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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended November 30, 2023

 

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: 333-206804

 

Savmobi Technology, Inc.

(Exact name of Company as specified in its charter)

 

Nevada   47-3240707
(State of incorporation)   (I.R.S. Employer Identification No.)

 

Building B8, China Zhigu, Yinhu Street, Fuyang District, Hangzhou, Zhejiang, China

(Address of principal executive offices)

 

+86 57187197085

(Company’s telephone number, including area code)

 

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

None

 

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

 

Title of Each Class   Name of Each Exchange On Which Registered
Common Stock, $0.001 par value per share   N/A

 

Indicate by check mark if the Company is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the Company 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 issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Company 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 Company 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 Company 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 Company’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 Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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)   Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

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

 

As of January 13, 2024, 1,061,900,000 shares of the issuer’s common stock were issued and outstanding.

 

Documents Incorporated By Reference: None

 

 

 

 
 

 

FORM 10-Q

TABLE OF CONTENTS

 

    Page No.
PART I. - FINANCIAL INFORMATION
     
Item 1. Financial Statements  
  Balance Sheets as of November 30, 2023 (Unaudited) and May 31, 2023 3
  Statements of Operations for the Six Months Ended November 30, 2023 and 2022 (Unaudited) 4
  Statements of Stockholders’ Equity 5
  Statements of Cash Flows for the Six Months Ended November 30, 2023 and 2022 (Unaudited) 6
  Notes to Financial Statements (Unaudited) 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22
Item 3. Quantitative and Qualitative Disclosures About Market Risk 29
Item 4. Controls and Procedures 29
     
PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings 29
Item 1A Risk Factors 29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 29
Item 3. Defaults Upon Senior Securities 29
Item 4. Mine Safety Disclosures 29
Item 5. Other Information 29
Item 6. Exhibits 29

 

 2 

 

 

SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES

CONDENSED CONLIDATED BALANCE SHEETS

 

  

November 30,

2023

(Unaudited)

  

May 31,

2023

(Audited)

 
   $   $ 
Assets          
Current assets          
Cash and cash equivalents   61,381    483,705 
Restricted cash   1,370    10,273 
Accounts receivable   449,446    409,380 
Inventories   206,787    177,034 
Amount due from related parties   16,000    16,000 
Prepaid expenses and other current assets   2,672,554    2,021,604 
Total current assets   3,407,538    3,117,996 
           
Non-current assets          
Plant and equipment, net   6,229,645    6,581,823 
Intangible assets, net   14,487    15,543 
Right-of-use assets   122,621    277,184 
Other non-current assets   2,646,268    2,884,090 
Total non-current assets   9,013,021    9,758,640 
           
Total Assets   12,420,559    12,876,636 
           
Liabilities and Stockholders’ (Deficit) Equity          
Current liabilities          
Short-term loan   1,401,345    - 
Accounts payables   900,698    775,293 
Advances from customers   4,126,950    622,069 
Other current payables   1,608,082    1,301,624 
Taxes payable   25,872    18,737 
Amounts due to related parties   1,619,070    1,057,721 
Operating lease liabilities, current   85,663    126,659 
Total current liabilities   9,767,680    3,902,103 
           
Non-current liabilities          
Long-term loan   29,118,893    32,740,623 
Operating lease liabilities   25,759    121,555 
Total non-current liabilities   29,144,652    32,862,178 
           
Total Liabilities   38,912,332    36,764,281 
           
Stockholders’ (Deficit) Equity          
Common stock ($0.001 par value, 10,000,000,000 shares authorized, 1,061,900,000 share issued and outstanding as of November 30, 2023 and May 31, 2023, respectively)   1,061,900    1,061,900 
Additional paid-in capital   8,474,336    8,474,336 
Accumulated deficit   (35,364,940)   (32,751,349)
Accumulated other comprehensive income   411,772    344,031 
Non-controlling interest   (1,074,841)   (1,016,563)
Total (Deficit) Equity   (26,491,773)   (23,887,645)
           
Total Liabilities and (Deficit) Equity   12,420,559    12,876,636 

 

 3 

 

 

SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

                 
   Three months ended November 30, 2023   Three months ended November 30, 2022   Six months ended November 30, 2023   Six months ended November 30, 2022 
Net revenue  $386,855   $691,489   $788,759   $1,487,868 
Cost of revenues   (523,272)   (887,865)   (1,146,680)   (2,084,574)
Gross loss   (136,417)   (196,376)   (357,921)   (596,706)
                     
Operating expenses                    
Selling and marketing expenses   (62,368)   (117,136)   (160,853)   (300,585)
General and administrative expenses   (1,040,838)   (720,663)   (2,119,238)   (2,323,961)
Research and development expenses   (100,313)   (261,258)   (198,219)   (267,779)
Impairment losses   123,557    11,540    87,448    11,540 
Total operating expenses   (1,079,962)   (1,087,517)   (2,390,862)   (2,880,785)
                     
Operating loss   (1,216,379)   (1,283,893)   (2,748,783)   (3,477,491)
                     
Other income (expenses):                    
Interest income   162    59    320    163 
Interest expense   (9,725)   -    (9,725)   - 
Other income/(expense)   84,659    (13,692)   84,850    (77,337)
Total other income/(expenses)   75,096    (13,633)   75,445    (77,174)
                     
Loss before tax from operations   (1,141,283)   (1,297,526)   (2,673,338)   (3,554,665)
                     
Provision for income tax   -    (19)   -    (19)
                     
Net loss   (1,141,283)   (1,297,545)   (2,673,338)   (3,554,684)
                     
Other comprehensive income:                    
Foreign currency translation (loss)/income   (418,299)   518,624    67,684    1,182,216 
Total comprehensive loss   (1,559,582)   (778,921)   (2,605,654)   (2,372,468)
                     
Net loss attributable to:                    
Owners of the Company   (1,120,566)   (1,266,866)   (2,613,591)   (3,506,927)
Non-controlling interest   (20,717)   (30,679)   (59,747)   (47,757)
Net Loss   (1,141,283)   (1,297,545)   (2,673,338)   (3,554,684)
Total comprehensive loss attributable to:                    
Owners of the Company   (1,540,587)   (752,512)   (2,545,850)   (2,337,106)
Non-controlling interest   (18,995)   (26,409)   (59,804)   (35,362)
Total Comprehensive Loss   (1,559,582)   (778,921)   (2,605,654)   (2,372,468)
Loss per common share:
                    
Basic and Diluted  $(0.00)   (0.02)   (0.00)   (0.57)
Weighted Average Number of Common Share Outstanding:                    
Basic and Diluted   1,061,900,000    61,900,000    1,061,900,000    61,900,000 

 

 4 

 

 

SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the six months ended November 30, 2023 and 2022

 

                                 
   Common Stock  

Additional

Paid In

   Retained  

Other

Comprehensive

  

Total

Shareholders’

   Non-controlling   Total 
   Shares   Amount   Capital   Earnings   Income/(loss)   Equity   Interest   Equity 
Balance at, May 31, 2022 (Unaudited)   61,900,000    61,900    9,474,336    (26,355,961)   (987,312)        (17,807,037)   (626,651)   (18,433,688)
Net income   -    -    -    (3,506,927)   -    (3,506,927)   (47,757)   (3,554,684)
Foreign currency translation adjustments   -    -    -    -    1,169,821    1,169,821    12,395    1,182,216 
Balance at, November 30, 2022 (Unaudited)   61,900,000    61,900    9,474,336    (29,862,888)   182,509    (20,144,143)   (662,013)   (20,806,156)
                                         
Balance at, May 31,2023 (Audited)   1,061,900.000    1,061,900    8,474,336    (32,751,349)   344,031    (22,871,082)   (1,016,563)   (23,887,645)
Net income   -    -    -    (2,613,591)   -    (2,613,591)   (59,747)   (2,673,338)
Foreign currency translation adjustments   -    -    -    -    67,741    67,741    (57)   67,684 
Disposal of subsidiaries   -    -    -    -    -    -    1,526    1,526 
Balance at, November 30, 2023 (Unaudited)   1,061,900.000    1,061,900    8,474,336    (35,364,940)   411,772    (25,416,932)   (1,074,841)   (26,491,773)

 

 5 

 

 

