Maitong Sunshine Cultural Development Co., Ltd 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 3299) F-2 Consolidated Balance Sheets as of September 30, 2024 and September 30, 2023 F-3 Consolidated Statements of Operations and Comprehensive (Loss) for the years Ended September 30, 2024 and 2023 F-4 Consolidated Statements of Changes in Shareholders’ Deficit for the years ended September 30, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the years ended September 30, 2024 F-6 Notes to Consolidated Financial Statements F-7 - F-18 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To: Board of Directors and Shareholders of Maitong Sunshine Cultural Development Co., Limited Opinions on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Maitong Sunshine Cultural Development Co., Limited (the “Company”) as of September 30, 2024 and 2023, and the related consolidated statements of operations and comprehensive (loss), changes in shareholders’ (deficit) equity, and cash flows for the year ended September 30, 2024 and period from September 7, 2023 to September 30, 2023 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for the year ended September 30, 2024 and period from September 7, 2023 to September 30, 2023, in conformity with accounting principles generally accepted in the United States of America. Material Uncertainty Relating to Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company does not have an established source of revenues sufficient to cover its operating cost, has suffered recurring losses from operations, and has an accumulated deficit and a working capital deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 2 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that responds to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ ARK Pro CPA & Co ARK Pro CPA & Co (Formerly HKCM CPA & Co.) We have served as the Company’s auditor since 2024. Hong Kong, China November 25, 2024 PCAOB Firm ID: 3299 F- 2 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2024 AND 2023 (EXPRESSED IN US DOLLARS) September 30, September 30, 2024 2023 Assets Current Assets: Cash $ 698,307 $ - Prepayments 44,352 - Other receivables 713 1,141 Total current assets 743,372 1,141 Property and equipment, net 2,803 - Right-of-use assets 6,159 40,752 Total assets $ 752,334 $ 41,893 Liabilities and Deficit Current Liabilities: Accounts payable 8,991 - Advance from customers 461,946 - Accrued expenses $ 77,696 $ 30,790 Due to related parties 200,481 9,626 Other payables 3,086 1,239 Income tax payable 1,724 - Operating lease liabilities, current 6,159 34,830 Total current liabilities 760,083 76,485 Operating lease liabilities, less current portion - 5,922 Total liabilities 760,083 82,407 Equity/(Deficit): Preferred stock; $ 0.001 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2024 and 2023 - - Common stock; $ 0.001 par value, 150,000,000 shares authorized; 60,000,000 shares issued and outstanding at September 30, 2024 and 2023 60,000 60,000 Additional paid-in capital - - Capital stock subscription receivable - ( 60,000 ) Accumulated (deficit) ( 71,312 ) ( 40,502 ) Accumulated other comprehensive income (loss) 3,563 ( 12 ) Total stockholders’ (deficit) ( 7,749 ) ( 40,514 ) Total liabilities and (deficit) $ 752,334 $ 41,893 The accompanying notes are an integral part of these consolidated financial statements. F- 3 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (EXPRESSED IN US DOLLARS) For the Years Ended September 30, 2024 Period from September 7, 2023 to September 30, 2023 Revenue $ 804,887 $ 10,981 Cost of revenue 439,260 6,411 Gross profit 365,627 4,570 Selling, general and administrative expenses 388,580 45,182 (Loss) from operations ( 22,953 ) ( 40,612 ) Other income (expense) ( 108 ) 110 (Loss) before provision for income taxes ( 23,061 ) ( 40,502 ) Provision for income taxes 7,749 - Net (loss) $ ( 30,810 ) $ ( 40,502 ) Comprehensive (loss): Net (loss) $ ( 30,810 ) $ ( 40,502 ) Foreign currency translation adjustment 3,575 ( 12 ) Comprehensive (loss) $ ( 27,235 ) $ ( 40,514 ) Basic and diluted earning per share $ ( 0.0006 ) $ ( 0.0014 ) Weighted average number of shares outstanding 55,150,820 29,400,000 The accompanying notes are an integral part of these consolidated financial statements F- 4 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY/(DEFICIT) FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (EXPRESSED IN US DOLLARS, EXCEPT SHARES) Common stock Additional Capital stock Accumulated Other Total Stockholders’ Number of Shares Amount Paid-in Capital subscription receivable Accumulated Deficit Comprehensive Loss Equity (Deficit) Shares issued 60,000,000 $ 60,000 $ - $ - $ - $ - $ 60,000 Subsidiary’s stock issued - - - ( 60,000 ) - - ( 60,000 ) Net loss - - - - ( 40,502 ) - ( 40,502 ) Foreign currency translation adjustment - - - - - ( 12 ) ( 12 ) Balance at September 30, 2023 60,000,000 60,000 - ( 