclosed:

 

On July 5, 2016, Tiffany Aguayo, the majority shareholder, owning approximately 76.9% of the total issued and outstanding shares of SWTS, entered into two separate Stock Purchase Agreements for the sale of 13,000,000 and 3,000,000 shares of SWTS common stock equivalent to her complete ownership of SWTS with Ying-Chien Lin and Lynx Consulting Group Ltd (“Lynx”), respectively. Pursuant to the execution of the Stock Purchase Agreements, Mr. Lin and Lynx owned approximately 62.5% and 14.4% of the total voting rights of SWTS, respectively.

 

On July 5, 2016, Tiffany Aguayo, the major debtholder, owning approximately 85.8% of the total liabilities as of June 30, 2016, entered into a Debt Assignment Agreement and sold $40,000 of the outstanding debt from advances made on behalf of the Company to Growth Point Advisors Ltd. Pursuant to this Agreement, the Company entered into a Convertible Promissory Note (the “Note”) with Growth Point Advisors Ltd. to replace the Debt Assignment Agreement. The Note bears an interest rate of 8% per annum, due on July 4th 2017, and convertible by giving five days’ notice to the Company.

 

On July 10, 2016, the Company issued 15,000,000 shares of its common stock to Mr. Ying-Chien Lin for services of being a Director and Chairman of the Board valued at $15,000.

 

On July 10, 2016, the Company issued 10,000,000 shares of its common stock to Mr. Ming-Shu Tsai for services of being a Director of the Board valued at $10,000.

 

On July 14, 2016, the Company entered into a consulting agreement with Chronos Investments Ltd for the term of twelve months. Under the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 to make better strategic decisions in corporate performance, value creating, macro economical forces and global & local markets.

 

On July 14, 2016, the Company entered into a consulting agreement with Cygnus Management Ltd for the term of twelve months. Under the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 in assisting clients to best benefit from M&A or improving operating and financial efficiency.

 

F-14
 

 

On July 15, 2016, the Company entered into a consulting agreement with Silverciti Group Ltd for the term of twelve months. Under the Agreement, the Company issued 2,500,000 shares of its common stock in exchange for services valued at $25,000 in asset management.

 

On July 19, 2016, the Company filed with the Secretary of State of Delaware, amending its Articles of Incorporation by changing the name of the Company to “Atlas Technology International, Inc.”

 

On August 18, 2016, the Company created a wholly-owned Hong Kong limited company (“subsidiary”) under the name Atlas Tech Trading Limited.

 

On August 23, 2016, the Company filed with the Secretary of State of Delaware an Amended and Restated Certificate of Incorporation in which the Company confirmed its name change to Atlas Technology International, Inc. and set forth therein the designations for the Series A, B and C Preferred Stock. 

 

F-15
 

 

Item 9. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure.

 

On June 9, 2016, Sweets & Treats Inc. (the “Company”) dismissed its independent registered public accounting firm, Li & Company, PC (“Li”). The Board of Directors of the Company appointed MaloneBailey, LLP (“MaloneBailey”) as its new independent registered public accounting firm to audit and review the Company’s financial statements. There have been no other changes in or disagreements with accountants on accounting or financial disclosure matters.

 

Item 9A. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company's management, including the Company's Co-Chief Executive Officers (the Company's principal executive officer and interim principal accounting officer), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company's Co-Chief Executive Officers concluded that the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including Co-Chief Executive Officers, as appropriate, to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control over Financial Reporting

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company's management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2016. The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management concluded that our internal control over financial reporting was not effective, as of June 30, 2016. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that amounted to material weaknesses.

 

The matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives of having segregation of the initiation of transactions, the recording of transactions and the custody of assets; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Co-Chief Executive Officers and Chief Financial Officer in connection with the review of our financial statements as of June 30, 2016.

