UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. employer | |
| incorporation or formation) | Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: +
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of December 8, 2023, there were shares of Common Stock, $0.001 par value per share, outstanding.
PART I – FINANCIAL INFORMATION
BRILLIANT N.E.V. CORP.
INDEX TO FINANCIAL STATEMENTS
| Page
Number | |
| BALANCE SHEETS | F-1 |
| STATEMENTS OF OPERATIONS | F-2 |
| STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT | F-3 |
| STATEMENT OF CASH FLOWS | F-4 |
| NOTES TO THE FINANCIAL STATEMENTS | F-5 to F-9 |
-1-
Item 1. Financial Statements
BRILLIANT N.E.V. CORP.
BALANCE SHEETS
| ASSETS | October 31, 2023 | July 31, 2023 | ||||||
| (Audited) | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | $ | ||||||
| Advances - related party | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common Stock, par value, authorized shares, shares issued and outstanding as of October 31, 2023 and July 31, 2023 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income (loss) | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
See accompanying notes to the financial statements.
F-1
BRILLIANT N.E.V CORP.
STATEMENTS OF OPERATIONS
| For the three months ended Oct 31, | ||||||||
| 2023 | 2022 (Consolidated) | |||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit (loss) | ||||||||
| EXPENSES | ||||||||
| Professional fees | ||||||||
| General and administrative Expenses | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ||||
| LOSS FROM DISCONTINUED OPERATIONS | ( | ) | ||||||
| Net loss before tax | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| OTHER COMPREHENSIVE ITEM | ||||||||
| Foreign currency translation gain (loss) | ||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS - BASIC & DILUTED | $ | ) | $ | ) | ||||
| NET LOSS PER COMMON SHARE FROM DISCONTINUED OPERATIONS - BASIC & DILUTED | $ | ) | $ | ) | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED | ||||||||
See accompanying notes to the financial statements.
F-2
BRILLIANT N.E.V CORP.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
For the three months ended October 31, 2023 and 2022
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Income(Loss) | Deficit | TOTAL | |||||||||||||||||||
| Balance, July 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Net Loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance, October 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
(Consolidated) | ||||||||||||||||||||||||
| Balance, July 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Currency translation | — | |||||||||||||||||||||||
| Net loss – discontinued operations | — | ( | ) | ( | ) | |||||||||||||||||||
| Net loss – continuing operations | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance, October 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
See accompanying notes to the financial statements.
F-3
BRILLIANT N.E.V CORP.
STATEMENTS OF CASH FLOWS
| For the three months ended Oct 31, | ||||||||
| 2023 | 2022 | |||||||
| OPERATING ACTIVITIES | (Consolidated) | |||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinued operations | ( | ) | ||||||
| Adjustments to reconcile net cash used in operating activities: | ||||||||
| Right-of-use/lease liability adjustments | ||||||||
| Decrease in assets: | ||||||||
| Change in prepaid expenses | ||||||||
| Increase in liabilities: | ||||||||
| Accounts payable | ||||||||
| Increase in discontinued operations | ||||||||
| Net cash provided (used) in continuing operation activities | ( | ) | ( | ) | ||||
| Net cash provided (used) in discontinued operation activities | ( | ) | ||||||
| FINANCING ACTIVITIES: | ||||||||
| Advances (debt adjustment)from related party - continuing operation | ||||||||
| Advances from related party - discontinued operation | ||||||||
| Total Net Cash Provided (used) by Financing Activities | ||||||||
| EFFECT OF EXCHANGE RATE CHANGE ON CASH | ( | ) | ||||||
| NET INCREASE (DECREASE) IN CASH | ( | ) | ||||||
| CASH AT BEGINNING OF YEAR | ||||||||
| CASH AT END OF THE PERIOD | ||||||||
| CASH AT END OF THE PERIOD – CONTINNUING OPERATIONS | ||||||||
| CASH AT END OF THE PERIOD – DISCONTINUED OPERATIONS | $ | $ | ||||||
| Supplemental Cash flow Information: | ||||||||
| Interest Paid | $ | $ | ||||||
| Taxes Paid | $ | $ | ||||||
| Supplemental Disclosure of Non Cash Lease Activity: | ||||||||
| Recognition of Right of use asset | $ | $ | ||||||
| Recognition of Lease liability | $ | $ | ||||||
See accompanying notes to the financial statements.
F-4
BRILLIANT N.E.V CORP.
