UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

FORM 10-K

 

(Mark One)

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

For the fiscal year ended December 31, 2019

OR

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

For the transition period from                to               

 

Commission File Number: 303-207103

 

JACC STUDIOS INC.

(Exact name of registrant as specified in its charter)

 

Nevada		NA
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

18124 Wedge Pkwy, Ste 1050
Reno, NV 89511

(Address of principal executive offices) (Zip Code)

Telephone: (778) 995-1267
Email: jaccstudios.jhy@gmail.com

 

(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.001 par value
(Title of Class)

 

Securities registered pursuant to Section 12(g) of the Act:
None

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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in 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 or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐		Accelerated filer ☐		Non-accelerated filer ☐		Smaller reporting company ☒
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

 

As of May 8, 2020, 51,535,000 shares of the registrant’s common stock were outstanding.

JACC STUDIOS, INC. 

Annual Report on Form 10-K

For the Fiscal Year Ended December 31, 2019

 

TABLE OF CONTENTS

 

Cautionary Note Regarding Forward-Looking Statements		i
PART I
Item 1.	Description of Business	1
Item 1A.	Risk Factors	2
Item 1B.	Unresolved Staff Comments	2
Item 2.	Description of Property	2
Item 3.	Legal Proceedings	2
Item 4.	Mine Safety Disclosure	2
PART II
Item 5.	Market for Common Equity and Related Stockholder Matters	3
Item 6.	Selected Financial Data	3
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	3
Item 8.	Financial Statements	3
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	15
Item 9A.	Controls and Procedures	15
Item 9B.	Other Information	16
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	17
Item 11.	Executive Compensation	18
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	19
Item 13.	Certain Relationships and Related Transactions, and Director Independence	20
Item 14.	Principal Accountant Fees and Services	20
PART IV
Item 15.	Exhibits, Financial Statement Schedules	21

 

FORWARD-LOOKING STATEMENTS

 

We make forward-looking statements in this Report and in other materials we file with the Securities and Exchange Commission (“SEC”) or otherwise make public. In this Report, both Part I, Item 1, “Business,” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contain forward-looking statements. In addition, our senior management makes forward-looking statements to analysts, investors, the media and others. Statements with respect to expected revenue, income, receivables, backlog, client attrition, acquisitions and other growth opportunities, sources of funding operations and acquisitions, the integration of our solutions, the sufficiency of available liquidity, research and development, and other statements of our plans, beliefs or expectations are forward-looking statements. These and other statements using words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” and similar expressions also are forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. The forward-looking statements we make are not guarantees of future performance, and we have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or historical earnings levels.

 

Among the factors that could cause actual future results to differ materially from our expectations are the risks and uncertainties described under “Risk Factors” set forth in Part I, Item 1A, and the other cautionary statements in other documents we file with the SEC, including the following:

 

•

competitive products and pricing;

•

product demand and market acceptance;

•

entry into new markets;

•

new product and services development and commercialization;

•

key strategic alliances with vendors that resell our products;

•

uncertainty in continued relationships with clients due to termination rights;

•

our ability to control costs;

•

availability of products produced by third-party vendors;

•

the success of our relationships with channel partners;

•

fluctuations in operating results;

•

critical accounting policies and judgments;

•

changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other standard-setting organizations;

 

PART I

 

ITEM 1.

Business

 

Company Overview

 

THE COMPANY

 

Business Overview

 

JACC Studios Inc. (the “Company”) was incorporated in the State of Nevada on April 24, 2014, The Company is in the development stage whose purpose is to provide channels for the Chinese online game developers and operators to have access to the North American market, provide English translation and re-production for Chinese online game developers and operators, assist them in user data tracking, and help promote their games.

 

The Company has no operations to date. The Company never commenced any operational activities.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated any revenues since inception, has sustained accumulated losses of $123,225 for the period from inception to December 31, 2019, and has a working capital deficiency of $7,375 as of December 31, 2019. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company’s continuation as a going concern is dependent upon, among other things, its ability to generate revenues and its ability to obtain capital from third parties.  The Company plans to rely on the proceeds from loans from both unrelated and related parties to provide the resources necessary to fund the development of its business plan and operations. No assurance can be given that the Company will be successful in these efforts.

