Item 1. Business
History
Evergreen International Corp. (“Evergreen”, “we”, “our” or “the Company”) is a Delaware corporation organized in 1980 under the name Arbor Energy Corporation. Until September 2, 2003, we engaged in the production and wholesale distribution of wood products for home use, principally fireplace wood and garden stakes. Our products were packaged in and distributed from our facility in Little Marsh, Pennsylvania.
Substantially all of our products were sold to The Home Depot, Inc. for resale at its retail outlets. We informed Home Depot that we would no longer do business with that company due to increased difficulties in transacting business with Home Depot on a profitable basis. We stated to Home Depot that these difficulties included Home Depot’s prohibition against price increases despite increases in our costs of production, a diminution in the Home Depot territories we were allowed to sell product to, and Home Depot’s demands regarding returns of ordered products that we were unwilling to accede to for economic reasons. As a result, on September 2, 2003, we discontinued our wood products business.
On June 22, 2018, the Company entered into a Stock Purchase Agreement (the “SPA”) with a third party (the “Purchaser”) and certain selling stockholders, including the Company’s controlling stockholders (all of the selling stockholders, collectively, the “Sellers”), pursuant to which the Purchaser has agreed to acquire shares of common stock representing approximately 98.75% of the company’s issued and outstanding common stock (the “Shares”). The transaction contemplated by the SPA was subject to various conditions, including payment of a cash dividend to the Company’s stockholders and the Company’s changing its name and stock symbol as per the direction of the Purchaser.
On July 6, 2018, the Board of Directors of the Company (i) declared a cash dividend in an aggregate amount of $181,996, or an average of $0.024760 per share, payable to stockholders of record on July 16, 2018, and (ii) approved an amendment to the Company’s Certificate of Incorporation to change the Company’s name to Evergreen International, Corp, which amendment was filed with the Secretary of State of the State of Delaware on July 13, 2018 and became effective July 20, 2018.
On July 27, 2018, the transactions contemplated by the SPA were closed, and as a result, the Purchaser completed the acquisition of the Shares, representing 98.75% of the company’s issued and outstanding common stock for $325,000, which was funded by the Purchaser’s personal funds. The consummation of the transactions contemplated by the SPA resulted in a change of control of the Company.
Current Business Strategy
The Company is seeking one or more potential business opportunities through merger or acquisition or the establishment of a new business.
Our present management may or may not become involved as management in the aforementioned business or subsidiary or may hire qualified but as yet unidentified management personnel. There can, however, be no assurance whatsoever that we will be able to acquire a business. A potential acquisition of a business may involve the acquisition of, or merger with, a company which does not need additional capital but which desires to establish a public trading market for its shares. A company that seeks a transaction with us in order to consolidate its operations through a merger, reorganization, asset acquisition, or some other form of combination may desire to do so to avoid what it may deem to be adverse consequences of itself undertaking a public offering. Factors considered may include time delays, significant expense, and loss of voting control. In connection with such acquisition, it is possible that an amount of stock constituting control of us would be purchased from us or our current officers, directors and stockholders resulting in substantial profits to such persons without similar profits being realized by other stockholders. Moreover, no assurance can be given with respect to the experience or qualifications of as yet unknown persons who may, in the future, manage our operations and affairs or any business or subsidiary acquired by us. In the event of a change in control of us and our Board of Directors, the payment of any dividends would be wholly dependent upon such persons. Furthermore, it is impossible as yet to determine what, if any, rights applicable state law may provide to our shareholders in any merger or reorganization.
We may establish or acquire a business and/or invest in one or more new and developing corporations, whether directly or by way of statutory merger, which we believe will offer significant long-term growth potential. In the case of an equity position, we will seek to acquire primarily a majority owned and wholly owned capital stock position in such corporation. We are not restricted to any particular industry and may engage in any line of business. Accordingly, we have broad discretion as to the type of businesses we may acquire and equity investments we may make.
We assume that any business we acquire or equity investment we make, whether directly or by way of statutory merger, will involve a business that is new and unseasoned, or a business that has been operating for a limited period of time and has a limited or unsuccessful record of revenues or earnings. Investments in start-up enterprises involve a high degree of risk of total loss of investment. Except in cases of a merger or other instances where stockholders’ approval may be required by applicable law, our stockholders will not have the opportunity to review the relative merits or weaknesses of any proposed business to be acquired or equity investment to be made and, accordingly, will have to rely upon the discretion of our management in selecting a business or investment.
We have identified certain general policies which we will consider in evaluating business acquisition candidates and investment possibilities. These policies are listed below.
1.We will examine the products or services of a business being considered to determine whether a market exists for the products or services and whether the business can manufacture and/or market the products or produce the services at a competitive cost.