SAVMOBI TECHNOLIGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended November 30, 2023 and 2022

 

   2023   2022 
   $   $ 
         
Net loss   (2,673,338)   (3,554,684)
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization   390,716    604,337 
Depreciation of right-of-use assets   63,313    342,786 
Bad debt expense   (87,448)   - 
Changes in operating assets and liabilities          
Accounts receivable   40,691    (129,896)
Inventories   (66,257)   (27,247)
Prepaid expenses and other current assets   (602,210)   (588,717)
Other non-current assets   225,356    199,216 
Accounts payable and other current liabilities   3,897,562    2,206,691 
Net cash provided by/(used in) operating activities   1,188,385    (947,514)
           
Cash flows from investing activities          
Repaid for right-of-use assets   (31,203)   (39,976)
Proceeds from sale of property and equipment   134,547    114,618 
Purchase of property and equipment   (198,902)   (1,049,086)
Purchase of intangible assets   -    (13,787)
Net cash used in investing activities   (95,558)   (988,231)
           
Cash flows from financing activities          
Amount due to related party   563,442    120,402 
Proceeds from short-term borrowings   1,389,275    - 
Proceeds from long-term borrowings   -    1,880,161 
Repayments of long-term borrowings   (3,472,271)   - 
Net cash (used in)/provided by financing activities   (1,519,554)   2,000,563 
           
Effect of exchange rate changes on cash and cash equivalents   (4,500)   (7,952)
           
Net increase/(decrease) of cash and cash equivalents   (431,227)   56,866 
           
Cash and cash equivalents–beginning balances   493,978    108,787 
           
Cash and cash equivalents–ending balances   62,751    165,653 
           
Supplementary cash flow information:          
Interest received   320    163 
Interest paid   9,725    - 

 

 6 

 

 

1. Organization and Principal Activities

 

On March 6, 2015, SavMobi Technology Inc. (“the Company”), was incorporated in the State of Nevada and established a fiscal year end of May 31. Initially the business platform was in providing application software to a global vendor platform to connect people to businesses and provide a new shopping experience.

 

On May 18, 2017, Lakwinder Singh Sidhu, the Company’s former Director and CEO, completed a transaction with New Reap Global Ltd., by which New Reap Global Ltd. acquired 32,500,000 shares of common stock, representing 68.4% ownership of the Company.

 

On March 19, 2018 New Reap Global transferred 250,000 restricted shares to Eng Wah Kung.

 

On May 10, 2018 and May 30, 2018, 16,959,684 were transferred to Arden Wealth and Trust. 2,000,000 shares are free trading from HongLing Shang, 559,684 restricted shares from New Reap Global, LTD and 2,400,000 each from Xuedong Zhang, Jingmei Jiang, Qianxian, Yulan Qi, Baoxin Song, Jianlong Wu. On June 15, 2018 New Reap Global transferred 690,316 restricted shares to EMRD Global Holdings.

 

On June 26, 2018 New Reap Global transferred 3,000,000 restricted shares to FORTRESS ADVISORS, LLC and 3,000,000 to Baywall Inc.

 

On November 10, 2020, ten (10) shareholders of the Company, including affiliates Arden Wealth & Trust (Switzerland) AG and New Reap Global Limited, entered into stock purchase agreements with an aggregate of nineteen (19) non-U.S. accredited investors to sell an aggregate of 42,440,316 shares of common stock of the “Company, which represents approximately 68.6% of the issued and outstanding shares of common stock of the Company.

 

On June 8, 2022, three (3) shareholders of the Company, including Ma Hongyu, Ye Caiyun, and Li Wenzhe entered into stock purchase agreements with an aggregate of five (5) non-U.S. accredited investors (the “Purchase Agreements”) to sell an aggregate of 25,095,788 shares of common stock of the Company, which represents approximately 40.54% of the issued and outstanding shares of common stock of the Company, for consideration of $250,958.

 

The Purchase Agreements were fully executed and delivered on June 8, 2022. Zhang Yiping and Chen Xinxin acquired approximately 24.54% and 6.46% of the issued and outstanding shares of the Company, respectively, and the remaining purchasers each acquired less than 4.99% of the issued and outstanding shares.After the change of ownership, the Company’s current principal offices is located in Building B8, China Zhigu, Yinhu Street, Fuyang District, Hangzhou, Zhejiang, China. 

 

Purchasers  Shares acquired   % 
Zhang Yiping   15,189,500    24.54%
Chen Xinxin   4,000,000    6.46%
Wang Yanfang   2,000,000    3.23%
Liu Chen   2,000,000    3.23%
Liu Ying   1,906,288    3.08%

 

On December 15, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Intellegence Parking Group Limited (“Intellegence”), a Cayman Island company formed on June 29, 2022, Chen Xinxin (“Xinxin”), the officer and director, and control shareholder of Intelligence and the shareholders of Intelligence (the “Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of Intellegence was exchanged for 1,000,000,000 shares of common stock of SVMB issued to the Shareholders, in accordance with the Share Exchange Agreement. The former stockholders of Intellegence will acquire a majority of the issued and outstanding common stock as a result of the share exchange transaction. The transaction has been accounted for as a recapitalization of the Company, whereby Intellegence is the accounting acquirer.

 

Immediately after completion of such share exchange, SVMB will hold a total of 200,000,000 issued and outstanding shares of Intellegence. Zhang Guowei is the sole director of Intellegence Parking Group Limited.

 

Consequently, SVMB has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and Intellegence is now a wholly owned subsidiary.

 

 7 

 

 

Intellegence Parking Group Limited (“Intellegence Parking”) was incorporated on June 29, 2022 under the laws of Cayman Islands. It is controlled by Guowei Zhang, Xiujuan Chen, Hongwei Li and Chuchu Zhang. Intellegence Parking is an investment holding company.

 

Intellegence Parking (Hong Kong) Limited (“Intellegence HK”) was incorporated on July 20, 2022 under the laws of Hong Kong SAR. Intelligence HK is a wholly subsidiary of Intellegence Parking since incorporation and it is an investment holding company.

 

Huixin Zhiying (Hangzhou) Technology Co. (“Huixin”) was incorporated on October 24, 2022 under the laws of PRC. It is a wholly owned subsidiary of Intellegence HK since incorporation and it is an investment holding company.

 

Zhongxiang Huji Town Zhuyi Techonology Co. (“Huji”) was incorporated on August 14, 2023, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Pursuant to the Business Operation Agreement entered into among Huixin WFOE and Zhejiang Jingbo Ecological Technology Co. between November 15 and 11, 2022, the Company obtained control over these PRC domestic companies by entering into a series of contractual arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements include power of attorney, exclusive option agreement, exclusive business cooperation agreements, equity pledge agreements, and other operating agreements. These contractual agreements can be extended at the relevant PRC subsidiaries’ options prior to the expiration date. As a result, the Company maintains the ability to control these PRC domestic companies, is entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb all expected losses of these PRC domestic companies.

 

The Company consolidated its financial statements due to common control.

 

The Company’s major subsidiaries, VIEs and VIE’s subsidiaries are described as follows: 

 

  Country/Place and date of  Percentage of direct or indirect economic benefits ownership 
Companies  incorporation/establishment  November 30, 
      2023   2022 
Major Subsidiaries             
Intellegence Parking Group Limited  Cayman June 29, 2022   100%    100% 
Intellegence Parking (Hong Kong) Limited  Hong Kong July 20, 2022   100%    100% 
Huixin Zhiying (Hangzhou) Technology Co.  PRC October 24, 2022   100%    100% 
              
Major VIEs (Including VIE’s Subsidiaries)             
Zhejiang Jingbo Ecological Technology Co.  PRC December 18, 2019   100%    100% 
Hangzhou Zhuyi Technology Co.  PRC November 13, 2017   100%    100% 

 

2. Variable Interest Entities

 

Pursuant to the Business Operation Agreement entered into among Huixin WFOE and Zhejiang Jingbo Ecological Technology Co., the Company obtained control over these PRC domestic companies by entering into a series of contractual arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements include power of attorney, exclusive option agreement, exclusive business cooperation agreements, equity pledge agreements, and other operating agreements. These contractual agreements can be extended at the relevant PRC subsidiaries’ options prior to the expiration date. As a result, the Company maintains the ability to control these PRC domestic companies, is entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb all expected losses of these PRC domestic companies.