NOTES TO THE FINANCIAL STATEMENTS
JULY 31, 2023
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Brilliant N.E.V. Corp. (“Company”) was incorporated on March 22, 2016 under the laws of the State of Nevada, USA. The Company initially was formed for the purpose of producing and selling handcrafted soaps. Except where content requires, the Company includes its subsidiaries.
Brilliant N.E.V. Corp. registered a wholly foreign-owned entity in Shanghai, China on April 13, 2020 named Shanghai Clancy Enterprise Management Co., Ltd. (Shanghai Clancy). Shanghai Clancy registered a wholly-owned subsidiary in Beijing on April 24, 2020. Its name is Beijing Clancy Information Technology Co., Ltd. (Beijing Clancy). The main business scope is technology development, transfer, consultation, services and promotion.
From August 1, 2020 to April 30, 2021, the Company business centered on providing IT services to a small number of clients. Beginning in May 2021, the Company terminated its IT services and re-focused its business operations to providing business consulting services to small and median sized businesses. Management believes their prior business experience will enable them to assist small and medium sized companies improve their operating efficiencies. The Company will charge its clients based on their performance. Management believes the new business model will reduce internal overhead costs and potentially provide a larger market for its services.
In June 2023, the Company’s former major shareholder and sole director Mr. Xiangying Meng and other shareholders, entered into a stock purchase agreement (SPA) with Mr. Guangzhe Su. Pursuant to the SPA, Mr. Guangzhe Su became the major shareholder and the Company’s CEO. Due to the ownership change and pursuant to the SPA, the Company ceased the operations of its China subsidiaries.
On July 28, 2023, the Company changed its name from Clancy Corp. to Brilliant N.E.V. Corp. The Company amended its Articles of Incorporation with the Nevada Secretary of State to effect the name change. It also has filed an Issuer Company-Related Action Notification Form with FINRA to reflect the name change and applied for a new stock symbol.
In October 2023, the Company, Shanghai Clancy, and Hongshan Yuanda Limited (a company owned by Mr. Meng, the current Chief Financial Officer of the Company) entered an agreement to assign, transfer and convey all of its rights, titles and interest in and to Shanghai Clancy, along with its ownership of Beijing Clancy (including all assets and liabilities of both companies), to Hongshan Yuanda Limited. The effective date of this transfer is June 30, 2023. As of the date of transfer, Shanghai Clancy had no operations and no assets and all liabilities were assigned to the transferee.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended October 31, 2023, the Company incurred loss, an accumulated deficit and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Covid-19 pandemic presents novel challenges and a chaotic business environment globally. The duration and intensity of the impact of the Covid-19 to business entities differ geographically. Covid-19 has a limited impact on the Company’s activities The impact on the Company’s result of operation and the financial statements was immaterial as of October 31, 2023.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION.
The accompanying unaudited condensed financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the balance sheet as of July 31, 2023, which has been derived from audited financial statements, and these unaudited condensed financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended October 31, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year ending July 31, 2024 or for any future period.
F-5
These unaudited condensed financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended July 31, 2023.
Fiscal year end
The Company’s year end is July 31st.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and highly liquid investments with original maturities of three months or less. Because of short maturity of these investments, the carrying amounts approximate their fair values.
Concentration of Credit Risk
The Company is exposed to credit risk in the normal course of business, primarily related to cash and cash equivalents. The cash is deposited in the institution insured by the Federal Deposit Insurance Corporation (FDIC). The Company has not experienced any losses in such accounts.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the balance sheets. Finance leases are included in finance lease ROU assets and finance lease liabilities in the balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities recognized at October 31, 2023 and July 31, 2023 based on the present value of lease payments over the lease term discounted using the rate implicit in the lease. In cases where the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The Company has elected not to recognize operating lease ROU assets and liabilities arising from short-term leases.
F-6
Reporting Currency and Translation
The financial statements of the Company’s foreign subsidiaries are measured using the local currency, Renminbi (“RMB”), as the functional currency; whereas the functional currency of Brilliant N.E.V. Corp. and reporting currency of the Company is the United States dollar (“USD” or “$”).