2.We will invest in a corporation that we believe has a strong potential for growth. We will evaluate the corporation’s business and determine the quality and experience of its management.
3.We may invest in an operating corporation that has experienced increases in gross revenues which exceed industry averages. The market for the corporation’s products will be evaluated by determining the relationship of size, growth potential and competitive factors in that corporation’s industry. This may include the purchase of businesses which offer opportunities for consolidation.
4.We will also consider the following factors:
(a)Special risks associated with the business and the industry,
(b)Equity available to the business,
(c)Capital requirements of the business,
(d)Potential for profitability and
(e)The effect of market and economic conditions and governmental policies on the business and its products.
It is unlikely that any one prospective corporation with which we may seek to enter a relationship will conform in all respects to the policies described above. Accordingly, this description is intended to serve only as a general guide for our projected investment activities. These policies are not fundamental policies and may be changed at any time by our Management and Director.
We anticipate that we will be brought into contact with a prospective business acquisition or equity investment primarily through the efforts of its officers, directors and principal stockholders who in the course of their business activities frequently come into contact with corporations whose products, services or concepts may be subject to successful development and marketing. In such connection, we may pay a bonus to such officers, directors, principal stockholders or their affiliates. Any such payment would not be higher than that which would ordinarily be paid to a non-affiliated person.
We do not have any contracts or commitments with anyone or any firm with regard to these business activities. We also do not have any arrangements or understandings with respect to the acquisition of any business entity or the acquisition of any interest therein.
We may use independent consultants (who may agree to receive our stock in payment for their services in lieu of cash) to explore areas of, and to seek out, acquisition prospects. Such independent consultants would be expected to have such expertise or knowledge which would be of use to us in any investment decision.
At this time, we believe that any equity investments will be made in private transactions with privately owned corporations. Securities acquired in this manner are restricted from public sale unless they are registered under the Securities Act of 1933, or unless an exemption from registration is available.
Government Regulation
We may be subject to government regulations promulgated by various local, state and Federal government agencies with regard to its proposed business. Additionally, if we purchase equity positions, we will be subject to various rules and regulations promulgated by the Securities and Exchange Commission and the various state securities commissions. We do not intend to engage in the business of investing, reinvesting, owning, holding or trading in securities or otherwise engaging in activities which would render us an “investment company” as defined in the Investment Company Act of 1940, as amended.
Our financing activities will be limited by Section 3(a)(3) of the Investment Company Act of 1940 in that the we will not be permitted to own or propose to acquire investment securities having a total value exceeding 40% of the value of our total assets (excluding government securities and cash items) on an unconsolidated basis. We are permitted under Section 3(a)(3) of the 1940 Act to own or propose to own securities of a majority owned subsidiary which is defined under Section 2(a)(24) of the 1940 Act to mean 50% or more of the outstanding securities of which are owned by us or our majority owned subsidiary. Notwithstanding Section 3(a)(3) of the 1940 Act, we would not be considered an investment company where we are engaged directly or indirectly through a wholly-owned subsidiary (which is defined to mean at least 95% ownership of the outstanding voting stock), in a business or businesses, other than that of investing, owning, holding or trading in securities.
In addition to the limitations imposed by the Investment Company Act of 1940 as mentioned above, there are a number of other provisions of the Federal securities laws which will affect our proposed investments.
Most, if not all, of the securities which we acquire as equity investments will be “restricted securities” within the meaning of the Securities Act of 1933 (“Securities Act”) and will not be permitted to be resold without compliance with the Securities Act. The registration of securities owned by us is likely to be a time consuming and expensive process, and we always bear the risk that, because of these delays, we will be unable to resell such securities, or that we will not be able to obtain an attractive price for the securities. It is highly improbable that we would be able to sell any of the securities we acquired.
Competition
There are numerous companies seeking business opportunities which are larger, have more experience, and are better financed than we are. We may encounter intense competition from numerous other firms seeking new business opportunities. Any investments we make will entail a high degree of business and financial risk that may result in substantial losses to us.
Personnel
Jianguo Wei is the sole Director, CEO, CFO, President and Treasurer of the Company.
Item 1A.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to provide information pursuant to this Item.
Item 1B.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Item 2. Description of Properties
Our business address is 6F Fazhan Building, No. 658, Chaoyang Street Jingxiu District, Baoding City, Hebei, China. We share office space at this address with companies controlled by our majority shareholder, Jianguo Wei. Currently, we are not paying for the use of the facilities or clerical services required as they are deemed to be minimal at this time.
Item 3.