60,000 ) ( 40,502 ) ( 12 ) ( 40,514 ) Net loss - - - - ( 30,810 ) - ( 30,810 ) Capital subscription received - - - 60,000 - - 60,000 Foreign currency translation adjustment - - - - - 3,575 3,575 Balance at September 30, 2024 60,000,000 $ 60,000 $ - $ - $ ( 71,312 ) $ 3,563 $ ( 7,749 ) The accompanying notes are an integral part of these condensed consolidated financial statements F- 5 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (EXPRESSED IN US DOLLARS) For the Year Ended September 30, 2024 Period from September 7, 2023 to September 30, 2023 Cash Flows from Operating Activities Net loss $ ( 30,810 ) $ ( 40,502 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 990 - Operating lease expense 35,330 3,068 Interest expense 767 - Changes in operating assets and liabilities: Prepayments ( 43,262 ) 30,000 Other receivable 462 ( 1,181 ) Accounts payable 8,770 - Customer deposits 450,583 - Accrued expenses 46,516 817 Due to related parties - 9,626 Lease payment ( 36,097 ) ( 3,068 ) Income tax payable 1,681 - Other payables 1,771 1,240 Net cash provided by operating activities 436,701 - Cash Flows from Investing Activities Purchase of fixed assets ( 3,724 ) - Net cash used in investing activities ( 3,724 ) - Cash Flows from Financing Activities Proceeds from subscription 60,000 - Loans from related parties 188,400 - Net cash provided by financing activities 248,400 - Effect of exchange rate fluctuation on cash and cash equivalents 16,930 - Net increase in cash and cash equivalents 698,307 - Cash and cash equivalents, beginning of year - - Cash and cash equivalents, end of year $ 698,307 - Supplemental disclosure of cash flow information Cash paid for income taxes $ 6,067 - Cash paid for interest expense $ 767 121 Supplemental disclosure of non-cash activities Right-of-use assets and related lease liabilities $ 6,159 40,752 The accompanying notes are an integral part of these consolidated financial statements. F- 6 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION Maitong Sunshine Cultural Development Co., Limited (“MGSD”, together as a group with its subsidiaries referred to as “Maitong Sunshine”, “Company”, “us” or “we”) was incorporated in the State of Nevada on October 26, 2023. MGSD through its operating subsidiary, which has headquarters in Beijing, China, provides cultural tourism and products sales, and plans to market arts expositions. The Company currently has 12 full-time employees. MGSD’s subsidiaries includes: Maitong Sunshine Cultural Development Co., Limited (Samoa) (“MGSD Samoa”), initially named as Oriental Culture Development Co., Limited, was established on September 7, 2023 under the laws of Samoa. On November 27, 2023, MGSD issued 60,000,000 shares of its common stock to the original shareholders of MGSD Samoa, in exchange for 100 % of the outstanding shares of MGSD Samoa (the “Share Exchange”). Maitong Sunshine Cultural Development Co., Limited (Hong Kong) (“MGSD HK”), initially named as Oriental Culture Development Co., Limited, was established on September 13, 2023 under the laws of Hong Kong. MGSD Samoa holds a 100 % interest in MGSD HK. Beijing Tongzhilian Cultural Development Co., Limited ( “Tongzhilian”) is a privately held Limited Company that was approved on September 13, 2023 and registered on October 11, 2023 in Beijing, China. MGSD HK holds a 100 % interest in Tongzhilian. The transactions summarized above are treated in our financial statements as a corporate restructuring (reorganization) of entities under common control, as each of the four entities have at all times been under the control of Ms. Huang Fang. Therefore, in accordance with ASC 805-50-45-5, the current capital structure has been retroactively presented in prior periods as if such structure existed at that time and the entities under common control are presented on a combined basis for all periods. Since all of the subsidiaries were under common control for all periods presented, the results of these subsidiaries are included in the Company’s financial statements for all periods. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Going concern Management has determined there is substantial doubt about the Company’s ability to continue as a going concern as a result of lack of significant revenues and recurring losses. If the Company is unable to generate significant revenue or secure additional financing, it may be required to cease or curtail its operations. The accompanying consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty. The Company’s operations have been financed primarily by loans from related parties. We expect that Huang Fang, the President, CEO, chairwoman of the board and a shareholder of the Company, will provide support in the future if needed. We do not, however, have any formal agreement with Ms. Huang requiring her to provide financing to the Company nor any method of enforcing our expectation. B. Basis