U. S.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-QSB Mark One XX QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) - - --------- OF THE SECURITIES EXCHANGE ACT OF 193410-Q(MARK ONE)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
March 31, 1996September 30, 2021OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) - - --------- OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ______
Commission File
Number: 1-13160 DYCAM, INC. (Exact name of small business issuer as specified in its charter) Delaware 95-4202424 (State or other jurisdiction (I.R.S. Employer or organization) Identification Number) 9414 Eton Ave. Chatsworth, California 91311 (AddressNo. 000-56156
FOVEA JEWELRY HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Wyoming
95-4202424
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Room 403, 4/F, Phase 1 Austin Tower
22-26A Austin Avenue
Tsim Sha Tsui, Hong Kong
(Address of principal executive
offices) (818) 998-8008 (Issuer'soffices, zip code)+852 6847 6812
(Registrant’s telephone number, including area code)
(NONE) (Former(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Indicate by check mark whether the
registrantissuer (1) has filed all reports required to be filed by Section 13 or15 (d)15(d) of the Securities Exchange Act of 1934 during thepreceedingpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.YES X NO ----- ----- StateYes ☒ No ☐Indicate by check mark whether the
numberregistrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofshares outstandingRegulation S-T (§232.405 ofeachthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
issuer's classesExchange Act. (check one):
Large accelerated filer
☐
Accelerated filer
☐
Non-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 Exchange Act Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
As of September 30, 2021, there were approximately 8,099,119 shares of common
equitystock, $0.001 par value per share, outstanding.
FOVEA JEWELRY HOLDINGS, LTD.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2021
INDEX
2 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of Fovea Jewelry Holdings, Ltd., a Wyoming corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of oil and gas prices, the possibility that equipment development efforts will not produces equipment that prospective customers want to purchase, the Company’s need for and ability to obtain additional financing, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the
latest practicable date. Common Stock, $.01 Par Value, 3,120,836 shares asdate made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date ofMay 1, 1996 Transitional Small Business Disclosure Format (Check one) YES NO X ----- -----such statements or to reflect the occurrence of anticipated or unanticipated events.
3 Table of Contents PART I. FINANCIAL INFORMATION
ItemITEM 1.
Financial Statements DYCAM, INC.FINANCIAL STATEMENTS.FOVEA JEWELRY HOLDINGS, LTD
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Page
5
Condensed Consolidated Statements of Operations and Comprehensive Income
6
7
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
8
9
4 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1996
ASSETS ------ March 31, 1996 December 31, 1995Current assets: Cash and cash equivalents $1,385,000 $1,374,000 Accounts receivable, net 201,000 115,000 Inventory 624,000 698,000 Prepaid expenses and other current assets 34,000 37,000 ------------- --------------- Total current assets 2,244,000 2,224,000 Goodwill, net of accumulated amortization of $596,000 4,958,000 5,027,000 Property and equipment, net 437,000 452,000 Deposits 32,000 33,000 Note Receivable from Styles 1,000,000 1,000,000 ------------- --------------- $8,671,000 $8,736,000 ============= ===============LIABILITIES AND STOCKHOLDERS' EQUITY -------------------------------------Current liabilities: Accounts payable $255,000 $120,000 Accrued payroll and related expenses 65,000 65,000 Accrued expenses 24,000 14,000 -------- -------- Total current liabilities 344,000 199,000 Stockholders' equity Common stock (par value $.01) 31,000 31,000 Additional paid in capital 10,710,000 10,710,000 Retained earnings (deficit) (2,414,000) (2,204,000) ------------- --------------- Total shareholders' equity 8,327,000 8,537,000 ------------- --------------- Total liabilities and shareholders' equity $8,671,000 $8,736,000 ============= ===============The(Currency expressed in United States Dollars (“US$”), except for number of shares)
September 30,
2021
December 31,
2020
(Unaudited)
(Audited)
ASSETS
Current asset:
Cash and cash equivalents
$ 956,572
$ 832,151
Total current assets
956,572
832,151
Non-current asset:
Plant and equipment
22,474
28,378
TOTAL ASSETS
$ 979,046
$ 860,529
LIABILTIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Income tax payable
$ 10,887
$ 236
Deferred tax liabilities
3,708
4,682
Total current liabilities
14,595
4,918
TOTAL LIABILITIES
14,595
4,918
Commitments and contingencies
0
0
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no share issued and outstanding as of September 30, 2020 and December 31, 2020
0
0
Series A preferred stock, $0.001 par value,1,000,000 shares designated; 1,000,001 and 1,000,000 issued and outstanding, as of September 30, 2021 and December 31, 2020, respectively
1,000
1,000
Common stock, $0.001 par value; 2,000,000,000 shares authorized; 8,099,119 and 10,199,119 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
8,099
10,199
Common stock to be issued
0
90
Additional paid-in capital
131,700
129,510
Accumulated other comprehensive loss
(19,820 )
(10,591 ) Retained earnings
843,472
725,403
Stockholders’ equity
964,451
855,611
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 979,046
$ 860,529
See accompanying notes
are an integral part of theseto condensed consolidated financial statements.2DYCAM, INC.