 

As of the date of this filing, the Company has 51,535,000 shares of $0.001 par value common stock issued and outstanding.

 

JACC STUDIOS INC’s fiscal year end is December 31.

 

The Company is an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act.

 

The Company shall continue to be deemed an emerging growth company until the earliest of—

 

(A)

the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five (5) years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;

 

(B)

the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title;

 

(C)

the date on which such issuer has, during the previous three (3) year period, issued more than $1,000,000,000 in non-convertible debt; or

 

(D)

the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.’

 

As an emerging growth company, the company is exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.

 

Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.

 

As an emerging growth company, the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.

 

ITEM 1A.

Risk Factors

 

Not applicable.

 

ITEM 1B.

Unresolved Staff Comments

 

Not applicable.

 

ITEM 2.

Properties

 

The Company’s principal offices are located at 18124 Wedge Pkwy, Ste 1050, Reno, NV 89511.

 

The Company believes that its facilities are adequate for its current needs and that suitable alternative space is available to accommodate expansion of the Company’s operations.

 

ITEM 3.

Legal Proceedings

 

We may be, from time to time, a party to various legal proceedings and claims, which arise in the ordinary course of business. We are not aware of any legal matters that could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

 

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

 

The Company’s common stock does not yet trade.

 

ITEM 6.

Selected Financial Data

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

 

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

This section must be read in conjunction with the Financial Statements included in this report.

 

This section of the filing includes a number of forward-looking statements that reflect our current views regarding the future events and financial performance of JACC STUDIOS INC.

 

Results of Operations

 

The Company currently has no operations and incurred losses of $40,154 and $16,168 for the years ended December 31, 2019 and 2018 respectively due to increase of professional fees and software development costs.

 

Limited Operating History; Need for Additional Capital

 

There is limited historical financial information about us on which to base an evaluation of our performance.  We are a development stage company and generated no revenues from operations.  We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in our rebranding efforts, and possible cost overruns due to the price and cost increases in supplies and services.

 

If we do not raise or generate revenues sufficient to cover professional fees, estimated to be $10,000 for the next 12 months, we would not be able to remain reporting with the SEC, and therefore we would not be able to obtain an OTCBB quotation.

 

While our sole officer and director has generally indicated a willingness to provide services and financial contributions if necessary, there are presently no agreements, arrangements, commitments, or specific understandings, either verbally or in writing, between the officer and director and JACC STUDIOS INC.  During the next year of operations, our officer and director will provide his labor at no charge.

 

If we are unable to meet our needs for cash from either our revenues or possible alternative sources, then we may be unable to continue, develop, or expand our operations.

 

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

 

ITEM 8.

Financial Statements And Supplementary Data

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To Stockholders and the Board of Directors

of JACC Studios Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of JACC Studios Inc. (the “Company”) as of December 31, 2019 and 2018, and the related statements of operations, stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the financial statements, the Company has not generated any revenues since inception, has sustained accumulated losses of $123,225 for the period from inception to December 31, 2019, and has a working capital deficiency of $7,375 as of December 31, 2019. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are described in Note 3 to the financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Prager Metis CPAs, LLC 

 

We have served as the Company’s auditor since 2018

 

Hackensack, New Jersey

May 8, 2020

 

JACC STUDIOS INC

BALANCE SHEETS

 

ASSETS		December 31, 2019				December 31, 2018
CURRENT ASSETS
Cash		$	16,581			$	113
Total current assets			16,581				113
TOTAL ASSETS		$	16,581			$	113
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
CURRENT LIABILITIES
Accrued expenses		$	13,972			$	8,510
Stockholder loan			9,984				23,474
Total current liabilities			23,956				31,984
TOTAL LIABILITIES			23,956				31,984
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value, 200,000,000 shares authorized, 51,535,000 and 27,260,000 shares issued and outstanding as of December 31, 2019 and 2018, respectively			51,535				27,260
Additional paid-in capital			89,815				49,440
Stock subscription receivable			(25,500	)			(25,500	)
Accumulated deficit			(123,225	)			(83,071	)
Total stockholders' deficit			(7,375	)			(31,871	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	16,581			$	113

 

The accompanying notes are an integral part of these financial statements.