 

To address the material weaknesses set forth in items (2) and (3) discussed above, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

 

Management's Remediation Initiatives

 

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate, the following series of measures:

 

We plan to increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. First, we plan to create a position to segregate duties consistent with control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions and (iii) the custody of assets. Second, we will create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. We did not implement the said remedial measures in eleven months ended June 30, 2016. We anticipate that these remedial measures will be implemented when our financial conditions permit.

 

11 
 

 

Changes in Internal Controls over financial reporting

 

No change in our internal control over financial reporting occurred during the eleven months ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

None.

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

The following table sets forth the names and ages of officers and directors as of June 30, 2016.

 

Name Age Position
Tiffany Aguayo 30 President, Chief Executive Officer, Chief Financial Officer and Director

 

Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years.

 

Tiffany Aguayo, Chief Executive Officer, Chief Financial Officer and Director

 

Ms. Aguayo has served as our President, Chief Executive Officer and Chief Financial Officer of our Company and wholly-owned subsidiary Sweets and Treats CA since the inception in April 2011. From 2009 to 2010, Ms. Aguayo also served in the special education department of the Los Angeles Unified School District working with students and minor with special needs. From 2005-2009, Ms. Aguayo served as a senior tax specialist with H&R Block where she assisted many individuals with their tax matters.

 

Ms. Aguayo graduated with a Bachelor of Arts Degree in East Asia Studies from the University of California, Los Angeles (UCLA). Prior to attending UCLA, Ms. Aguayo earned her Associates Degree in Culinary Studies at Los Angeles Mission College. Ms. Aguayo is fluent in Mandarin, Spanish, Italian and English.

 

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

 

Family Relationships

 

There are no family relationships between any of our directors or executive officers.

 

Certain Legal Proceedings

 

To our knowledge, no director, nominee for director, or executive officer of the Company has been a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years.

 

Code of Ethics

 

The company has not adopted a Code of Ethics applicable to its Principal Executive Officer and Principal Financial Officer.

 

Item 11. Executive Compensation

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us:

 

12 
 

 

SUMMARY COMPENSATION TABLE

 

Name and Principal Position  Year  Salary ($) 

Bonus

($)

  Stock Awards ($)  Option Awards ($)  Non-Equity Incentive Plan Compensation ($) 

Non-Qualified Deferred Compensation Earnings

($)

  All Other Compensation ($)  Total ($)
Tiffany Aguayo, President, CEO, CFO, Secretary, Treasurer & Director   2016    700    0    0    0    0    0    0    700 
    2015    893    0    0    0    0    0    0    893 

 

Option Grants

 

There are no stock option plans or common shares set aside for any stock option plan.

 

Long-Term Incentive Plan (“LTIP”) Awards Table

 

There were no awards made to a named executive officers in the last completed fiscal year under any LTIP

 

Compensation of Directors

 

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors (which consists solely of Tiffany Aguayo as of June 30, 2016) has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

 

Employment Agreements

 

Currently, we do not have an employment agreement in place with our officers and directors.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our shares of common stock, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities, shares subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on shares issued and outstanding as of June 30, 2016.

 

 

 Name  Amount and Nature of Voting Beneficial Ownership  % of Class
Tiffany Aguayo(1)(2)   16,000,000    76.92%
All officers and directors as a group (1 person)   16,000,000    76.92%

 

(1) Member of our board of directors.
(2) Significant Shareholder

 

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our shares of common stock, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities, shares subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on shares issued and outstanding as of September 27, 2016.

 

13 
 

 

 Name  Amount and Nature of Voting Beneficial Ownership  % of Class
       
Ying-Chien Lin (1)   28,000,000    52.43%
           
Ming-Shu Tsai(1)(2)   10,000,000    18.73%
           
Tiffany Aguayo(1)(2)   -0-    -0- 
           
Lynx Consulting Group Ltd (3)   3,000,000    5.62%
           
All officers and directors as a group (3 person)   38,000,000    71.16%

 

(1) Member of our board of directors.
(2) Co-Chief Executive Officers
(3) Significant Shareholder

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

 

Certain Related Party Transactions

 

Advances from President, CEO and Significant Stockholder

 

From time to time, the stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

 

Tiffany Aguayo, the President, CEO and majority shareholder of the Company advanced $44,648 and $152 during the twelve months ended June 30, 2016 and eleven months ended July 31, 2015, respectively, none of which has been repaid. Ms. Aguayo also advanced $5,000 and $10,000 in aggregate on October 16, 2015 and November 23, 2015, respectively, none of which have been repaid.