5 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996AND1995
Three months ended March 31, 1996 March 31, 1995Revenues Camera sales $763,000 $405,000 Contract engineering fees $66,000 License fees $16,000 $3,000 ------------------ ---------------- Total revenues $845,000 $408,000 ------------------ ---------------- Cost of revenues Camera sales 487,000 347,000 Contract engineering fees 45,000 License fees 11,000 ------------------ ---------------- Total cost of revenues 543,000 347,000 ------------------ ---------------- Gross profit 302,000 61,000 ------------------ ---------------- Operating expenses: Selling, general & administrative expenses 285,000 330,000 Research and Development 159,000 199,000 Depreciation and amortization 109,000 83,000 ------------------ ---------------- Total operating expenses 553,000 612,000 ------------------ ---------------- Loss from operations (251,000) (551,000) Non-operating income 41,000 41,000 ------------------ ---------------- Loss before taxes (210,000) (510,000) Provision for income taxes 0 0 ------------------ ---------------- Net loss ($210,000) ($510,000) ================= ============== Net income (loss) per share: Primary (0.07) (0.16) Fully diluted (0.07) (0.16) Weighted average shares of common stock outstanding Primary 3,120,836 3,120,836 Fully diluted 3,120,836 3,120,836TheCOMPREHENSIVE INCOME(Currency expressed in United States Dollars (“US$”))
(Unaudited)
Three Months ended
September 30,
Nine Months ended
September 30,
2021
2020
2021
2020
REVENUE, NET
$ 97,651
$ 542,900
$ 565,824
$ 942,965
Cost of revenue
(81,348 )
(271,443 )
(407,903 )
(604,566 )
Gross profit
16,303
271,457
157,921
338,399
Operating expenses:
General and administrative expenses
(10,803 )
(8,630 )
(30,129 )
(32,220 )
Total operating expenses
(10,803 )
(8,630 )
(30,129 )
(32,220 )
INCOME BEFORE INCOME TAXES
5,500
262,827
127,792
306,179
Income tax expenses
(295 )
(22,312 )
(9,723 )
(21,674 )
NET INCOME
5,205
240,515
118,069
284,505
Other comprehensive income (loss):
– Foreign currency adjustment income (loss)
(2,584 )
326
(9,229 )
(16,025 )
COMPREHENSIVE INCOME
$ 2,621
$ 240,841
$ 108,840
$ 268,480
Net income per share – Basic and Diluted
$ 0.00
$ 0.02
$ 0.01
$ 0.03
Weighted average common shares outstanding
– Basic and Diluted
8,099,119
10,161,039
9,568,350
10,161,039
See accompanying notes
are an integral part of theseto condensed consolidated financial statements.3DYCAM INC. STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEAR ENDED 1995 AND THREE MONTHS ENDED MARCH 31, 1996
Common Stock --------------------- Additional Accumulated Stockholders Shares Amount Paid-in Cap. Deficit Equity ----------- --------- ------------ ----------- ------------Balance at December 31, 1994 3,120,836 $31,000 $10,710,000 ($852,000) $9,889,000 Net loss (1,352,000) (1,352,000) Balance at December 31, 1995 3,120,836 31,000 10,710,000 (2,204,000) 8,537,000 Net loss for first three months (210,000) (210,000) --------- ------- ---------- ---------- --------- Balance at March 31, 1996 3,120,836 31,000 10,710,000 (2,414,000) 8,327,0006 Table of Contents 4DYCAM, INC. STATEMENTFOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 and 1995
March 31, 1996 March 31, 1995CASH FLOWS FROM OPERATING ACTIVITIES: Net Income ($210,000) ($510,000) ---------- ---------- Adjustments to reconcile Net Income (loss) to Net Cash provided by (used in) operating activities: Depreciation 39,000 14,000 Amortization of goodwill 69,000 69,000 Allowance for doubtful accounts Changes in assets and liabilities: (Increase)/decrease in accounts receivable (86,000) (39,000) (Increase)/decrease in royalty receivable 0 0 (Increase)/decrease in inventories 74,000 (41,000) (Increase)/decrease in prepaid expenses 3,000 20,000 (Increase)/decrease in other current assets 1,000 0 Increase/(decrease) in accounts payable 135,000 (1,000) Increase/(decrease) in accounts payable-intercompany 0 (129,000) Increase/(decrease) in accrued expenses 10,000 0 Increase/(decrease) in accrued payroll and related expenses 0 0 Increase/(decrease) in deferred revenue 0 0 Increase/(decrease) in income taxes payable 0 0 ---------- ---------- Total adjustments 137,000 (190,000) ---------- ---------- Net cash provided by operating activities 35,000 (617,000) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: (Increase)/decrease in property and equipment (24,000) (131,000) (Increase)/decrease in Note receivable from SOV 0 (500,000) (Increase)/decrease in deposits 0 (28,000) ---------- ---------- Net cash used in investing activities (24,000) (659,000) CASH FLOWS FROM FINANCING ACTIVITIES: Offering Expenses 0 0 Issuance of common stock 0 0 ---------- ---------- Net cash provided by financing activities 0 0 NET INCREASE/(DECREASE) IN CASH 11,000 (1,276,000) CASH, BEGINNING BALANCE 1,374,000 3,715,000 ---------- ---------- CASH, ENDING BALANCE $1,385,000 $2,439,000 ========== ==========The(Currency expressed in United States Dollars (“US$”))
(Unaudited)
Nine Months ended September 30,
2021
2020
Cash flow from operating activities:
Net income
$ 118,069
$ 284,505
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of plant and equipment
5,794
5,798
Change in operating assets and liabilities:
Accounts receivable
0
(543,639 ) Deferred tax liabilities
(974 )
(3,431 ) Accounts payable
0
271,812
Accrued liabilities and other payables
10,651
14,456
Net cash provided by operating activities
133,540
29,501
Cash flows from financing activities:
Amount due to a director
0
2,062
Net cash provided by financing activities
0
2,062
Foreign currency translation adjustment
(9,119 )
(16,188 )
Net change in cash and cash equivalents
115,302
15,375
BEGINNING OF PERIOD
832,151
31,380
END OF PERIOD
$ 956,572
$ 46,755
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes
$ 0
$ 0
Cash paid for interest
$ 0
$ 0
See accompanying notes
are an integral part of theseto condensed consolidated financial statements.5DYCAM INC.
