10-K/A: First America Resources Corporation Files Amended Annual Report Due to Shell Company Misclassification

First America Resources Corporation filed an amended annual report to correct a misclassification on its cover page, acknowledging its status as a shell company.

Summary

• First America Resources Corporation filed an amended Annual Report on Form 10-K/A to correct an error in its original filing, where it incorrectly stated it was not a shell company.
• The company has also confirmed its status as a small reporting company.
• This amendment does not modify or update any other disclosures from the original report filed on October 6, 2023.
• The company's previous business involved selling lithium-ion batteries, but this was discontinued after a change in control in 2013.
• First America Resources Corporation is planning to acquire FAMCe, a scrap metal recycling company, or another operating company, with a target completion within the next 12 months, though it may take longer.
• The company had no revenue for the fiscal years ended June 30, 2023 and 2022.
• Operating expenses were $19,121 for 2023 and $17,203 for 2022, resulting in net losses of the same amounts.
• The company's cash and cash equivalents were $97,226 as of June 30, 2023, and $15,847 as of June 30, 2022.
• The company has a significant accumulated deficit of $431,131 as of June 30, 2023.
• The company's financial statements have been prepared assuming it will continue as a going concern, but there is substantial doubt about its ability to do so.
• The company is funded by loans from its President and Director, Jian Li, who is owed $228,933 as of June 30, 2023.
• The company has a net operating loss carried forward of $431,099 available to offset future taxable income.

Sentiment

Score: 3

Explanation: The document reveals significant financial challenges, including no revenue, substantial losses, and a going concern issue. While there are plans for acquisition and new business ventures, the company's current financial state and reliance on related-party loans are major concerns.

Positives

• The company's cash position improved significantly from $15,847 in 2022 to $97,226 in 2023.
• The company received a cash infusion of $100,500 from its President, Mr. Jian Li, to develop its business model.
• The company is actively pursuing an acquisition to become an operating company.

Negatives

• The company has not generated any revenue for the past two fiscal years.
• The company has incurred net losses of $19,121 in 2023 and $17,203 in 2022.
• The company has a significant accumulated deficit of $431,131.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company is reliant on loans from its President and Director, Jian Li.
• The company's disclosure controls and procedures were not effective as of June 30, 2023.
• The company has identified material weaknesses in its internal control over financial reporting.

Risks

• The company's lack of revenue and operating history raise substantial doubt about its ability to continue as a going concern.
• The company is dependent on loans from its President and Director, Jian Li, for funding.
• The company's failure to secure additional financing or generate revenue could lead to the cessation of operations.
• The company's disclosure controls and procedures were not effective as of June 30, 2023.
• The company has identified material weaknesses in its internal control over financial reporting, including a lack of accounting personnel, internal audit function, and audit committee.
• The company's planned acquisition may not be completed within the anticipated timeframe or at all.

Future Outlook

The company anticipates acquiring FAMCe or another operating company within the next 12 months, though it may take longer. The company also plans to pursue real estate investments and battery sales and distribution. The company's ability to execute these plans depends on securing additional financing.

Management Comments

• Management anticipates that after acquisition we will be competitive in pricing of some or all of the following: Copper, Brass, Stainless, Aluminum, High Temp Alloys, Zinc, Tin, Cobalt, Tungsten Alloys, and electronic material.
• Management plans to acquire FAMCe or another operating company.
• Management intends to initially purchase income-producing properties or properties that will produce rent income in a short period of time.
• Management plans to do additional equity financing and sell properties at a higher price to buy new properties.
• Management is in negotiations with a battery supplier for sales and distribution in the US markets.

Industry Context

The company's shift from lithium-ion batteries to scrap metal recycling and real estate reflects a strategic pivot to potentially more profitable sectors. The scrap metal industry is subject to commodity price fluctuations, while real estate investments carry their own set of risks and opportunities. The company's entry into battery sales and distribution aligns with the growing demand for energy storage solutions.

Comparison to Industry Standards

• The company's lack of revenue and significant accumulated deficit are not typical for established companies in the scrap metal recycling or real estate industries.
• Companies like Sims Metal Management and Schnitzer Steel are established players in the scrap metal industry with significant revenue and operational scale, unlike First America Resources Corporation.
• Real estate companies like American Tower and Prologis have established portfolios and revenue streams, which First America Resources Corporation is yet to develop.
• The company's reliance on loans from its President and Director is not a common practice for publicly traded companies, which typically rely on a mix of debt and equity financing from diverse sources.
• The company's internal control weaknesses are a significant concern, as publicly traded companies are expected to have robust internal controls to ensure the reliability of financial reporting.

Related Party Transactions

• The company has significant loans from its President and Director, Jian Li, totaling $228,933 as of June 30, 2023.
• The company's office space is provided at no charge by FAMCe, a company owned primarily by Jian Li.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern issues.
• Employees are limited to management, and their future is tied to the company's ability to secure financing and generate revenue.
• Customers and suppliers are not yet impacted as the company has no current operations, but this will change if the acquisition is completed.
• Creditors, primarily Jian Li, are exposed to the risk of non-repayment of loans if the company fails.

Next Steps

• The company plans to complete the acquisition of FAMCe or another operating company.
• The company intends to acquire income-producing real estate properties.
• The company plans to begin sales and distribution of batteries in the US market.
• The company will need to secure additional equity financing to support its business plans.
• The company will need to address its internal control weaknesses.

Key Dates

Keywords

shell company, amended annual report, scrap metal recycling, FAMCe, going concern, net loss, operating expenses, internal control, material weakness, Jian Li, lithium-ion batteries, real estate, battery technology