 

JACC STUDIOS INC

STATEMENTS OF OPERATIONS

 

		Year Ended December 31
		2019				2018
REVENUE		$	—			$	—
OPERATING EXPENSES
General and administrative			25,279				16,168
Software development costs			14,875				—
Total operating expenses			40,154				16,168
Loss before provision for income taxes			(40,154	)			(16,168	)
Provision for income taxes			—				—
Net loss		$	(40,154	)		$	(16,168	)
Loss per share - basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average number of shares outstanding - basic and diluted			29,388,219				27,260,000

 

The accompanying notes are an integral part of these financial statements.

 

JACC STUDIOS INC

STATEMENTS OF STOCKHOLDERS' DEFICIT

 

														Additional				Stock								Total
						Common Stock								Paid-In				Subscription				Accumulated				Stockholders'
						Shares				Amount				Capital				Receivable				Deficit				Deficit
	Balance - December 31, 2017						27,260,000			$	27,260			$	49,440			$	(25,500	)		$	(66,903	)		$(15,703)
				Net loss			—				—				—				—				(16,168	)		(16,168)
	Balance - December 31, 2018						27,260,000				27,260				49,440				(25,500	)			(83,071	)		(31,871)
				Issuance of common stock in private placement			24,275,000				24,275				40,375				—				—			64,650
				Net loss			—				—				—				—				(40,154	)		(40,154)
	Balance - December 31, 2019						51,535,000			$	51,535			$	89,815			$	(25,500	)		$	(123,225	)		$(7,375)

 

The accompanying notes are an integral part of these financial statements.

 

JACC STUDIOS INC

STATEMENTS OF CASH FLOWS

 

		Year Ended December 31
		2019				2018
Cash Flows from Operating Activities:
Net loss		$	(40,154	)		$	(16,168	)
Adjustments to reconcile net loss to net cash used in operating activities:			—				—
Change in operating assets and liabilities
Accrued expenses			5,462				1,066
Net Cash Used in Operating Activities			(34,692	)			(15,102	)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock in private placement			64,650				—
Proceeds from (repayment of ) stockholder loan			(13,490	)			15,030
Net Cash Provided by Financing Activities			51,160				15,030
Net increase (decrease) in cash			16,468				(72	)
Cash at beginning of year			113				185
Cash at end of year		$	16,581			$	113
Supplemental disclosures of cash flow information:
Cash paid during the years for:
Interest		$	—			$	—
Income taxes		$	—			$	—

 

The accompanying notes are an integral part of these financial statements.

 

JACC STUDIOS INC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

JACC Studios Inc. (the “Company”) was incorporated in the State of Nevada on April 24, 2014. The Company is in the development stage whose purpose is to provide channels for the Chinese online game developers and operators to have access to the North American market, provide English translation and re-production for Chinese online game developers and operators, assist them in user data tracking, and help promote their games.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Development Stage Company

 

The Company is considered to be in the development stage as defined in ASC 915 “Development Stage Entities.” The Company is devoting substantially all of its efforts to the development of its business plans. The Company has elected to adopt early application of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements; and does not present or disclose inception-to-date information and other remaining disclosure requirements of Topic 915.

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP).

 

Use of estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash

 

Cash includes cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.

 

JACC STUDIOS INC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Software Development Costs

 

The Company accounts for software development cost in accordance with ASC 985-20 whereby cost of developing computer software to be sold, leased, or otherwise marketed includes software that is part of a product or process to be sold to a customer shall be accounted for under ASC 985-20. All cost incurred to establish technological feasibility of a computer software product to be sold, leased or otherwise marketed are expensed when incurred. The technological feasibility of a computer software product is established when the entity has completed all planning, designing, coding, and testing activities that are necessary to establish that the product can be produced to meet its design specifications including functions, features, and technical performance requirements. Cost of producing product masters incurred subsequent to establishing technological feasibility shall be capitalized. Those cost include coding and testing performed subsequent to establishing technological feasibility. Capitalization of computer software cost shall cease when the product is available for general release to customers.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

ASC 740 provides guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. If the Company determines that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. A liability for uncertain tax positions would then be recorded if the Company determined it is more likely than not that a position would not be sustained upon examination or if a payment would have to be made to a taxing authority and the amount is reasonably estimable. The Company does not believe any uncertain tax positions exist that would result in the Company having a liability to the taxing authorities. The Company classifies interest and penalties related to unrecognized tax benefits, if and when required, as part of interest expense and other expense in the statements of operations. As of December 31, 2019 and 2018, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 

Stock Based Compensation

 

Stock based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.

