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EX-32.1 - CERTIFICATION - Moregain Pictures, Inc.alad_ex32z1.htm
EX-31.1 - CERTIFICATION - Moregain Pictures, Inc.alad_ex31z1.htm
EX-10.5 - LOAN EXTENSION AGREEMENT - Moregain Pictures, Inc.alad_ex10z5.htm

 



 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

þ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2018

 

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________________ to________________

 

Commission file number 000-55297

 

MOREGAIN PICTURES, INC.

Formerly Aladdin International, Inc.

(Exact name of registrant as specified in its charter)

 Nevada

41-0990229

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)


117 E. Huntington Drive, Arcadia, CA 91006

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: (626)-400-5727


Securities registered under Section 12(b) of the Act:

 

None

Title of each class

 

Securities registered under Section 12(g) of the Act:

 

Common Stock, $0.001 par value

(Title of class)

 

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


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 þ   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 þ   No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ   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 registrants 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. þ


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer   ¨

 

Accelerated filer   ¨

Non-accelerated filer     ¨

(Do not check if a smaller

Smaller reporting company  þ

 

reporting company)

Emerging growth company  ¨


If an emerging growth company, indicate by checkmark 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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ   No ¨


The aggregate market value of common equity held by non-affiliates as of December 31, 2017 was $21,540,597, based upon the closing price of the Registrant’s common stock as quoted in the OTC Marketplace on such date.


As of October 15, 2018, the registrant had outstanding 7,180,199 shares of common stock.


DOCUMENTS INCORPORATED BY REFERENCE


None

 

 






 


TABLE OF CONTENTS

 

Item No.

 

 

 

Page No.

 

PART I

 

1

 

Business

 

1

 

1A

 

Risk Factors

 

4

 

1B

 

Unresolved Staff Comments

 

7

 

2

 

Properties

 

7

 

3

 

Legal Proceedings

 

7

 

4

 

Mine Safety Disclosures

 

7

 

 

 

 

 

 

 

PART II

5

 

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

 

8

 

6

 

Selected Financial Data

 

8

 

7

 

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

 

8

 

7A

 

Quantitative and Qualitative Disclosures About Market Risk

 

14

 

8

 

Financial Statements and Supplementary Data

 

14

 

9

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

28

 

9A

 

Controls and Procedures

 

28

 

9B

 

Other Information

 

29

 

 

 

 

 

 

 

PART III

10

 

Directors, Executive Officers and Corporate Governance

 

30

 

11

 

Executive Compensation

 

32

 

12

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

32

 

13

 

Certain Relationships and Related Transactions, and Director Independence

 

33

 

14

 

Principal Accounting Fees and Services

 

33

 

 

 

 

 

 

 

PART IV

15

 

Exhibits, Financial Statement Schedules

 

34

 

 

 

 

 

 

 

 

 

SIGNATURES

 

35

 

 













 


PART I

 

Forward Looking Statements

 

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.


Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.


Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.


In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "Common Stock" refer to common stock, par value $.001 per share in our capital stock.


As used in this annual report, the terms “Company,” "we", "us", "our", refer to Aladdin International, Inc., as our company was formerly known as until September 18, 2018 and Moregain Pictures, Inc. after such date.

 

ITEM 1.

BUSINESS

 

Overview


The Company was incorporated under the laws of the state of Minnesota on May 3, 1972. The Company was a franchisee of fast food restaurants in Milwaukee, Wisconsin until the franchised restaurants were sold in October 1998. Since June 2010, the Company has had insignificant operations and assets consisting solely of cash. As such, the Company is presently defined as a "shell" company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).


On February 14, 2008, the Company entered into a Stock Purchase Agreement with Michael Friess and Sanford Schwartz, both of whom have been successful in completing merger transactions between public blank-check companies they controlled with private operating companies. The Stock Purchase Agreement provided that some time following the sale of the Company’s real estate and the distribution of the sale proceeds to the Company’s shareholders, each of Mr. Friess and Mr. Schwartz would purchase 1,819,374 shares of the Company’s common stock (representing 40% of the then-to-be outstanding shares of the Company’s common stock) for $10,000. On June 24, 2010, the Company sold the real estate. The Board of Directors declared a dividend of $0.148 per share paid on May 6, 2011, to its shareholders of record on March 31, 2011. On July 16, 2014, in connection with the sale of the shares to Mr. Friess and Mr. Schwartz, Mr. Friess and Mr. Schwartz were appointed to the Company’s Board of Directors, the then current Directors resigned from the Board, Mr. Friess was appointed CEO of the Company, and Mr. Schwartz was appointed CFO and Secretary.


On November 25, 2014, the Company held a shareholder meeting to reincorporate the Company in the State of Nevada and amend the Articles of Incorporation to increase the authorized common stock of the Company to seven hundred eighty million (780,000,000) shares of common stock and to authorize the creation of 20,000,000 shares of preferred stock.


On July 20, 2015, Mr. Michael Friess and Mr. Sanford Schwartz (each, a “Seller,” together, the “Sellers”) and Billion Rewards Development Limited, a British Virgin Islands corporation (the “Purchaser”), entered into a Securities Purchase Agreement (the “Purchase Agreement”), pursuant to which the Sellers sold to the Purchaser, and the Purchaser purchased from the Sellers, an aggregate of 3,638,748 shares of Common Stock of the Company (the “Shares”), which represented 80% of the issued and outstanding shares of Common Stock for the purchase price of $300,000.



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The closing of the transaction occurred on July 20, 2015 (the “Closing”). In connection with the Purchase Agreements, Mr. Sanford Schwartz resigned as the CFO and director of the Company, and Mr. Michael Friess resigned as a CEO and president of the Company. Mr. Ningdi Chen was appointed as the Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary, and director of the Company as of July 20, 2015. As a result of the transactions, control of the Company passed to the Purchaser (the “Change of Control Transaction”). Post-Closing, Michael Friess resigned as a director effective on the tenth day following the Company’s mailing of this Information Statement on Schedule 14f-1 to its shareholders (the “Effective Date”), which occurred on July 23, 2015. Immediately after the Closing, the Shares acquired by the Purchaser comprised 80% of the issued and outstanding Common Stock of the Company.


On June 3, 2017, a total of $343,840 of the third party loans was converted to a total of 2,631,764 shares of Common Stock of the Company (Form 8-K, the “Debt Conversion Agreement”), As a result, Billion Rewards Development Limited held an aggregate of 6,270,512 shares of Common Stock of the Company, which represents 87.33% of the issued and outstanding shares of Common Stock as of June 30, 2017


On January 10, 2018 the Company entered into a loan agreement with Michael Wu, an unaffiliated third party, whereby Michael Wu agreed to provide a no-interest loan in the amount of $70,000 (the “January 10th Loan”) to the Company with the maturity date of June 30, 2018. The loan has been extended to December 31, 2018.


On March 20, 2018, the Company entered into certain consulting agreement (the “Shilong Agreement”) with Shilong Film Investment Inc. (“Shilong”), a California corporation that engages in film production investment in Hollywood, Hong Kong, ND China. Pursuant to the Shilong Agreement, Shilong agreed to provide the Company with strategy to promote growth, advisory service with respect to business development, marketing efforts to increase awareness for the Company’s corporate image. In considering for the services, the Company agreed to issue Shilong warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock, exercisable for five (5) years from the date of issuance at an exercise price of $0.15 per share.


On March 21, 2018, Billion Rewards Development Limited, a British Virgin Islands corporation, the then majority shareholder of the Company entered into a Securities Purchase Agreement with Moregain Capital Group, a Nevada Corporation, pursuant to which Moregain Capital Group LLC purchased from Billion Rewards Development Limited, an aggregate of 6,270,512 shares of Common Stock of the Company, which represent 87.33% of the issued and outstanding shares of Common Stock, for the purchase price of $180,000.


In connection with the Securities Purchase Agreements, on March 23, 2018, Mr. Qinghua Chen resigned from all office positions and director of the Company, effective immediately. Mr. Michael D. Antonovich was appointed as the Chairman of the Board, Lianne Hermann as the Chief Financial Officer and Sherwood Wu as an Independent Director of the Board, all effective on March 23, 2018.


On March 23, 2018, Board of Directors of the Registrant approved “2018 Performance Boost Stock Option Plan” in order to retain and recruit certain selected employees, consultants, and directors. In the same day, stock options to purchase a total of 2,000,000 shares of common stock were granted to certain employees, consultants, and directors exercisable at $0.15 per share, the closing price on March 22, 2018, following a 10-year vesting schedule starting 12-months from the commencement date of March 23, 2018.


On March 23, 2018, the Board and the majority shareholder of the Company approved the name change to “Moregain Pictures, Inc..” in connection with the Company’s focus in developing motion picture, entertainment and media business. We are in the process to effectuate the name change.


On May 15, 2018, Ms. Lianne Herrmann tendered her resignation as Chief Financial Officer and Treasurer of the Company, effective immediately. On May 18, 2018, the Board of Directors of the Company appointed Richard Pao as the Chief Financial Officer and Treasurer, and Jesse Weiner as General Counsel, effective immediately.


The Company has opted to become a "blank check" company and to further engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. At this time, the Company's purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation.




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The Company has opted to register its common stock pursuant to section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) in an effort to maximize shareholder value. The best use and primary attraction of the Company as a merger partner or acquisition vehicle will be its status as a reporting public company. Any business combination or transaction is expected to result in a significant issuance of shares and substantial dilution to present stockholders of the Company.