Item 3. Legal Proceedings
We are not presently a party to any known litigation.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock is quoted in the over-the-counter market on the OTC Pink of the OTC market, under the symbol “EVGI.” Our stock is not traded or quoted on any automated quotation system. There is no established trading market for our common stock, and there is minimal trading in our common stock. Quotations for and transactions in our common stock are highly sporadic and such information should not be relied upon as a meaningful indication of the price at which a shareholder could sell our common stock. Accordingly, no price information is being supplied herein.
Recent Sales of Unregistered Securities
During the years ended April 30, 2019 and 2018, no securities were issued by the Company.
Special Sales Practice Requirements with Regard to “Penny Stocks”
In order to protect investors from patterns of fraud and abuse that have occurred in the market for low priced securities commonly referred to as “penny stocks,” the SEC has adopted regulations that generally define a “penny stock” to be any equity security having a market price (as defined) less than $5.00 per share, or an exercise price of less than $5.00 per share, subject to certain exceptions. The price of our stock is currently below $5.00 per share and our stock is subject to the “penny stock” regulations. As a result, broker-dealers selling our common stock are subject to additional sales practices when they sell our stock to persons other than established clients and “accredited investors.” For transactions covered by these rules, before the transaction is executed, the broker-dealer must make a special customer suitability determination, receive the purchaser’s written consent to the transaction and deliver a risk disclosure document relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative taking the order, current quotations for the securities and, if applicable, the fact that the broker-dealer is the sole market maker and the broker-dealer’s presumed control over the market. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Such “penny stock” rules may restrict trading in our common stock and may deter broker-dealers from effecting transactions in our common stock.
As a result of the aforesaid rules regulating penny stocks, the market liquidity for our securities, if any, may be severely and adversely affected by restricting the ability of broker-dealers to sell our securities in the secondary market.
Stockholders
There were approximately 167 holders of record of our common stock as of July 29, 2019, inclusive of those brokerage firms and/or clearing houses holding our securities for their clientele, with each such brokerage house and/or clearing house being considered as one holder. The aggregate number of shares of common stock outstanding as of July 29, 2019 was 7,350,540 shares.
Dividends
A cash dividend of $0.15 per share was declared in April 2004 and paid on May 1, 2004 to all stockholders of record as of March 22, 2004. A cash dividend $0.024760 per share was declared and paid in July 2018 to all shareholders in conjunction with the SPA discussed in Item 1. No other dividends have since been declared on our stock, and we do not anticipate paying dividends on our common stock in the foreseeable future.
Item 6.
Item 6. Selected Financial Data
As a smaller reporting company, we are not required to provide information pursuant to this Item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Historical Background
Historically, we were a wood products company that had been in business since 1980. Our business fluctuated over the years. We were almost wholly dependent on sales to The Home Depot, Inc. As discussed below in “Discontinued Operations,” on September 2, 2003, we discontinued our wood products business.
Discontinued Operations
On September 2, 2003, we terminated our business relationship with Home Depot due to increased difficulties in transacting business with such company on a profitable basis. These difficulties included Home Depot’s prohibition against price increases, despite increases in our costs of production, a diminution in the Home Depot territories to which we were allowed to sell product, and Home Depot’s demands regarding returns of ordered products that we were unwilling to accede to for economic reasons.
General
At present, we are seeking other business opportunities, but we may not be able to identify any such opportunities, and even if we are able to identify other opportunities, we may not be able to capitalize on them or they may not be profitable.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements, including the following:
Income Taxes
We account for income taxes in accordance with FASB ASC Topic 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
FASB ASC Topic 740, Income Taxes, requires us to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, we must measure the tax position to determine the amount to recognize in our consolidated financial statements. We performed a review of our material tax positions in accordance with recognition and measurement standards established by ASC Topic 740 and concluded we had no unrecognized tax benefit that would affect the effective tax rate if recognized for the fiscal years ended April 30, 2019 and 2018.
We include interest and penalties arising from the underpayment of income taxes, if any, in our consolidated statements of operations in general and administrative expenses. As of and April 30, 2019 and 2018, we had no accrued interest or penalties related to uncertain tax positions.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, accounts payable and accrued expenses. The carrying amount of these financial instruments approximates fair value because of the short-term nature of these items.
Fiscal year ended April 30, 2019 compared to the fiscal year ended April 30, 2018
Since we discontinued our wood products business, there were no sales from continuing operations during the years ended April 30, 2019 and 2018.
Selling, general and administrative expenses were $53,059 for the fiscal year ended April 30, 2019, a change of $33,074 or 165% over selling, general and administrative expenses of $19,985 for the fiscal year ended April 30, 2018. The increase during the current period is primarily due to increased filing fees and increased legal and professional fees related to the stock purchase agreement discussed in Note 2 of the financial statements.