The Company has discontinued operations in China where the local currency of RMB was used to prepare the financial statements which were translated into the Company’s reporting currency, U.S. dollars. The local currency of RMB is the functional currency for the discontinued operations outside the United States. Changes in the exchange rates between this currency and the Company’s reporting currency, are partially responsible for some of the periodic changes in the financial statements. Assets and liabilities of the Company’s foreign operations are translated into U.S. dollars at the spot rate in effect at the applicable reporting date. Revenues and expenses of the Company’s foreign discontinued operations are translated at the average exchange rate during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in stockholders’ deficit. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in general and administrative expense in the period in which they occur. For the three months ended October 31, 2023 and 2022 there were no realized or unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entities.
The exchange rates used to translate amounts in RMB to USD for the purposes of preparing the financial statements were as follows:
| October 31, 2023 | October 31, 2022 | |||||||
| Period end USD: RMB exchange rate | N/A* | |||||||
| Average USD: RMB exchange rate | N/A* | |||||||
| * | The Company discontinued its operations in China in June 2023. |
Foreign Operations
All of the Company’s discontinued operations and assets are located in Beijing China. The Company may be adversely affected by possible political or economic events in this country. The effect of these factors cannot be accurately predicted.
The Company computes income (loss) per share in accordance with FASB ASC 260 “Earnings per Share”. Basic (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of October 31, 2023, and July 31, 2023, there were no potentially dilutive equity instruments issued or outstanding.
Comprehensive Income
The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220, “Comprehensive Income,” in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. The Company has one item of other comprehensive income, consisting of a foreign translation adjustment; however, the translation adjustment was immaterial for the three months ended October 31, 2023 and 2022.
Financial Instruments
The carrying value of the Company’s short-term financial instruments, such as accounts payable and advances, approximates their fair values because of their short maturities.
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Recently Adopted Accounting Pronouncements
As of October 31, 2023, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.
F-7
NOTE 4 – DISCONTINUED OPERATIONS
In June 2023, the Company’s former major shareholder and sole director Mr. Xiangying Meng along with other shareholders, entered into a stock purchase agreement (SPA) with Mr. Guangzhe Su. Pursuant to the SPA, Mr. Guangzhe Su became the major shareholder and the Company’s CEO. Due to the ownership change and pursuant to the SPA, the Company ceased the operations of its China subsidiaries in June 2023.
The following table presents the components of discontinued operations in relation to the China subsidiaries reported in the statements of operations:
| Three Months Ended October 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Sales | ||||||||
| Operating costs and expenses | ||||||||
| Income (loss) from operations before other income and income taxes | ( | ) | ||||||
| Other income (loss) | ||||||||
| Income (loss) before income taxes, loss on equity investment, and non-controlling interest | ( | ) | ||||||
| Income tax | ||||||||
| Income (loss) from discontinued operations | ( | ) | ||||||
| Comprehensive income statement | ||||||||
| Net income (loss) from discontinued operations | ( | ) | ||||||
| Foreign currency translation gain | ||||||||
| Total comprehensive income (loss) from discontinued operations | ( | ) | ||||||
NOTE 5 – COMMITMENTS AND CONTINGENCIES
On October 19, 2017 the Company entered into a five-year rental agreement for a $540 monthly fee, starting on November 1, 2017. Leased Premise with the area of 74 square meters is located at 8 Stasinou Ave, Lefkosia 1060, Nicosia, Cyprus.
Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, the Company has capitalized the present value of the minimum lease payments commencing August 1, 2019, using an estimated incremental borrowing rate of 6%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.
Because
of the ownership change in June 2019, the Company did not use the premise anymore and no payments were made. But the Company adopted
ASC 842 accounting for leases and continued to accumulated lease liabilities up to the quarter ended July 31, 2023. Due to the ownership
change and pursuant to the SPA, the former major shareholder assumed the accumulated lease liabilities of $
On May 26, 2020, the Company entered into a three-year rental agreement for a 32,000 RMB per month. The office is located on the second floor of BYD 4S shop, No 56, Dongsihuan South Road, Chaoyang District, Beijing. In May 2020, the Company paid 480,000RMB ($67,306) including the first year rent of 384,000 RMB ($53,845) and three month rent of 96,000 RMB ($13,461) as the security deposit. In May 2021, the Company paid 384,000 RMB ($60,300) for the second year. In June 2022, the Company paid 384,000 RMB ($59,170) for the third and final year. Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, the Company has capitalized the present value of the minimum lease payments commencing August 1, 2019, using an estimated incremental borrowing rate of 6%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.