The proposed business activities described herein classify the Company as a "blank check" company. Many states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Management does not intend to undertake any additional offerings of the Company's securities, either debt or equity, until such time as the Company has successfully implemented its business plan described herein.


Plan of Operation


The Company will specialize in investing in Hollywood movies with a focus on films with an extraordinary cast and crew, exciting storylines, and high production quality. It prefers films that target global audiences and have a global distribution network.


The Company plans to focus on developing innovative concepts with a fresh approach, covers award-winning feature films, short films, live events, and new media content. It is committed to building an inclusive pipeline and telling the diverse stories in its industry to advance the art and business of China and America's creative economy. The Company embraces new advances in technology. Innovations in filmmaking transport audiences to new worlds and deliver content where, when, and on any device, they want.


The Company is majority owned by a private company, Moregain Capital Group, Inc, a comprehensive private equity investment and management company specializing in financing the healthcare industry, the gambling industry, and the entertainment industry, as well as commercial bank investment and capital market cooperation.


Our goal is to become a professional and comprehensive film company specializing in the investment, development, and distribution of blockbuster movies in Hollywood.


The Company hopes to cooperate with six major US production companies, focusing on the exchange of resources, complementing each other’s strengths, and building strong, supportive alliances. Headquartered in Los Angeles with immediate access to Hollywood, the Company will use creativity and innovation to maximize its advantages in order to support the success of its investments and films. This includes exploring opportunities to acquire and hold film and television companies in Hollywood, China, Hong Kong, and other regions, while implementing in-depth reorganization to lead to a more globally successful industry. It believes that “a country is strong because of its strong economy; a country’s economy is strong because of its strong culture; a country’s culture is strong because of its strong films.” A movie is like a name card for a nation which reflects the culture of its country and connects the world through the spirit of humanities in turn promoting international change.


Acquisition of Opportunities


In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. It may also acquire stock or assets of an existing business. On the consummation of a transaction, it is probable that the present management and shareholders of the Company will no longer be in control of the Company. In addition, the Company's director may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of the Company's shareholders or may sell their stock in the Company. Any and all such sales will only be made in compliance with the securities laws of the United States and any applicable state.


It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after the Company has successfully consummated a merger or acquisition and the Company is no longer considered a "shell" company. The issuance of substantial additional securities and their potential sale into any trading market which may develop in the Company's securities may have a depressive effect on the value of the Company's securities in the future, if such a market develops, of which there is no assurance.




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With respect to any merger or acquisition, the negotiations with target company management is expected to focus on the percentage of the Company which the target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, the Company's shareholders will in all likelihood hold a substantially lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's then shareholders.


The Company will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with the Company's attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.


The Company will not acquire or merge with any entity which cannot provide independent audited financial statements prior to the closing of the proposed transaction. Upon the effective date of this registration statement, the Company is subject to all of the reporting requirements included in the Exchange Act. Included in these requirements is the affirmative duty of the Company to file independent audited financial statements as part of its Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as the Company's audited financial statements included in its annual report on Form 10-K. The Company does not intend to provide the Company's security holders with any disclosure documents, including audited financial statements, concerning an acquisition or merger candidate and its business prior to the consummation of any acquisition or merger transaction.


The Company will remain an insignificant participant among the firms which engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than the Company. In view of the Company's extremely limited financial resources and limited management availability, the Company will continue to be at a significant competitive disadvantage compared to the Company's competitors.


Research and development activities during the last two years


We have not expended funds for research and development costs during the last two years.


ITEM 1A.

RISK FACTORS

 

Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.


RISK FACTORS


A. Conflicts of Interest. Our officer and director has other business interests to which he currently devotes attention, and is expected to continue to do so. As a result, conflicts of interest may arise that can be resolved only through his exercise of judgment in a manner which is consistent with his fiduciary duties to the Company.


It is anticipated that our principal shareholders may actively negotiate or otherwise consent to the purchase of all or a portion of their common stock as a condition to, or in connection with, a proposed merger or acquisition transaction. In this process, our principal shareholders may consider their own personal pecuniary benefit rather than the best interests of our other shareholders and the other shareholders are not expected to be afforded the opportunity to approve or consent to any particular stock buy-out transaction.


B. Need for Additional Financing. We have very limited funds, and such funds are unlikely to be adequate to take advantage of any available business opportunities. Even if our funds prove to be sufficient to acquire an interest in, or complete a transaction with, a business opportunity, we may not have enough capital to exploit the opportunity. Our ultimate success may depend upon our ability to raise additional capital. We have not investigated the availability, source, or terms that might govern the acquisition of additional capital and will not do so until we determine a need for additional financing.


If additional capital is needed, there is no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us. If such funds are not available, our operations will be limited to those that can be financed with our modest capital.



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C. Regulation of Penny Stocks. Our securities, when available for trading, will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell our securities and also may affect the ability of our shareholders in this offering to sell their securities in any market that might develop.


Shareholders should be aware that, according to Securities and Exchange Commission Release No. 34-29093, the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The Company's management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.


D. No Operating History or Revenue and Minimal Assets. The Company has had no operating history nor any revenues or earnings from operations since 1998. The Company has no significant assets or significant financial resources. The Company will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in the Company incurring a net operating loss which will increase continuously until the Company can consummate a business combination with a profitable business opportunity. There is no assurance that the Company can identify such a business opportunity and consummate such a business combination.


E. No Assurance of Success or Profitability. There is no assurance that we will acquire a business opportunity. Even if we should become involved in a business opportunity, there is no assurance that it will generate revenues or profits, or that the market price of our common stock will be increased thereby.


F. Possible Business - Not Identified and Highly Risky. We have not identified and have no commitments to enter into or acquire a specific business opportunity. Therefore we can disclose the risks and hazards of a business or opportunity that we may enter into in only a general manner, and cannot disclose the risks and hazards of any specific business or opportunity. An investor can expect a potential business opportunity to be quite risky. Our acquisition of or participation in a business opportunity will likely be highly illiquid and could result in a total loss to us and our shareholders if the business or opportunity proves to be unsuccessful.


G. Type of Business Acquired. The type of business to be acquired may be one that desires to avoid affecting its own public offering and the accompanying expense, delays, uncertainties, and federal and state requirements which purport to protect investors. Because of our limited capital, it is more likely than not that any acquisition will involve other parties whose primary interest is the acquisition of control of a publicly traded company. Moreover, any business opportunity acquired may be currently unprofitable or present other negative factors.


H. Impracticability of Exhaustive Investigation. Our limited funds and the lack of full-time management will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a business opportunity before we commit to such opportunity. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like, which, if we had more funds, would be desirable. We will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor, or others associated with the business opportunity seeking our participation. A significant portion of our available funds may be expended for investigative expenses and other expenses related to preliminary aspects of completing an acquisition transaction, whether or not any business opportunity investigated is eventually acquired.


I. Lack of Diversification. Because of our limited financial resources, it is unlikely that we will be able to diversify our acquisitions or operations. This probable inability to diversify our activities into more than one area will subject us to economic fluctuations within a particular business or industry and therefore increase the risks associated with our operations.



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J. Requirement of Audited Financial Statements May Disqualify Business Opportunities. Management of the Company believes that any potential business opportunity must provide audited financial statements for review, and for the protection of all parties to the business combination. One or more attractive business opportunities may choose to forego the possibility of a business combination with the Company, rather than incur the expenses associated with preparing audited financial statements.


K. Other Regulation. An acquisition we make may be of a business that is subject to regulation or licensing by federal, state, or local authorities. Compliance with such regulations and licensing can be expected to be a time-consuming, expensive process and may limit our other investment opportunities.


L. Dependence Upon Management; Limited Participation of Management. We will be heavily dependent upon the skills, talents, and abilities of our officer and director to implement our business plan, and may, from time to time, find that the inability of such persons to devote their full-time attention to our business results in a delay in progress toward implementing our business plan. Furthermore, we will be entirely dependent upon the experience of our officers and directors in seeking, investigating, and acquiring a business and in making decisions regarding our operations. Because investors will not be able to evaluate the merits of our possible business acquisitions, they should critically assess the information concerning our officers and directors.


M. Lack of Continuity in Management. The Company does not have an employment agreement with any of its officers or directors, and as a result, there is no assurance that they will continue to manage the Company in the future. In connection with the acquisition of a business opportunity, it is likely the current officers and directors of the Company will resign. A decision to resign will be based upon the identity of the business opportunity and the nature of the transaction, and is likely to occur without the vote or consent of the shareholders of the Company.


N. Indemnification of Officers and Directors. Our Articles of Incorporation provides that we will indemnify our directors, officers, employees, and agents to the fullest extent permitted by Nevada law. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's promise to repay us if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures which we may be unable to recoup.


O. Dependence Upon Outside Advisors. To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. The selection of any such advisors will be made by our officers without any input from shareholders. Furthermore, it is anticipated that such persons may be engaged on an "as needed" basis without a continuing fiduciary or other obligation to the Company. In the event management considers it necessary to hire outside advisors, they may elect to hire persons who are affiliates of one or more officers or directors of the Company, if they are able to provide the required services.


P. Leveraged Transactions. There is a possibility that any acquisition of a business opportunity we make may be leveraged, i.e., we may finance the acquisition of the business opportunity by borrowing against the assets of the business opportunity to be acquired, or against the projected future revenues or profits of the business opportunity. This could increase our exposure to losses. A business opportunity acquired through a leveraged transaction is profitable only if it generates enough revenues to cover the related debt and expenses. Failure to make payments on the debt incurred to purchase the business opportunity could result in the loss of a portion or all of the assets acquired. There is no assurance that any business opportunity acquired through a leveraged transaction will generate sufficient revenues to cover the related debt and expenses.