Interest income for the year ended April 30, 2019 was $133 compared to $211 for the year ended April 30, 2018.
For fiscal year ended April 30, 2019, we had net loss of $52,926, as compared to a net loss of $19,774 for the prior year. The increase during the current year is primarily due to increased professional fees.
Liquidity and capital resources
As at April 30, 2019, we had cash and cash equivalents of $785 as compared to $205,636 at April 30, 2018.
Our operating activities used $22,855 in cash during the fiscal year ended April 30, 2019 as compared to $20,399 during the fiscal year ended April 30, 2018.
Since terminating our wood products business in September 2003, we have not yet found a suitable business opportunity or merger candidate because of the limited cash resources available to us and the limited and sporadic trading market for our common stock. We continue to explore various business opportunities that may be available to us.
At the present time, we have no commitments for capital expenditures and do not anticipate making any such expenditure unless and until we establish a business or acquire an operating business.
Off-Balance Sheet Transactions
We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.
Critical Accounting Policies and Significant Judgments and Estimates
The Securities and Exchange Commission (“SEC”) issued disclosure guidance for “critical accounting policies.” The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.
Our significant accounting policies are described in the Notes to these financial statements. Currently, based on the Company’s limited activity, we do not believe that there are any accounting policies that require the application of difficult, subjective or complex judgments.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide information pursuant to this Item.
Item 8.
Item 8. Financial Statements and Supplementary Data.
The audited financial statements of the Company for the fiscal year ended April 30, 2019 and the notes thereto are set forth below. The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the U.S., or US GAAP, and pursuant to Regulation S-K as promulgated by the SEC. The financial statements have been prepared assuming the Company will continue as a going concern.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Evergreen International Corp.
(FKA - Arbor Entech Corporation)
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Evergreen International Corp. (FKA - Arbor Entech Corporation) (the Company) as of April 30, 2018 and the related statements of operations, stockholders’ equity, and cash flow for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2018, and the results of its operation and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/s/ Rosenberg Rich Baker Berman P.A.
We have served as the Company’s auditor since 2008.
Somerset, New Jersey
July 24, 2018
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Evergreen International Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Evergreen International Corp. (the “Company”) as of April 30, 2019, and the related statement of operations, changes in stockholders’ (deficit) equity, and cash flows for the year ended April 30, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2019, and the results of its operations and its cash flows for the year ended April 30, 2019, in conformity with accounting principles generally accepted in the United States of America.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has accumulated deficit and negative working capital with no operating activities. 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 1. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provide a reasonable basis for our opinion.
/s/ Friedman LLP
We have served as the Company’s auditor since 2018.
New York, New York
July 29, 2019
EVERGREEN INTERNATIONAL CORP.
BALANCE SHEETS
The accompanying notes are an integral part of the financial statements.
EVERGREEN INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of the financial statements.
EVERGREEN INTERNATIONAL CORP.
STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
YEARS ENDED APRIL 30, 2019 AND 2018
The accompanying notes are an integral part of the financial statements.
EVERGREEN INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the financial statements.
EVERGREEN INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
Historically, Evergreen International Corp. (“Evergreen”, “we”, “our” or “the Company”) was a wood products company that had been in business since 1980. Our business fluctuated over the years. We were almost wholly dependent on sales to The Home Depot, Inc. On September 2, 2003, we terminated our business relationship with Home Depot due to increased difficulties in transacting business with such company on a profitable basis. These difficulties included Home Depot’s prohibition against price increases, despite increases in our costs of production, a diminution in the Home Depot territories to which we were allowed to sell product, and Home Depot’s demands regarding returns of ordered products that we were unwilling to accede to for economic reasons.
On June 22, 2018, the Company entered into a Stock Purchase Agreement (the “SPA”) with a third party (the “Purchaser”) and certain selling stockholders, including the Company’s controlling stockholders (all of the selling stockholders, collectively, the “Sellers”), pursuant to which the Purchaser has agreed to acquire shares of common stock representing approximately 98.75% of the company’s issued and outstanding common stock (the “Shares”). The transaction contemplated by the SPA was subject to various conditions, including payment of a cash dividend to the Company’s stockholders and the Company’s changing its name and stock symbol as per the direction of the Purchaser.
On July 6, 2018, the Board of Directors of the Company (i) declared a cash dividend in an aggregate amount of $181,996, or an average of $0.024760 per share, payable to stockholders of record on July 16, 2018, and (ii) approved an amendment to the Company’s Certificate of Incorporation to change the Company’s name to Evergreen International, Corp, which amendment was filed with the Secretary of State of the State of Delaware on July 13, 2018 and became effective July 20, 2018.