7 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
For the Three and Nine Months ended September 30, 2021 and 2020
Series A
preferred stock
Series B
preferred stock
Common stock
Common
stock
Additional
Accumulated other
Total
No. of
shares
Amount
No. of
shares
Amount
No. of
shares
Amount
to be issued
paid-in capital
comprehensive
income (loss)
Retained
earnings
stockholders’
equity
Balance as of January 1, 2020
1,000,000
$ 1,000
-
$
10,090,974
$ 10,091
$ 0
$
$ 369
$ 18,996
$ 30,526
Issuance of fractional shares
-
0
-
0
108,145
108
0
-
(108 )
-
Foreign currency translation adjustment
-
0
-
0
-
0
0
(17,977 )
0
(17,977 ) Net income for the period
-
0
-
0
-
0
0
0
13,510
13,510
Balance as of March 31, 2020
1,000,000
$ 1,000
-
0
10,161,039
$ 10,161
$ 0
$
$ (17,608 )
$ 32,468
$ 26,059
Foreign currency translation adjustment
-
0
-
0
0
0
1,626
0
1,626
Net income for the period
-
0
-
0
-
0
0
0
0
30,480
30,480
Balance as of June 30, 2020
1,000,000
$ 1,000
-
$ 0
10,161,039
$ 10,161
$ 0
$ 0
$ (15,982 )
$ 62,498
$ 58,165
Foreign currency translation adjustment
-
0
-
0
-
0
0
0
326
0
326
Net income for the period
-
0
-
0
-
0
0
0
0
240,515
240,515
Balance as of September 30, 2020
1,000,000
$ 1,000
-
$ 0
10,161,039
$ 10,161
$ 0
$ 0
$ (15,656 )
$ 303,463
$ 299,006
Balance as of January 1, 2021 (Audited)
1,000,000
$ 1,000
-
0
10,199,119
$ 10,199
$ 90
$ 129,510
$ (10,591 )
$ 725,403
$ 855,611
Shares issued to service providers
-
0
-
0
900,000
900
(90 )
(810 )
0
0
0
Foreign currency translation adjustment
-
0
-
0
-
0
0
0
(7,743 )
0
(7,743 ) Net income for the period
-
0
-
0
-
0
0
0
0
66,858
66,858
Balance as of March 31, 2021
1,000,000
$ 1,000
-
0
11,099,119
$ 11,099
$ 0
$ 128,700
$ (18,334 )
$ 792,261
$ 914,726
Issuance of preferred stock and cancellation of common stock
-
0
1
0
(3,000,000 )
(3,000 )
3,000
0
0
0
Foreign currency translation adjustment
-
0
-
0
-
0
0
0
1,098
0
1,098
Net income for the period
-
0
-
0
-
0
0
0
0
46,006
46,006
Balance as of June 30, 2021
1,000,000
1,000
1
0
8,099,119
8,099
0
131,700
(17,236 )
838,267
961,830
Foreign currency translation adjustment
-
0
-
0
-
0
0
0
(2,584 )
0
(2,584 ) Net income for the period
-
0
-
0
-
0
0
0
0
5,205
5,205
Balance as of September 30, 2021
1,000,000
$ 1,000
1
$ 0
8,099,119
$ 8,099
$ 0
$ 131,700
$ (19,820 )
$ 843,472
$ 964,451
See accompanying notes to consolidated financial statements.
8 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE – 1
-DESCRIPTION OF BUSINESS AND ORGANIZATIONFovea Jewelry Holdings, Ltd (the “Company” or “FJHL”) was originally founded on February 1, 2006 as Dycam, Inc. On March 4, 2019, the Company redomiciled from Nevada to Wyoming. Currently, the Company through its subsidiaries, mainly commenced to operate an online store to sell the quality jewelry at affordable prices on www.fovea-jewellery.com. The goal is to “Deliver A Better Living”. All products selling on the online store are with great quality, natural, socially responsible and niche.
Description of subsidiaries
Name
Place of incorporation
and kind of
legal entity
Principal activities
and place of operation
Particulars of registered/
paid up share
capital
Effective interest
held
Fovea International Holdings Limited
British Virgin Islands
Investment holding
100 ordinary shares at par value of US$1
100 % Fovea Jewellery Holdings Limited
Hong Kong
Sales and marketing in Hong Kong
1 ordinary share at par value of HK$1
100 % Gold Shiny International Limited
British Virgin Islands
Investment holding
115 ordinary shares at par value of US$1
100 % Gold Shiny (Asia) Limited
Hong Kong
Sales and marketing in Hong Kong
1 ordinary share at par value of HK$1
100 % The Company and its subsidiaries are hereinafter referred to as (the “Company”).
NOTE – 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - --------------------------------------------------- GeneralThe accompanying
unaudited interimcondensed consolidated financial statements reflect the application ofDycam Inc. (the "Company")certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.
·
Basis of presentation These accompanying condensed consolidated financial statements have been prepared in
accordanceU.S. Dollars in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules andwithregulations of theinstructions to Form 10-QSB. Certain notesSecurities andother information have been condensed or omitted from the interim financial statements presented in this report.Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required bygenerally accepted accounting principlesU.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statementsreflect all adjustments considered necessary for a fair presentation and all such adjustments are of a normal and recurring nature. Thenot misleading have been included. Operating resultsof operationsfor thenine monthsinterim period ended September 30, 2021 are not necessarily indicative of the resultstothat may be expected for thefull year. For furtherfiscal year ending December 31, 2021. The informationrefer toincluded in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis, and the financial statements andfootnotesnotes thereto included in theCompany's annual report on form 10-KSBCompany’s Form 10-K for the fiscal year ended December 31,1995 as2020, filed with theU.S. Securities and Exchange Commission. Property and Equipment Included in property and equipment is camera equipment held under lease to a subsidiary of Styles in the amount of $206,000. Equipment under operating leases is recorded at cost, net of accumulated depreciation. Such camera equipment is being depreciated over four years. Goodwill Goodwill, which represents the excess of purchase price over fair value of net assets acquired, is amortizedSEC ona straight-line basis over the expected periods to be benefited. Dycam assesses the recoverability of this intangible asset by determining whether the amortization of the goodwill balance over its remaining life can be recovered through projected undiscounted future cash flows. The amount of goodwill impairment, if any, is measured based on projected undiscounted future cash flows and is charged to operations in the period in which goodwill impairment is determined by management. Goodwill is being amortized on a straight-line basis over the expected 20 year life. During 1995 and 1994 Dycam recorded $278,000 and $249,000 of amortization expense, respectively. Goodwill amortization of $69,000 was recorded for the three months endedMarch31, 1996 and 1995, respectively. At March 31, 1996 no impairment of goodwill was determined by management. Revenue Recognition Revenue from camera sales is recognized upon shipment of products. Contract engineering fees are recognized when the service is performed. License fee revenue is recognized when earned. Revenue from camera equipment leased to a subsidiary of Styles is included in camera sales and is being recognized when earned. 6DYCAM INC.26, 2021.
