{"url_path":"/sec/lvpa/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-18","source_url":"https://www.sec.gov/Archives/edgar/data/831378/0001477932-26-003267-index.html","accession_number":"0001477932-26-003267","cik":"0000831378","ticker":"LVPA","issuer_name":"LVPAI GROUP Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/831378/0001477932-26-003267-index.html","primary_entity_key":"0000831378","primary_entity_name":"LVPAI GROUP Ltd"},"word_count":3150,"has_tables":true,"body_markdown":"**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**\n\n \n\n[Report of Independent Registered Public Accounting Firm](#report) (PCAOB ID: 6104)\n\n \n\nF-1\n\n \n\n \n\n \n\n \n\n \n\n[Balance Sheets as of January 31, 2026 and January 31, 2025](#bs)\n\n \n\nF-2\n\n \n\n \n\n \n\n \n\n \n\n[Statements of Operations for the Years ended January 31, 2026 and January 31, 2025](#sop)\n\n \n\nF-3\n\n \n\n \n\n \n\n \n\n \n\n[Statement of Changes in Stockholders’ Deficit for the Years ended January 31, 2026 and January 31, 2025](#equity)\n\n \n\nF-4\n\n \n\n \n\n \n\n \n\n \n\n[Statements of Cash Flows for the Years ended January 31, 2026 and January 31, 2025](#cf)\n\n \n\nF-5\n\n \n\n \n\n \n\n \n\n \n\n[Notes to the Financial Statements](#notes)\n\n \n\nF-6 - F-9\n\n \n\n \n\n \n\n29\n\n*Table of Contents*\n\n  \n\n**MICHAEL GILLESPIE & ASSOCIATES, PLLC**\n\n**CERTIFIED PUBLIC ACCOUNTANTS**\n\n**Vancouver, WA 98666**\n\n**206.353.5736**\n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n \n\nTo the Shareholders & Board of Directors\n\nLVPAI Group Limited                  \n\n \n\n**Opinion on the Financial Statements**\n\nWe have audited the accompanying balance sheets of LVPAI Group Limited as of January 31, 2026, and 2025 and the related statements of operations, changes in stockholders’ deficit, cash flows, and the related notes (collectively referred to as “financial statements”) for the years then ended. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026, and 2025 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.\n\n \n\n**Going Concern**\n\nThe accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #2 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note #2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.\n\n \n\n**Basis for Opinion**\n\nThese 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.\n\nWe conducted our audits 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.\n\nOur audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.\n\n \n\n/S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC\n\nWe have served as the Company’s auditor since 2023.\n\nPCAOB ID 6104\n\nVancouver, Washington\n\nMay 18, 2026\n\n \n\n \n\nF-1\n\n*Table of Contents*\n\n  \n\n**LVPAI GROUP LIMITED**\n\n**BALANCE SHEETS**\n\n \n\n \n\n \n\n**January 31,**\n\n**202****6**\n\n \n\n \n\n**January 31,**\n\n**202****5**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**ASSETS**\n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal Assets\n\n \n$-\n \n\n \n$-\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**LIABILITIES & STOCKHOLDERS’ DEFICIT**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccrued liabilities\n\n \n$1,835\n \n\n \n$1,465\n \n\nNote payable related parties\n\n \n\n \n166,205\n \n\n \n\n \n136,190\n \n\nTotal liabilities\n\n \n\n \n168,040\n \n\n \n\n \n137,655\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCommitments and Contingencies\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nStockholders’ Equity\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPreferred Series A stock, $0.001 par value, 20,000,000 shares authorized, 8,000,000 shares issued and outstanding\n\n \n\n \n8,000\n \n\n \n\n \n8,000\n \n\nCommon stock, $0.001 par value; 300,000,000 authorized, 100,103,103 shares issued and outstanding\n\n \n\n \n100,103\n \n\n \n\n \n100,103\n \n\nAdditional paid in capital\n\n \n\n \n19,518,948\n \n\n \n\n \n19,518,948\n \n\nAccumulated deficit\n\n \n\n \n(19,795,091 )\n \n\n \n(19,764,706 )\n\nTotal Stockholders’ Deficit\n\n \n\n \n(168,040 )\n \n\n \n(137,655 )\n\nTotal Liabilities and Stockholders’ Deficit\n\n \n$-\n \n\n \n$-\n \n\n \n\nThe accompanying notes are an integral part of these financial statements.