of presentation The accompanying consolidated financial statements are expressed in U.S. Dollars and have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). F- 7 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Principles of consolidation The consolidated financial statements include the accounts of MGSD and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100 % of assets, liabilities, and net income or loss of these subsidiaries. MGSD’s subsidiaries as of September 30, 2024 are listed as follows: Name Place of Incorporation Attributable equity interest % Authorized capital Maitong Sunshine Cultural Development Co., Limited Samoa 100 USD 1,000,000 Maitong Sunshine Cultural Development Co., Limited Hong Kong 100 HKD 10,000 Beijing Tongzhilian Cultural Development Co., Ltd China 100 RMB 1,000,000 D. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ from these estimates. E. Functional currency and foreign currency translation An entity’s functional currency is the currency of the primary economic environment in which it operates. Normally that is the currency of the environment in which the entity primarily generates and expends cash. Management’s judgment is essential to determining the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. Based on that assessment, the functional currency of the Company is the Chinese Renminbi (“RMB’). The functional currency of MGSD HK is the Hong Kong Dollar and the functional currency of MGSD Samoa and MGSD is the United States dollar (“US Dollars” or “$”). The reporting currency of these consolidated financial statements is in US Dollars. The financial statements of MGSD’s subsidiaries, which are prepared using the RMB, are translated into the Company’s reporting currency, the US Dollar. Assets and liabilities are translated using the exchange rate at each reporting period end date. Revenue and expenses are translated using weighted average rates prevailing during each reporting period, and stockholders’ equity (deficit) is translated at historical exchange rates. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income or expense. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses resulting from these transactions are included in operations. F- 8 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The exchange rates used for foreign currency translation are as follows: For the years ended September 30, 2024 2023 (USD to RMB/ USD to HKD) (USD to RMB/ USD to HKD) Assets and liabilities period end exchange rate 7.0149 / 7.7702 7.2952 / 7.8315 Revenue and expenses period weighted average 7.1918 / 7.8127 7.0511 / 7.8310 F. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk are due from related parties and other receivables arising from its normal business activities. The carrying amounts of these financial instruments represent the maximum amount of loss due to credit risk. The deposits placed with financial institutions are not protected by statutory or commercial insurance. In the event of bankruptcy of one of these financial institutions, the Company may be unlikely to reclaim its deposits in full. Management believes that these financial institutions are of high credit quality and continually monitors the credit worthiness of these financial institutions. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base. The majority of sales are cash receipt in advance. For those credit sales, the Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. For the period from September 7, 2023 through September 30, 2023, there is only a small volume of sales in the three-week period recorded. All sales are not significant. For the fiscal year ended September 30, 2024, the Company had 2 major customers that each accounted for over 10% of its total revenue. For the years ended September 30, 2024 Revenue Percentage of revenue Customer A $ 265,313 33 % Customer B 130,099 16 % For the period from September 7, 2023 through September 30, 2023, there is only a small volume of sales in the three-week period recorded. All procurement are not significant. For the fiscal year ended September 30, 2024, the Company had 3 major suppliers that each accounted for over 10% of its total cost of revenue. F- 9 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) For the year ended September 30, 2024 Cost of revenue Percentage of Cost of revenue Supplier A $ 241,855 55 % Supplier B 73,834 17 % Supplier C 58,609 13 % G. Fair value measurements The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 820, Fair Value Measurements (“ASC 820”), for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined as the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value for the assets and liabilities required or permitted to be recorded, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices, other than those in Level 1, in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability, Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). There