9 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- CONTINUED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - - -------------------------------------------------------------- Loss Per Common Share Loss per common share has been computed on the weighted average(Currency expressed in United States Dollars (“US$”), except for number of
common and equivalent shares outstanding. Primary and fully diluted net loss per share are approximately the same. Dycam has granted certain options which have been treated as common share equivalents in calculating net loss per share, unless antidilutive.shares)(Unaudited)
·
Use of Estimates The preparationof estimates and assumptionsIn preparing these condensed consolidated financial statements,
in conformity with generally accepted accounting principles ("GAAP") requiresmanagementto makemakes estimates and assumptions that affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities atin thedate of the financial statementsbalance sheet andthe reported amounts ofrevenues and expenses during thereported period.periods reported. Actual resultscould materiallymay differ fromthosethese estimates.NOTE 2 - CONCENTRATIONS - - ----------------------- Major Customers/Vendors No
·
Basis of consolidation The condensed consolidated financial statements include the accounts of FJHL and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
·
Cash and cash equivalents Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
·
Accounts receivable Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit is extended based on evaluation of a customer’s financial condition, the customer
accountedcredit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually formore than 10%collectibility. At the end ofcamera salesfiscal year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of September 30, 2021 and December 31, 2020, there was no allowance for doubtful accounts.
·
Plant and equipment Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Expected useful lives
Computer equipment
5 years
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Depreciation expense for the three months ended
MarchSeptember 30, 2021 and 2020 were $1,929 and $1,932, respectively.Depreciation expense for the nine months ended September 30, 2021 and 2020 were $5,794 and $5,798, respectively.
·
Revenue recognition The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) using the full retrospective transition method. The Company’s adoption of ASU 2014-09 did not have a material impact on the amount and timing of revenue recognized in its condensed consolidated financial statements.
10 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Under ASU 2014-09, the Company recognizes revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
•
identify the contract with a customer;
•
identify the performance obligations in the contract;
•
determine the transaction price;
•
allocate the transaction price to performance obligations in the contract; and
•
recognize revenue as the performance obligation is satisfied.
·
Cost of revenue Cost of revenue consists primarily of the cost of goods sold, which are directly attributable to the sales of products.
·
Income taxes The Company adopted the ASC 740 Income tax provisions of paragraph 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the condensed consolidated financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the condensed consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
·
Uncertain tax positions The Company did not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the nine months ended September 30, 2021 and 2020.
·
Foreign currencies translation 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 transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated statement of operations.
11 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The reporting currency of the Company is United States Dollar (“US$”) and the accompanying condensed consolidated financial statements have been expressed in US$. In addition, the Company is operating in Hong Kong and maintains its books and record in its local currency, Hong Kong Dollars (“HKD”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statements of changes in stockholder’s equity.
September 30,
2021
September 30,
2020
Period-end HKD:US$ exchange rate
0.12843
0.12903
Period average HKD:US$ exchange rate
0.12876
0.12885
·
Comprehensive income ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying condensed consolidated statements of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
·
Share-based compensation The Company follows ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all share-based payment awards, including restricted stock units, based on estimated grant date fair values. Restricted stock units are valued using the market price of the Company’s common shares on the date of grant. The Company records compensation expense, net of estimated forfeitures, over the requisite service period.
·
Segment reporting ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in condensed consolidated financial statements. For the period ended September 30, 2021 and 2020, the Company operates in one reportable operating segment in Hong Kong.
·
Related parties The Company follows the ASC 850-10, Related Party for the identification of related parties and disclosure of related party transactions.
Pursuant to section 850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
12 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
·
Commitments and contingencies The Company follows the ASC 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the 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 assesses 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 un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
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 condensed consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
·
Fair value of financial instruments The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Level 1
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3
Pricing inputs that are generally observable inputs and not corroborated by market data.
13 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, approximate their fair values because of the short maturity of these instruments.
·
Recent accounting pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes.” The standard is expected to reduce cost and complexity related to accounting for income taxes. The new guidance eliminates certain exceptions and clarifies and amends existing guidance to promote consistent application among reporting entities. Depending on the amended guidance within this standard, adoption is to be applied on a retrospective, modified retrospective or prospective basis. The Company adopted this standard effective January 1, 2021, and the adoption did not have a material effect on the Company’s consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, “Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The new guidance clarifies the interactions between accounting standards that apply to equity investments without readily determinable fair values. Specifically, it addresses the accounting for the transition into and out of the equity method. The Company adopted this standard effective January 1, 2021 on a prospective basis, and the adoption did not have a material effect on the Company’s consolidated financial statements.
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
NOTE – 3 STOCKHOLDERS’ EQUITY
Authorized shares
As of September 30, 2021 and December 31,
19962020, the Company’s authorized shares were 5,000,000 shares of preferred stock, with a par value of $0.001.As of September 30, 2021 and December 31, 2020, the Company’s authorized shares were 2,000,000,000 shares of common stock, with a par value of $0.001.
14 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Series B Preferred Stock
On April 12, 2021, the Company designated a class of preferred stock titled, Series B Preferred Stock, with a par value of $0.001 per share, and consisting of one share. The Series B preferred carries voting rights equal to 110% of the total voting rights of the outstanding common stock and voting power of the Company, and has the right to appoint one director of the Company.
Issued and outstanding shares
In January 2021, the Company completed the issuance of 900,000 shares of its common stock to six individuals of consultants and service providers for their services rendered to the Company.
As of September 30, 2021 and December 31, 2020, the Company had 1,000,000 shares of Series A preferred stock issued and outstanding.
As of September 30, 2021 and December 31, 2020, the Company had 1 and 0 share of Series B preferred stock issued and outstanding respectively.
As of September 30, 2021 and December 31, 2020, the Company had 8,099,119 and 10,199,119 shares of common stock issued and outstanding, respectively.
NOTE – 4 INCOME TAX
The provision for income taxes consisted of the following:
Nine months ended September 30,
2021
2020
Current tax
$ 10,679
$ 25,129
Deferred tax
(956 )
(3,455 )
Income tax expense
$ 9,723
$ 21,674
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company mainly operates in Hong Kong that is subject to taxes in the jurisdictions in which they operate, as follows:
United States of America
FJHL is registered in the State of Wyoming and is subject to the tax laws of United States of America.
For the nine months ended September 30, 2021 and 2020, there was no operation in the United States of America.
BVI
Under the current BVI law, the Company is not subject to tax on income.