On July 27, 2018, the transactions contemplated by the SPA were closed, and as a result, the Purchaser completed the acquisition of the Shares, representing 98.75% of the company’s issued and outstanding common stock for $325,000, which was funded by the Purchaser’s personal funds. The consummation of the transactions contemplated by the SPA resulted in a change of control of the Company.
Cash and Cash Equivalents
The Company considers all highly liquid short-term investments with a maturity of three months or less at time of purchase to be cash equivalents. There were no cash equivalents as of April 30, 2019 and 2018.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes
Income taxes are provided in accordance with ASC 740 Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Loss Per Share
The basic computation of loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with ASC 260, “Earnings Per Share”. Since the Company has no common stock equivalents, diluted loss per share is the same as basic loss per share.
Fair Value of Financial Instruments
The fair value of the Company’s financial instruments, which consist primarily of cash and cash equivalents and accounts payable and accrued liabilities, approximate their carrying amounts reported due to their short-term nature.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Going Concern Risk
As of April 30, 2019, the Company has accumulated losses of $2,228,780, negative working capital of $30,786, and has no operating activities currently. These factors raise substantial doubt about the Company’s ability to continue as a going concern. It is management’s intention to fund the ongoing operations of the Company while it seeks potential business opportunities.
NOTE 2 - STOCKHLDERS’ (DEFICIT) EQUITY
Change of Control
On June 22, 2018, the Company entered into a Stock Purchase Agreement (the “SPA”) with a third party (the “Purchaser”) and certain selling stockholders, including the Company’s controlling stockholders (all of the selling stockholders, collectively, the “Sellers”), pursuant to which the Purchaser has agreed to acquire shares of common stock representing approximately 98.75% of the company’s issued and outstanding common stock (the “Shares”). The transaction contemplated by the SPA was subject to various conditions, including payment of a cash dividend to the Company’s stockholders and the Company’s changing its name and stock symbol as per the direction of the Purchaser.
On July 27, 2018, the transactions contemplated by the SPA were closed, and as a result, the Purchaser completed the acquisition of the Shares, representing 98.75% of the company’s issued and outstanding common stock for $325,000, which was funded by the Purchaser’s personal funds. The consummation of the transactions contemplated by the SPA resulted in a change of control of the Company.
Special Dividend
As a condition to the SPA discussed above, the Company issued a cash dividend of substantially all of its cash, less a reserve to discharge any remaining liabilities of the Company. The dividend was paid based on an average rate of $0.024760 per share for an aggregate total of $181,996.
NOTE 3 - CHANGES IN MANAGEMENT
Pursuant to the requirements of the SPA closed on July 27, 2018, effective on August 6, 2018, Mr. Brad Houtkin resigned from his positions as President, CEO, CFO, Treasurer and Director of the Company. Mr. Michael Houtkin resigned as the Secretary and Director of the Company, and Ms. Sherry Houtkin resigned as the Director of the Company. Further, effective as of the same date, the Board of Directors of the Company appointed Jianguo Wei as the sole Director, CEO, CFO, President and Treasurer of the Company, and Ge Gao as the Corporate Secretary of the Company.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the fiscal year ended April 30, 2019, the Company’s CEO and related party, Jianguo Wei, paid certain expenses on behalf of the Company. At April 30, 2019, the Company had a payable to this related party of $20,345.
NOTE 5 - INCOME TAXES
For income tax purposes, the Company has available net operating loss carryforwards (“NOL”) at April 30, 2019 of approximately $534,000 expiring in various years from 2024 through 2040 to reduce state taxable income, if any. The Federal NOL generated will not expire due to NOLs having an indefinite life as enacted in the 2017 Tax Cuts and Jobs Act.
The deferred tax asset at April 30, 2019 and 2018 is summarized as follows:
The Company has taken a 100% valuation allowance against the deferred asset attributable to the NOL carry-forwards and other temporary differences due to the uncertainty of realizing the future tax benefits.
The difference in the Federal Statutory Rate of 21% and the state rate of approximately 10% and the Company’s effective tax rate of 0% is due to a valuation allowance against the deferred tax asset attributable to the net operating loss carryforward for federal and state taxes.
NOTE 6 - RECENT ACCOUNTING PRONOUNCEMENTS
Management does not believe there would have been a material effect on the accompanying financial statements had any recently issued, but not yet effective, accounting standards been adopted in the current period.
NOTE 7 - SUBSEQUENT EVENTS
We have evaluated all events that occurred after the balance sheet date through the date when our financial statements were issued to determine if they must be reported. Management has determined that there were no additional reportable subsequent events to be disclosed.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
On September 11, 2018, Rosenberg Rich Baker Berman P.A. ("RRBB") resigned as the independent registered public accounting firm for the Company. On September 12, 2018, the Company engaged Friedman LLP, as its new independent registered public accounting firm. The change of the Company's independent registered public accounting firm from RRBB to Friedman LLP was approved by the Company's sole director.