 

Zhejiang Jingbo Ecological Technology Co. is a PRC company which was formed on December 18, 2019 and is engaged in the business of smart parking application software and platform operations business. Zhang Guowei has been the Chairman of Zhejiang Jingbo Ecological Technology Co. since December 2019.

 

 8 

 

 

Hangzhou Zhuyi Technology Co. (“Hangzhou Zhuyi”) was incorporated under the laws of the PRC on November 13, 2017 with a capital of RMB 60,000,000. The majority shareholder at the time of establishment was Guowei Zhang. On April 1, 2020, Zhejiang Jingbo Ecological Technology became the sole shareholder of Hangzhou Zhuyi. Hangzhou Zhuyi is specialized in smart parking projects, smart parking mobile applications and cloud platform construction innovation.

 

Zhejiang Linglingyi Network Technology Co. (“Linglingyi”) was incorporated on November 17, 2018. Its sole director is Guowei Zhang. Hangzhou Zhuyi acquired 100% of Linglingyi on April 29. 2022. Its main businesses are smart parking projects and smart parking mobile applications.

 

Liangshan Tongfu Technology Co. (“Liangshan”) was incorporated on November 13, 2018. On September 29, 2022, Hangzhou Zhuyi entered in a share agreement with Hangzhou Kaai Technology Co. to purchase 26% of Liangshan’s shares. As a result, Hangzhou Zhuyi holds 67% of Liangshan. Liangshan is into smart parking projects and smart parking mobile applications businesses.

 

Zhuyi Technology (Anping) Co. (“Anping”) was incorporated on May 12, 2022, which is 90% owned by Hangzhou Zhuyi and it mainly focuses on smart parking projects and smart parking mobile applications. Anping was deregistered on 27 June, 2023.

 

Haikou Zhuyi Technology Co. (“Haikou”) was incorporated on May 9, 2022 which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Yibin Huibo Technology Co. (“Yibin”) was incorporated on July 4, 2019, which is 80% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Xide Zhuyi Technology Co. (“Xide”) was incorporated on October 14, 2021, which is 67% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Hubei Tongpo Parking Management Co. (“Tongpo”) was incorporated on November 4, 2020, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Zhuyi Technology (Taining) Co. (“Taining”) was incorporated on May 18, 2021, which is 72% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Zhongxiang Huji Town Zhuyi Techonology Co. (“Huji”) was incorporated on August 14, 2023, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Intellengence Parking Group Limited provides smart parking projects, smart parking mobile applications and cloud platform construction innovation through its consolidated subsidiaries, variable interest entities (“VIE”s) and VIE’s subsidiaries (Collectively, the “Group”).

 

a. Contractual agreements with VIEs

 

Power of Attorney

 

Pursuant to the power of attorney agreements among the Wholly Foreign Owned Enterprises (“WFOE”s), the VIEs and their respective Nominee Shareholders, each Nominee Shareholder of the VIEs irrevocably undertakes to appoint the WFOE, as the attorney-in-fact to exercise all of the rights as a shareholder of the VIEs, including, but not limited to, the right to convene and attend shareholders’ meeting, vote on any resolution that requires a shareholder vote, such as appoint or remove directors and other senior management, and other voting rights pursuant to the articles of association (subject to the amendments) of the VIEs. Each power of attorney agreement is irrevocable and remains in effect as long as the Nominee Shareholder continues to be a shareholder of the VIEs. Unless otherwise required by PRC Laws, none of the VIEs or its shareholders can unilaterally terminate this agreement.

 

 9 

 

 

Exclusive Option Agreements

 

Pursuant to the exclusive option agreements among WFOEs, the VIEs and their respective Nominee Shareholders, the Nominee Shareholders granted WFOEs exclusive right to purchase, when and to the extent permitted under PRC law, all or part of the equity interests from shareholders of VIEs. The exercise price for the options to purchase all or part of the equity interests shall be the minimum amount of consideration permissible under then applicable PRC law. The agreement shall be valid until WFOEs or its designated party purchases all the shares from shareholders of VIEs. The terms of the exclusive option agreement are 10 years and can be automatically extended until such time WFOEs delivers a confirmation letter specifying the renewal term of this agreement. Unless otherwise required by PRC Laws, the VIEs or its shareholders shall not unilaterally terminate this agreement.

 

Exclusive Business Corporation Agreement

 

Pursuant to the exclusive business cooperation agreements among the WFOEs and the VIEs, respectively, the WFOEs have the exclusive right to provide the VIEs with services related to, among other things, comprehensive technical support, professional training, consulting services, trademark and copyright of system,. Without prior written consent of the WFOEs, the VIEs agree not to directly or indirectly accept the same or any similar services provided by any others regarding the matters ascribed by the exclusive business cooperation agreements. The VIEs agree to pay the WFOEs services fees, which shall be determined by the WFOEs. The WFOEs have the exclusive ownership of intellectual property rights created as a result of the performance of the agreements. The agreements shall remain effective except that the WFOEs are entitled to terminate the agreements in writing. Unless otherwise required by PRC Laws, the VIEs shall not unilaterally terminate this agreement.

 

Equity Pledge Agreement

 

Pursuant to the equity pledge agreements among the WFOEs, the VIEs and their respective Nominee Shareholders, the Nominee Shareholders of the VIEs pledged all of their respective equity interests in the VIEs to the WFOEs as collaterals for performance of the obligations of the VIEs and their Nominee Shareholders under the exclusive business cooperation agreements, the power of attorney agreements, and the exclusive option agreements. The Nominee Shareholders of the VIEs also undertake that, during the term of the equity pledge agreements, unless otherwise approved by the WFOEs in writing, they will not transfer the pledged equity interests or create or allow any new pledge or other encumbrance on the pledged equity interests. These equity pledge agreements remain in force until VIEs and their respective Nominee Shareholders discharge all their obligations under the contractual agreements.

 

Spousal Consent Letter

 

Pursuant to the spousal consent letters, the spouses of some of the individual Nominee Shareholders of the VIEs unconditionally and irrevocably agree that the equity interest in the VIEs held by and registered in the name of his or her respective spouse will be disposed of pursuant to the relevant exclusive business cooperation agreements, equity pledge agreements, the exclusive option agreements and the power of attorney agreements, without his or her consent. In addition, each of them agrees not to assert any rights over the equity interest in the VIEs held by their respective spouses. In addition, in the event that any of them obtains any equity interest in the VIEs held by their respective spouses for any reason, such spouses agree to be bound by similar obligations and agreed to enter into similar contractual arrangements.

 

b. Risks in relation to the VIE structure

 

On March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020, together with their implementation rules and ancillary regulations. The Foreign Investment Law does not explicitly classify contractual arrangements as a form of foreign investment, but it contains a catch-all provision under the definition of “foreign investment”, which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. It is unclear whether the Group’s corporate structure will be seen as violating the foreign investment rules as the Group is currently leveraging the contractual arrangements to operate certain business in which foreign investors are prohibited from or restricted to investing. If variable interest entities fall within the definition of foreign investment entities, the Group’s ability to use the contractual arrangements with its VIEs and the Group’s ability to conduct business through the VIEs could be severely limited.

 

 10 

 

 

If the PRC government otherwise finds that the Group in violation of any existing or future PRC laws or regulations or lacks the necessary permits or licenses to operate the business, the Group’s relevant PRC regulatory authorities could:

 

● revoke the business licenses and/or operating licenses of the Group’s PRC entities;

 

● impose fines;

 

● confiscate any income that they deem to be obtained through illegal operations, or impose other requirements with which the Group may not be able to comply;

 

● discontinue or place restrictions or onerous conditions on the Group’s operations;

 

● place restrictions on the right to collect revenues;

 

● require the Group to restructure ownership structure or operations, including terminating the contractual agreements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect the ability to consolidate the financial results of and derive economic interests from the VIEs and their subsidiaries;

 

● restrict or prohibit the use of the proceeds from financing activities to finance the business and operations of the VIEs and their subsidiaries; or

 

● take other regulatory or enforcement actions that could be harmful to the Group’s business.