 

JACC STUDIOS INC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Loss per Share

 

Basic loss per share is calculated by dividing the Company’s net loss applicable to common stock by the weighted average number of shares during the period. Diluted earnings per share is calculated by dividing the Company’s net loss by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There is no dilutive debt or equity.

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

 

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 — quoted prices in active markets for identical assets or liabilities

 

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

 

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

The Company has no assets or liabilities valued at fair value on a recurring basis.

 

Recent accounting pronouncements

 

From time to time, new accounting pronouncements are issues by the Financial Accounting Standards Board or other standard bodies that may have an impact on the Company’s accounting and reporting. The Company believes that any recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations, and cash flows when implemented.

 

JACC STUDIOS INC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

 

NOTE 3 - GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not generated any revenues since inception, has sustained accumulated losses of $123,225 for the period from inception to December 31, 2019, and has a working capital deficiency of $7,375 as of December 31, 2019. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company’s continuation as a going concern is dependent upon, among other things, its ability to generate revenues and its ability to obtain capital from third parties.  The Company plans to rely on the proceeds from loans from both unrelated and related parties to provide the resources necessary to fund the development of its business plan and operations. No assurance can be given that the Company will be successful in these efforts.

 

NOTE 4 – STOCKHOLDER LOAN

During the year ended December 31, 2019, the Company made repayments of $13,490 to a stockholder, net of the advances received from the stockholder. During the year ended December 31, 2018, the Company was advanced $15,030 by a stockholder for working capital purposes. The stockholder loan balance was $9,984 and $23,474 as of December 31, 2019 and 2018, respectively. The loan is non-interest bearing and payable on demand.

 

NOTE 5 – STOCKHOLDERS’ DEFICIT

 

Authorized Stock

 

The Company has authorized 200,000,000 common shares with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

Stock Subscription Receivable

 

On June 1, 2015, the Company issued 25,500,000 shares of common stock to its founders for a subscription amount of $25,500. As of December 31, 2019, the subscription has not yet been paid, and is reflected as a stock subscription receivable on the accompanying financial statements.

 

Issuance of Common Stocks in Private Placement

 

From July to November 2019, the Company conducted a private placement and issued a total 24,275,000 shares of common stock for a total cash consideration of $64,650.

 

JACC STUDIOS INC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

 

NOTE 6 – SOFTWARE DEVELOPMENT COSTS

 

In September 2019, the Company purchased a game platform software from a third party for a total price of $14,018. The Company further upgraded the PayPal payment function of the software with an additional cost of $857. The software has not been put into service as of December 31, 2019. The Company has expensed all the expenditures of $14,875 during 2019.

 

NOTE 7 - INCOME TAXES

 

The reconciliation of income tax benefit at the U.S. statutory rate of 21% for the years ended December 31, 2019 and 2018 to the Company’s effective tax rate is as follows:

 

		Year Ended December 31,
		2019				2018
			21	%			21	%
Income tax benefit at statutory rate		$	(8,432	)		$	(3,395	)
Change in valuation allowance			8,432				3,395
Income tax expense		$	—			$	—

 

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets as of December 31, 2019 and 2018 are as follows:

		December 31				December 31
		2019				2018
Net operating loss carryforward		$	25,877			$	17,445
Valuation allowance			(25,877	)			(17,445	)
Net deferred tax assets		$	—			$	—

 

As of December 31, 2019, the Company has approximately $123,200 of net operating losses (“NOL”) carryovers to offset taxable income, if any, in future years. Of the net operating loss from the Company’s operations, $66,903 can be carried forward for a period of twenty years from the year of the initial loss and $56,322 can be carried forward with no time limit from the year of the initial loss pursuant to relevant US laws and regulations. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets relating to the NOL period because it is more likely than not that all of the deferred tax assets will not be realized.