The reports of RRBB on the Company’s financial statements for the two most recent fiscal years did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the two most recent fiscal years and through the Resignation Date, there were (i) no disagreements between the Company and RRBB on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of RRBB, would have caused RRBB to make reference thereto in their reports on the consolidated financial statements for such years, and (ii) no reportable events as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
We provided a copy of the above statements to RRBB and requested that RRBB furnish a letter addressed to the SEC stating whether it agrees with the above statements, and if not, stating the respects in which it does not agree. A copy of the letter from RRBB addressed to the SEC, dated September 14, 2018, is filed as Exhibit 16.1.
During the fiscal year ended April 30, 2018 and the subsequent period prior to our engagement of Friedman, neither we nor anyone on our behalf consulted Friedman regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on our financial statements, or (ii) any matter that was either the subject of a disagreement with Friedman or a reportable event.
During the fiscal year ended April 30, 2018 and the subsequent period prior to our engagement of Friedman, we have not obtained any written report or oral advice that Friedman concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue.
Item 9A.
Item 9A. Controls and Procedures.
Management’s Report on Disclosure Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating the cost-benefit relationship of possible changes or additions to our controls and procedures.
As of April 30, 2019, we carried out an evaluation, under the supervision and with the participation of our management, including our President/Chief Financial Officer, 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. Based upon that evaluation, our President and Treasurer concluded that our disclosure controls and procedures are effective in enabling us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period.
Management’s Report on Internal Control over Financial Reporting.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
With the participation of our President/Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 30, 2019, based on the framework and criteria established in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our assessment of the effectiveness in internal control over financial reporting as of April 30, 2019, we concluded that our internal controls over financial reporting were effective.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal control Over Financial Reporting.
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Item 9B. Other Information.
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth certain information concerning our directors and executive officers:
The sole director has been elected to serve until the next annual meeting of stockholders, or until his earlier resignation, removal from office, death or incapacity. Officers are elected by the directors at meetings called by the directors for such purpose.
Jianguo Wei has been our President, CEO, CFO, Treasurer and Sole Director since July 27, 2018. The chairman of Beijing Evergreen Grand Healthcare Management Co., Ltd. since August 2018. Mr. Wei has been the chairman of Changqing Foundation since January 2017, the chairman of Changqing International Senior Care Indurstry Group Co., Ltd. (“Changqing International Group”) since June 2011, and the chief executive officer and executive director of Baoding Evergreen since July 2001. From July 1986 to September 1999, Mr. Wei served as the vice president of the Baoding Branch of China Construction Bank Corporation and was responsible for the management of the branch. Mr. Wei received his associate degree in ventilation, water supply, and drainage from Nanjing Institute of Engineering in 1979, and his MBA from the Department of Economic Management of Tsinghua University in 2005.
Ge Gao has been our Corporate Secretary since July 27, 2018. The chief executive officer and director of Beijing Evergreen Grand Healthcare Management Co., Ltd.since August 2018. Mr. Gao has been a director of Changqing Foundation since January 2017 and a director of Changqing International Group since August 2012. From January 2017 to January 2019, Mr. Gao served as the chief executive officer of Changqing Foundation. From July 2009 to July 2011, Mr. Gao served as the department director of the strategy and investment department of Chongqing Zhongxun Group Co., Ltd., responsible for its merger and investment business. From June 2007 to July 2009, Mr. Gao served as the department director of the capital management and investment departments of Chongqing Tongsheng Industry (Group) Co., Ltd., responsible for its capital management and investment businesses. From September 2004 to September 2010, Mr. Gao served as a department director and associate professor of Chongqing Technology and Business University, teaching banking and securities investment related courses. From August 1991 to August 2004, Mr. Gao also worked at Guizhou Zhongtian (Group) Co., Ltd., Huawei Technologies Co. Ltd., and China Southern Securities Co., Ltd., serving on positions related to investment and finance. Mr. Gao received his bachelor's degree in mathematics from Southwest Normal University in 1988 and his master's degree in economics and management from Zhongnan University of Finance and Economics in 1991.
Lack of Committees and Independent Directors
Our Board of Directors does not currently have a compensation committee, audit committee or nominating committee. Consequently, we do not have an audit committee financial expert. We are not required to have an audit committee. We believe that the cost of having an audit committee and retaining a financial expert at this time is unnecessary and would be prohibitive given our current financial condition.
