10-K: LAMY Reports Control Change, Net Income Amid Going Concern

LAMY announced a change in control with Zhang Shengwu acquiring majority shares, reported net income for FY2025 despite revenue decline, and faces substantial doubt about its ability to continue as a going concern.

Summary

• A change in control occurred on December 6, 2024, with Zhang Shengwu acquiring 5,250,000 shares, representing approximately 67.51% of the outstanding common stock, for a total consideration of $335,910.
• Former officers Dwight Witmer and Stephen Townsend resigned, and Zhang Shengwu was appointed as the Sole Director, President, Chief Executive Officer, and Secretary of the company.
• The company is a startup developing an eLearning and gaming platform called 'twoplus1' designed to teach financial knowledge and resource management to children.
• Revenue for the fiscal year ended May 31, 2025, decreased to $3,750 from $11,500 in the prior fiscal year.
• Net income for FY2025 was $51,395, a significant improvement from a net loss of $25,807 in FY2024, largely attributable to $86,739 in 'Other Income' from debt forgiveness and a note payable write-off.
• Operating expenses increased to $31,843 in FY2025 from $28,076 in FY2024.
• The cash balance was $0 as of May 31, 2025, down from $1,028 in FY2024.
• The company's accumulated deficit was reduced to $31,770 as of May 31, 2025, from $83,165 in FY2024.
• The independent auditor issued a going-concern opinion, citing substantial doubt about the company's ability to continue operations.
• Management identified material weaknesses in internal control over financial reporting, including a lack of segregation of duties, a limited corporate governance structure, and an absence of a formal management review process.

Sentiment

Score: 3

Explanation: The company faces severe financial challenges, including zero cash, declining revenue, and a going concern opinion. While a net income was reported, it was primarily due to non-recurring debt forgiveness rather than operational strength. Significant internal control weaknesses and reliance on future capital raises for basic operations indicate a high-risk profile.

Positives

• Achieved a net income of $51,395 for FY2025, a significant turnaround from a $25,807 net loss in FY2024.
• Reduced the accumulated deficit from $83,165 to $31,770.
• Net cash used in operating activities decreased from $12,484 in FY2024 to $4,528 in FY2025, indicating improved operational cash burn.
• Former CEO Dwight Witmer forgave $12,958 in advances owed to the company, improving its financial position.
• A $29,000 note payable to Smarty Pants, LLC was written off, contributing to the 'Other Income' and reduction of liabilities.
• Working capital improved from a deficit of $1,205 to $0 as of May 31, 2025.

Negatives

• Revenue declined significantly to $3,750 in FY2025 from $11,500 in FY2024.
• The cash balance is $0 as of May 31, 2025, indicating severe liquidity issues.
• The independent auditor issued a going-concern opinion, raising substantial doubt about the company's ability to continue operations.
• Management reported material weaknesses in internal control over financial reporting, including a lack of segregation of duties and limited corporate governance.
• The company has not yet established an ongoing source of revenue sufficient to cover operating costs.
• Operating expenses increased to $31,843 in FY2025.
• Net cash provided by financing activities decreased from $5,657 in FY2024 to $3,500 in FY2025.

Risks

• Ability to select an appropriate target business or businesses.
• Ability to complete an initial business combination.
• Expectations around the performance of prospective target businesses.
• Success in retaining or recruiting, or changes required in, officers, key employees, or directors following an initial business combination.
• Officers and directors allocating time to other businesses and potential conflicts of interest.
• Potential ability to obtain additional financing to complete an initial business combination.
• The pool of prospective target businesses in the life sciences industry (boilerplate risk from forward-looking statements).
• The ability of officers and directors to generate a number of potential acquisition opportunities.
• Public securities potential liquidity and trading.
• Lack of a market for securities.
• The use of proceeds not held in the trust account or available from interest income on the trust account balance.
• The trust account not being subject to claims of third parties.
• Financial performance following an initial public offering.
• Risks from cybersecurity threats, as a formal risk management program is not yet implemented.
• Inability to obtain adequate capital, which may require reducing, delaying, or eliminating planned operations.
• Substantial doubt about the company's ability to continue as a going concern.
• Material weakness in internal control over financial reporting due to lack of segregation of duties, limited corporate governance structure, and lack of formal management review process.

Future Outlook

Management anticipates that significant revenues will not be generated until sufficient funds are obtained to initiate a marketing program, for which there is no assurance. Operating expenses are expected to remain at current levels unless additional capital is secured or operations generate significant revenues. The company intends to implement a formal cybersecurity risk management program before the end of 2025.