Q. Competition. The search for potentially profitable business opportunities is intensely competitive. We expect to be at a disadvantage when competing with many firms that have substantially greater financial and management resources and capabilities than we do. These competitive conditions will exist in any industry in which we may become interested.


R. No Foreseeable Dividends. We do not anticipate paying cash dividends on our common stock in the foreseeable future.


S. Loss of Control by Present Management and Shareholders. We may consider an acquisition in which we would issue as consideration for the business opportunity to be acquired, an amount of our authorized but unissued common stock that would, upon issuance, represent the great majority of the voting power and equity of the Company. The result of such an acquisition would be that the acquired company's shareholders and management would control the Company, and our management could be replaced by persons unknown at this time. Such a merger would result in a greatly reduced percentage of ownership by our current shareholders.




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T. Public Market Exists. The principal trading market for our common stock is OTC Markets. There were 7,180,199 shares of our common stock outstanding as of June 30, 2018. No assurance can be given that a market will develop or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Factors such as those discussed in this "Risk Factors" section may have a significant impact upon the market price of the securities. Because of the low price of the securities, many brokerage firms may not be willing to effect transactions in the securities. Even if a purchaser finds a broker willing to effect a transaction in these securities, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such securities as collateral for any loans.


U. Government Regulations. Although we are subject to the reporting requirements under the Exchange Act, management believes we will not be subject to regulation under the Investment Company Act of 1940, as amended (the “Investment Company Act”), since we will not be engaged in the business of investing or trading in securities. If we engage in business combinations which result in our holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act. If so, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to our status under the Investment Company Act and, consequently, violation of the Investment Company Act could subject us to material adverse consequences.


V. Potential Acquisitions. If we enter into a business combination with a foreign company, we will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, regulatory problems, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders and cultural and language differences. Foreign economies may differ favorably or unfavorably from the United States economy in growth of gross national product, rate of inflation, market development, rate of savings, and capital investment, resource self-sufficiency and balance of payment positions, and in other respects.


W. Employees We currently have one employee, our executive officer, Jesse Weiner, who devotes approximately 15% of his time to our business and currently is responsible for our general strategy, fund raising and customer relations. Once revenues will support the expense we will hire additional staff.


ITEM 1B.

UNRESOLVED STAFF COMMENTS


Not applicable.


ITEM 2.

PROPERTIES.


The Company has no properties and at this time has no agreements to acquire any properties. The Company currently maintains a mailing address at 117 E. Huntington Dr., Arcadia, CA 91006, which is the address of Moregain Capital Group, Inc., its majority shareholder.


ITEM 3.

LEGAL PROCEEDINGS.

 

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 4.

MINE SAFETY DISCLOSURES.

 

Not Applicable.





7



 


PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information.


The Company’s common stock is quoted on the OTC Marketplace (“OTC”) under the symbol “ALAD.”


The following table sets forth the high and low sales prices as reported on the OTC. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.


 

 

High

 

 

Low

  

First Quarter ended September 30, 2016

 

$

0.45

 

 

$

0.15

 

Second Quarter ended December 31, 2016

 

$

0.29

 

 

$

0.18

 

Third Quarter ended March 31, 2017

 

$

0.30

 

 

$

0.18

 

Fourth Quarter ended June 30, 2017

 

$

0.51

 

 

$

0.18

 

First Quarter ended September 30, 2017

 

$

0.43

 

 

$

0.30

 

Second Quarter ended December 31, 2017

 

$

0.30

 

 

$

0.15

 

Third Quarter ended March 31, 2018

 

$

8.00

 

 

$

0.15

 

Fourth Quarter ended June 30, 2018

 

$

25.00

 

 

$

5.00

 


The last reported sales price of our common stock on the OTC on October 12, 2018 was $3.00.


As of October 15, 2018, there were 157 stockholders of record of our common stock.


Dividend Policy

 

The Company has never paid dividends on its common stock and does not anticipate that it will pay dividends in the foreseeable future. It intends to use any future earnings for the expansion of its business. Any future determination of applicable dividends will be made at the discretion of the board of directors and will depend on the results of operations, financial condition, capital requirements and other factors deemed relevant. 


Securities Authorized for Issuance under Equity Compensation Plans

 

There was no outstanding equity compensation awards as of June 30, 2018.


Recent Sales of Unregistered Securities


There was no sales of unregistered securities as of June 30, 2018.


ITEM 6.

SELECTED FINANCIAL DATA.

 

 As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Our Management's Discussion and Analysis contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. 




8



 


Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of unanticipated events.


The management’s discussion and analysis of our financial condition and results of operations are based upon our condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").


The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, the audited financial statements and related notes elsewhere in this Annual Report on Form 10-K.


Results of Operations


For the fiscal years ended June 30, 2018 and June 30, 2017


The following table provides selected financial data about our company for the years ended June 30, 2018 and June 30, 2017. For detailed financial information, see the financial statements included in this annual report.


Balance Sheet Data:

 

 

6/30/2018

 

 

6/30/2017

 

Cash

 

 

$

18,593

 

 

$

59,529

 

Total assets

 

 

 

21,380

 

 

 

62,870

 

Total liabilities

 

 

 

105,894

 

 

 

52,013

 

Shareholders' equity (deficit)

 

 

$

(84,714

)

 

$

10,857

 


The following summary of our results of operations should be read in conjunction with our financial statements included herein. Our operating results for the years ended June 30, 2018 and 2017 are summarized as follows:


 

 

Years Ended June 30,

 

 

 

2018

 

 

2017

 

Revenue

 

$

 

 

$

 

Operating Expenses

 

 

261,374

 

 

 

79,040

 

Net Loss

 

$

(261,371

)

 

$

(277,852

)


During last two fiscal years. There was no cash used for investing activities. The cash flow summary is as follows:


 

 

Year Ended June 30,

 

 

 

 

 

 

2018

 

 

2017

 

 

Change

 

Cash provided/(used) by operating activities

 

$

(110,936

)

 

$

9,380

 

 

$

(101,556

)

Cash provided/(used) for financing activities

 

$

70,000

 

 

 

 

 

$

70,000

 


Revenues


We have not earned any revenues for the fiscal years ended June 30, 2018 and June 30, 2017. We are presently in the development of our business and we can provide no assurance that we will begin earning revenues.


Expenses


Our expenses for the years ended June 30, 2018 and 2017 are outlined in the table below:


 

 

Years Ended June 30

 

 

 

2018

 

 

2017

 

General and Administrative Expense

 

$

261,374

 

 

$

277,852

 

Total Expenses

 

$

261,374

 

 

$

277,852

 



9



 


General and administrative expenses for the fiscal years ended June 30, 2018 and June 30, 2017 were 261,371, and $277,852, respectively, which were comprised of $64,020 and $35,879, respectively of professional fees, which included our accounting expenses incurred in connection with the preparation of our financial statements, professional fees that we pay to our legal counsel and other professional fees. The increase in our accounting fees and professional fees is associated with our developmental business activity.


Net Losses


The net loss for the fiscal years ended June 30, 2018 and June 30, 2017 were $261,371, and $277,852, respectively. In addition to professional fees and general and administrative expenses we also incurred marketing expenses, tax and license expenses for the year ended June 30, 2018 and rental and interest expenses for the year ended June 30, 2017.


Going Concern


The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company has no business operations, and has recurring losses, which raise substantial doubt about its ability to continue as a going concern.


In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments relative to the recoverability of assets and classification of liabilities that might be necessary should the company be able to continue as a going concern. The Company has financed its operations primarily through the sale of stock and advances from related parties. There is no assurance there will be future sales of stock or that these advances will continue in the future.


Liquidity and Capital Resources


As of June 30, 2018, we had $18,593 cash on hand, we had liabilities of $105,894, and our working capital deficit was $85,459.


We currently have no external sources of liquidity such as arrangements with credit institutions.


Assuming we do not complete a business combination, we anticipate needing approximately $60,000 in order to effectively execute our business plan over the next 12 months. If we are unable to raise the funds, we will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that we will be able to keep costs from being more than these estimated amounts or that we will be able to raise such funds. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to seek a buyer for our business or another entity with which we could create a joint venture. If all of these alternatives fail, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.


Plan of Operation


At this time, the Company's purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an Exchange Act registered corporation. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature. This discussion of the proposed business is intentionally general and is not meant to be restrictive of the Company's virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to shareholders of the Company because it will not permit the Company to offset potential losses from one venture against gains from another.




10



 


The Company may seek a business opportunity with entities which have recently commenced operations, or which wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. The Company may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. However, there is no guarantee that any of such merger or acquisition will be successful. No definitive documentation has been entered into in connection with any acquisition and there can be no assurance that the Company will successfully make any acquisition. If an acquisition occurs, the Company would likely issue a substantial number of additional shares of its common stock at a price which could be substantially below the current trading price of the Company’s common stock. There may be no independent valuation done of any proposed target and there can be no assurance that the value of any proposed target would approximate the value of securities of the Company to be issued in connection with such acquisition.


The Company anticipates that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the perceived benefits of a publicly registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes), for all shareholders and other factors.