15 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Hong Kong
The Company’s subsidiary operating in Hong Kong is subject to the Hong Kong Profits Tax at the two-tiered profits tax rates from 8.25% to 16.5% on the estimated assessable profits arising in Hong Kong during the current year, after deducting a tax concession for the tax year. The reconciliation of income tax rate to the effective income tax rate for the nine months ended September 30, 2021 and 2020 is as follows:
Nine months ended September 30,
2021
2020
Income before income taxes
$ 127,792
$ 306,179
Statutory income tax rate
16.5 %
16.5 % Income tax expense at statutory rate
21,086
50,519
Tax effect of non-deductible items
637
956
Tax effect of tax holiday
(11,044 )
(26,346 ) Income tax expense
$ 10,679
$ 25,129
The following table sets forth the significant components of the deferred tax liabilities of the Company as of September 30, 2021 and December 31, 2020:
September 30,
2021
December 31,
2020
Deferred tax liabilities:
Accelerated depreciation
$ (3,708 )
$ (4,682 ) NOTE – 5 RELATED PARTY TRANSACTIONS
Apart from the transactions and balances detailed elsewhere in these accompanying condensed consolidated financial statements, the Company has no other significant or
1995. Dycam purchased materials from one vendor for $280,000 and $50,000, which represented 55% and 17%material related party transactions during the periods presented.NOTE – 6 CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of
all materials purchased duringrisk:(a) Major customers
For the three months ended
March 31, 1996September 30, 2021, there is one single customer who accounts for 100% of the Company’s revenues totaling $97,651.For the three months ended September 30, 2020, there is one single customer who accounts for 100% of the Company’s revenues totaling $542,900 and
1995, respectively. Concentrationits outstanding receivable balances ofCredit Risk Financial investments which potentially expose$543,639 as at period-end date.For the nine months ended September 30, 2021, there is one single customer who accounts for 100% of the Company’s revenues totaling $565,824.
For the nine months ended September 30, 2020, there is one single customer who accounts for 87% or more of the Company’s revenues totaling $818,008 and its outstanding receivable balances of $543,639 as at period-end date.
All of the Company’s customers are located in Hong Kong.
(b) Major vendor
For the three months ended September 30, 2021, there is one single vendor who accounts for 100% of the Company’s purchases totaling $81,348.
16 Table of Contents FOVEA JEWELRY HOLDINGS, LTD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
For the three months ended September 30, 2020, there is one single customer who accounts for 100% of the Company’s purchases totaling $271,443 and its outstanding receivable balances of $271,812 as at period-end date.
For the nine months ended September 30, 2021, there is one single customer who accounts for 100% of the Company’s purchases totaling $407,903.
Nine months ended September 30, 2020
September 30, 2020
Vendors
Purchases
Percentage
of purchases
Accounts
payable
Vendors B
$ 515,657
85 %
$ 271,812
Vendors C
88,909
15 %
0
Total:
$ 604,566
100 %
Total:
$ 271,812
The Company’s vendor is located in Hong Kong.
(c) Economic and political risk
The Company’s major operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.
(d) Exchange rate risk
The Company cannot guarantee that the current exchange rate will remain steady; therefore there is a possibility that the Company
to a concentrationcould post the same amount ofcredit risk as defined by Statement of Financial Accounting Standards No. 105, consist primarily of cashprofit for two comparable periods andaccounts receivable. The Company places its cash with high credit quality institutions but at times has amounts in one institution in excessbecause of thefederally insured limitfluctuating exchange rate actually post higher or lower profit depending on exchange rate of$100,000. ConcentrationHKD converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.NOTE – 7 COMMITMENTS AND CONTINGENCIES
As of
credit risk with respect to trade receivables is limited due to the diversity of the Company's customer base. Generally,September 30, 2021, the Companydoes not require collateralhas no material commitments orother security to support customer receivables. Management consistently monitorscontingencies.NOTE – 8 SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before condensed consolidated financial statements are issued, the Company has evaluated all events or transactions that occurred after September 30, 2021, up through the date the Company issued the unaudited condensed consolidated financial statements.
17 Table of Contents ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following information should be read in conjunction with (i) the financial
conditionstatements ofits customers to reduceFovea Jewelry Holdings, Ltd., a Wyoming corporation (the “Company”), and therisk of loss. 7DYCAM INC. NOTES TO FINANCIAL STATEMENTS - CONTINUED NOTE 3 - TRANSACTIONS WITH STYLES - - --------------------------------- Note Receivable from Styles on Video Inc. On December 14, 1994, Dycam loaned to Styles $500,000. On January 25, 1995, Dycam loaned an additional $500,000 to Styles. Styles signed an amendednotes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information andrestated promissory note dated January 25, 1995 forthefull $1,000,000 note, bearing interest at 2% above a bank's prime rate, interest payable monthly, with a maturity date of September 1, 1995. Dycam subsequently extended the maturity date of the note toDecember 31,1998,2020 audited financial statements andfixed the interest rate at 10%. The interest is payable monthly. The Note is secured by a pledge of 1,916,667 shares of the common stock of Dycam owned by Styles. Interest income of approximately $25,000 isrelated notes included in theaccompanyingCompany’s Annual Report on Form 10-K (File No. 000-56156; the “Form 10”), as filed with the Securities and Exchange Commission on March31, 1996 statement26, 2021. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements.OVERVIEW
The Company is incorporated in the State of Wyoming as a result of a domestication from the State of Nevada on March 4, 2019, and has a fiscal year end of December 31.