were no transfers between level 1, level 2 or level 3 measurements for the fiscal year ended September 30, 2024. Financial assets and liabilities of the Company are primarily comprised of cash, prepayments, other receivables, accounts payables, accrued expenses, other payables, advance from customers, due to related parties, other payables, income tax payable and lease liabilities. As of September 30, 2024 and 2023, the carrying values of these financial instruments approximated their fair values due to the short-term maturity of these instruments. F- 10 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) H. Segment information and geographic data The Company is operating in one segment in accordance with the accounting guidance in FASB ASC Topic 280, Segment Reporting . The company’s revenues are from customers in People’s Republic of China (“PRC”). Most assets of the Company are located in the PRC. I. Revenue recognition The Company adopted FASB ASC Section 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sales of products and services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue as each performance obligation is satisfied. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each of the Company’s activities as described below. Service revenue The Company provides cultural tourism services and small-scale training services. The Company’s policy is to recognize revenue at that time the services have been performed. Cost of service revenue consists primarily of the purchase cost, staff cost and other cost to fulfill a contract with a customer. Products sales revenue Products sales revenue mainly includes sales of cultural and creative products and sales of gift products. T he Company’s policy is to recognize the sales when the products, ownership and risk of loss have transferred to the purchasers, and collection of the sales proceeds, if not prepaid, is reasonably assured, all of which generally occur when the customer receives the products. Accordingly, revenue is recognized at the point in time when delivery is made. Cost of product sale consists primarily of the cost of product procurement, and other cost to fulfill a contract with a customer. J. Income taxes The Company follows FASB ASC Section 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740-10-30 requires income tax positions to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under ASC 740-10-30, tax positions that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. F- 11 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities or the deferred tax asset valuation allowance. As a result of the implementation of ASC 740-10, the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10. The Company recognized no material adjustments to liabilities or shareholder’s equity as a result of the implementation. K. Earnings (loss) per share The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings Per Share . ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average common shares outstanding during the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stock using the treasury stock method and the potential shares of converted common stock associated with the convertible debt using the if-converted method. Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS. L. Leases In February 2016, the FASB issued ASU 2016-02–Leases (Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”) lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement and presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For both financing and operating leases, the ROU asset and lease liability is initially measured at the present value of the lease payments in the consolidated balance sheet. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if necessary. M. Cash As of September 30, 2024, cash consists of bank deposits and deposits in the Alipay, which are unrestricted as to withdrawal and use. All highly liquid investments with original stated maturities of three months or less are classified as cash. N. Recently adopted accounting pronouncements We do not believe that any recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. F- 12 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 3. PREPAYMENTS At September 30, 2024, prepayments consisted of: As of September 30, 2024 2023 Jinjiu International Consulting Services (Beijing) Co., Ltd $ 39,915 $ - Beijing Shuangjiang Huixin Trading Co., Ltd 4,018 - Beijing Shengrui Minghua Tea Industry Co., Ltd 279 - Beijing Yiguanjia Health Technology Co., Ltd 140 - Total Prepayments $ 44,352 $ - NOTE 4. OTHER RECEIVABLES At September 30, 2024 and 2023, other receivables consisted of: As of September 30, 2024 2023 Collected money on behalf of the company by employee $ - $ 1,141 Shanghai Ctrip International Travel Agency Co., Ltd 713 - Total other receivables $ 713 $ 1,141 NOTE 