10-Q: Legend Spices Becomes Shell Company, Reports Zero Assets

Legend Spices, Inc. has ceased its Armenian operations, becoming a shell company with zero assets and a significant working capital deficit, while planning a capital raise.

Summary

• Legend Spices, Inc. has discontinued its operations in Armenia as of March 29, 2025, and is now operating as a shell company with no new business focus determined.
• Total assets were reported as $0 as of March 31, 2025, and June 30, 2025, following the write-down of all inventory ($572) and accounts receivable ($2,727).
• The company reported no revenue or cost of sales for the three months ended June 30, 2025.
• For the six months ended June 30, 2025, revenue decreased by 78.43% to $644, and gross profit decreased by 69.29% to $285 compared to the same period in 2024.
• Net loss for the six months ended June 30, 2025, was $(8,861), an improvement from $(17,860) in the prior year, primarily due to reduced operating expenses following the cessation of operations.
• A significant related party debt of $69,717 owed by the company was forgiven by former shareholder Khachatur Mkrtchyan on March 31, 2025, and recorded as a capital contribution.
• The company has an accumulated deficit of $118,086 and a working capital deficit of $7,581 as of June 30, 2025.
• Management has identified a material weakness in internal control over financial reporting due to inadequate staffing and supervision in bookkeeping and accounting.
• The company's only employee, Suzanna, resigned on January 31, 2025, and there are currently no new employees handling operations.

Sentiment

Score: 2

Explanation: The company has ceased all operations, has zero assets, and is a shell company with significant going concern doubts. While debt forgiveness improved the balance sheet, the lack of a business model, employees, and effective internal controls presents a highly negative outlook. The only positive is the reduction in cash burn due to cessation of operations, which is not a sign of health.

Positives

• Net loss for the six months ended June 30, 2025, decreased to $(8,861) from $(17,860) in the prior year, primarily due to reduced operating expenses from discontinued operations.
• Net cash used in operating activities significantly decreased to $(399) for the six months ended June 30, 2025, from $(18,553) in the prior year, reflecting the cessation of operations.
• A related party debt of $69,717 was forgiven by a former shareholder, improving the total stockholders' deficit from $(68,047) as of December 31, 2024, to $(7,581) as of June 30, 2025.
• Total current liabilities decreased substantially from $71,985 as of December 31, 2024, to $7,581 as of June 30, 2025, largely due to the debt forgiveness.

Negatives

• The company has discontinued all prior operations and is now a shell company with no new business determined yet.
• Total assets are $0 as of June 30, 2025, following write-downs of all inventory ($572) and accounts receivable ($2,727).
• No revenue or cost of sales were generated in the three months ended June 30, 2025.
• Revenue for the six months ended June 30, 2025, decreased by 78.43% to $644, and gross profit decreased by 69.29% to $285 compared to the prior year.
• The company has an accumulated deficit of $118,086 since inception and a working capital deficit of $7,581 as of June 30, 2025.
• Substantial doubt exists regarding the company's ability to continue as a going concern.
• The company has no employees, with the only employee resigning on January 31, 2025.
• Internal control over financial reporting was deemed not effective due to a material weakness in inadequate staffing and supervision.
• No current commitment from officers, directors, or other financiers to supplement operations or provide future financing.

Risks

• Inability to raise capital through an offering may force the company to curtail or cease operations.
• Failure to obtain financing could have a substantial adverse effect on business and financial results.
• The sale of additional equity or debt securities, if accomplished, may result in dilution to existing shareholders.
• The company is currently a shell company with no determined new business focus, creating uncertainty about future operations and revenue generation.
• A material weakness in internal control over financial reporting due to inadequate staffing and supervision could adversely affect the reliability of financial reporting.
• Exposure to credit risk, interest rate risk, market risk, and currency risk, with no derivative instruments used to mitigate foreign exchange risk.
• Liquidity risk due to reliance on funds from operating subsidiaries (which are now discontinued) and other related sources, or advances.
• Net operating loss carry forwards of approximately $118,086 as of June 30, 2025, are subject to annual limitations and may be limited in use in future years if a change in ownership occurs.

Future Outlook

The company has discontinued its operations in Armenia and is in the process of realigning its business focus without any new business determined yet, effectively operating as a shell company. Management intends to raise capital through an offering to address its going concern issues, but cannot offer assurance that financing will be available or that past performance is indicative of future performance.

Management Comments

• "We have discontinued our operations in Armenia and are in the process of realigning our business focus without any new business determined yet. The Company can currently be understood as a shell company for the time being."
• "Management does not believe past performance is indicative of future performance."
• "We have no current commitment from our Officer and Director or any other financier to supplement our operations or provide us with financing in the future."
• "If we are unable to raise capital from an offering, we may be forced to curtail or cease our operations."
• "The relatively small number of staffs who have bookkeeping and accounting functions prevents us from segregating duties within our financial reporting."

Industry Context

Legend Spices, Inc. has transitioned from a spice and seasonings producer to a shell company, discontinuing all prior operations. This move places it outside its former industry context, as it currently has no active business model or revenue-generating activities. Its future relevance will depend entirely on its ability to acquire new operations or assets, a common trajectory for shell companies seeking reverse mergers or new ventures.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• No pending legal proceedings or litigation, and no governmental authority is contemplating any proceeding that would have a material adverse effect on the company.

Related Party Transactions

• Khachatur Mkrtchyan, the former single largest shareholder, waived $69,717 of debt owed by the company on March 31, 2025, which was recorded as an increase in Additional Paid-In Capital.
• As of June 30, 2025, $5,300 is owed to Qihui Wang for audit fees.

Stakeholder Impact

• Shareholders face significant dilution risk from potential capital raise and uncertainty regarding future business direction and value as a shell company, despite an improved stockholders' deficit due to debt forgiveness.
• There are no employees currently, as the only employee resigned.
• Creditors have seen reduced liabilities due to debt forgiveness, but the company's ongoing going concern risk remains.
• Customers and suppliers are not directly impacted as all prior operations have ceased.

Next Steps

• Raise capital through an offering.
• Realign business focus and determine a new business.

Key Dates

Recommendation

Legend Spices, Inc. has ceased all revenue-generating operations, written down all assets to zero, and is explicitly a shell company with no determined future business. The company has no employees, a material weakness in internal controls, and faces substantial doubt about its ability to continue as a going concern. While a significant related party debt was forgiven, this merely reduces the deficit without addressing the fundamental lack of a viable business. The stated intention to raise capital carries high dilution risk for existing shareholders, with no assurance of success. Given the complete lack of operational activity and severe financial distress, the stock represents a high-risk, speculative investment with no clear path to value creation.

Keywords

shell company, discontinued operations, Armenia, Qihui Wang, Khachatur Mkrtchyan, going concern, capital raise, financial deficit, internal control weakness, spices, seasonings, SEC filing, 10-Q