 

The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct the Group’s business. In addition, if the imposition of any of these penalties causes the Group to lose the rights to direct the activities of the VIEs or the right to receive its economic benefits, the Group would no longer be able to consolidate the VIEs. The management believes that the likelihood for the Group to lose such ability is remote based on current facts and circumstances. However, the interpretation and implementation of the laws and regulations in the PRC and their application to an effect on the legality, binding effect and enforceability of contracts are subject to the discretion of competent PRC authorities, and therefore there is no assurance that relevant PRC authorities will take the same position as the Group herein in respect of the legality, binding effect and enforceability of each of the contractual arrangements. Meanwhile, since the PRC legal system continues to rapidly evolve, it may lead to changes in PRC laws, regulations and policies or in the interpretation and application of existing laws, regulations and policies, which may limit legal protections available to the Group to enforce the contractual arrangements should the VIEs or the Nominee Shareholders of the VIEs fail to perform their obligations under those arrangements. The enforceability, and therefore the benefits, of the contractual agreements between the Company and the VIEs depend on Nominee Shareholders enforcing the contracts. There is a risk that Nominee shareholders of VIEs, who in some cases are also shareholders of the Company may have conflict of interests with the Company in the future or fail to perform their contractual obligations. Given the significance and importance of the VIEs, there would be a significant negative impact to the Company if these contracts were not enforced.

 

The Group’s operations depend on the VIEs to honor their contractual agreements with the Group. The Company’s ability to direct activities of the VIEs that most significantly impact their economic performance and the Company’s right to receive the economic benefits that could potentially be significant to the VIEs depend on the authorization by the shareholders of the VIEs to exercise voting rights on all matters requiring shareholder approval in the VIEs. The Company believes that the agreements on authorization to exercise shareholder’s voting power are enforceable against each party thereto in accordance with their terms and applicable PRC laws or regulations currently in effect and the possibility that it will no longer be able to consolidate the VIEs as a result of the aforementioned risks and uncertainties is remote.

 

c. Summary of financial information of the Group’s VIEs (inclusive of VIE’s subsidiaries)

 

The following tables set forth the financial statement balances and amounts of the VIEs and their subsidiaries included in the condensed financial statements after the elimination of intercompany balances and transactions among VIEs and their subsidiaries within the Group.

 

 11 

 

 

The consolidated financial statements of the Group’s VIEs have been audited by filing the Form 10-K for the year ended May 31, 2023.

 

  

November 30,

2023

  

May 31,

2023 (Audited)

 
   $   $ 
Cash and cash equivalents   61,296    401,984 
Restricted cash   1,370    10,273 
Accounts receivable   449,446    409,380 
Inventories   206,787    177,034 
Prepaid expenses and other current assets   2,693,186    2,045,736 
Plant and equipment, net   6,229,645    6,581,823 
Intangible assets, net   14,487    15,543 
Right-of-use assets   122,621    277,184 
Other non-current assets   2,646,268    2,884,090 
Total Assets   12,425,106    12,803,047 
Short-term loan   1,401,345    - 
Accounts payables   888,631    749,226 
Advances from customers   4,126,950    622,069 
Other current payables   1,607,427    1,300,969 
Taxes payable   25,872    18,737 
Amounts due to related parties   524,664    540,897 
Operating lease liabilities, current   85,663    126,659 
Long-term loan   29,118,893    32,740,623 
Operating lease liabilities, non-current   25,759    121,555 
Total Liabilities   37,805,204    36,220,735 
Total (Deficit) Equity of VIEs   (25,380,098)   (23,417,688)
Total Liabilities and (Deficit) Equity of VIEs   12,425,106    12,803,047 

 

  

Six Months Ended

November 30, 2023

  

Six Months Ended

November 30, 2022

 
   $   $ 
Net revenues   788,759    1,487,868 
Cost of revenues   (1,146,680)   (2,084,574)
Gross loss   (357,921)   (596,706)
Total costs and expenses   (1,749,144)   (2,842,140)
Operating loss   (2,107,065)   (3,438,846)
Total other income and (expenses)   75,445    (77,174)
Loss before taxes from operations   (2,031,620)   (3,516,020)
Provision for income tax   -    (19)
Net loss   (2,031,620)   (3,516,039)
Net loss attributable to VIEs   (1,971,873)   (3,468,282)

 

         
   Six Months Ended November 30, 
   2023   2022 
Net cash provided by/(used in) operating activities   1,847,603    (17,047,129)
Net cash (used in)/provided by investing activities   (95,558)   187,610 
Net cash (used in)/provided by financing activities   (2,097,136)   16,838,474 
Effect of exchange rate changes on cash and cash equivalents   (4,500)   (5,256)
Net decrease in cash and cash equivalents   (349,591)   (26,301)
Cash and cash equivalents at the beginning of period   412,257    135,088 
Cash and cash equivalents at the end of period   62,666    108,787 

 

 12 

 

 

3. Summary of Significant Accounting Policies

 

The Company’s significant accounting policies have not changed from the year ended May 31, 2023.

 

The accompanying unaudited condensed interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United Statements of America. However, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial position and operating results have been included in these unaudited condensed interim financial statements. These unaudited condensed interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023, as filed with the SEC on October 2, 2023. Operating results for the three months ended November 30, 2023 are not necessarily indicative of the results that may be expected for any subsequent quarter or for the year ending May 31, 2024.

 

Going Concern

 

The Company incurred net loss of $2,673,338 during the six months ended November 30, 2023. As of November 30, 2023, the Company had total deficit of $26,491,773. The Company incurred net loss of $6,783,522 during the year ended May 31, 2023. As of May 31, 2023, the Company had total deficit of $23,887,645.

 

The ability to continue as a going concern is dependent upon long-term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on long term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Foreign currency translation

 

The accompanying financial statements are presented in United States dollars. The functional currencies of the Company are in Renminbi (RMB). The Company’s assets and liabilities are translated into United States dollars from RMB at year-end exchange rates, and its revenues and expenses are translated at the average exchange rate during the year. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

 

 

    11302023    05312023    11302022 
Period/Year end RMB: US$ exchange rate   7.1360    7.1100    7.0879 
Annual average RMB: US$ exchange rate   7.1980    6.9185    6.9324 

 

The RMB is not freely convertible into foreign currencies and all foreign exchange transactions must be conducted through authorized financial institutions.

 

Earnings per share

 

The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis from the potential conversion of convertible securities or the exercise of options and or warrants; the dilutive effects of potentially convertible securities are calculated using the as-if method; the potentially dilutive effect of options or warrants are calculated using the treasury stock method. Securities that are potentially an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.

 

 13 

 

 

4. Trade Receivables

 

The Company does not provide any credit terms to its customers for smart parking. Cash will be collected by the exit of parking lots. The Company provides one to three months credits term for customers purchasing parking equipment.

 

5. Prepaid Expenses and Other Current Assets

 

   November 30, 2023   May 31, 2023 
Prepayment   490,887    591,277 
Prepayment for rental (a)   435,869    438,256 
Deposit   397,020    366,478 
Loan receivable (b)   327,619    342,882 
Advances to employees   522,190    125,508 
Other   137,942    157,164 
VAT   361,027    39 
Total   2,672,554    2,021,604 

 

(a)Prepayment for rental included a rental agreement of parking lot with a third party. The contract became effective on January 1, 2021 and will end on December 31, 2030. The Company has paid full rent as of November 30, 2023.

 

(b)Loan receivables are loans borrow to third parties. All loans are interest free and will be repaid on demand.

 

6. Property and Equipment

 

Schedule of Property and Equipment

   Furniture, fixtures and office equipment   Building (a)   Vehicles   Project Facilities   Construction in progress (b)   Total 
Cost                              
At May 31,2023   962,271    4,437,065    123,212    3,039,646    972,730    9,534,924 
Additions during the year   12,397    -    2,779    43,210    140,516    198,902 
Disposals during the year   (16,002)   -    -    (10,613)   (129,438)   (156,053)
Effects of currency translation   (3,543)   (16,166)   (425)   (10,796)   (3,448)   (34,378)
At November 30,2023   955,123    4,420,899    125,566    3,061,447    980,360    9,543,395 
                               
Accumulated depreciation                              
At May 31,2023   902,974    579,952    106,927    1,363,248    -    2,953,101 
Depreciation during the year   50,046    104,092    6,225    229,363    -    389,726 
Disposals during the year   (15,202)   -    -    (6,306)   -    (21,508)
Effects of currency translation   (2,993)   (1,209)   (336)   (3,031)   -    (7,569)
At November 30,2023   934,825    682,835    112,816    1,583,274    -    3,313,750 
                               
Net book value                              
At May 31,2023   59,297    3,857,113    16,285    1,676,398    972,730    6,581,823 
At November 30,2023   20,298    3,738,064    12,750    1,478,173    980,360    6,229,645 

 

(a)In January 2023, the Company obtained title searches of the building. Official addresses on the title searches are Floor 1 to 6, No. 1 to 10, Chuangyi Road, Yinhu Village, Shoujiang Town, Fuyang District, China.