Total
lease expense under operating leases for the three months ended October 31, 2023 and 2022 were $
As
of October 31, 2023 and July 31, 2023, both leases ended and there were
F-8
NOTE 6 – RELATED PARTY TRANSACTIONS
The
Company’s former major shareholder and now Chief Financial Officer has been funding the Company for its operations on an as needed
basis. For the three months ended October 31, 2022, the Company received $
NOTE 7 - RESEARCH AND DEVELOPMENT EXPENSE
The
Company incurred significant expenses in research and development (R&D). For the three months ended October 31, 2023 and 2022, the
R&D expenses were $
NOTE 8 – GENERAL AND ADMINISTRATIVE EXPENSES (G&A)
The general and administrative expenses contain the following – continuing operations:
| For the three months ended Oct 31, | ||||||||
| Description | 2023 | 2022 | ||||||
| Payroll and payroll tax expenses | $ | |||||||
| Professional fees | ||||||||
| Lease expenses | ||||||||
| Other G&A | ||||||||
| Total | $ | $ | ||||||
The general and administrative expenses contain the following – discontinued operations:
| For the year ended July 31, | ||||||||
| Description | 2023 | 2022 | ||||||
| Payroll and payroll tax expenses | $ | |||||||
| Professional fees | ||||||||
| Lease expenses | ||||||||
| Other G&A | ||||||||
| Total | $ | $ | ||||||
NOTE 9 – INCOME TAXES
The Company utilizes the asset and liability method of accounting for income taxes in accordance with FASB ASC 740, “Income Taxes”. Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets also include the prior years’ net operating losses (“NOL”) carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled. The Company’s PRC subsidiaries file their income tax returns online with PRC tax authorities. The Company conducts all of its businesses through its subsidiaries and affiliated entities, principally in the PRC.
| (A) | United States (“US”) |
The
Company’s US parent company was incorporated in the US and is subject to U.S. income tax rate of 21% and files U.S. federal income
tax return. As of October 31, 2023, the US entity had net operating loss carry forwards for income tax purpose of $
F-9
| (B) | PRC |
The Company’s wholly owned Chinese subsidiary Shanghai Clancy is a wholly foreign-owned entity (“WFOE”). Shanghai Clancy had no business activity from inception through July 31, 2022. The Company’s second tier WOFE subsidiary, Beijing Clancy, is subject to the reduced PRC income tax rate as follows as per Caishui (2019) No. 13 issued by General Administration of Taxation, Ministry of Finance of PRC in January 2019: if the annual taxable income of small enterprises does not exceed RMB 1 million ($152,000), only 25% of such taxable income is required for paying the income tax at an income tax rate of 20% (equivalent to 5% of the total taxable income); if the annual taxable income of small enterprises is between RMB 1 million ($152,000) and RMB 3 million ($456,000), only 50% of such taxable income is required for paying the income tax at an income tax rate of 20% (equivalent to 10% of the total taxable income). This tax-reduced policy is effective for the period from January 1, 2019 through December 31, 2022. Beijing Clancy did not have taxable income for year ending July 31, 2023. Tax losses of the operating subsidiaries of the Company may be carried forward for five years in China.
Due to the discontinuation of the Chinese subsidiaries, the NOL does not have any impact to the Company as of October 31, 2023.
In
December 2020, the Company issued shares of common stock of the Company to five individuals including the Company’s
CEO, at $ per share. The Company received proceeds of $
NOTE 11 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date of filing the financial statements with the Securities and Exchange Commission, the date the financial statements were available to be issued. Management is not aware of any reportable events that occurred subsequent to the balance sheet date up to the date of filing this report.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain statements made in this quarterly report on Form 10-Q are “forward-looking statements” in regard to the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the registrant to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this quarterly report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the registrant or any other person that the objectives and plans of the registrant will be achieved.
Substantial risks exist with respect to an investment in the Company. These risks include but are not limited to, those factors discussed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023, filed with the Securities and Exchange Commission (“Commission”) on October 31, 2023. More broadly, these factors include, but are not limited to:
| ● | We have incurred significant losses and expect to incur future losses; | |
| ● | Our current financial condition and immediate need for capital; | |
| ● | Potential significant dilution resulting from the issuance of new securities for any funding, debt conversion or any business combination; and | |
| ● | We are a “penny stock” company. |
-2-
Description of Business
Brilliant N.E.V. Corp. (“The Company”) was incorporated on March 22, 2016 under the laws of the State of Nevada, USA. The Company initially was formed for the purpose of producing and selling handcrafted soaps.