\n\n \n\n \n\nF-2\n\n*Table of Contents*\n\n  \n\n**LVPAI GROUP LIMITED**\n\n**STATEMENTS OF OPERATIONS**\n\n \n\n \n\n \n\n**Year ended**\n\n \n\n \n\n**Year ended**\n\n \n\n \n\n \n\n**January 31,**\n\n**202****6**\n\n \n\n \n\n**January 31,**\n\n**202****5**\n\n \n\nRevenue\n\n \n$-\n \n\n \n$-\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOperating Expenses:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAdministrative expenses\n\n \n\n \n30,385\n \n\n \n\n \n32,555\n \n\nTotal operating expenses\n\n \n\n \n30,385\n \n\n \n\n \n32,555\n \n\nLoss from operations\n\n \n\n \n(30,385 )\n \n\n \n(32,555 )\n\nOther expense\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOther expense net\n\n \n\n \n-\n \n\n \n\n \n-\n \n\nLoss before provision for income taxes\n\n \n\n \n(30,385 )\n \n\n \n(32,555 )\n\nProvision for income taxes\n\n \n\n \n-\n \n\n \n\n \n-\n \n\nNet Loss\n\n \n$(30,385 )\n \n$(32,555 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBasic and diluted loss per common share\n\n \n$(0.00 )\n \n$(0.00 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nWeighted average number of shares outstanding\n\n \n\n \n100,103,103\n \n\n \n\n \n100,103,103\n \n\n \n\nThe accompanying notes are an integral part of these financial statements.\n\n \n\n \n\nF-3\n\n*Table of Contents*\n\n  \n\n**LVPAI GROUP LIMITED**\n\n**STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**\n\n**(Audited)**\n\n \n\n \n\n \n\n**Preferred Stock**\n\n \n\n \n\n**Common Stock**\n\n \n\n \n\n**Additional Paid-in**\n\n \n\n \n\n**Accumulated**\n\n \n\n \n\n**Total Stockholders’**\n\n \n\n \n\n \n\n**Shares**\n\n \n\n \n\n**Value**\n\n \n\n \n\n**Shares**\n\n \n\n \n\n**Value**\n\n \n\n \n\n**Capital**\n\n \n\n \n\n**Deficit**\n\n \n\n \n\n**Deficit**\n\n \n\nBalance, January 31, 2024\n\n \n\n \n8,000,000\n \n\n \n$8,000\n \n\n \n\n \n100,103,103\n \n\n \n$100,103\n \n\n \n$19,518,948\n \n\n \n$(19,732,151 )\n \n$(105,100 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n(32,555 )\n \n\n \n(32,555 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBalance, January 31, 2025\n\n \n\n \n8,000,000\n \n\n \n$8,000\n \n\n \n\n \n100,103,103\n \n\n \n$100,103\n \n\n \n$19,518,948\n \n\n \n$(19,764,706 )\n \n$(137,655 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n(30,385 )\n \n\n \n(30,385 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nBalance, January 31, 2026\n\n \n\n \n8,000,000\n \n\n \n$8,000\n \n\n \n\n \n100,103,103\n \n\n \n$100,103\n \n\n \n$19,518,948\n \n\n \n$(19,795,091 )\n \n$(168,040 )\n\n \n\nThe accompanying notes are an integral part of the financial statements.\n\n \n\n \n\nF-4\n\n*Table of Contents*\n\n  \n\n**LVPAI GROUP LIMITED**\n\n**STATEMENTS OF CASH FLOWS**\n\n**(Audited)**\n\n \n\n \n\n \n\n**Year ended**\n\n \n\n \n\n**Year ended**\n\n \n\n \n\n \n\n**January 31,**\n\n**202****6**\n\n \n\n \n\n**January 31,**\n\n**202****5**\n\n \n\n**Cash Flows From Operating Activities:**\n\n \n\n \n\n \n\n \n\n \n\n \n\nNet loss\n\n \n$(30,385 )\n \n$(32,555 )\n\nAdjustments to reconcile net income to net cash provided by (used for) operating activities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nStock- based compensation\n\n \n\n \n-\n \n\n \n\n \n-\n \n\nChanges in operating assets and liabilities:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccrued liabilities\n\n \n\n \n370\n \n\n \n\n \n1,025\n \n\nNet cash used for operating activities\n\n \n\n \n(30,015 )\n \n\n \n(31,530 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**Cash Flows From Financing Activities:**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nProceeds from related party loans\n\n \n\n \n30,015\n \n\n \n\n \n31,530\n \n\nNet cash provided by financing activities\n\n \n\n \n30,015\n \n\n \n\n \n31,530\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nNet Increase In Cash\n\n \n\n \n-\n \n\n \n\n \n-\n \n\nCash At The Beginning Of The Period\n\n \n\n \n-\n \n\n \n\n \n-\n \n\nCash At The End Of The Period\n\n \n$-\n \n\n \n$-\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nSupplemental disclosure of cash flow information:\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash paid for interest\n\n \n$-\n \n\n \n$-\n \n\n \n\nThe accompanying notes are an integral part of these financial statements.