 

(b)The Company has 4 constructions in progress in total, none of which is related to testing projects. These constructions, related to parking lots, are expected to be completed before the end of February, 2024.

 

 14 

 

 

7. Intangible Assets

 

Cost  $  
At May 31,2023   28,529 
Additions during the period   - 
Disposals during the period   - 
Effects of currency translation   (104)
At November 30,2023   28,425 
Accumulated depreciation     
At May 31,2023   12,986 
Depreciation during the period   990 
Disposals during the period   - 
Effects of currency translation   (38)
At November 30,2023   13,938 
Net book value     
At May 31,2023   15,543 
At November 30,2023   14,487 

 

8. Right-of-use Assets

 

   $ 
Cost     
At May 31, 2023   2,118,650 
Additions during the period   21,945 
Write-off during the period   (110,862)
Effects of currency translation   (8,492)
At November 30, 2023   2,021,241 
      
Accumulated depreciation     
At May 31,2023   1,841,466 
Depreciation during the period   63,313 
Write-off during the period   - 
Effects of currency translation   (6,159)
At November 30, 2023   1,898,620 
      
Net book value     
At May 31, 2023   277,184 
At November 30, 2023   122,621 

 

Right of use assets consisted of 6 contracts renting offices, warehouses and parking lots. Contracted terms ranged between two and five years with the earliest start date being January 1, 2020.

 

9. Other non-current assets

 

Other non-current assets mainly consisted of a rental agreement of parking lot with a third party. The contract became effective on January 1, 2021 and will end on December 31, 2030. The Company has paid full rent as of November 30, 2023.

 

 15 

 

 

10. Short-term borrowings

 

   November 30, 2023   May 31, 2023 
   $   $ 
Short-term loan (a)   1,401,345    - 
Short-term loan borrowings   1,401,345    - 

 

The Company entered into a one-year contract with Zhejiang Chouzhou Commercial Bank on September 26, 2023. The borrowing amount is RMB 10,000,000 (equivalent to USD 1,401,345) with an annual interest rate of 4.5%. The borrowing is secured by Floor 1-6, No. 1-10, Chuangyi Road, Yinhu Village and guaranteed by Jianqiang Liu, the vice president.

 

11. Other payables and Accruals

 

   November 30, 2023   May 31, 2023 
   $   $ 
Accrued payroll and welfare payables   518,258    338,657 
Deposit   96,017    27,194 
Loans payable   413,397    344,585 
Advanced to employees   69,368    70,305 
Other (a)   511,042    520,883 
Total   1,608,082    1,301,624 

 

(a)Other mainly included collection of parking fees on behalf of a third party.

 

12. Related Party Transactions

 

(a) The Company had the following balances due to and due from related parties:

 

At November 30, 2023 and May 31, 2023, the Company owned funds from the following related parties:

 

   November 30, 2023   May 31, 2023   Relationship
            
Intellegence Triumph Holdings Limited   5,000    5,000   Corporate shareholder
Virtue Victory Holdings Limited   5,200    5,200   Corporate shareholder
Strength Union Holdings Limited   5,800    5,800   Corporate shareholder
Total amount due from related parties   16,000    16,000    

 

At November 30, 2023 and May 31, 2023, owed funds to the following related parties:

 

   November 30, 2023   May 31.2023   Relationship
Current liabilities:             
Guowei Zhang   1,617,570    1,056,221   President of the Company
Xinxin Chen   1,500    1,500   Former shareholder
Total amount due to related parties   1,619,070    1,057,721    
              
Non-current liabilities:             
Shaoxing Keqiao Zhuyi Technology Co., Ltd   29,118,893    32,740,623   An entity controlled by a shareholder
Total long-term loans   29,118,893    32,740,623    

 

Advances from Guowei Zhang were unsecured, non-interest bearing and due on demand.

 

 16 

 

 

During the three months ended November 30, 2023, the Company borrowed from related parties of $498,266 and made repayments to related parties of $14,305. During the year ended May 31, 2023, the Company borrowed from related parties of $713,753 and made repayments to related parties of $16,552.

 

As of May 31, 2022, the outstanding balance of long-term loans was RMB 221,267,008.77 (equivalent to USD$33,211,152). It consisted of two loans related to Beijing Zhibo Innovation Technology Co., Ltd (“Zhibo”). The Company entered into a three year loan on September 20, 2019. The agreement commenced on October 1, 2019. The maximum borrowing is RMB 300,000,000 (equivalent to USD $45,028,818) with an interest rate of 3.6%. 25% of the outstanding balance should be repaid each quarter. Supplementary contracted were signed between the two parties agreeing there would be no repayment of principle for the next 12 months and interest expense was waived. The other contract was a two-year interest-free agreement signed on September 1st, 2020 at which date the contracted commenced. Principle was RMB 22,000,000 (equivalent to USD$3,302,098). As of May 31, 2022, outstanding balances of the first and second loans were RMB 201,909,728.77 (equivalent to USD$30,305,855) and RMB 19,357,280 (equivalent to USD$2,905,297), respectively.

 

Zhibo extended the above contracts to September 30, 2025 when they expired in 2022. Repayments and interest expenses are not required until September 30, 2024. Interest expenses calculated on an annual rate of 3% will be paid monthly from 1 October, 2024. Principle will be fully repaid upon maturity.

 

Due to business restructure, Zhibo was deregistered at the beginning of 2023. Before deregistration, on January 15, 2023, Zhibo transferred the debts to a number of companies/partnerships with the clauses unchanged.

 

Furthermore, in order to help the Company consolidate debts and providing financial support to the Company, Shaoxin Keqiao Zhuyi Technology Co., Ltd., whose sole shareholder is Xiujuan Chen, took over the debts from the businesses Loan transfer agreements were executed on March 16 and 17, 2023 with the original clauses unchanged. Xiujuan Chen is also one of the shareholders of the Company. After the loans transferred to Shaoxin Keqiao Zhuyi Technology Co., Ltd., outstanding balances were offset in part or in full if the transferees were our current debtors.

 

During the six months ended November 30, 2023, the Company did not borrow extra funds and made repayments of RMB 24,993,410 (equivalent to USD$3,472,271) to Shaoxin Keqiao Zhuyi Technology Co., Ltd..

 

13. Income Taxes

 

PRC

 

The Company’s subsidiaries incorporated in the PRC are subject to a profits tax rate of 25% for income generated and operation in the country.

 

The full realization of the tax benefit associated with the carry forward losses depends predominantly upon the Company’s ability to generate taxable income during the carry forward period.

 

Income tax expense (benefits)

 

   November 30, 2023   November 30, 2022 
   $   $ 
Loss before tax   (2,673,338)   (3,554,665)
Tax credit calculated at statutory tax rate   (668,335)   (888,666)
Effect of different tax rates   25,669    1,546 
Deferred tax asset not recognized during the period/year   642,666    887,120 
Income tax expenses   -    19 

 

The Company accounts for income taxes using the asset/liability method prescribed by ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Company can utilise the benefits.

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets.

 

 17 

 

 

14. Long-term Borrowings

 

As of May 31, 2022, the outstanding balance of long-term loans was RMB 221,267,008.77 (equivalent to USD$33,211,152). It consisted of two loans related to Beijing Zhibo Innovation Technology Co., Ltd (“Zhibo”). The Company entered into a three year loan on September 20, 2019. The agreement commenced on October 1, 2019. The maximum borrowing is RMB 300,000,000 (equivalent to USD $45,028,818) with an interest rate of 3.6%. 25% of the outstanding balance should be repaid each quarter. Supplementary contracted were signed between the two parties agreeing there would be no repayment of principle for the next 12 months and interest expense was waived. The other contract was a two-year interest-free agreement signed on September 1st, 2020 at which date the contracted commenced. Principle was RMB 22,000,000 (equivalent to USD$3,302,098). As of May 31, 2022, outstanding balances of the first and second loans were RMB 201,909,728.77 (equivalent to USD$30,305,855) and RMB 19,357,280 (equivalent to USD$2,905,297), respectively.