Lack of Independent Directors
Under the National Association of Securities Dealers Automated Quotations definition, an “independent director” means a person other than an officer or employee of the Company or its subsidiaries or any other individuals having a relationship that, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director. The board’s discretion in determining director independence is not completely unfettered. Further, under the NASDAQ definition, an independent director is a person who (1) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years), employed by the company; (2) has not (or whose immediate family members have not) been paid more than $120,000 during the current or past three fiscal years; (3) has not (or whose immediately family has not) been a partner in or controlling shareholder or executive officer of an organization which the company made, or from which the company received, payments in excess of the greater of $200,000 or 5% of that organization’s consolidated gross revenues, in any of the most recent three fiscal years; (4) has not (or whose immediate family members have not), over the past three years been employed as an executive officer of a company in which an executive officer of Arbor has served on that company’s compensation committee; or (5) is not currently (or whose immediate family members are not currently), and has not been over the past three years (or whose immediate family members have not been over the past three years) a partner of Arbor’s outside auditor.
The term “Financial Expert” is defined under the Sarbanes-Oxley Act of 2002, as amended, as a person who has the following attributes: an understanding of generally accepted accounting principles and financial statements; has the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the company’s financial statements, or experience actively supervising one or more persons engaged in such activities; an understanding of internal controls and procedures for financial reporting; and an understanding of audit committee functions.
Currently, the Company has no independent directors. The Company may in the future seek to add to the Board an “independent director” who is a “financial expert” and at that time, to form an audit committee. In the event an audit committee is established, of which there can be no assurances given, its first responsibility would be to adopt a written charter. Such charter would be expected to include, among other things:
●being directly responsible for the appointment, compensation and oversight of our independent auditor, which shall report directly to the audit committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work;
●annually reviewing and reassessing the adequacy of the committee’s formal charter;
●reviewing the annual audited financial statements with our management and the independent auditors and the adequacy of our internal accounting controls;
●reviewing analyses prepared by our management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
●reviewing the independence of the independent auditors;
●reviewing our auditing and accounting principles and practices with the independent auditors and reviewing major changes to our auditing and accounting principles and practices as suggested by the independent auditor or its management;
●reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and
●all responsibilities given to the audit committee by virtue of the Sarbanes-Oxley Act of 2002, which was signed into law by President George W. Bush on July 30, 2002.
Corporate Governance
Our business, property and affairs are managed by, or under the direction of, our Board, in accordance with the General Corporation Law of the State of Delaware and our By-Laws. Members of the Board are kept informed of our business through discussions with the Principal Executive Officer and other key members of management, by reviewing materials provided to them by management.
We intend to review our corporate governance policies and practices by comparing our policies and practices with those suggested by various groups or authorities active in evaluating or setting best practices for corporate governance of public companies. Based on this review, we will adopt, changes that the Board believes are the appropriate corporate governance policies and practices for our Company. We will also adopt changes, as appropriate, to comply with the Sarbanes-Oxley Act of 2002 and subsequent rule changes made by the SEC and any applicable securities exchange.
Director Qualifications and Diversity
In the future, the Board expects to seek independent directors who represent a diversity of backgrounds and experiences that will enhance the quality of the board’s deliberations and decisions. Candidates shall have substantial experience with one or more publicly traded companies or shall have achieved a high level of distinction in their chosen fields. The board will be particularly interested in maintaining a mix that includes individuals who are active or retired executive officers and senior executives, particularly those with experience in the finance and capital market industries.
In evaluating future nominations to the Board of Directors, our Board expects to look for certain personal attributes, such as integrity, ability and willingness to apply sound and independent business judgment, comprehensive understanding of a director’s role in corporate governance, availability for meetings and consultation on Company matters, and the willingness to assume and carry out fiduciary responsibilities. Qualified candidates for membership on the Board will be considered without regard to race, color, religion, sex, ancestry, national origin or disability.
Risk Oversight
Enterprise risks are identified and prioritized by management and each prioritized risk is assigned to the full board for oversight. These risks include, without limitation, the following:
Risks and exposures associated with strategic, financial and execution risks and other current matters that may present material risk to our operations, plans, prospects or reputation.
Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, investment guidelines and credit and liquidity matters.
Risks and exposures relating to corporate governance; and management and director succession planning.
Risks and exposures associated with leadership assessment, and compensation programs and arrangements, including incentive plans.
Board Leadership Structure
In accordance with the Company’s By-Laws, the Chairman of the Board presides at all meetings of the Board. Since the Company does not have a Chairman of the Board, the By-Laws of the Corporation require the President, Jianguo Wei, to serve as the Chairman of the Board and to preside at all meetings. Currently, the offices of President (who serves as Chairman of the Board, Chief Executive Officer and Chief Financial Officer) are not separated.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (“Section 16(a)”) requires our Directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities (collectively, “Section 16 reporting persons”), to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Section 16 reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based on among other things a review of the copies of any such reports furnished to us, during the fiscal year ended April 30, 2019, none of the Section 16 reporting persons failed to file on a timely basis reports required by Section 16(a) of the Exchange Act with respect to such fiscal year.