The Company has little or no capital with which to provide the owners of business opportunities with any significant cash or other assets. However, management believes the Company will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly registered company without incurring the cost and time required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including the costs of preparing Form 8-K's, 10-K's and 10-Q's, agreements and related reports and documents. The Exchange Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the Exchange Act. The officers and directors of the Company have not conducted market research and are not aware of statistical data which would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.


The analysis of new business opportunities will be undertaken by, or under the supervision of, the officer and director of the Company. Management intends to concentrate on identifying preliminary prospective business opportunities, which may be brought to its attention through present associations of the Company's officer and director. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the perceived public recognition of acceptance of products, services, or trades; name identification; and other relevant factors. The Company will not acquire or merge with any company for which audited financial statements cannot be obtained prior to the closing of the proposed transaction.


The Company will not restrict its search for any specific kind of firms but may acquire a venture which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer. The Company may also, at its discretion, obtain funds in one or more private placements to be used to finance and consummate a merger or acquisition of a business opportunity.


It is anticipated that the Company will require approximately $60,000 during the next 12 months to implement its business plan described herein. The Company has limited capital with which about $18,000 to pay these anticipated expenses. It is the intent of management to provide the working capital necessary to support and preserve the integrity of the Company but there is no legal obligation for management to provide any additional funding to the Company. The Company has not identified any alternative sources and there is substantial doubt about the Company’s ability to continue as a going concern.


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.



11



 


Critical Accounting Policies


This summary of significant accounting policies of the Company is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements.


(a) Organization and Description of Business


The Company was incorporated under the laws of the state of Minnesota on May 3, 1972. The Company was a franchisee of fast food restaurants in Milwaukee, Wisconsin until the franchised restaurants were sold in October 1998. After the sale, the Company has been engaged in searching for a merger candidate that would expand the Company’s business plan.


The Company held a shareholder meeting on November 25, 2014 to reincorporate the Company in the State of Nevada and amend the Articles of Incorporation to increase the authorized capital stock of the Company to eight hundred million (800,000,000) shares. The shares of common stock consist of 780,000,000 shares of common stock with full voting rights and a par value of $0.001 per share and 20,000,000 shares of preferred stock with a par value of $0.001 per share. The merger of the Minnesota Company into the Nevada Company was effective on December 23, 2014 and the Articles of Merger were filed on December 30, 2014.


(b) Use of Estimates in the Preparation of Financial Statements


The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


(c) Per Share Information


Earnings (loss) per share of common stock are computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share are not shown for periods in which the Company incurs a loss because it would be anti-dilutive.


(d) Basis of Presentation - Going Concern


The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company has no business operations and has recurring losses, which raise substantial doubt about its ability to continue as a going concern.


In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments relative to the recoverability of assets and classification of liabilities that might be necessary should the company be able to continue as a going concern. The Company has financed its operations primarily through the sale of stock and advances from related parties. There is no assurance there will be future sales of stock or that these advances will continue in the future.


Management has opted to commence filing with the Securities and Exchange Commission (SEC) and then to seek a business combination. Management believes that this plan provides an opportunity for the Company to continue as a going concern.


(e) Recent Accounting Pronouncements


There were various accounting standards and interpretations issued during 2018 and 2017, none of which are expected to a have a material impact on the Company’s consolidated financial position, operations or cash flows.




12



 


(f) Risks and Uncertainties


The Company is subject to substantial business risks and uncertainties inherent in starting a new business. There is no assurance that the Company will be able to complete a business combination.


There is no historical financial information about us on which to base an evaluation of our performance. We are a development stage company and have not generated 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 implementing our business plan, and possible cost overruns due to increases in the cost of services.


To become profitable and competitive, we must implement our business plan and generate revenue.



(g) Cash and Cash Equivalents


The Company considers cash and cash equivalents to consist of cash on hand and demand deposits in banks with an initial maturity of 90 days or less.


(h) Furniture and equipment


Furniture and equipment are stated at cost and are depreciated over the assets’ estimated useful lives ranging from three to seven years using the straight-line method of depreciation as follows:


Furniture

7 years

Equipment

3 - 5 years


Depreciation expense totaled $554 for both years ended June 30, 2018 and 2017. Repairs and maintenance are charged to expense as incurred and expenditures for additions and improvements are capitalized.


(i) Fair Value of Financial Instruments


Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ASC Subtopic 825-10 ("ASC 825-10"), "Disclosures about Fair Value of Financial Instruments." ASC 825-10 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company's cash, cash equivalents, accounts payable, and advance from affiliates approximate their estimated fair values due to their short-term maturities.


(j) Related Party Debt - Convertible Note


The Company occasionally obtains financing from related parties in the form of notes payable which are convertible into shares of the Company’s common stock. The Company accounts for convertible notes and debt issuance costs associated with convertible notes following the guidance set forth in ASC 470-20, Debt with Conversion and Other Options; ASC 480, Distinguishing Liabilities from Equity; ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity; EITF 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock; and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs.


The terms of such convertible notes payable are analyzed by management to determine their accounting treatment, including determining whether conversion features are required to be bifurcated and treated as a discount, allocation of fair value of the issuance to the debt instrument and any beneficial conversion features, and the applicable classification of the convertible notes payable as debt, equity or mezzanine temporary equity.


The intrinsic value of the embedded conversion feature of related party convertible notes payable are included in the discount to notes payable, which is accreted to interest expense over the expected term of the note using the effective interest method. The Company’s management also estimates the total fair value of any beneficial conversion feature in allocating debt proceeds. The proceeds allocated to the beneficial conversion feature are determined by taking the estimated fair value of shares issuable under the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of the Company’s common stock as of the date of issuance.




13



 


(k) Related Party Debt – Non-Convertible Note


The Company occasionally obtains financing from related parties in the form of notes payable. The Company accounts for such notes following the guidance set forth in ASC 470, Debt, and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) simplifying the Presentation of Debt Issuance Costs.


(l) Operating Leases


The Company accounts for operating leases in accordance with ASC 840, Leases, SFAS No. 13, Accounting for Leases, and Financial Accounting Standards Board (FASB) Technical Bulletin 881, “Issues Relating to Accounting for Leases.” Accordingly, rent expense under operating leases for the Company’s administrative office is recognized on a straight-line basis over the original term of each lease, inclusive of predetermined rent escalations or modifications.


(m) Income Taxes


The Company records deferred taxes in accordance with Statement of Financial Accounting Standards (SFAS) ASC 740, "Accounting for Income Taxes." The statement requires recognition of deferred tax assets and liabilities for temporary differences between the tax bases of assets and liabilities and the amounts at which they are carried in the financial statements, the effect of net operating losses, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.


(n) Concentrations


Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At June 30, 2018 and June 30, 2017, the Company had no amounts of cash or cash equivalents in financial institutions in excess of amounts insured by agencies of the U.S. Government.


(o) Reclassification


Certain amounts previously reported have been reclassified to conform to current presentation.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company, we are not required to provide the information required by this Item.


ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

INDEX TO FINANCIAL STATEMENTS


MOREGAIN PICTURES, INC.


FINANCIAL STATEMENTS


Reports of Independent Registered Public Accounting Firm

15

 

 

Financial Statements:

 

 

 

Balance Sheets

17

Statements of Operations

18

Statement of Changes in Stockholders' Equity (Deficit)

19

Statements of Cash Flows

20

Notes to Financial Statements

21




14



 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders and Board of Directors of

Moregain Pictures, Inc


Opinion on the Financial Statements


We have audited the accompanying balance sheet of Moregain Pictures, Inc (the “Company”) as of June 30, 2018, and the related statements of operations, stockholders’ deficit, and cash flows for the year then ended, 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 June 30, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.


Going Concern Matter


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note [1] to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note [1]. The 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 audit. 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 audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.


/s/ MaloneBailey, LLP

www.malonebailey.com

We have served as the Company's auditor since 2018.

Houston, Texas

October 15, 2018








15



 


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors

Moregain Pictures, Inc.

(fka Aladdin International, Inc.)



We have audited the accompanying balance sheet of Moregain Pictures, Inc. (fka Aladdin International, Inc.), as of June 30, 2017, and the related statements of operations, stockholders’ equity (deficit), and cash flows for year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.


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


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Moregain Pictures, Inc. (fka Aladdin International, Inc.) as of June 30, 2017, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1, the Company has no business operations and has recurring losses, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



SCHUMACHER & ASSOCIATES, INC.


Littleton, Colorado
September 22, 2017





16



 


MOREGAIN PICTURES, INC.

BALANCE SHEETS


 

 

June 30,

2018

 

 

June 30,

2017

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,593

 

 

$

59,529

 

Prepaid expenses

 

 

1,842

 

 

 

1,842

 

Total Current Assets

 

 

20,435

 

 

 

61,371

 

 

  

 

                    

  

  

 

                    

  

Fixed Assets:

 

 

 

 

 

 

 

 

Furniture and Equipment, net of accumulated depreciation of $1,314 and $760, respectively

 

 

945

 

 

 

1,499

 

Total Fixed Assets

 

 

945

 

 

 

1,499

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

21,380

 

 

$

62,870

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

35,894

 

 

$

52,013

 

Note Payable

 

 

70,000

 

 

 

 

Total Current Liabilities

 

 

105,894

 

 

 

52,013

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

105,894

 

 

 

52,013

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Notes 4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit)

 

 

 

 

 

 

 

 

Preferred stock, $.001 par value 20,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

 

Common stock, $.001 par value 780,000,000 shares authorized, 7,180,199 issued and outstanding at June 30, 2018 and June 30, 2017

 

 

7,180

 

 

 

7,180

 

Additional paid-in capital

 

 

1,028,907

 

 

 

862,907

 

Accumulated (deficit)

 

 

(1,120,601

)

 

 

(859,230

)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

 

 

(84,514

)

 

 

10,857

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

$

21,380

 

 

$

62,870

 





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




17



 


MOREGAIN PICTURES, INC..