 

On December 22, 2017, legislation commonly known as the Tax Cuts and Jobs Act, or the Tax Act, was signed into law. The Tax Act, among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%, requires taxpayers to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. The Company did not have any earnings from foreign subsidiaries, and, as such, the international aspects of the Tax Act are not applicable.

 

JACC STUDIOS INC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

 

NOTE 8 – SUBSEQUENT EVENTS

 

The Company evaluated all events subsequent to December 31, 2019 through the date of issuance of the financial statements.

 

The Company’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020 was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material adverse impact on the Company’s financial position, operations and cash flows. Possible areas that may be affected include, but are not limited to, disruption to the Company’s potential customers, unavailability of products/services and supplies used in operations, and the unavailability of capital.

 

ITEM 9.

Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

 

None.

 

ITEM 9A.

Controls And Procedures

 

Management’s Report on Disclosure Controls and Procedures

 

Under the supervision and with the participation of our senior management, including our chief executive officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K (the “Evaluation Date”). Based on this evaluation, our chief executive officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer, as appropriate to allow timely decisions regarding required disclosure.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. With the participation of our chief executive officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2019 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based upon such evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2019 based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures 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, (2) 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; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of December 31, 2019.

 

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the year ended December 31, 2019 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

ITEM 9B.

Other Information

 

None.

 

PART III

 

ITEM 10.

Directors, Executive Officers

 

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

Our director is elected by the stockholders to a term of one year and serve, until a successor is elected and qualified. Our officer is appointed by the Board of Directors to a term of one year and serve, until a successor is duly elected and qualified, or until removed from office. Our Board of Directors does not have any nominating, auditing or compensation committees.

 

The following table sets forth certain information regarding our executive officer and director as of the date of this report: 

 

Name		Age		Position		Period of Service(1)
Zhongbo Jia		63		President, Secretary, Treasurer, and Director		Inception - July 24, 2018
Jianhua Yu		64		President, Secretary, Treasurer, and Director		July 24, 2018 - Current

 

Notes:

 

(1)

Our director will hold office until the next annual meeting of the stockholders, typically held on or near the anniversary date of inception, and until successors have been elected and qualified. Mr. Jia was the sole director and he appointed himself as the company’s sole officer. On July 24, 2018, President Zhongbo Jia resigned as the Company’s sole officer and director and Jianhua Yu was appointed Director and President and Secretary. Mr. Yu will hold office until resignation or removal from office.

 

(2)

Mr. Jia has outside interests and obligations other than JACC STUDIOS INC. He intends to spend approximately ten (10) hours per month on our business affairs. At the date of this report, JACC STUDIOS INC is not engaged in any transactions, either directly or indirectly, with any persons or organizations considered promoters.

 

ITEM 11.

Executive Compensation

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table
			Annual Compensation																Long-Term Compensation
Name and Principal Position			Year				Salary ($)				Bonus ($)				Other Annual Compensation  ($)				Restricted Stock Awards ($)				Securities Underlying  Options (#)				LTIP Payouts ($)				All Other Compensation ($)
Jianhua Yu			2019				—				—				—				—				—				—				—
Officer and Director			2018				—				—				—				—				—				—				—
Zhongbo Jia			2019				—				—				—				—				—				—				—
Officer and Director			2018				—				—				—				—				—				—				—

 

DIRECTORS’ COMPENSATION

 

Our director is not entitled to receive compensation for services rendered to JACC STUDIOS INC, or for each meeting attended except for reimbursement of out-of-pocket expenses. There are no formal or informal arrangements or agreements to compensate directors for services provided as a director.

 

EMPLOYMENT CONTRACTS AND OFFICERS’ COMPENSATION

 

Since JACC STUDIOS INC’s incorporation on April 24, 2014, we have not paid any compensation to any officer, director or employee. We do not have employment agreements. Any future compensation to be paid will be determined by the Board of Directors, and, as appropriate, an employment agreement will be executed. We do not currently have plans to pay any compensation until such time as it maintains a positive cash flow.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

ITEM 12.