5. CAPITAL STOCK SUBSCRIPTION RECEIVABLE As of September 30, 2024 and 2023, capital stock subscription receivable consists of the following: As of September 30, Name 2024 2023 Huang Fang $ - $ 60,000 Total $ - $ 60,000 On September 7, 2023 our shareholders purchased the authorized shares of MGSD-Samoa for $ 60,000 . Our CEO, Huang Fang, funded the purchase by giving MGSD-Samoa her personal promissory note in the amount of $ 60,000 . As of September 30, 2023, the Company had a capital stock subscription receivable of $ 60,000 due from Huang Fang. During the fiscal year ended September 30, 2024, Ms. Huang made payments to satisfy the $ 60,000 note payable to MGSD-Samoa. F- 13 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 6. ACCOUNTS PAYABLE As of September 30, 2024 and 2023, accounts payable consists of the following: As of September 30, 2024 2023 Hebei Bailu Business Hotel Co., Ltd $ 8,991 $ - Total $ 8,991 $ - NOTE 7. ADVANCE FROM CUSTOMERS As of September 30, 2024 and 2023, advance from customers consists of the following: As of September 30, 2024 2023 Pre-collected member funds $ 461,946 $ - Total $ 461,946 $ - As of September 30, 2024, advances from customers totalled $ 461,946 . The Company receives prepayments from customers who subscribe for a membership in the Company’s . These pre-collected member funds can be used by customers to offset purchases of the company’s products. NOTE 8. DUE TO RELATED PARTIES Due to related parties consists of the following: As of September 30, Name of related party 2024 2023 Interest-free loan and payment of company expenses: Beijing Devoter Oriental Co., Ltd. $ 9,626 $ 9,626 Huang Fang 190,855 - Total $ 200,481 $ 9,626 As of September 30, 2024 and 2023, the Company had a balance of $ 9,626 and $ 9,626 due to Beijing Devoter Oriental Co., Ltd, which represented expenses paid on behalf of the Company. As of September 30, 2024, the Company owed Huang Fang a balance of $ 190,855 which represented expenses paid on behalf of the Company and the interest-free loan she provided to the Company. Huang Fang is the President, CEO, Chairwoman of the Board and a major shareholder of the Company. She is also the CEO and controlling shareholder of Beijing Devoter Oriental Co., Ltd, and Beijing Devoter Oriental Co., Ltd owns 85 % of the registered equity of Devoter (Beijing) Technology Co., Ltd. F- 14 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 9. ACCRUED EXPENSES As of September 30, 2024 and 2023, accrued expenses consisted of: As of September 30, 2024 2023 Audit fee $ 60,000 $ 30,000 Payroll payable 11,052 790 Social security payable 4,346 - PragerMetis 1,500 - Vstock Transfer 798 - Total accrued expenses $ 77,696 $ 30,790 As of September 30, 2024 and 2023, the Company recorded payables to its auditor of $ 60,000 and $ 30,000 for services in connection with the Company in the United States. As of September 30, 2024 and 2023, the Company recorded payroll payable of $ 11,052 and $ 790 . As of September 30, 2024, the Company recorded social security payable of $ 4,346 . As of September 30, 2024, the Company recorded tax filing fees of $ 1,500 . As of September 30, 2024, the Company recorded agency fee payable of $ 798 . NOTE 10. OTHER PAYABLES As of September 30, 2024 and 2023, other payables consist of the following: As of September 30, 2024 2023 Value added tax and surtax $ 3,086 $ 33 Payment on behalf of the company by employee - 1,206 Total $ 3,086 $ 1,239 NOTE 11. LEASE On September 1, 2023, Huang Fang, the CEO of the holding company of Tongzhilian, arranged to lease an office for the soon-to-be-established company, and Tongzhilian signed and confirmed the agreement when it was officially established. Under the terms of the agreement, Tongzhilian leased office space (approximately 144 square meters) under an operating lease agreement with Devoter (Beijing) Technology Co., Ltd, and is committed to make lease payments of approximately $ 44,482 (RMB 324,506 ) for the period between September 1, 2023 and November 30, 2024. On October 9, 2023, Tongzhilian renewed operating lease agreement for the period from December 1, 2024 to November 30, 2025. Under the terms of the agreement, Tongzhilian committed to make lease payments of approximately $ 37,000 (RMB 259,605 ) for that period. As of September 30, 2024 and 2023, the lease amortization expense was $ 35,330 and $ 2,947 . F- 15 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 11. LEASE (continued) Huang Fang is the President, CEO, Chairwoman of the Board and a major shareholder of the Company. She is also the CEO and controlling shareholder of Beijing Devoter Oriental Co., Ltd, and Beijing Devoter Oriental Co., Ltd owns 85 % of the registered equity of Devoter (Beijing) Technology Co., Ltd. Devoter (Beijing) Technology Co., Ltd is a related party of the Tongzhilian. As of September 30, 2024 and 2023, the Company has the following amounts