 STATEMENTS OF OPERATIONS


 

 

Year
Ended
June 30,
2018

 

 

Year
Ended
June 30,
2017

 

Revenues

 

$

 

 

$

 

 

  

 

                    

  

  

 

                    

  

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and Administrative Expense

 

 

261,374

 

 

 

79,040

 

Total Operating Expenses

 

 

261,374

 

 

 

79,040

 

 

 

 

 

 

 

 

 

 

Net Operating (Loss)

 

 

(261,374

)

 

 

(79,040

)

 

 

 

 

 

 

 

 

 

Other Expenses:

 

 

 

 

 

 

 

 

Interest and amortization of debt discount expense

 

 

(3

 

 

13,667

 

Loss on extinguishment of debt

 

 

 

 

 

185,145

 

Total Other Expenses

 

 

(3

 

 

198,812

 

 

 

 

 

 

 

 

 

 

Net (Loss)

 

$

(261,371

)

 

$

(277,852

)

 

 

 

 

 

 

 

 

 

Per Share

 

$

(0.04

)

 

$

(0.06

)

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

7,180,199

 

 

 

4,743,113

 





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




18



 


MOREGAIN PICTURES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

For the Period from July 1, 2016 through June 30, 2018


 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid In

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Deficit)

 

 

Total

 

Balance at June 30, 2016

 

 

4,548,435

 

 

$

4,548

 

 

$

322,883

 

 

$

(581,378

)

 

$

(253,947

)

Imputed Interest

 

 

 

 

 

 

 

 

13,671

 

 

 

 

 

 

13,671

 

Issuance of stock for debt conversion (Note 4)

 

 

2,631,764

 

 

 

2,632

 

 

 

526,353

 

 

 

 

 

 

528,985

 

Net loss-year ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

(277,852

)

 

 

(277,852

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2017

 

 

7,180,199

 

 

$

7,180

 

 

$

862,907

 

 

$

(859,230

)

 

$

10,857

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Share-based compensation to nonemployees

 

 

 

 

 

 

 

 

166,000

 

 

 

 

 

 

166,000

 

Net loss-year ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

(261,371

)

 

 

(261,371

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

 

 

7,180,199

 

 

$

7,180

 

 

$

1,028,907

 

 

$

(1,120,601

)

 

$

(84,514

)






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







19



 


MOREGAIN PICTURES, INC.

STATEMENTS OF CASH FLOWS


 

 

Year
Ended
June 30,
2018

 

 

Year
Ended
June 30,
2017

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net (loss)

 

$

(261,371

)

 

$

(277,852

)

Adjustments to reconcile net loss to net cash used in operating activities:

  

 

                    

  

  

 

                    

  

Depreciation expense

 

 

554

 

 

 

554

 

Share-based nonemployee compensation to additional paid-in capital

 

 

166,000

 

 

 

 

Imputed interest expense on related party notes

 

 

 

 

 

13,671

 

Increase in accounts payable & accrued expenses

 

 

(16,119

 

 

18,173

 

Loss on extinguishment of debt

 

 

 

 

 

185,145

 

(Increase) in prepaid expenses and deposits

 

 

 

 

 

69,689

 

Net Cash provided by (Used in) Operating Activities

 

 

(110,936

)

 

 

9,380

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from loans

 

 

70,000

 

 

 

 

Net Cash Provided by Financing Activities

 

 

70,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase(Decrease) in Cash

 

 

(40,936

 

 

9,380

 

Cash, Beginning of Period

 

 

59,529

 

 

 

50,149

 

Cash, End of Period

 

$

18,593

 

 

$

59,529

 

 

 

 

 

 

 

 

 

 

Interest Paid

 

$

 

 

$

 

Income Taxes Paid

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Non-Cash Transactions:

 

 

 

 

 

 

 

 

Conversion of debt to common stock

 

$

 

 

$

343,840

 




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




20



 


MOREGAIN PICTURES, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018


(1)

Summary of Accounting Policies, and Description of Business


This summary of significant accounting policies of MOREGAIN PICTURES, Inc. (the “Company”) is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements.


(a) Organization and Description of Business


The Company was incorporated under the laws of the state of Minnesota on May 3, 1972. The Company was a franchisee of fast food restaurants in Milwaukee, Wisconsin until the franchised restaurants were sold in October 1998. After the sale, the Company has been engaged in searching for a merger candidate that would expand the Company’s business plan.


Pursuant to the Articles of Incorporation of MOREGAIN PICTURES, INC., the Company is authorized to issue 780,000,000 common shares with $.001 par value. There were 7,180,199 and 7,180,199 shares of common stock issued and outstanding at June 30, 2018 and June 30, 2017, respectively.


On February 14, 2008, the Company entered into a Stock Purchase Agreement, subject to certain contingencies, with Michael Friess and Sanford Schwartz. On July 16, 2014, Mr. Friess and Mr. Schwartz purchased 3,638,748 shares of the Company’s common stock (representing 80% of the then-to-be outstanding shares of the Company’s common stock) for $20,000, resulting in a change in control of the Company. In connection with the purchase of the common stock, the current members of the Company’s Board of Directors resigned and Mr. Friess and Mr. Schwartz were elected to the Company’s Board of Directors. Further, Mr. Friess was appointed CEO of the Company, and Mr. Schwartz was appointed CFO and Secretary.


The Company held a shareholder meeting on November 25, 2014 to reincorporate the Company in the State of Nevada and amend the Articles of Incorporation to increase the authorized capital stock of the Company to eight hundred million (800,000,000) shares. The shares of common stock consist of 780,000,000 shares of common stock with full voting rights and a par value of $0.001 per share and 20,000,000 shares of preferred stock with a par value of $0.001 per share. The merger of the Minnesota Company into the Nevada Company was effective on December 23, 2014 and the Articles of Merger were filed on December 30, 2014.


The merger of the Minnesota Company into the Nevada Company was effective on December 23, 2014 and the Articles of Merger were filed on December 30, 2014.


All references in the accompanying financial statements to the number of shares authorized and outstanding have been retroactively adjusted to reflect the new capital structure and par values effective December 23, 2014.


In accordance with the Agreement and Plan of Merger, effective December 30, 2014, MOREGAIN PICTURES, INC. adopted the new capital structure which includes total authorized capital stock of 800,000,000 shares, of which 780,000,000 are common stock, with a par value of $.001 per share and 20,000,000 shares are preferred stock, with a par value of $.001 per share. The preferred stock may be issued from time to time in one or more series with such designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions thereof, and shall be stated in the resolutions adopted by the Company’s board providing for the issuance of such preferred stock or series thereof. In addition, the issued and outstanding shares of our common stock automatically converted shares of MOREGAIN PICTURES, INC. (Minnesota) at a ratio of one (1) share of our currently outstanding common stock for one (1) share of MOREGAIN PICTURES, INC. (Nevada).


On July 20, 2015, Michael Friess and Sanford Schwartz (collectively, the “Shareholders”), former majority shareholders of the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Billion Rewards, pursuant to which the Shareholders sold to Billion Rewards an aggregate of 3,638,748 shares of common stock, par value $.001 per share of the Company (the “Majority Interests”) for $300,000 (the “Transaction”), resulting in Billion Rewards owning approximately 80% of the then total outstanding shares of the Company, and a change in control of the Company.




21



MOREGAIN PICTURES INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018

 


(1)

Summary of Accounting Policies, and Description of Business (Continued)


In connection with the Purchase Agreement, on July 20, 2015, Michael Friess, the Company’s Chief Executive Officer, President of the Company resigned from all of his executive positions with the Company, Mr. Friess resigned as a director of the company on the tenth day after the mailing of the information statement on schedule 14f-1 to the shareholders of the Company. Sanford Schwartz, the Company’s Chief Financial Officer, Secretary, Treasurer, and member of the Board resigned from all of his positions with the Company on July 20, 2015.


Also effective on July 20, 2015, Ningdi Chen was appointed as the Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary and Director of the Board.


On May 20, 2016, the Board of Directors of Aladdin International Inc. (“Company”) accepted the resignation of Mr. Kai Ming Zhao as the Chief Executive Officer, Chief Financial Officer, President, Secretary, and Treasurer of the Company, effective immediately after the election of Mr. Qinghua Chen to the Board of Directors as described below and the filing of this Form 8-K. Mr. Zhou’s resignation as an officer does not result from any disagreement with the Company, its management, or the Board of Directors, on any matter relating to the Company’s operations, policies or practices.


On March 20, 2018, the Company entered into certain consulting agreement with Shilong Film Investment Inc. (“Shilong”), a California corporation that engages in film production investment in Hollywood, Hong Kong, ND China. Pursuant to the Agreement, Shilong agreed to provide the Company with strategy to promote growth, advisory service with respect to business development, marketing efforts to increase awareness for the Company’s corporate image. In considering for the services, the Company agreed to issue Shilong warrants to purchase an aggregate of 3,000,000 shares of the Company’s common stock, exercisable for five (5) years from the date of issuance at an exercise price of $0.15 per share.