Securities Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters

 

The following table will identify, as of May 8, 2020, the number and percentage of outstanding shares of common stock of the Company owned by (i) each person known to the Company who owns more than five percent of the outstanding common stock, (ii) each officer and director, and (iii) and officers and directors of the Company as a group. The following information is based upon 51,535,000 shares of common stock of the Company which are issued and outstanding as of May 8, 2020. Unless otherwise specified, the named beneficial owner has, to our knowledge, either sole or majority voting and investment power.

 

Title Of Class				Name, Title and Address of Beneficial Owner of Shares(1)		Amount of Beneficial Ownership(2)				Percent of Class
	Common			Jianhua Yu, President, Secretary, Treasurer and Director			1,500,000				2.91	%
	Common			Yan Zhao, Director			4,000,000				7.76	%
				All Directors and Officers as a group			5,500,000				10.67	%
				Beneficial owners of 5% or more
				Zhongbo Jia			5,000,000				9.70	%
				Xiaoliang Jia			4,000,000				7.76	%
				Yi Jia			4,000,000				7.76	%
				Esther Wen Xin Hu			4,000,000				7.76	%
				Teresa Wei			4,000,000				7.76	%
				Liang Qi			4,000,000				7.76	%
				Jian Xin Wang			4,000,000				7.76	%
				Yong Huang			4,000,000				7.76	%
				Jinghua Xu			3,000,000				5.82	%
				Total			36,000,000				69.84	%

 

Footnotes

 

(1)

The address of the executive officer and director is c/o JACC STUDIOS INC.

 

(2)

As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Mr. Jia, the company’s largest stockholder is the only promoter of the Company.

 

ITEM 13.

Certain Relationships, Related Transactions And Directors Independence

 

STOCK OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN

 

JACC STUDIOS INC currently does not have existing or proposed option or SAR grants.

 

ITEM 14.

Principal Accounting Fees And Services

 

Audit Fees

 

The aggregate fees billed by Prager Metis CPAs, LLC for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the years ended December 31, 2019 and 2018 totaled $18,800 and $7,500, respectively.

 

The aggregate fees billed by Paritz & Company, P.A. for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the year ended December 31, 2018 totaled $3,000.

 

Audit-Related Fees

 

Audit-related services consist of fees for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. There were no fees billed by Paritz & Company, P.A and Prager Metis CPAs, LLC, respectively, for audit-related services rendered during the last two fiscal years.

 

Tax Fees

 

Tax services consist of fees for the preparation of federal and state tax returns. There were no fees billed by Paritz & Company, P.A and Prager Metis CPAs, LLC, respectively, for tax services rendered during the last two fiscal years.

 

All Other Fees

 

There were no any other fees billed by Paritz & Company, P.A and Prager Metis CPAs, LLC during the last two fiscal years.

 

Audit Committee Pre-Approval Policies

 

Our Board of Directors reviewed the audit and non-audit services rendered by Paritz & Company, P.A and Prager Metis CPAs, LLC during the periods set forth above and concluded that such services were compatible with maintaining the auditors’ independence. All audit and non-audit services performed by our independent accountants are pre-approved by our Board of Directors to assure that such services do not impair the auditors’ independence from us.

 

PART IV

 

ITEM 15.

Exhibits, Financial Statement Schedules

 

(a) See Index to Consolidated Financial Statements and Schedule Covered by Reports of Registered Public Accounting Firms included in Part II, Item 8 of this annual report on Form 10-K. See Index to Exhibits contained in this annual report on Form 10-K.

 

(b) Exhibits

 

See Index to Exhibits contained in this annual report on Form 10-K.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned.

 

JACC STUDIOS INC

(Registrant)

By: /s/ Jianhua Yu

President

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature	Title	Date
/s/ Jianhua Yu	President, Secretary and Director	May 8, 2020
Jianhua Yu	Chief Executive Officer
/s/ Jianhua Yu	Treasurer	May 8, 2020
Jianhua Yu	Chief Accounting Officer, Chief Financial Officer

 

INDEX TO EXHIBITS

 

EXHIBITS

 

31.1

Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1

Certification by Chief Executive Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.