recorded on the Company’s consolidated balance sheet: As of September 30, 2024 2023 Assets Right-of-use asset $ 6,159 $ 40,752 Total $ 6,159 $ 40,752 Liabilities Operating lease liability, current $ 6,159 $ 34,830 Operating lease liability, less current portion - 5,922 Total $ 6,159 $ 40,752 Future annual minimum lease payments for non-cancellable operating leases are as follows: Period Ending September 30 Operating Leases 2024 $ 2025 6,168 Thereafter - Total 6,168 Less: imputed interest 9 Total $ 6,159 NOTE 12. INCOME TAXES United States MGSD is a Nevada corporation that is subject to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions went into effect starting January 1, 2018. Samoa MGSD Samoa was incorporated in Samoa and, under the current laws of Samoa, is not subject to income tax. F- 16 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 12. INCOME TAXES (continued) Hong Kong MGSD HK was incorporated in Hong Kong and is subject to Hong Kong profits tax. MGSD HK is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5 %. The Company did not have any income (loss) subject to the Hong Kong profits tax. China Tongzhilian is subject to a 25 % standard enterprise income tax in the PRC. There was $ 7,749 accrued for income taxes for the fiscal year ended September 30, 2024. A reconciliation before income taxes for domestic and foreign locations for the fiscal year ended September 30, 2024 and 2023 is as follows: For the years ended September 30, 2024 2023 United States $ ( 167,036 ) $ ( 30,000 ) Foreign 143,975 ( 10,502 ) Before income taxes $ ( 23,061 ) $ ( 40,502 ) The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows: For the years ended September 30, 2024 2023 Income tax (benefit) at USA statutory rate 21 % 21 % U.S. valuation allowance ( 21 )% ( 21 )% Effective combined tax rate 0 % 0 % Taxable income of the PRC company has been increased by $ 5,625 after excluding non-deductible expenses. The difference between the PRC statutory income tax rate and the PRC effective tax rate was as follows: For the years ended September 30, 2024 2023 Income tax (benefit) at PRC statutory rate 25 % 25 % Tax preference ( 20 )% ( 25 )% Effective combined tax rate 5 % 0 % The Company did not recognize deferred tax assets since it is not likely to incur taxes against which such deferred tax assets may be offset. The deferred tax would apply to MGSD in the U.S. and Tongzhilian in China. The Company incurred losses from its United States operations for the fiscal year ended September 30, 2024 and the period from September 7, 2023 to September 30, 2023 of $ 167,036 and $ 30,000 . The Company’s United States operations consist solely of ownership of its foreign subsidiaries, and the losses arise from administration expenses. Accordingly, management provided a 100 % valuation allowance of $ 41,378 against the deferred tax assets related to the Company’s United States operations as of September 30, 2024, because the deferred tax benefits of the net operating loss carry forwards in the United States are not likely to be utilized. The US valuation allowance has increased by $ 35,078 for the fiscal year ended September 30, 2024. F- 17 MAITONG SUNSHINE CULTURAL DEVELOPMENT CO., LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2024 AND PERIOD FROM SEPTEMBER 7, 2023 TO SEPTEMBER 30, 2023 (AMOUNTS IN US DOLLARS) NOTE 12. INCOME TAXES (continued) The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the firm has significant business operations. The tax years under examination vary by jurisdiction. The table below presents the earliest tax year that remain subject to examination by major jurisdiction. The year as of U.S. Federal September 30, 2024 China December 31, 2023 NOTE 13. CONTINGENCIES Contingencies Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. The Company was not subject to any material loss contingency as of September 30, 2024. NOTE 14. BASIC AND DILUTED EARNINGS PER SHARE Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares comprise shares issuable upon the exercise of share-based awards, using the treasury stock method. The reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for income from continuing operations is shown as follows: For the year ended September 30, 2024 Numerator: Net loss attributable to common stockholders $ ( 30,810 ) Denominator: Basic and diluted weighted-average number of shares outstanding 55,150,820 Net income per share: Basic and diluted $ ( 0.0006 ) NOTE 15. SUBSEQUENT EVENTS Management has evaluated subsequent events through the date on which the consolidated financial statements were available to be issued. All subsequent events requiring recognition as of September 30, 2024 have been incorporated into these consolidated financial statements and there are no other subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.” F- 18 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.