\n\n \n\n \n\nF-5\n\n*Table of Contents*\n\n  \n\n**LVPAI GROUP LIMITED**\n\n**NOTES TO FINANCIAL STATEMENTS**\n\n \n\n**NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS**\n\n \n\nLvpai Group Limited has been dormant since November 2011. On March 16, 2020, as a result of a custodianship in Clark County, Nevada, Case Number: A-20-809716-B, Custodian Ventures LLC (“Custodian”) was appointed custodian of the Company.\n\n \n\nThe Company’s accounting year-end is January 31.\n\n \n\n \n\nF-6\n\n*Table of Contents*\n\n  \n\n**NOTE 2 – Going Concern**\n\n \n\nThe accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. The Company has incurred operating losses since inception. As of January 31, 2026 the Company had negative retained earnings of 19,795,091.\n\n \n\nBecause the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Since August 12, 2022 when a change of control in the Company occurred, the Company had been being funded by Mr. Chen Yuanhang  who extended interest-free demand loans to the Company. Historically, the Company has raised capital through private placements, as an interim measure to finance working capital needs and may continue to raise additional capital through the sale of common stock or other securities and obtaining some short-term loans. The Company will be required to continue to so until its operations become profitable. Also, the Company has, in the past, paid for consulting services with its common stock to maximize working capital, and intends to continue this practice where feasible.\n\n \n\n**NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n*Basis of Presentation*\n\n \n\nThe accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.\n\n \n\n*Use of Estimates*\n\n \n\nThe preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities, the liability for the excess share issuance, and disclosure of contingent assets and liabilities at the date of the financial statements. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.\n\n \n\n*Revenue Recognition*\n\n \n\nOn July 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Results for reporting periods beginning after January 1, 2018, are presented under ASC 606. As of and for the year ended January 31, 2026 the financial statements were not impacted due to the application of Topic 606 because the Company had no revenues.\n\n \n\n \n\nF-7\n\n*Table of Contents*\n\n  \n\n*Cash and cash equivalents*\n\n \n\nThe Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On January 31, 2026, and January 31, 2025, the Company’s cash equivalents totaled $0 and $0, respectively.\n\n \n\n*Income taxes*\n\n \n\nThe Company accounts for income taxes under FASB ASC 740, *“Accounting for Income Taxes”*. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, *“Accounting for Uncertainty in Income Taxes”* prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.\n\n \n\nThe amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.\n\n \n\n*Stock-based Compensation*\n\n \n\nThe Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.\n\n \n\n*Net Loss per Share*\n\n \n\nNet loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.\n\n \n\n*Recent Accounting Pronouncements*\n\n \n\nIn February 2016, the FASB issued ASU No. 2016-02, *Leases (Topic 842)*, which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, *Codification Improvements*, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, *Codification Improvements to Topic 842, Leases*in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases *(Topic 842) Targeted Improvements,*which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.\n\n \n\nWe adopted ASC 842 on July 1, 2020. The adoption of this guidance did not have any impact on our financial statements.\n\n \n\n \n\nF-8\n\n*Table of Contents*\n\n  \n\n**NOTE 4 – COMMITMENTS AND CONTINGENCIES**\n\n \n\nThe Company did not have any contractual commitments of January 31, 2026, and 2025.\n\n \n\n**NOTE 5 – NOTES PAYABLE RELATED PARTY**\n\n \n\nMr. Chen Yuanhang, the Company’s  chief executive officer, the principal member of the Company’s Court-appointed custodian is considered a related party. During the year ended January 31, 2026 and 2025, he extended $131,156 and $111,691 in interest free demand loans to the Company, respectively.\n\n \n\nMr. Fuzhu Yang, the Company’s chief former executive officer and chief financial officer and a principal member of the Company’s Court-appointed custodian is considered a related party. During the year ended January 31, 2026 and 2025, he extended $24,499 and $24,499 in interest free demand loans to the Company, respectively.