CRITICAL ACCOUNTING POLICIES
PLAN OF OPERATION
Our plan of operations
relatedover the next 12 month period is tothe Styles loan. The carrying amountcontinue developing our website to have a fully functioning online store and sell our diamond products.Results of Operations
Comparison of the
note receivable approximates its fair market value at December 31, 1995. Accounts Receivable From Subsidiary of Styles Included in accounts receivable at March 31, 1996 is approximately $35,000 due from a subsidiary of Styles. Revenues Included in the accompanying March 31, 1996 statement of operations under camera salesthree months ended September 30, 2021 andlicense fees is $33,000 and $16,000, respectively, of revenues related to camera equipment leased to a subsidiary of Styles. NOTE 4 - PROPERTY AND EQUIPMENT - - ------------------------------- Property and equipment at March 31, 1996 consists of the following:
Machinery and equipment $289,000 Camera equipment 223,000 Office equipment 105,000 ----------- 617,000 Less: accumulated depreciation (180,000) ----------- $ 437,000 ===========8MANAGEMENT'S DISCUSSION AND ANALYSIS GeneralSeptember 30, 2020The
Company commenced operations in April 1988, and was incorporated in Delaware in July, 1988. The Company became a wholly owned subsidiary of Styles on Video Inc. a publicly traded Delaware corporation (Styles) on February 7, 1994. Effective September 21, 1994, the Company effected an underwritten Rights Offering of 1,000,000 shares of its Common Stock. From and after the close of the Rights Offering, Styles owned approximately 55% of the Company's common stock. Since its inception, the Company's business has been the design, manufacture and sale of digital cameras and associated hardware and software products primarily for use with personal computers. Substantially all of the Company's revenues are derived from sales of digital cameras and supporting software and accessory products, technology licensing fees, and contract engineering work. Exceptfollowing table sets forth certain operational data for thehistorical information contained herein, the matters discussed in this Management's Discussion and Analysis are forward-looking statements that involve risks and uncertainties and, in some cases, are based upon various factors beyond Dycam's control. These factors include, among other things, the ability of Forever Yours to execute its business plan for the purchase and utilization of Dycam's digital cameras pursuant to their existing agreement, the ability of SOV to continue to service its outstanding indebtedness owed to Dycam, the market reception for digital cameras in general and Dycam's products specifically, the impact of competition from other companies in the digital camera industry, developments which may render Dycam's products and services obsolete or less attractive, Dycam's financial constraints, and overall economic conditions. Results of Operations Threethree months endedMarch 31, 1996September 30, 2021, compared to the three months endedMarch -------------------------------------------------------------------------- 31, 1995 - - -------- TotalSeptember 30, 2020:
Three months ended
September 30,
2021
2020
Revenue
$ 97,651
$ 542,900
Cost of revenue
(81,348 )
(271,443 ) Gross profit
16,303
271,457
Operating Expenses
(10,803 )
(8,630 ) Income from operations
5,500
262,827
Income tax expense
(295 )
(22,312 ) NET INCOME
$ 5,205
$ 240,515
Revenue. We generated revenues of $97,651 and $542,900 for the three months ended
March 31, 1996 were $845,000. Total revenues increased $437,000 (107%) from revenuesSeptember 30, 2021 and 2020, respectively. The decrease in revenue is attributable to the decrease in market demand.Cost of
$408,000Revenue. Cost of revenue for the three months endedMarch 31, 1995. The increase in revenueSeptember 30, 2021, wasprimarily associated with increased camera sales and contract engineering services. Revenues from camera sales were $763,000 (90% of total revenue) in the three months ended March 31, 1996$81,348, as compared to$405,000 in 1994 (99%cost oftotal revenue). Revenues from contract engineering were $66,000 (8%revenue ofrevenue) in the period as compared to negligible contract engineering revenues in$271,443 for the same period ended September 30, 2020. Cost of1995. License fee revenues in the period ended March 31, 1996 of $16,000 (2% of revenue) were realized from one customer, Forever Yours Inc. Dycam continues to pursue its standard product strategy by facilitating the use of general purpose digital cameras, and selling a range of Dycam branded and third party digital camera products, software, and accessories to selected target markets. Dycam, however, will continue to devote the majority of its engineering efforts in the custom product lines to exploit the opportunities to design products that combine custom built digital cameras with specialized software, hardware or packaging in order to satisfy an identified business opportunity. During 1995, Dycam devoted a substantial portion of its resources to pursuing custom and contract engineering business with the goal of generating future sales. One example of this strategy is Dycam's relationship with Forever Yours. Dycam believes that during 1996 a substantial portion of its revenues will be comprised of revenues derived from the sale of cameras to, and licensing revenues from, Forever Yours. The core element of the Forever Yours camera system is a specialized digital camera subsystem engineered and produced by Dycam under an exclusive contract with Forever Yours. Gross profits are comprised of revenues less direct costs of products and services. Gross profits as a percentage of revenues for the three months ended March 31, 1996 increased to 36%, compared to 15% in the three months ended March 31, 1995,revenue decreased primarily as a result of theincreased revenue from mature camera product sales, decreasesdecrease innew product startup costs,market demand.Gross Profit. We achieved a gross profit of $16,303 and
increased revenues from licenses and contract engineering. Also contributing to the improvement is the improved absorption of fixed costs afforded by the overall increase in revenues. Gross margins however, may continue to remain at lower levels if the Company's custom products business does not contribute a significant portion to the Company's revenues. 9Selling, general and administrative expenses consist of administrative expenses at the Company headquarters, the salaries of corporate officers and sales personnel, advertising and promotion, accounting, legal and other professional expenses, rent and occupancy costs. Selling, general and administrative expenses decreased $45,000$271,457 for the three months endedMarch 31, 1996September 30, 2021, and 2020, respectively. The decrease in gross profit is primarily attributable to$285,000 (34%the decreasing market demand.
18 Table of Contents Operating Expenses. We incurred G&A expenses of
revenues) from $330,000 (81%$10,803 and $8,630 for the three months ended September 30, 2021, and 2020, respectively. The increase in G&A is primarily attributable to increase professional, administrative and other fees.Income Tax Expense. Our income tax expenses for the three months ended September 30, 2021 and 2020 were $295 and $22,312, respectively.