Code of Ethics
We have not adopted a code of ethics as of the date hereof because we have had no business operations. We intend to adopt a code of ethics if and when we acquire an operating business.
Procedures for Security Holders to Nominate Directors
Our bylaws do not provide a procedure for Stockholders to nominate directors. The Board of Directors does not currently have a standing nominating committee. The Board of Directors currently has the responsibility of selecting individuals to be nominated for election to the Board of Directors. Qualifications considered by the Directors in nominating an individual may include, without limitation, independence, integrity, business experience, education, accounting and financial expertise, reputation, civic and community relationships and industry knowledge. In nominating an existing director for re-election to the Board of Directors, the Directors will consider and review an existing director’s Board and Committee attendance, performance and length of service.
Item 11.
Item 11. Executive Compensation
Summary Compensation Table
The following table summarizes the compensation paid to our President (principal executive officer) and Treasurer (principal financial officer).
(1)Jianguo Wei was appointed CEO, CFO, President on August 6, 2018.
(2)Brad Houtkin became our CEO in December 2008 in connection with acquiring control of our common stock. He resigned from his position on August 6, 2018
We do not have any employment agreements or stock option or bonus plans with any of our executive officers and we do not have any employees. No compensation was paid to any executive officer with respect to fiscal 2019 or 2018.
Narrative Compensation Disclosure
None of our executives are subject to employment contracts. No compensation was paid to any executive officer with respect to fiscal 2019 or 2018.
There were no outstanding equity awards at fiscal year-end. No grants of plan based awards were made in fiscal 2019. There were no option exercises and no stock awards vested, in each case during fiscal 2019 or 2018. We have no plan that provides for payments in connection with retirement. We have no deferred compensation plans.
Compensation of Directors
Directors do not receive any compensation for serving as such or for attending meetings of the Board. They may be reimbursed their out of pocket expenses incurred in connection with attending meetings.
Stock Options
Stock options and equity compensation awards to our directors are at the discretion of the Board. During the past three years, no options or equity awards have been made to our directors.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information as of July 29, 2019, with respect to:
● Any person known by us to own beneficially more than 5% of our common stock;
● Common stock beneficially owned by each of our officers and directors; and
● The amount of common stock beneficially owned by our officers and directors as a group.
Item 13.
Item 13. Certain Relationships and Related Transactions, Director Independence.
During the fiscal year ended April 30, 2019, the Company’s CEO and related party, Jianguo Wei, paid certain expenses on behalf of the Company. At April 30, 2019, the Company had a payable to this related party of $20,345.
Since each director of the Company is related to each other, an officer and/or principal stockholder of the Company, the Company lacks independent directors. See Item 10.
Item 14.
Item 14. Principal Accountant Fees and Services.
The following table presents the aggregate fees of the principal accountants for professional services rendered for the audit of our annual financial statements and review of financial statements included in our Form 10-K’s for the years ended April 30:
No fees, other than those disclosed above, were paid to our independent auditors during the indicated fiscal years.
(1)Audit and quarterly review fees were for audit work performed for the financial statements to be included in our Form 10-K and review of the financial statements to be included in our Form 10-Q’s filed with the Securities and Exchange Commission for the respective years.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
We currently do not have an audit committee. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant.
Item 15
Item 15 Exhibits and Financial Statement Schedules
The following items are filed as part of this report:
(1) Filed as an exhibit to Company’s Form 10-K filed on or about July 24, 2018, and incorporated herein by this reference.
(2) Filed as an exhibit to Amendment No. 1 to the Company’s Registration Statement on Form 10-SB (SEC File No. 01-15207) filed on or about August 2, 1999, and incorporated herein by this reference.
(3) Filed as an exhibit to Company’s Form 8-K filed on or about July 27, 2018, and incorporated herein by this reference.
(4) Filed as an exhibit to Company’s Form 8-K filed on or about September 14, 2018, and incorporated herein by this reference.
*Filed herewith.
**In accordance with Item 601(b)(32((ii) of Regulation S-K and SEC Release No. 34-47986, the certification furnished in Exhibits 32.1 hereto is deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
Item 16. Form 10-K Summary.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Evergreen International Corp.
/s/ Jianguo Wei
Jianguo Wei,
President, Chief Executive Officer and
Chief Financial Officer
Date: July 29, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jianguo Wei
President, CEO, CFO and Director
July 29, 2019
Jianguo Wei
(Principal Executive, Financial and Accounting Officer)