On March 21, 2018, Billion Rewards Development Limited, a British Virgin Islands corporation, the then majority shareholder of the Company entered into a Securities Purchase Agreement with Moregain Capital Group, a Nevada Corporation, pursuant to which Moregain Capital Group LLC purchased from Billion Rewards Development Limited, an aggregate of 6,270,512 shares of Common Stock of the Company, which represent 87.33% of the issued and outstanding shares of Common Stock, for the purchase price of $180,000.


In connection with the Securities Purchase Agreements, on March 23, 2018, Mr. Qinghua Chen resigned from all office positions and director of the Company, effective immediately. Mr. Michael D. Antonovich was appointed as the Chairman of the Board, Lianne Hermann as the Chief Financial Officer and Sherwood Wu as an Independent Director of the Board, all effective on March 23, 2018.


On March 23, 2018, Board of Directors of the Registrant approved “2018 Performance Boost Stock Option Plan” in order to retain and recruit certain selected employees, consultants, and directors. In the same day, stock options to purchase a total of 2,000,000 shares of common stock were granted to certain employees, consultants, and directors exercisable at $0.15 per share, the closing price on March 22, 2018, following a 10-year vesting schedule starting 12-months from the commencement date of March 23, 2018.


On March 23, 2018, the Board and the majority shareholder of the Company approved the name change to “Moregain Pictures, Inc.” in connection with the Company’s focus in developing motion picture, entertainment and media business. The name change took effect on September 18, 2018.


On May 15, 2018, Ms. Lianne Herrmann tendered her resignation as Chief Financial Officer and Treasurer of the Company, effective immediately. On May 18, 2018, the Board of Directors of the Company appointed Richard Pao as the Chief Financial Officer and Treasurer, and Jesse Weiner as General Counsel, effective immediately.




22



MOREGAIN PICTURES INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018

 


(1)

Summary of Accounting Policies, and Description of Business (Continued)


(b) Stock-Based Compensation


The Company records stock-based compensation in accordance with FASB ASC Topic 718, "Compensation – Stock Compensation." FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee's requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 505-50, "Equity-Based Payments to Non-Employees", which requires that such equity instruments are recorded at their fair value on the measurement date, with the measurement of such compensation being subject to periodic adjustment as the underlying equity instruments vest.


(c) Use of Estimates in the Preparation of Financial Statements


The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


(d) Per Share Information


Earnings (loss) per share of common stock is computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is not shown for periods in which the Company incurs a loss because it would be anti-dilutive.


(e) Basis of Presentation - Going Concern


The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company has no business operations and has recurring losses, which raise substantial doubt about its ability to continue as a going concern.


In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations. The financial statements do not include any adjustments relative to the recoverability of assets and classification of liabilities that might be necessary should the company be able to continue as a going concern. The Company has financed its operations primarily through the sale of stock and advances from related parties. There is no assurance there will be future sales of stock or that these advances will continue in the future.


Management has opted to commence filing with the Securities and Exchange Commission (SEC) and then to seek a business combination. Management believes that this plan provides an opportunity for the Company to continue as a going concern.


 (f) Recent Accounting Pronouncements


There were various accounting standards and interpretations issued during 2018 and 2017, none of which are expected to a have a material impact on the Company’s financial position, operations or cash flows.


(g) Risks and Uncertainties


The Company is subject to substantial business risks and uncertainties inherent in starting a new business. There is no assurance that the Company will be able to complete a business combination.




23



MOREGAIN PICTURES INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018

 


(1)

Summary of Accounting Policies, and Description of Business (Continued)


(h) Cash and Cash Equivalents


The Company considers cash and cash equivalents to consist of cash on hand and demand deposits in banks with an initial maturity of 90 days or less.


(i) Furniture and equipment


Furniture and equipment are stated at cost and are depreciated over the assets’ estimated useful lives ranging from three to seven years using the straight-line method of depreciation as follows:


Furniture

7 years

Equipment

3 - 5 years


Depreciation expense totaled $554 for the both years ended June 30, 2018 and 2017, respectively. Repairs and maintenance are charged to expense as incurred and expenditures for additions and improvements are capitalized.


(j) Fair Value of Financial Instruments


Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ASC Subtopic 825-10 ("ASC 825-10"), "Disclosures About Fair Value of Financial Instruments." ASC 825-10 requires disclosure of fair value information about financial instruments when it is practicable to estimate that value. The carrying amount of the Company's cash, cash equivalents, accounts payable, and related party notes payable approximate their estimated fair values due to their short-term maturities.


(j) Income Taxes


The Company records deferred taxes in accordance with Statement of Financial Accounting Standards (SFAS) ASC 740, "Accounting for Income Taxes." The statement requires recognition of deferred tax assets and liabilities for temporary differences between the tax bases of assets and liabilities and the amounts at which they are carried in the financial statements, the effect of net operating losses, based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.


(k) Concentrations


Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At June 30, 2018 and June 30, 2017, the Company had no amounts of cash or cash equivalents in financial institutions in excess of amounts insured by agencies of the U.S. Government.


(l) Reclassification


Certain amounts previously reported have been reclassified to conform to current presentation.


(m) Related Party Debt - Convertible Note


The Company occasionally obtains financing from related parties in the form of notes payable which are convertible into shares of the Company’s common stock. The Company accounts for convertible notes and debt issuance costs associated with convertible notes following the guidance set forth in ASC 470-20, Debt with Conversion and Other Options; ASC 480, Distinguishing Liabilities from Equity; ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity; EITF 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock; and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs.




24



MOREGAIN PICTURES INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018

 


(1)

Summary of Accounting Policies, and Description of Business (Continued)


The terms of such convertible notes payable are analyzed by management to determine their accounting treatment, including determining whether conversion features are required to be bifurcated and treated as a discount, allocation of fair value of the issuance to the debt instrument and any beneficial conversion features, and the applicable classification of the convertible notes payable as debt, equity or mezzanine temporary equity.


The intrinsic value of the embedded conversion feature of related party convertible notes payable are included in the discount to notes payable, which is accreted to interest expense over the expected term of the note using the effective interest method. The Company’s management also estimates the total fair value of any beneficial conversion feature in allocating debt proceeds. The proceeds allocated to the beneficial conversion feature are determined by taking the estimated fair value of shares issuable under the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of the Company’s common stock as of the date of issuance.


(n) Related Party Debt – Non-Convertible Note


The Company occasionally obtains financing from related parties in the form of notes payable. The Company accounts for such notes following the guidance set forth in ASC 470, Debt, and ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) simplifying the Presentation of Debt Issuance Costs.


(o) Operating Leases


The Company accounts for operating leases in accordance with ASC 840, Leases, SFAS No. 13, Accounting for Leases, and Financial Accounting Standards Board (FASB) Technical Bulletin 881, Issues Relating to Accounting for Leases. Accordingly, rent expense under operating leases for the Company’s administrative office is recognized on a straight-line basis over the original term of each lease, inclusive of predetermined rent escalations or modifications.


(2)

Income Taxes


Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company’s deferred tax assets consist entirely of the benefit from net operating loss (NOL) carry forwards. The net operating loss carry forward if not used, will expire in various years through 2037, and is severely restricted as per the Internal Revenue code due to the change in ownership. The Company’s deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net operating loss carry forwards. Net operating loss carry forwards may be further limited by other provisions of the tax laws. With few exceptions, our income tax returns are no longer subject to Federal tax examinations by tax authorities for years before June 30, 2014.


The Company’s estimated deferred tax assets, valuation allowance, and change in valuation allowance are as follows:


Year Ending

 

Estimated NOL Carry-forward

 

NOL Expires

 

Estimated Tax Benefit from NOL

 

Valuation Allowance

 

Change in Valuation Allowance

 

Net Tax Benefit

June 30, 2018

 

$623,679

 

Various

 

$130,973

 

$130,973

 

$33,185

 

June 30, 2017

 

$528,585

 

Various

 

$  97,788

 

$  97,788

 

$11,997

 


Income taxes at the statutory rate are reconciled to the Company’s actual income taxes as follows:


 

2018

 

2017

Income tax benefit at statutory rate resulting from net operating loss carry-forward

(21.0)%

 

(34)%

State tax (benefit) net of Federal benefit

(3.5)%

 

(3.5)%

Deferred income tax valuation allowance

24.5%

 

37.5%

Actual tax rate

 



25



MOREGAIN PICTURES INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018

 


(3)

Related Party Transactions


Currently, the Company uses the offices of its President for its minimal office facility needs for no consideration. No provision for these costs has been provided since it has been determined that they are immaterial.


On October 23, 2015, the Company and Billion Rewards Development (Billion Rewards), a British Virgin Island corporation whose beneficial owner is Mr. Shi Jianxiang, entered into a Loan Agreement (“October Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $200,000 (the “October Loan”) to the Company with an original maturity date of April 30, 2017 extended to January 31, 2017 and bearing no interest. Under the October Loan Agreement, if the Company conducted an offering for a total amount of $2,000,000 (the “Offering”) on or before February 28, 2017, the October Loan would be automatically converted into shares of common stock, par value $.001 per share of the Company at the conversion price equal to the purchase price in the Offering. In addition, pursuant to the October Loan Agreement, Billion Rewards would be entitled to convert any portion or all of the October Loan into shares of Common Stock of the Company, at the conversion price of volume weighted average price of the Common Stock as reported by Bloomberg for twenty trading days prior to such conversion. The Company has estimated the intrinsic value of this embedded conversion feature and recorded it as a discount to related party convertible debt of $8,059 and amortized it fully as of June 30, 2017. On November 5, 2015 the Company received the October Loan in the amount of $200,000. On May 5, 2017 the Company and Billion Rewards entered into an amendment agreement (“Amendment No 1 to October Loan Agreement”), whereby Billion Rewards agreed to modify and amend the October Loan to make it nonconvertible and to extend the due date from April 30, 2017 to January 31, 2017 and bearing no interest.