On April 13, 2020, the Company registered Shanghai Clancy Enterprise Management Co., Ltd. (Shanghai Clancy) as a wholly foreign-owned entity and as a wholly owned subsidiary in Shanghai, China. Shanghai Clancy had no business activity from inception through June 30, 2023. On April 24, 2020, Shanghai Clancy registered Beijing Clancy Information Technology Co., Ltd. (Beijing Clancy) in Beijing as its wholly-owned subsidiary and a second tier subsidiary of the Company.
From August 1, 2020 to April 30, 2021, the Company business centered on providing IT services to a small number of clients. In May 2021, the Company ceased its IT services and re-focused its operations to provide marketing services to small and median sized businesses. Brilliant N.E.V. Corp. was a product marketing consulting firm that provides product marketing consulting services to clients. The Company developed marketing programs and strategies in line with customer needs. Our marketing programs was designed to provide clients with detailed analysis on the market data in their industry, including historical data. We also assisted clients expand their marketing communication channels including but not limited to advertisements in the business journals, electronical communication tools such as WeChat marketing programs, etc. We charge an agreed upon fee based on technical difficulties and the marketing reach of the programs. During the fourth quarter of fiscal 2022, we terminated this business.
In June 2023, the Company’s former major shareholder and sole director Mr. Xiangying Meng, entered into a stock purchase agreement (SPA) with Mr. Guangzhe Su. Pursuant to the SPA, Mr. Guangzhe Su became the major shareholder and the Company’s CEO. Due to the ownership change and pursuant to the SPA, the Company ceased the operations of its China subsidiaries.
On July 28, 2023, the Company changed its name from Clancy Corp. to Brilliant N.E.V. Corp. The Company amended its Articles of Incorporation with the Nevada Secretary of State to effect the name change. It also has filed an Issuer Company-Related Action Notification Form with FINRA to reflect the name change and applied for a new stock symbol.
In October 2023, the Company, Shanghai Clancy, and Hongshan Yuanda Limited (a company owned by Mr. Meng, the current Chief Financial Officer of the Company) entered an agreement to assign, transfer and convey all of its rights, titles and interest in and to Shanghai Clancy, along with its ownership of Beijing Clancy (including all assets and liabilities of both companies), to Hongshan Yuanda Limited. The effective date of this transfer is June 30, 2023. As of the date of transfer, Shanghai Clancy had no operations and no assets and all liabilities were assigned to the transferee.
Results of Operations
Revenues.
For the three months ended October 31, 2023 and 2022, the Company had no revenues.
Costs of Revenues
For the three months ended October 31, 2023 and 2022, the Company had no cost of goods sold as we did not have any revenues for the respective periods.
Operating Expenses
For the three months ended October 31, 2023, the Company had total operating expenses of $13,216 consisting of $12,230 of professional fees and $987 of general and administrative expenses.
For the three months ended October 31, 2022, the Company had total operating expenses of $93,223, including operating expenses of $26,898 from continuing operations and $66,325 from discontinued operations. The operating expenses of $26,898 from continuing operations consist of $22,000 professional fees, $0 of research and development and $4,898 of general and administrative expenses. The operating expenses of $66,325 from discontinued operations consist of $0 of professional fees, $26,425 in research and development (R&D), $39,912 in general and administrative expenses and interest income of $13.
The decrease of $80,007 in operating expenses was due to the discontinuation of the Company’s business in China in June 2023.
Net Loss
For the three months ended October 31, 2023 and 2022, the Company had net losses of $13,216 and $93,223, respectively, for the reasons discussed above.
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Liquidity and Capital Resources
The Company had $12,167 and $1,302 in cash and cash equivalents as of October 31, 2023 and July 31, 2023, respectively.
As of October 31, 2023 and July 31, 2023, the Company had working capital deficit of $18,617 and $5,401, respectively. The increase in working capital deficit was due to net loss for the current period.
The Company can provide no assurances that it can continue to satisfy its cash requirements for at least the next twelve months.