Net Income. During the three months ended September 30, 2021, we incurred a net income of
revenues)$5,205, as compared to net income of $240,515 for the same periodin 1995.ended September 30, 2020.Comparison of the nine months ended September 30, 2021 and September 30, 2020
Nine months ended September 30,
2021
2020
Revenue
$ 565,824
$ 942,965
Cost of revenue
(407,903 )
(604,566 ) Gross profit
157,921
338,399
Operating Expenses
(30,129 )
(32,220 ) Income from operations
127,792
306,179
Income tax expense
(9,723 )
(21,674 ) NET INCOME
$ 118,069
$ 284,505
Revenue. We generated revenues of $565,824 and $942,965 for the nine months ended September 30, 2021 and 2020, respectively. The decrease
resulted primarily from reductionsinpersonnel and expenditures in the 1996 period, and continuing efforts to control costs. Product development and research expenses decreased $40,000 to $159,000 (19% of revenues) in the three months ended March 31, 1996 compared to $199,000 (49% of revenues) in 1995. This decreaserevenue is attributable toreductionsthe decrease inpersonnel, andmarket demand.Cost of Revenue. Cost of revenue for the
completion of certain developments of products introduced for sale in 1995, including the camera developed in conjunction with Forever Yours, Inc.. The Company believes that continuing research and development is essential to maintaining its competitive position, and expects to continue to expend funds in this area. Inventories decreased by $74,000 to $624,000 at March 31, 1996 whennine months ended September 30, 2021, was $407,903, as compared toDecember 31, 1995,cost of revenue of $604,566 for the same period ended September 30, 2020. Cost of revenue decreased primarily as a result of theincreasedecrease incamera shipments, including the Forever Yours camera system,market demand.Gross Profit. We achieved a gross profit of $157,921 and
continuing sales of older products from inventory. The acceptance and success of the Forever Yours business is not yet assured, and if unsuccessful may result in lower than anticipated revenues$338,399 for theCompanynine months ended September 30, 2021, anda write down2020, respectively. The decrease in gross profit is primarily attributable to the decreasing market demand.Operating Expenses. We incurred G&A expenses of
the carrying value of that unique inventory associated with the Forever Yours camera system. The net loss per common share was ($0.07)$30,129 and $32,220 for thethreenine months endedMarch 31, 1996September 30, 2021, and 2020, respectively. The decrease in G&A is primarily attributable to decrease professional, administrative and other fees.Income Tax Expense. Our income tax expenses for the nine months ended September 30, 2021 and 2020 were $9,723 and $21,674, respectively.
Net Income. During the nine months ended September 30, 2021, we incurred a net income of $118,069, as compared to net
loss per common shareincome of($0.16)$284,505 for thethree monthssame period endedMarch 31, 1995.September 30, 2020.Liquidity and Capital Resources
At March 31, 1996, DycamAs of September 30, 2020, we had cash and
short-term investments on handcash equivalents of$1,385,000, up $11,000 from $1,374,000 at$956,572. As of December 31,1995. Accounts receivable, net2020, we had cash and cash equivalents ofallowance for doubtful accounts of $5,000, increased $86,000 during$832,151.
Nine Months Ended September 30,
2021
2020
Net cash provided by operating activities
$ 133,540
$ 29,501
Net cash used in investing activities
$ -
$ -
Net cash provided by financing activities
$ -
$ 2,062
19 Table of Contents Net Cash Provided By Operating Activities.
For the
threenine months endedMarch 31, 1996. CameraSeptember 30, 2021, net cash provided by operating activities was $133,540 which consisted primarily of a net income of $118,069, depreciation of property, plant and equipmentrelated to operating leases to Forever Yours, increasedof $5,794, an increase in income tax payables of $10,651 and offset by$23,000 duringa decrease in deferred tax liabilities of $974.For the
threenine months endedMarch 31, 1996. Such cameraSeptember 30, 2020, net cash provided by operating activities was $29,501, which consisted primarily of a net income of $284,505, depreciation of property, plant and equipmentwill be depreciated over the lifeofthe leases. Current liabilities increased by $145,000 to $344,000, primarily as a result$5,798, an increase in accounts receivable ofincreases$543,639, an increase in accounts payable of$135,000. Dycam's working capital at March 31, 1996 was $1,900,000$271,812, an increase in income tax payable of $25,164, offset by a decrease in accrued expenses and other payables of$125,000$10,708 and a decrease in deferred tax liabilities of $3,431.Net Cash Used In Investing Activities.
For the nine months ended September 30, 2021 and 2020, net cash used in investing activities was $0.
Net Cash Provided By Financing Activities.
For the nine months ended September 30, 2021, net cash provided by financing activities was $0.
For the nine months ended September 30, 2020, net cash provided by financing activities was $2,062, which primarily consisted of advances from a director.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Subsequent Events
None through the date of this filing.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 3.
ITEM 4. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, our Chief Executive Officer, who acts as both our principal executive officer and our principal financial officer, is responsible for conducting an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when
comparedthis report was being prepared. Based on this evaluation, our Chief Executive Officer, who acts as both principal executive officer and principal financial officer, concluded as of the evaluation date that our disclosure controls and procedures were not effective as of September 30, 2021.There were no changes in the Company’s internal controls over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to
$2,025,000materially affect the Company’s internal control over financial reporting.
20 Table of Contents PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not currently subject to any legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.
ITEM 1A.RISK FACTORS
As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
ITEM 5. OTHER INFORMATION.
Series B Preferred Stock
On April 12, 2021, the Company designated a class of preferred stock titled, Series B Preferred Stock, with a par value of $0.001 per share, and consisting of one share. The Series B preferred carries voting rights equal to 110% of the total voting rights of the outstanding common stock and voting power of the Company, and has the right to appoint one director of the Company.
21 Table of Contents Additionally, the one share of Series B Preferred Stock contains protective provisions, which precludes the Company from taking the certain actions without the approval of the holder of the share of Series B Preferred Stock. More specifically, so long as any shares of Series B Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at
Decemberleast a majority of the then outstanding shares of Series B Preferred Stock, voting as a separate class:
(a)
amend the Articles of Incorporation or, unless approved by the Board of Directors, including by the Series B Director, amend the Company’s Bylaws;
(b)
change or modify the rights, preferences or other terms of the Series B Preferred Stock, or increase or decrease the number of authorized shares of Series B Preferred Stock;
(c)
reclassify or recapitalize any outstanding equity securities, or, unless approved by the Board of Directors, including by the Series B Director, authorize or issue, or undertake an obligation to authorize or issue, any equity securities or any debt securities convertible into or exercisable for any equity securities (other than the issuance of stock-options or securities under any employee option or benefit plan);
(d)
authorize or effect any transaction constituting a “Deemed Liquidation” under the Articles, or any other merger or consolidation of the Company;
(e)
increase or decrease the size of the Board of Directors as provided in the Bylaws of the Company or remove the Series B Director (unless approved by the Board of Directors, including the Series B Director);
(f)
declare or pay any dividends or make any other distribution with respect to any class or series of capital stock (unless approved by the Board of Directors, including the Series B Director);
(g)
redeem, repurchase or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any outstanding shares of capital stock (other than the repurchase of shares of Common Stock from employees, consultants or other service providers pursuant to agreements approved by the Board of Directors under which the Company has the option to repurchase such shares at no greater than original cost upon the occurrence of certain events, such as the termination of employment) (unless approved by the Board of Directors, including the Series B Director);
(h)
create or amend any stock option plan of the Company, if any (other than amendments that do not require approval of the stockholders under the terms of the plan or applicable law) or approve any new equity incentive plan;
(i)
replace the President and/or Chief Executive Officer of the Company (unless approved by the Board of Directors, including the Series B Director);
(j)
transfer assets to any subsidiary or other affiliated entity (unless approved by the Board of Directors, including the Series B Director);
(k)
issue, or cause any subsidiary of the Company to issue, any indebtedness or debt security, other than trade accounts payable and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase or otherwise alter in any material respect the terms of any indebtedness previously approved or required to be approved by the holders of the Series B Preferred Stock (unless approved by the Board of Directors, including the Series B Director);
(l)
modify or change the nature of the Company’s business;
(m)
acquire, or cause a Subsidiary of the Company to acquire, in any transaction or series of related transactions, the stock or any material assets of another person, or enter into any joint venture with any other person (unless approved by the Board of Directors, including the Series B Director); or
(n)
sell, transfer, license, lease or otherwise dispose of, in any transaction or series of related transactions, any material assets of the Company or any Subsidiary outside the ordinary course of business (unless approved by the Board of Directors, including the Series B Director).