On January 7, 2016 the Company and Billion Rewards entered into a loan agreement (“January Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $100,000 (the “January Loan”) to the Company with the maturity date of January 31, 2017 and bearing no interest.


On May 19, 2016 the Company and Billion Rewards entered into a loan agreement (“June Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $43,840 (the “June Loan”) to the Company with the maturity date of April 30, 2017 and bearing no interest.


The Company occasionally incurs expenses that are paid by related parties. Otherwise, the expenses paid by the related parties were reimbursed in time. Qinghua Chen paid for various company expenses of $4,549 and was reimbursed for all expenses. Thus nothing payable was due to Mr. Chen as of June 30, 2018. As of June 30, 2018, there is no payable due to related parties.


On June 3, 2017, Billion Rewards and the Company entered in a Debt Conversion Agreement (the "Agreement") pursuant to which Billion Rewards converted certain outstanding promissory notes (the "Notes") in the aggregate principal amount of $343,840 into shares of the Company’s Common Stock. The conversion price of the Notes was $0.131 per share and the market price was $0.201 per share, resulting in a $185,145 discount, which was recorded as loss on extinguishment of debt in the statement of operations. In accordance with the terms of the Agreement, the Notes were converted into 2,631,764 shares of Common Stock and the Notes were cancelled. As a result of such conversion and issuance of Common Stock, the Company’s issued and outstanding Common Stock totaled 7,180,199 shares as of June 3, 2017. Billion Rewards beneficially owns 6,270,512 shares of Common Stock, which represents 87.3% of the total outstanding shares of the Company’s Common Stock as of June 30, 2018.


Currently, the Company uses the office of Moregain Capital Group, its major shareholder for its minimal office facility needs for no consideration. No provision for these costs has been provided since it has been determined that they are immaterial.






26



MOREGAIN PICTURES INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 2018

 


(4)

Commitments and Contingencies


Operating Lease


The Company entered into a non-cancelable operating sub-lease for office space on December 22, 2015 for a term that expires August 18, 2017 and paid $116,523 to the landlord of which $63,558 was a security deposit and $52,965 for five months prepaid rent of which all has been expensed as of June 30, 2017. Total rent expensed for the years ended June 30, 2018 and 2017 was $0 and $8,957, respectively. The sub-lease was for an 18-month period and commenced on February 7, 2017. On January 24, 2017, the Company has terminated the lease and in March 2017 received $59,905 as a partial return of the security deposit.


(5)

Warrants


The warrants issued by the Company are classified as equity. The fair value of the warrants was recorded as additional-paid-in-capital, and no further adjustments are made.

 

For stock warrants paid in consideration of services rendered by non-employees, the Company recognizes consulting expense in accordance with the requirements of FASB ASC 505-50, Equity-Based Payments to Non-Employees.


On March 20, 2018, the Company entered into a one-year consulting agreement with Shilong Film Investment, Inc. for business development and marketing services to the Company (the (former) General Counsel (now CEO) of Moregain Capital Group is married to the President of Shilong Film Investment, Inc.). In consideration for the services, the Company agreed to issue warrants to purchase an aggregate of 3,000,000 shares of Company’s common stock, exercisable for five years from the date of issuance at an exercise price of $0.15 per share (the “Warrants”). The Company classified the Warrants as equity. Using the Black-Scholes-Merton pricing model, the Company determined the aggregate value of the Warrants to be approximately $600,000. This amount will be recognized over the one-year term of the consulting agreement. The warrants have a cashless exercise feature. For the quarter ended June 30, 2018, the Company recognized approximately $166,000 in marketing expenses as a result of the consulting agreement.


 

 

2018

 

Risk-Free Interest Rate

 

 

2.69

%

Expected Life (years)

 

 

5

 

Expected Volatility

 

 

467

%

Expected Dividend Yield

 

 

0

%


A summary of the Company’s warrant activity and related information for the nine months ended June 30, 2018 are shown below:

 

 

 

Warrants

 

 

Weighted
Average
Exercise Price

 

Outstanding, July 1, 2017

 

 

 

 

$

 

Issued

 

 

3,000,000

 

 

 

0.15

 

Expired

 

 

 

 

 

 

Outstanding, June 30, 2018

 

 

3,000,000

 

 

 

0.15

 

Exercisable, June 30, 2018

 

 

3,000,000

 

 

$

0.15

 


(6)

Note Payable


On January 10, 2018 the Company entered into a loan agreement with Michael Wu, an unaffiliated third party, whereby Michael Wu agreed to provide an unsecured loan in the amount of $70,000 (the “January 10th Loan”) to the Company with the maturity date of June 30, 2018 and bearing no interest. The loan was extended to December 31, 2018.





27



 


ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

None.

 

ITEM 9A.

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures


Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.


In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2018.


Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.


Changes in Internal Controls over Financial Reporting


As of June 30, 2018, there have been no changes in the internal controls over financial reporting, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Management’s Report on Internal Control over Financial Reporting


Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of June 30, 2018, using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control – 2013 Integrated Framework as a basis for our assessment.


Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.




28



 


A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified the following material weaknesses in our internal control over financial reporting. (1) The Company has inadequate staffing and supervision within the bookkeeping and accounting operations of our company. The relatively small number of employees who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. (3) The Company has a limited corporate governance structure. Our corporate governance responsibilities are performed by the Board of Directors, none of whom are independent under applicable standards: we do not have an audit committee or compensation committee. Because our Board of Directors only meets periodically throughout the year, some of our corporate governance functions are not performed concurrent (or timely) with the underlying transactions including evaluation of the application of accounting principles and disclosures relating to those transactions. (4) Certain internal controls were not fully operating and effective in a manner to effectively support the requirements of the financial reporting and period-end close process, (5) Due to the limited personnel in the management of the Company after the change of control, the internal controls were ineffective.  Principally, this related to the controls and procedures surrounding the consistent completion, review and approval of key balance sheet account analyses and reconciliations. Material errors were corrected in the preparation of the financial statements for the year ended June 30, 2018. It is reasonably possible that, if not remediated, these control deficiencies could result in a material misstatement of the Company's financial statements in a future annual or interim period. Management is aware of these issues and is planning to implement more stringent controls in the future.


As we are not aware of any instance in which the company failed to identify or resolve a disclosure matter or failed to perform a timely and effective review, we determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our resources at this time and not in the interest of shareholders.


Because of the above condition, the Company’s internal controls over financial reporting were not effective as of June 30, 2018.


This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.


ITEM 9B.

OTHER INFORMATION.


None.




29



 


PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

The name, age and title of our executive officer and director is as follows:


Name and Address of Executive Officer and/or Director

 

Age

 

Position

Jesse Weiner

 

46

 

Chairman and CEO, President, Secretary, and Director


Jesse Weiner was appointed director and Chief Executive Officer and Secretary on May 15, 2018 and effective September 20, 2018, Interim Chief Financial Officer and Treasurer of the Company. Mr. Weiner graduated from Emory University in 1994 and received his law degree from George Washington University in 2009. He then worked in China on corporate and intellectual property matters as an associate at the Yingke Law Firm from November of 2013 up until joining the Company, as well the international law firm of Hogan Lovells from July 2013 to November 2013. His deep knowledge and experience in structuring large-scale entertainment, media, and financial/loan facility transactions provides the basis for his qualifications as a director.


Term of Office


A Director is appointed to hold office until the next annual meeting of our stockholders or until a successor is elected and qualified, or until resignation or removal in accordance with the provisions of the Company by-laws or Nevada corporate law. An Officer is appointed by our Board of Directors and holds office until removed by the Board. The Board of Directors has no nominating, auditing or compensation committees.


No officer or director of the Company has been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring, suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities. No officer or director of the Company has been convicted in any criminal proceeding (excluding traffic violations) nor are they the subject of any currently pending criminal proceeding.


Committees of the Board of Directors


We do not have a standing nominating, compensation or audit committee. Rather, our full Board of Directors performs the functions of these committees. We do not believe it is necessary for our Board of Directors to appoint such committees because the volume of matters that come before our Board of Directors for consideration permits the directors to give sufficient time and attention to such matters to be involved in all decision making. Additionally, because our Common Stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees. Our Board of Directors, which performs the functions of an audit committee, does not have a member who would qualify as an “audit committee financial expert” within the definition of Item 407(d)(5)(ii) of Regulation S-K.


The Board does not have a nominating committee because the Board does not believe that a defined policy with regard to the consideration of candidates recommended by shareholders is necessary at this time because it believes that, given the limited scope of the Company’s operations, a specific nominating policy would be premature and of little assistance until the Company’s business operations are at a more advanced level. There are no specific, minimum qualifications that the Board believes must be met by a candidate recommended by the Board. Currently, the entire Board decides on nominees, on the recommendation of any member of the Board, followed by the Board's review of the candidates’ resumes and interviews of candidates. Based on the information gathered, the Board then makes a decision on whether to recommend the candidates as nominees for director. The Company does not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominees.