Management Comments

• We are a startup developing a business taping the eLearning market and the gaming market by teaching financial knowledge and resource management to children.
• The product is to be delivered through an educational platform and, in particular, a video game marketed as twoplus1 which for a competitive subscription fee will provide an immersive learning experience in finance and real estate.
• Our business has not suffered any bankruptcy, receivership or similar proceeding at any time.
• We do not anticipate that we will generate significant revenues, until we have obtained sufficient funds to initiate a marketing program, of which there is no assurance.
• Unless and until we obtain additional capital or our operations begin to generate significant revenues, of which there is no assurance, we expect that our operating expenses will remain at current levels.
• Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing.
• Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our system of internal control.
• We may not be able to fully remediate the material weakness until we commence operations at which time, we would expect to hire more staff.
• Mr. Zhang will devote not less than 20 hours per week on the business of the Company.

Industry Context

LAMY is positioning itself in the growing eLearning and gaming markets, specifically targeting children's financial literacy. This niche combines educational technology with interactive entertainment, a trend gaining traction as parents seek engaging ways to teach essential life skills. The company's strategy of using a subscription model and virtual property trading within a game like 'twoplus1' aligns with the gamification of education, which aims to increase engagement and retention. However, as a startup, it faces intense competition from established educational platforms and gaming companies, and its current financial state highlights the significant capital requirements for market penetration and scaling in these competitive sectors.

Comparison to Industry Standards

• The company's current revenue of $3,750 is extremely low compared to established players in the eLearning or educational gaming industry, which often generate millions or billions in annual revenue (e.g., Chegg, Roblox, Duolingo). This indicates LAMY is still in a very nascent, pre-revenue or early-revenue stage.
• The 'going concern' opinion from the auditor is a critical red flag, common for early-stage startups but a significant deviation from financially stable industry peers. Companies like Coursera or Kahoot! have robust revenue streams and positive cash flows, unlike LAMY's current zero cash balance and reliance on future capital raises.
• The reported material weaknesses in internal controls, including lack of segregation of duties and limited corporate governance, fall significantly below the standards expected of publicly traded companies, even smaller reporting companies. Larger, more mature companies like Electronic Arts or Take-Two Interactive have sophisticated internal control frameworks and independent board committees.
• The business model of 'twoplus1' with virtual property trading for commissions is innovative but untested at scale. Successful educational games often rely on strong pedagogical frameworks and widespread adoption, which requires substantial marketing and development capital, far exceeding LAMY's current financial capacity.

Management Changes

Corporate Governance

Legal Proceedings

• Not subject to any material legal proceedings, nor is any material legal proceeding threatened against the company or its officers/directors.

Related Party Transactions

• Dwight Witmer, former CEO, forgave $12,958 in advances owed to him by the company, effective December 6, 2024.

Stakeholder Impact

• Shareholders: Significant change in control, potential for dilution if new capital is raised, high risk due to going concern and internal control weaknesses, but also potential for future growth if business plan succeeds.
• Management/Employees: New sole director and CEO, Zhang Shengwu, with former officers resigning. Current management is lean, with the CEO dedicating part-time hours. Future hiring contingent on operational growth and capital.
• Creditors: Existing liabilities (advances from related parties, note payable) have been significantly reduced or written off, improving the balance sheet, but the company still has no cash.
• Customers: The 'twoplus1' platform is still in development/early stages; future success depends on market acceptance and effective marketing.

Next Steps

• Obtain additional capital from management, significant shareholders, or third-party equity/debt financing.
• Initiate a marketing program for the 'twoplus1' platform once sufficient funds are secured.
• Implement a formal cybersecurity risk management program before the end of 2025.
• Remediate material weaknesses in internal control over financial reporting, potentially by hiring more staff once operations increase.
• Adopt insider trading policies and procedures once trading in common stock commences.

Key Dates

Recommendation

Despite reporting a net income for FY2025, this was primarily driven by non-recurring debt forgiveness and a note payable write-off, not sustainable operational profitability. The company has zero cash, declining revenue, and its independent auditor has issued a going-concern opinion, indicating substantial doubt about its ability to continue operations. Furthermore, significant material weaknesses in internal control over financial reporting and a limited corporate governance structure present severe operational and compliance risks. The stock trades sporadically on OTCID, suggesting low liquidity. Given these fundamental weaknesses and high risks, a seasoned investor would likely recommend a strong sell.

Keywords

eLearning, gaming, financial education, resource management, children's education, startup, twoplus1, SEC filing, 10-K, going concern, corporate governance, cybersecurity, OTC Markets