 

Zhibo extended the above contracts to September 30, 2025 when they expired in 2022. Repayments and interest expenses are not required until September 30, 2024. Interest expenses calculated on an annual rate of 3% will be paid monthly from 1 October, 2024. Principle will be fully repaid upon maturity.

 

Due to business restructure, Zhibo was deregistered at the beginning of 2023. Before deregistration, on January 15, 2023, Zhibo transferred the debts to a number of companies/partnerships with the clauses unchanged.

 

Furthermore, in order to help the Company consolidate debts and providing financial support to the Company, Shaoxin Keqiao Zhuyi Technology Co., Ltd., whose sole shareholder is Xiujuan Chen, took over the debts from the businesses . Loan transfer agreements were executed on March 16 and 17, 2023 with the original clauses unchanged. Xiujuan Chen is also one of the shareholders of the Company. After the loans transferred to Shaoxin Keqiao Zhuyi Technology Co., Ltd., outstanding balances were offset in part or in full if the transferees were our current debtors.

 

During the six months ended November 30, 2023, the Company did not borrow extra funds and made repayments of RMB 24,993,410 (equivalent to USD$3,472,271) to Shaoxin Keqiao Zhuyi Technology Co., Ltd..

 

15. Leases

 

Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company entered into 6 agreements for renting offices, warehouses and parking lots. As of November 30, 2023, the Company has $122,621 of right-of-use assets, $85,663 in current operating lease liabilities and $25,759 in non-current operating lease liabilities.

 

Significant assumptions and judgments made as part of the adoption of this new lease standard include determining (i) whether a contract contains a lease, (ii) whether a contract involves an identified asset, and (iii) which party to the contract directs the use of the asset. The discount rates used to calculate the present value of lease payments were determined based on hypothetical borrowing rates available to the Company over terms similar to the lease terms.

 

The Company’s future minimum payments under long-term non-cancellable operating leases are as follows:

 

  

As of

November 30, 2023

  

As of

May 31, 2023

 
   $   $ 
Within 1 year   89,062    136,710 
After 1 year but within 5 years   26,593    127,793 
Total lease payments   115,655    264,503 
           
Less: imputed interest   (4,233)   (16,289)
Total lease obligations   111,422    248,214 
Less: current obligations   (85,663)   (126,659)
Long-term lease obligations   25,759    121,555 

 

16. Non-controlling interests (NCI)

 

Non-controlling interests (“NCI”) represent the portion of net assets in consolidated entities that are not owned by the Company.

 

Anping was deregistered on 27 June, 2023.

 

The following table represent the non-controlling ownership interests and non-controlling interest balances reported in stockholder’s equity as of November 30, 2023 and May 31, 2023 respectively.

 

 18 

 

 

    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123 
   Liangshan   Yibin   Xide   Taining   Anping   Total 
    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123 
NCI ownership interest   33%   33%   20%   20%   33%   33%   28%   28%   0%   10%          
NCI balances   (906,055)   (864,174)   (13,887)   (19,951)   (76,149)   (64,157)   (78,750)   (66,755)   -    (1,526)   (1,074,841)   (1,016,563)

 

The summarized financial information for subsidiary that has non-controlling interest which are material to the Company is provided below. This information is based on amounts before inter-company elimination.

 

Summarized statement of financial position as at

 

    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123 
   Liangshan   Yibin   Xide   Taining   Anping   Total 
    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123 
Non-current assets   246,190    391,073    -    -    45,371    49,521    127,557    153,693    -    -    419,118    594,287 
Current assets   96,867    102,279    1,576    1,617    7,523    9,276    22,969    23,567    -    1    128,935    136,740 
Current liabilities   (785,013)   (748,450)   (55,339)   (86,863)   (268,002)   (238,248)   (115,040)   (91,047)   -    -    (1,223,394)   (1,164,608)
Non-current liabilities   -    (60,039)   -    -    -    -    -    (6,551)   -    -    -    (66,590)
Net assets   (441,956)   (315,137)   (53,763)   (85,246)   (215,108)   (179,451)   35,486    79,662    -    1    (675,341)   (500,171)

 

 19 

 

 

    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123 
   Liangshan   Yibin   Xide   Taining   Anping   Total 
    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123    113023    053123 
Net Assets   (441,956)   (315,137)   (53,763)   (85,246)   (215,108)   (179,451)   35,486    79,662    -    1    (675,341)   (500,171)
Less: Zhuyi capital and additional paid-in capital   (2,101,929)   (2,101,930)   -    -    -    -    (310,895)   (310,895)   -    (16,551)   (2,412,824)   (2,429,376)
Less: OCI   (100,867)   (100,820)   (7,835)   (7,255)   (7,823)   (7,482)   (2,921)   (3,589)   -    646    (119,446)   (118,500)
Accumulated Deficits   (2,644,752)   (2,517,887)   (61,598)   (92,501)   (222,931)   (186,933)   (278,330)   (234,822)   -    (15,904)   (3,207,611)   (3,048,047)
Accumulated Deficits attributable to NCI   (872,769)   (830,903)   (12,320)   (18,500)   (73,567)   (61,688)   (77,932)   (65,750)   -    (1,590)   (1,036,588)   (978,431)
Plus: OCI attributable to NCI   (33,286)   (33,271)   (1,567)   (1,451)   (2,582)   (2,469)   (818)   (1,005)   -    64    (38,253)   (38,132)
NCI balances   (906,055)   (864,174)   (13,887)   (19,951)   (76,149)   (64,157)   (78,750)   (66,755)   -    (1,526)   (1,074,841)   (1,016,563)

 

 20 

 

 

17. Reserves

   

  Statutory reserve

 

Pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises, the Company must make appropriations from after-tax profit to non-distributable reserve funds. Subject to certain cumulative limits, the general reserve requires annual appropriations of 10% of after-tax profits as determined under the PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity registered capital; the other reserve appropriations are at the Company’s discretion. These reserves can only be used for specific purposes of enterprise expansion and are not distributable as cash dividends. During the six months ended November 30, 2023 and the year ended May 31, 2023, the Company did not accrue any statutory reserve.

 

  Foreign currency translation reserve

 

The foreign currency translation reserve represents translation differences arising from translation of foreign currency financial statements into the Company’s reporting currency.

 

18. Quantitative and Qualitative Disclosure about Market Risks

 

  A. Credit risk
     
    The Company’s deposits are with banks located in the PRC. They do not carry federal deposit insurance and may be subject to loss if the banks become insolvent.
   

 

Accounts receivable are typically unsecured and are derived from revenues earned from customers in the PRC. The credit risk with respect to account receivables is mitigated by credit control policies we carry out with respect to our customers and our ongoing monitoring process of outstanding balances.

     
  B. Economic and political risks
     
    The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by changes in the political, economic, and legal environments in the PRC.
     
    The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
     
  C. Interest risk
     
    The Company is subject to interest rate risk when long term loans become due and require refinancing.

 

19. Subsequent Events

 

The Company submitted Form DEF 14C for changing the Company’s name to Jingbo Technology, Inc. on December 14, 2023. To date, the Company is still awaiting approval from FINRA.

 

The Company has performed an evaluation of subsequent events through January 16, 2024, which was the date of the issuance of the consolidated financial statements, and determined that no events would have required adjustment or disclosure in the consolidated financial statements other than that discussed above.

 

 21 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward looking statement notice

 

This section of this Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

Special Note Regarding Forward Looking Statements

 

In addition to historical information, this report contains forward-looking statements. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future. 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. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.

 

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

 

Overview

 

On March 6, 2015, SavMobi Technology Inc. (“the Company”, was incorporated in the State of Nevada and established a fiscal year end of May 31. Initially the business platform was in providing application software to a global vendor platform to connect people to businesses and provide a new shopping experience.