The following is a summary of the Company’s cash flows from operating and financing activities for the three months ended October 31, 2023 and 2022:
| Three Months Ended October 31, 2023 | Three Months Ended October 31, 2022 | |||||||
| Net Cash Used From Operating Activities – Continuing Operations | $ | (8,534 | ) | $ | (16,558 | ) | ||
| Net Cash Used From Operating Activities – Discontinued Operations | — | (52,719 | ) | |||||
| Net Cash Provided (adjustment) From Financing Activities – Continuing Operations | $ | 19,400 | $ | 20,085 | ||||
| Net Cash Provided From Financing Activities – Discontinued Operations | — | 49,605 | ||||||
| Effect of exchange rate change on cash | $ | — | $ | (1,038 | ) | |||
| Net Change in Cash | $ | 10,866 | $ | (625 | ) | |||
Operating Activities
During the three months ended October 31, 2023, the Company had a net loss of $13,216 and after adjusting for increase of $4,682 in accounts payable, resulted in net cash of $8,534 used from continuing operations. By comparison, during the three months ended October 31, 2022, the Company had used $69,277 in operating activities, $16,558 used in continuing operations and $52,719 used in discontinued operations.
Financing Activities
During the three months ended October 31, 2023, the Company received $19,400 from the advances from the related party. By comparison, during the three months ended October 31, 2022, the Company received $20,085 of proceeds from continuing operations and $49,605 from discontinued operations. The significant change in financing activities was due to the ownership change in June 2023 and the discontinuation of its China operations.
Our financial statements reflect the fact that we do not have sufficient revenue to cover expenses. We are at present under-capitalized. The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Basis of presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. The Company’s year end is July 31.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $12,167 in cash and equivalents as of October 31, 2023 and $1,302 as of July 31, 2023.
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Depreciation, Amortization, and Capitalization
The Company records depreciation and amortization when appropriate using straight-line balance method over the estimated useful life of the assets. The Company establishes capitalization policy of its assets based on dollar amount that are more than $1,000 in value or if it’s estimated useful life exceeds one year. We estimate that the useful life of our equipment is 3 years. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Fair Value of Financial Instruments
ASC topic 820 “Fair Value Measurements and Disclosures” establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
| Level 1: | defined as observable inputs such as quoted prices in active markets; |
| Level 2: | defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and |
| Level 3: | defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The carrying value of cash and the Company’s loan from shareholder approximates its fair value due to their short-term maturity.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Specifically, Section 606-10-50 requires an entity to provide information about: a. Revenue recognized from contracts with customers, including the disaggregation of revenue into appropriate categories; b. Contract balances, including the opening and closing balances of receivables, contract assets, and contract liabilities; c. Performance obligations, including when the entity typically satisfies its performance obligations and the transaction price that is allocated to the remaining performance obligations in a contract; d. Significant judgments, and changes in judgments, made in applying the requirements to those contracts.
Basic Income (Loss) Per Share
The Company computes income (loss) per share in accordance with FASB ASC 260 “Earnings per Share”. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of July 31, 2023, there were no potentially dilutive debt or equity instruments issued or outstanding.
Comprehensive Income
Comprehensive income is defined as all changes in stockholders’ equity (deficit), exclusive of transactions with owners, such as capital investments. Comprehensive income includes net income or loss, changes in certain assets and liabilities that are reported directly in equity such as translation adjustments on investments in foreign subsidiaries and unrealized gains (losses) on available-for-sale securities. For the three months ended October 31, 2023, the comprehensive loss was $13,216, the same as that of the net loss which contains the foreign currency translation gain/loss of $0.
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Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Recent Accounting Pronouncements
We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
As a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, the Company is not required to provide this information.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this quarterly report, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act (“Exchange Act”) as of October 31, 2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s 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 Commission’s rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
Change in Internal Control over Financial Reporting
During the quarter ended October 31, 2023, there has been no changes in internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are presently no material pending legal proceedings to which the Company, any executive officer, any owner of record or beneficially of more than five percent of any class of voting securities is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
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Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable to our Company.
Item 5. Other Information.
None
Item 6. Exhibits.
| Exhibit | Description | |
| 31.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |
| 32.1 | Certification of the Company’s Principal Executive Officer and Principal Financial pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ | |
| 101.INS | XBRL INSTANCE DOCUMENT* | |
| 101.SCH | XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT* | |
| 101.CAL | XBRL TAXONOMY CALCULATION LINKBASE DOCUMENT* | |
| 101.DEF | XBRL TAXONOMY DEFINITION LINKBASE DOCUMENT* | |
| 101.LAB | XBRL TAXONOMY LABEL LINKBASE DOCUMENT* | |
| 101.PRE | XBRL TAXONOMY PRESENTATION LINKBASE DOCUMENT* |
+ In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: December 13, 2023 | BRILLIANT N.E.V. CORP. |
| /s/ Xiangying Meng | |
Xiangying Meng Chief Financial Officer |
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