 

Free Office Space

 

We have been provided office space by our Co-Chief Executive Officer Tiffany Aguayo at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statement.

 

 

Indebtedness of Management

 

No officer, director or security holder known to us to own of record or beneficially more than 5% of our common stock or any member of the immediate family or sharing the household (other than a tenant or employee) of any of the foregoing persons is indebted to us.

 

Transactions with Promoters

 

We did not expressly engage a promoter at the time of its formation. Due to Ms. Aguayo’s initiative in founding and organizing the business of the Company, she may be deemed to be a promoter under Securities Act Rule 405.

 

Independence of the Board of Directors

 

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation or has been, at any time during the past three years, employed by the company. Accordingly, we do not have any independent director as of the date of this registration statement.

 

14 
 

 

Item 14. Principal Accountant Fees and Services

 

Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K or 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings was $15,000 and $17,500 for the eleven months ended June 30, 2016 and twelve months ended July 31, 2015, respectively.

 

Audit Related Fees

 

Audit related services fees was $13,000 for the eleven months ended June 30, 2016 and twelve months ended July 31, 2015.

 

Tax Fees

 

For the Company’s eleven months ended June 30, 2016 and twelve months ended July 31, 2015, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

The Company did not incur any other fees related to services rendered by our principal accountant for the eleven months ended June 30, 2016 and twelve months ended July 31, 2015.

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

-approved by our audit committee; or
-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

 

We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors.

 

The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

 

 

15 
 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

A copy of our initial Certificate of Incorporation, as amended, was filed and incorporated by reference, as Exhibit 3.1, and copies of our Amended and Restated Certificate of Incorporation and our current Bylaws were also filed and incorporated by reference, as Exhibits 3.2 and 3.3, to our originally filed Form S-1 Registration Statement that is referenced here in Part IV, Item 15.

 

a) Documents filed as part of this Annual Report

 

1. Consolidated Financial Statements

 

2. Financial Statement Schedules

 

3. Exhibits

 

Exhibit Number   Description
3.1   Certificate of Incorporation (Incorporated by reference from our Registration Statement on Form S-1, filed on December 11, 2014).
3.2   Amended and Restated Certificate of Incorporation (Incorporated by reference from our Schedule 14C, filed on August 16, 2016).
3.3   Bylaws (Incorporated by reference from our Registration Statement on Form S-1, filed on December 11, 2014).
31.1   Certifications of the Co-Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+   Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+   Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB   XBRL Taxonomy Extension Label Linkbase Document.
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document.

+In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

16 
 

 

SIGNATURES

 

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    Sweets & Treats, Inc.
     
September 27, 2016 By: /s/ Tiffany Aguayo
    Tiffany Aguayo
    President, Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer and Principal Accounting Officer)
     
     

 

  

 

Pursuant to the requirements of the Securities Exchange Act of 1934, 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

 

Title

 

Date

         

/s/Tiffany Aguayo

 

President, Co-Chief Executive Officer,

 

September 27, 2016

Tiffany Aguayo

 

Chief Financial Officer and Director

 

 

 

 

(Principal Executive Officer and Principal Accounting Officer)

 

 

         
         
/s/ Ming-Shu Tsai   Co-Chief Executive Officer and Director   September 27, 2016
Ming-Shu Tsai        
         
         
/s/ Ying-Chien Lin   Chairman and Director   September 27, 2016
Ying-Chien Lin        

17