 

On May 18, 2017, Lakwinder Singh Sidhu, the Company’s former Director and CEO, completed a transaction with New Reap Global Ltd., by which New Reap Global Ltd. acquired 32,500,000 shares of common stock, representing 68.4% ownership of the Company.

 

On March 19, 2018 New Reap Global transferred 250,000 restricted shares to Eng Wah Kung.

 

On May 10, 2018 and May 30, 2018, 16,959,684 were transferred to Arden Wealth and Trust. 2,000,000 shares are free trading from HongLing Shang, 559,684 restricted shares from New Reap Global, LTD and 2,400,000 each from Xuedong Zhang, Jingmei Jiang, Qianxian, Yulan Qi, Baoxin Song, Jianlong Wu.

 

On June 15, 2018 New Reap Global transferred 690,316 restricted shares to EMRD Global Holdings.

 

On June 26, 2018 New Reap Global transferred 3,000,000 restricted shares to FORTRESS ADVISORS, LLC and 3,000,000 to Baywall Inc.

 

On November 10, 2020, ten (10) shareholders of the Company, including affiliates Arden Wealth & Trust (Switzerland) AG and New Reap Global Limited, entered into stock purchase agreements with an aggregate of nineteen (19) non-U.S. accredited investors to sell an aggregate of 42,440,316 shares of common stock of the “Company, which represents approximately 68.6% of the issued and outstanding shares of common stock of the Company.

 

 22 

 

 

On June 8, 2022, three (3) shareholders of the Company, including Ma Hongyu, Ye Caiyun, and Li Wenzhe entered into stock purchase agreements with an aggregate of five (5) non-U.S. accredited investors (the “Purchase Agreements”) to sell an aggregate of 25,095,788 shares of common stock of the Company, which represents approximately 40.54% of the issued and outstanding shares of common stock of the Company, for consideration of $250,958.

 

The Purchase Agreements were fully executed and delivered on June 8, 2022. Zhang Yiping and Chen Xinxin acquired approximately 24.54% and 6.46% of the issued and outstanding shares of the Company, respectively, and the remaining purchasers each acquired less than 4.99% of the issued and outstanding shares. After the change of ownership, the Company’s current principal offices is located in Building B8, China Zhigu, Yinhu Street, Fuyang District, Hangzhou, Zhejiang, China.

 

Purchasers  Shares acquired   % 
Zhang Yiping   15,189,500    24.54%
Chen Xinxin   4,000,000    6.46%
Wang Yanfang   2,000,000    3.23%
Liu Chen   2,000,000    3.23%
Liu Ying   1,906,288    3.08%

 

On December 15, 2022, Savmobi Technology, Inc. (“SVMB,”) entered into a share exchange agreement (the “Share Exchange Agreement”) with Intellegence Parking Group Limited (“Intellegence”), a Cayman Island company formed on June 29, 2022, Chen Xinxin (“Xinxin”), the officer and director, and control shareholder of Intelligence and the shareholders of Intelligence (the “Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of Intellegence was exchanged for 1,000,000,000 shares of common stock of SVMB issued to the Shareholders, in accordance with the Share Exchange Agreement. The former stockholders of Intellegence will acquire a majority of the issued and outstanding common stock as a result of the share exchange transaction. The transaction has been accounted for as a recapitalization of the Company, whereby Intellegence is the accounting acquirer.

 

Immediately after completion of such share exchange, SVMB will hold a total of 200,000,000 issued and outstanding shares of Intellegence. Zhang Guowei is the sole director of Intellegence Parking Group Limited.

 

Consequently, SVMB has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and Intellegence is now a wholly owned subsidiary.

 

Intellegence Parking Group Limited (“Intellegence Parking”) was incorporated on June 29, 2022 under the laws of Cayman Islands. It is controlled by Guowei Zhang, Xiujuan Chen, Hongwei Li and Chuchu Zhang. Intellegence Parking is an investment holding company.

 

Intellegence Parking (Hong Kong) Limited (“Intellegence HK”) was incorporated on July 20, 2022 under the laws of Hong Kong SAR. Intelligence HK is a wholly subsidiary of Intellegence Parking since incorporation and it is an investment holding company.

 

Huixin Zhiying (Hangzhou) Technology Co. (“Huixin”) was incorporated on October 24, 2022 under the laws of PRC. It is a wholly owned subsidiary of Intellegence HK since incorporation and it is an investment holding company.

 

Pursuant to the Business Operation Agreement entered into among Huixin WFOE and Zhejiang Jingbo Ecological Technology Co. The Company obtained control over these PRC domestic companies by entering into a series of contractual arrangements with these PRC domestic companies and their respective Nominee Shareholders. These contractual agreements include power of attorney, exclusive option agreement, exclusive business cooperation agreements, equity pledge agreements, and other operating agreements. These contractual agreements can be extended at the relevant PRC subsidiaries’ options prior to the expiration date. As a result, the Company maintains the ability to control these PRC domestic companies, is entitled to substantially all of the economic benefits from these PRC domestic companies and is obligated to absorb all expected losses of these PRC domestic companies.

 

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Zhejiang Jingbo Ecological Technology Co. is a PRC company which was formed on December 18, 2019 and is engaged in the business of smart parking application software and platform operations business. Zhang Guowei has been the Chairman of Zhejiang Jingbo Ecological Technology Co. since December 2019.

 

Hangzhou Zhuyi Technology Co. (“Hangzhou Zhuyi”) was incorporated under the laws of the PRC on November 13, 2017 with a capital of RMB 60,000,000. The majority shareholder at the time of establishment was Guowei Zhang. On April 1, 2020, Zhejiang Jingbo Ecological Technology became the sole shareholder of Hangzhou Zhuyi. Hangzhou Zhuyi is specialized in smart parking projects, smart parking mobile applications and cloud platform construction innovation.

 

Zhejiang Linglingyi Network Technology Co. (“Linglingyi”) was incorporated on November 17, 2018. Its sole director is Guowei Zhang. Hangzhou Zhuyi acquired 100% of Linglingyi on April 29. 2022. Its main businesses are smart parking projects and smart parking mobile applications.

 

Liangshan Tongfu Technology Co. (“Liangshan”) was incorporated on November 13, 2018. On September 29, 2022, Hangzhou Zhuyi entered in a share agreement with Hangzhou Kaai Technology Co. to purchase 26% of Liangshan’s shares. As a result, Hangzhou Zhuyi holds 67% of Liangshan. Liangshan is into smart parking projects and smart parking mobile applications businesses.

 

Zhuyi Technology (Anping) Co. (“Anping”) was incorporated on May 12, 2022, which is 90% owned by Hangzhou Zhuyi and it mainly focuses on smart parking projects and smart parking mobile applications. Anping was deregistered on 27 June, 2023.

 

Haikou Zhuyi Technology Co. (“Haikou”) was incorporated on May 9, 2022 which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Yibin Huibo Technology Co. (“Yibin”) was incorporated on July 4, 2019, which is 80% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Xide Zhuyi Technology Co. (“Xide”) was incorporated on October 14, 2021, which is 67% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Hubei Tongpo Parking Management Co. (“Tongpo”) was incorporated on November 4, 2020, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Zhuyi Technology (Taining) Co. (“Taining”) was incorporated on May 18, 2021, which is 72% owned by Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Zhongxiang Huji Town Zhuyi Techonology Co. (“Huji”) was incorporated on August 14, 2023, which is a wholly subsidiary of Hangzhou Zhuyi. It mainly focuses on smart parking projects and smart parking mobile applications.

 

Intellengence Parking Group Limited provides smart parking projects, smart parking mobile applications and cloud platform construction innovation through its consolidated subsidiaries, variable interest entities (“VIE”s) and VIE’s subsidiaries.

 

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Corporate Structure

 

 

Result of Operations

 

For the three months ended November 30, 2023 and 2022

 

Revenue

 

The Company generated $386,855 for the three months ended November 30, 2023 compared to $691,489 for the three months ended November 30, 2022. Revenue mainly comprised of parking fee and sales of parking equipment. The decrease in revenue for the three months ended November 30, 2023 was mainly due to a decline in parking fee revenue as we were unable to renew some of our contracts with landlords.

 

Cost of Revenues

 

During the three months ended November 30, 2023, the Company incurred $523,272 in cost of revenue compared to $887,865 during the three months ended November 30, 2022. Cost of revenues mainly consisted of rent, depreciation and salary expenses. The decrease in costs of revenues was primarily contributed by a decrease in rent and salary expenses.