The Board does not have a compensation committee and is not required to have such a committee because the Company is not a “listed company” under SEC rules. The Company is currently a shell company with nominal assets, no employees and no active business operations. Its business plans are to seek a private operating company with which to merge or to complete a business combination in a reverse merger transaction. As such, the Company has no formal compensation program for its executive officers, directors or employees.




30



 


Director Independence


The Board has determined that the current director of the Company is an “independent” director. The Company is not a "listed company" under SEC rules and is therefore not required to have independent directors.


Shareholder Communications


There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. The Board does not believe that a defined policy with regard to the consideration of candidates recommended by stockholders is necessary at this time because it believes that, given the limited scope of the Company’s operations, a specific nominating policy would be premature and of little assistance until the Company’s business operations are at a more advanced level. There are no specific, minimum qualifications that the Board believes must be met by a candidate recommended by the Board. Currently, the entire Board decides on nominees, on the recommendation of any member of the Board followed by the Board’s review of the candidates’ resumes and interview of candidates. Based on the information gathered, the Board then makes a decision on whether to recommend the candidates as nominees for director. The Company does not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominee.


The Company does not have any restrictions on shareholder nominations under its articles of incorporation or by-laws. The only restrictions are those applicable generally under Nevada corporate law and the federal proxy rules, to the extent such rules are or become applicable. The Board will consider suggestions from individual shareholders, subject to evaluation of the person's merits. Stockholders may communicate nominee suggestions directly to the Board, accompanied by biographical details and a statement of support for the nominees. The suggested nominee must also provide a statement of consent to being considered for nomination. There are no formal criteria for nominees.


Changes in Nominating Process

 

There are no material changes to the procedures by which security holders may recommend nominees to our Board.


Legal Proceedings


To the Company’s knowledge, there are no material proceedings to which any current officer or director of the Company is a party adverse to the Company or has a material interest adverse to the Company.


Code of Ethics


 The Company has not as yet adopted a code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions as required by the Sarbanes-Oxley Act of 2002 due to our small size and limited resources and because management's attention has been focused on matters pertaining to the operation of the business.


Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% percent of our equity securities ("Reporting Persons") to file reports of ownership and changes in ownership with the SEC. Based solely on our review of copies of such reports and representations from the Reporting Persons, we believe that during the fiscal year ended December 31, 2017, the Reporting Persons timely filed all such reports.




31



 


ITEM 11.

EXECUTIVE COMPENSATION.


Executive Compensation


The following table provides certain information regarding compensation awarded to, earned by or paid to persons serving as our Chief Executive Officer during fiscal 2017 and 2016. No other officer had compensation exceeding $100,000 ("named executive officer").


Summary Compensation Table


 

 

Year

 

 

Salary($)

 

 

Stock
Awards

 

 

All other
Compensation

 

 

Total
Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jesse Weiner (1)

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

President, CEO, Secretary, Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael Antonovich (2)

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman and CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Qinghua Chen (3)

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman and CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

———————

(1)

On June 21, 2018, Mr. Weiner has served as the Company’s Chairman and CEO .

(2)

Mr. Antonovich served as the Company’s Chairman and CEO from March 23, 2018 until his resignation on June 17, 2018

(3)

Mr. Chen served as the Company’s Chairman and CEO from May 20, 2016 until his resignation on March 23, 2018.


ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.


The following table lists, as of October 12, 2018, the number of shares of common stock beneficially owned by (i) each person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each of our named executive officers and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder's address is c/o Moregain Pictures, Inc., 117 E. Huntington Drive, Arcadia, California 91006

 

 

 

Office

 

Shares
Beneficially
Owned(

 

Percent
of

Class(1)

 

 

 

 

 

 

 

 

 

Officers and Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jesse Weiner

 

CEO, Interim Chief Financial Officer and Secretary

 

 

 

0

 

 

 

0

%

All officers and directors as a group (one person)

 

 

 

 

 

 

0

 

 

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

5% Securities Holders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moregain Capital Group LLC(2)

117 E. Huntington Dr., Arcadia, CA 91006

 

 

 

 

 

 

6,270,512

 

 

 

87.3

%

———————

(1)

Based on 7,180,199 shares of the Company’s Common Stock issued and outstanding on October 12, 2018.

(2)

Yuming Xuan, President of Sunland Entertainment LLC has sole voting and dispositive power over shares held by Moregain Capital Group, Inc.




32



 


Change-in-Control Agreements

 

The Company does not have any change-in-control agreements with its executive officer.


ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

On October 23, 2015, the Company and Billion Rewards entered into a Loan Agreement (“October Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $200,000 (the “October Loan”) to the Company with an original maturity date of April 30, 2017 extended to January 31, 2017 and bearing no interest. Under the October Loan Agreement, if the Company conducted an offering for a total amount of $2,000,000 (the “Offering”) on or before February 28, 2017, the October Loan would be automatically converted into shares of common stock, par value $.001 per share of the Company at the conversion price equal to the purchase price in the Offering. On November 5, 2015 the Company received the October Loan in the amount of $200,000. On May 5, 2017, the Company and Billion Rewards modified and amended the October Loan to make it nonconvertible and to extend the due date from April 30, 2017 to January 31. The loan was converted to the Company’s Common Stock on June 3, 2017.


On January 7, 2017 the Company and Billion Rewards entered into a loan agreement (“January Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $100,000 (the “January Loan”) to the Company with the maturity date of January 31, 2017 and bearing no interest. On January 12, 2017 the Company received the January Loan in the amount of $100,000. The loan was converted to the Company’s Common Stock on June 3, 2017.


On May 19, 2017 the Company and Billion Rewards entered into a loan agreement (“June Loan Agreement”), whereby Billion Rewards agreed to provide a loan in the amount of $43,840 (the “June Loan”) to the Company with the maturity date of April 30, 2017 and bearing no interest. On June 9, 2017 the Company received the June Loan in the amount of $43,840. The loan was converted to the Company’s Common Stock on June 3, 2017.


Jesse Weiner is also the Chairman and CEO of majority shareholder Moregain Capital Group, Inc.


ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

Audit Fees


The aggregate fees billed during the fiscal years ended June 30, 2018 and 2017 for professional services rendered by our principal accountant, Schumacher & Associates, Inc., for the audit of our annual financial statements and quarterly reviews were $9,600 and $18,545, respectively, and for the fiscal year ended June 30, 2018, MaloneBailey LLP and TAAD LLP reviewed our quarterly financial statement reviews, for which they were paid $11,000 and $13,000, respectively.


Audit Related Fees


The Company incurred no fees for the fiscal years ended June 30, 2018 and 2017 for audit related services by our principal accountant that were reasonably related to the performance of the audit or review of our financial statements, and not reported under Audit Fees above.


Tax Service Fees


The Company incurred $- and $1,630 for the fiscal years ended June 30, 2018 and 2017 respectively for professional services rendered by our principal accountant for tax preparation.


All Other Fees


The Company did not incur any fees for other professional services rendered by our principal accountant during the fiscal years ended June 30, 2018 and 2017.


Administration of the Engagement; Pre-Approval of Audit and Permissible Non-Audit Services

 

We have not yet established an audit committee. Until then, there are no formal pre-approval policies and procedures. Nonetheless, the auditors engaged for these services are required to provide and uphold estimates for the cost of services to be rendered.



33



 


PART IV

 

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

The following exhibits are included with this registration statement:

 

Exhibit

 

 

 

Incorporated by Reference

 

Filed

Number

   

Description

 

Form

 

Exhibit

 

Date Filed

 

Herewith

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Articles of Incorporation of Aladdin International, Inc.

 

10-12G

 

3.1

 

10/27/2014

 

 

3.2

 

Bylaws of Aladdin International, Inc.

 

10-12G

 

3.2

 

10/27/2014

 

 

10.1

 

Consulting Agreement dated March 20, 2018 by and between Shilong Film Investment, Inc., and Aladdin International, Inc.

 

8-K

 

10.1

 

3/22/2018

 

 

10.2

 

Warrant Agreement dated March 20, 2018 by and between Shilong Film Investment, Inc., and Aladdin International, Inc.

 

8-K

 

10.2

 

3/22/2018

 

 

10.3

 

Securities Purchase Agreement dated March 21, 2018 by and between Billion Rewards Development Limited and Moregain Capital Group, LLC

 

8-K

 

10.1

 

3/27/2018

 

 

10.4

 

Performance Boost Stock Option Plan

 

8-K

 

10.2

 

3/27/2018

 

 

10.5

 

Loan Extension Agreement

 

 

 

 

 

 

 

X

16.1

 

Auditor Letter

 

8-K

 

16.1

 

11/9/2017

 

 

16.2

 

Auditor Letter

 

8-K

 

16.1

 

9/10/2018

 

 

31.1

 

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

X

32.1

 

Certification of Chief Executive Officer and Chief Financial Officer pursuant Section 906 Certifications under Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

X

101

 

Interactive data files pursuant to Rule 405 of Regulation S-T

 

 

 

 

 

 

 

X




34



 


SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

MOREGAIN PICTURES, INC..

 

By

/s/ Jesse Weiner

 

 

Jesse Weiner

 

 

Chief Executive Officer, President, Interim Chief Financial Officer, Secretary and a Director

 

 

(Principal Executive Officer and Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

Date:

 October 16, 2018

 


Signature

 

Title

 

Date

 

 

 

 

 

                                            

    

 

    

                                            

/s/ Jesse Weiner

 

Chief Executive Officer, Interim Chief Financial Officer, Secretary and a Director (Principal Executive Officer and Principal Financial and Accounting Officer)

 

October 16, 2018

Jesse Weiner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




35