Additionally, as long as any shares of Series B Preferred Stock remain outstanding, the holders of a majority of the shares of Series B Preferred Stock represented at a duly called special or annual meeting of such stockholders or by an action by written consent for that purpose shall be entitled to elect a special director to the board of directors.
Stock Purchase Agreement
On April 13, 2021, the Company entered into a Stock Purchase Agreement with Liao Zhicheng, the Company’s majority stockholder, pursuant to which the Company sold to Liao Zhicheng one share of Series B Preferred Stock in exchange for 3,000,000 shares of common stock of the Company. The Company anticipates cancelling and returning to its authorized capital stock the 3,000,000 shares of common stock purchased from Liao Zhicheng by May 31,
1995. Working capital decrease was primarily2021.
22 Table of Contents Risk Factor
Liao Zhicheng beneficially owns approximately or has the right to vote 100% of our Series B Preferred Stock, which counts for 110% of the total voting rights of the common stock. As a result, he has a controlling voting power in all matters submitted to our stockholders for approval including:
·
The election of our board of directors;
·
The amendment of our Articles of Incorporation or bylaws;
·
The adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.
As a result of
net losseshis ownership and position, Liao Zhicheng is able to substantially influence all matters requiring stockholder approval, including the election of$210,000. The current ratio at March 31, 1996 was 6.5 to 1 compared to 11.2 to 1 at December 31, 1995. Dycamdirectors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by him could affect the market price of our common stock if the marketplace does nothave any long term indebtedness and does not currently maintain any credit facilities. In December 1994 Dycam made a secured loan of $500,000orderly adjust toStyles. Dycam determined that it wasthe increase in shares in thebest interestsmarket and the value ofDycamyour investment in our company may decrease. Liao Zhicheng’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.ITEM 6. EXHIBITS.
(a) Exhibits required by Item 601 of Regulation SK.:
Number
Description
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).*+
101.SCH
Inline XBRL Taxonomy Extension Schema Document*+
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document*+
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document*+
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document*+
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document*+
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)*+
_____________
+ XBRL (Extensible Business Reporting Language) information is furnished and
its shareholders that it make this loan, which enabled Styles to continue funding Forever Yours, and thus the development and manufacturenot filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of theForever Yours digital camera by Forever Yours and Dycam. In January 1995 Dycam approved an additional secured loanSecurities Act of$500,000 to Styles. The two loans were memorialized in a single note bearing interest at the Bank1933, as amended, is deemed not filed for purposes ofAmerica NS&TA prime rate plus two percentage points and was payable interest only for seven months with the entire principal balance plus accrued and unpaid interest thereon due and payable on September 1, 1995. Dycam subsequently extended the maturity dateSection 18 of thenoteSecurities Exchange Act of 1934, as amended, and otherwise is not subject toDecember 31, 1998, and fixed the interest rate at 10% per year. All interest payments due have been paid. The note is secured by 1,916,667 shares of Dycam's Common Stock owned by Styles. If Styles is 10unable to satisfy its obligationsliability underthe note, Dycam may not be repaid and will exercise its right to acquire the 1,916,667 shares of Dycam Common Stock owned by Styles. Since the closing of the Rights Offering, Dycam has expended approximately $3,500,000 of the moneys raised in that offering, which amount includes the above-referenced $1,000,000 secured loan to Styles. Commencing in the second quarter of 1994, Dycam embarked on a program to market and sell its standard digital camera products to select markets. Although Dycam was able to generate short term increases in sales inthesemarkets, it has determined that a large market does not currently exist for its standard digital camera systems. Consequently, during the first quarter of 1995, Dycam decided to de-emphasize the sale of its internally designed standard products and will, in the future, concentrate its efforts on custom product development, value added distribution of standard digital cameras produced by others for Dycam, and cooperative ventures. These cooperative ventures include Dycam's ongoing relationship with Forever Yours, for whom Dycam has developed a digital imaging system designed for taking photographs of newborn infants. Dycam anticipates that its operating and research and development activities in fiscal 1996 will continue to use cash and expects that its cash balance in fiscal 1996 will continue to decline. However, Dycam believes that its existing cash balances, the payments due under the intercompany loan and cash flow from operations will be sufficient to meet its cash requirements through December 1996, after which time it may be required to raise additional capital. In addition, to the extent Dycam experiences growth in the future, or its cash flow from operations is less than anticipated, Dycam may be required to obtain additional sources of cash. There is no assurance that such sources will be available. 11DYCAM INC.sections.
23 Table of Contents SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
IssuerRegistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.Dycam Inc. May 13, 1996 By: John Edling ------------------ John Edling, President and Chief Financial Officer 12
FOVEA JEWELRY HOLDINGS, LTD. | |||
Date: November 22, 2021 | By: | /s/ Thomson Lee | |
Name: | Thomson Lee | ||
Title: | Chief Executive Officer (principal executive officer, principal accounting officer and principal financial officer) | ||
| 24 |