 

Gross loss

 

Gross loss was $136,417 for the three months ended November 30, 2023 compared to gross loss of $196,376 for the three months ended November 30, 2022. The gross profit for the three months ended November 30, 2023 was generated due to the decrease in cost of revenues.

 

Selling and marketing expenses

 

During the three months ended November 30, 2023, we incurred selling and marketing expenses of $62,368 compared to $117,136 during the three months ended November 30, 2022. Selling and marketing expenses mainly included salary expenses, travelling expenses and advertisement expenses. The decrease in selling and marketing expenses was primarily caused by a decrease in salary expenses and travelling expenses.

 

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General and administrative expenses

 

During the three months ended November 30, 2023, we incurred general and administrative expenses of $1,040,838 compared to $720,663 during the three months ended November 30, 2022. General and administrative expenses mainly consisted of salary expenses and professional fees. The increase in general and administrative expenses was mainly contributed by an increase in professional fees.

 

Research and development expenses

 

During the three months ended November 30, 2023, we incurred research and development expenses of $100,313 compared to $261,258 for the three months ended November 30, 2022. R&D expenses mainly comprised of salary expenses. The decrease in R&D expenses was primarily due to a decrease in salary expenses.

 

Net loss

 

As a result of foregoing, the net loss for the three months ended November 30, 2023 and 2022 was $1,141,283 and $1,297,545, respectively.

 

For the six months ended November 30, 2023 and 2022

 

Revenue

 

The Company generated $788,759 for the six months ended November 30, 2023 compared to $1,487,868 for the six months ended November 30, 2022. Revenue mainly comprised of parking fee and sales of parking equipment. The decrease in revenue for the six months ended November 30, 2023 was mainly due to a decline in parking fee revenue as we were unable to renew some of our contracts with landlords.

 

Cost of Revenues

 

During the six months ended November 30, 2023, the Company incurred $1,146,680 in cost of revenue compared to $2,084,574 during the six months ended November 30, 2022. Cost of revenues mainly consisted of rent, depreciation and salary expenses. The decrease in costs of revenues was primarily contributed by a decrease in rent and salary expenses.

 

Gross loss

 

Gross loss was $357,921 for the six months ended November 30, 2023 compared to $596,706 for the six months ended November 30, 2022. The decrease in gross loss for the six months ended November 30, 2023 was due to the significant decrease in cost of revenues.

 

Selling and marketing expenses

 

During the six months ended November 30, 2023, we incurred selling and marketing expenses of $160,853 compared to $300,585 during the six months ended November 30, 2022. Selling and marketing expenses mainly included salary expenses, travelling expenses and advertisement expenses. The decrease in selling and marketing expenses was primarily caused by a decrease in salary expenses and travelling expenses.

 

General and administrative expenses

 

During the six months ended November 30, 2023, we incurred general and administrative expenses of $2,119,238 compared to $2,323,961 during the six months ended November 30, 2022. General and administrative expenses mainly consisted of salary expenses and professional fees. The decrease in general and administrative expenses was mainly contributed by a decrease in salary expenses.

 

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Research and development expenses

 

During the six months ended November 30, 2023, we incurred research and development expenses of $198,219 compared to $267,779 for the six months ended November 30, 2022. R&D expenses mainly comprised of salary expenses. The decrease in R&D expenses was primarily due to a decrease in salary expenses.

 

Net loss

 

As a result of foregoing, the net loss for the six months ended November 30, 2023 and 2022 was $2,673,338 and $3,554,684, respectively.

 

Capital Resources and Liquidity

 

Working capital  November 30, 2023   May 31, 2023 
Total current assets  $3,407,538   $3,117,996 
Total current liabilities   9,767,680    3,902,103 
Working capital deficit  $(6,360,142)  $(784,107)

 

Total deficit for the six months ended November 30, 2023 was $6,360,142 compared to $784,107 for the year ended May 31, 2023. To date, we have financed our operations primarily from long-term loans.

 

Six months ended November 30, 2023 and 2022

 

   Six Months Ended November 30, 
   2023   2022 
Net cash provided by/(used in) operating activities  $1,188,385   $(947,514)
Net cash used in investing activities   (95,558)   (988,231)
Net cash (used in)/provided by financing activities   (1,519,554)   2,000,563 
Effect of exchange rate changes on cash and cash equivalents   (4,500)   (7,952)
Net increase/(decrease) in cash and cash equivalents   (431,227)   56,866 
Cash and cash equivalents at the beginning balances   493,978    108,787 
Cash and cash equivalents at the ending balances  $62,751   $165,653 

 

Cash Provided by/(Used in) Operating Activities

 

For the six months ended November 30, 2023, net cash provided by operating activities was $1,188,385, primarily consisting of a net loss of $2,673,338, an increase in prepaid expenses and other current assets of $602,210 and an increase in accounts payable and other current liabilities of $3,897,562, compared to net cash used in operating activities of $947,514 for the six months ended November 30, 2022, mainly comprised of a net loss of $3,554,684 and depreciation and amortization expenses of $947,123 and an increase in accounts payable and other current liabilities of $2,206,691.

 

Cash Used in Investing Activities

 

For the six-month periods ended November 30, 2023, net cash used in investing activities was $95,558 mainly including proceeds from sale of property and equipment of $134,547 and a purchase of property and equipment of $198,902, compared to net cash used in investing activities was $988,231 for the six months ended November 30, 2022, mainly consisted of a purchase of property and equipment of $1,049,086.

 

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Cash (Used in)/Provided by Financing Activities

 

For the six months ended November 30, 2023, net cash used in financing activities was $1,519,554 mainly comprising repayments of long-term loans of $3,472,271 and proceeds from short-term borrowings of $1,389,275. Net cash provided by financing activities was $2,000,563 for the six months ended November 30, 2022, consisting of advanced from related parties and long-term loans.

 

Going Concern Consideration

 

The ability to continue as a going concern is dependent upon long-term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on long term loans related to Shaoxing Keqiao Zhuyi Technology Co. and the director (Guowei Zhang) to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Off-balance sheet arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Contractual Obligations

 

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

 

Critical Accounting Policies and Estimates

 

We prepare our financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed financial statements.

 

While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with U.S. GAAP actual results could differ from our estimates and such differences could be material

 

Foreign Currency Exchange Rates

 

We are not materially affected by foreign currency exchange rates. However, it is difficult to predict how market forces, or PRC or U.S. government policy, might affect our operations. There remains significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result in a further and more significant change in the value of the RMB against the U.S. dollar. Limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. So far, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we potentially may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedging transactions may be limited, and we may not be able to successfully hedge our exposure at all. Furthermore, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency.

 

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

We are required to maintain “disclosure controls and procedures” as such term is defined in Rule 13a- 15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on their evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission 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, to allow timely decisions regarding required disclosure as a result of continuing weaknesses in our internal control over financial reporting.

 

As disclosed in our Annual Report on Form 10-K for the year ended May 31, 2023, based on management’s assessment of the effectiveness of our internal controls over financial reporting, management concluded that our internal controls over financial reporting were not effective as of November 30, 2023, due to: ( 1) lack of a functioning audit committee and lack of a majority of outside directors on the Company’s board of director; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. Management believes the above weakness constitute material weaknesses in our internal control over financial reporting. Until such time, if ever, that we remediate the material weakness in our internal control over financial reporting we expect that the material weaknesses in our disclosure controls and procedures will continue.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a- 15(f) or 15d- 15(f)) during the period covered by this report, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Currently we are not involved in any pending litigation or legal proceeding.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 2. Unregistered Sales of Securities and Use of Proceeds.

 

None

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

None

 

Item 5. Other Information.

 

None

 

Item 6. Exhibits.

 

31.1   Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2   Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1   Section 1350 Certification of Chief Executive Officer
32.2   Section 1350 Certification of Chief Financial Officer
101   Interactive data files pursuant to Rule 405 of Regulation S-T.
101.INS   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema Document
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  SavMobi Technology Inc.
  (Registrant)
     
Date: January 16, 2024 By: /s/ Zhang Guowei
    Zhang Guowei
    Chief Executive Officer
    Chief Financial Officer

 

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