\n\n \n\nMs. Ling Zhao, one of the company's shareholders. During the year ended January 31, 2026 and 2025, She extended $8,550 and nil in interest free demand loans to the Company, respectively.\n\n \n\n**NOTE 6 – HOLDER**\n\n \n\n**Common Stock**\n\n \n\nAs of January 31, 2026, Common stock, $0.001 par value; 300,000,000 authorized, 100,103,103 shares issued and outstanding.\n\n \n\n**Preferred Stock**\n\n \n\nThe Company’s board of directors has the authority, without further action by stockholders, to issue up to 20,000,000 shares of preferred stock in one or more series. The Company’s board of directors may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms and number of shares constituting any series or the designation of any series.\n\n \n\nAs of January 31, 2026, 8,000,000 shares of preferred stock were outstanding, and preferred Series A stock, $0.001 par value, 20,000,000 shares authorized.\n\n \n\n**Rights, Preferences, Privileges and Restrictions of the Outstanding Series A Preferred Stock**\n\n \n\nPursuant to the Certificate of Designation filed on April 27, 2020, the outstanding Series A Preferred Stock has the following rights, preferences, privileges and restrictions:\n\n \n\nDividend Rights – Holders of Series A Preferred Stock are entitled to receive dividends, on an as-converted basis, equally with holders of Common Stock, when and if declared by the Board of Directors.\n\n \n\nLiquidation Preference – In the event of any liquidation, dissolution or winding up of the Company, holders of Series A Preferred Stock are entitled to receive, prior to any distribution to holders of Common Stock, an amount per share equal to the Original Issue Price ($0.001 per share), plus any declared but unpaid dividends. After payment of such preferential amounts and any amounts required for other series of preferred stock, the remaining assets shall be distributed pro rata to holders of Common Stock and each series of preferred stock based on the number of shares of Common Stock held (assuming conversion of all preferred stock).\n\n \n\nRedemption Rights – The Series A Preferred Stock is non-redeemable other than upon mutual agreement of the Company and the holder, and only to the extent permitted by the Certificate of Designation, the Company’s Articles of Incorporation, and applicable law.\n\n \n\nConversion Rights – Each share of Series A Preferred Stock is convertible at the option of the holder at any time into shares of Common Stock at a conversion price of $0.00005 per share (resulting in 20 shares of Common Stock for each share of Series A Preferred Stock). Automatic conversion occurs upon (i) a public offering of the Company’s Common Stock, (ii) a liquidation, dissolution or winding up, or (iii) the date specified by holders of a majority of the outstanding Series A Preferred Stock.\n\n \n\nVoting Rights – Each share of Series A Preferred Stock entitles its holder to that number of votes equal to the number of shares of Common Stock into which it is convertible (20 votes per share). Holders of Series A Preferred Stock vote together with holders of Common Stock as a single class on all matters submitted to a vote of stockholders.\n\n \n\nProtective Provisions – So long as at least 200,000 shares of Series A Preferred Stock are outstanding, the Company may not, without the approval of holders of a majority of the then outstanding Series A Preferred Stock: (a) amend the Articles of Incorporation or bylaws in a manner that materially and adversely changes the rights, preferences or privileges of the Series A Preferred Stock; (b) increase or decrease the total number of authorized shares of Series A Preferred Stock (other than by redemption or conversion); or (c) redeem shares of Common Stock (other than repurchases upon termination of an officer, employee or director under a restricted stock purchase agreement).\n\n \n\nSinking Fund Terms – No sinking fund terms have been established for the Series A Preferred Stock.\n\n \n\n**NOTE 7 – SUBSEQUENT EVENTS**\n\n \n\nCompany evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.\n\n \n\nThere was no event that management deemed necessary for disclosure as a material subsequent event.\n\n \n\n \n\nF-9\n\n*Table of Contents*"}