10-K: Zhanling International Limited Reports Full Year 2023 Results Amidst Leadership and Ownership Changes

Zhanling International Limited, formerly Odenza Corp., released its annual report for the fiscal year ended December 31, 2023, highlighting a year of significant leadership and ownership transitions alongside ongoing efforts to identify a suitable business combination target.

Summary

• Zhanling International Limited, previously known as Odenza Corp., is a development-stage company focused on acquiring a business in China.
• The company has not generated any revenue since its inception in 2009.
• For the fiscal year ended December 31, 2023, the company reported a net loss of $29,283, compared to a net loss of $40,325 in 2022.
• Operating expenses decreased to $28,919 in 2023 from $39,733 in 2022, primarily due to lower professional fees.
• The company's accumulated deficit stood at $379,747 as of December 31, 2023.
• There were significant changes in leadership and ownership during the year, with NingNing Xu appointed as CEO, CFO, and Chairman on April 10, 2023, and YongQing Liu taking over these roles on March 28, 2024.
• The company's auditor is Enrome LLP, which is based in Singapore and is subject to PCAOB inspections.
• The company has 73,200 shares of common stock issued and outstanding as of December 31, 2023.
• The company has identified material weaknesses in its internal controls over financial reporting.

Sentiment

Score: 3

Explanation: The document highlights significant financial challenges, including no revenue, an accumulated deficit, and material weaknesses in internal controls. While there are some positive aspects, such as reduced operating expenses, the overall outlook is concerning from an investment perspective.

Positives

• Operating expenses decreased by $10,814, or 27.22%, year-over-year.
• The company's net loss decreased from $40,325 in 2022 to $29,283 in 2023.

Negatives

• The company has not generated any revenue since its inception.
• The company has an accumulated deficit of $379,747.
• The company has a working capital deficiency of $36,682.
• The company has identified material weaknesses in its internal controls over financial reporting.
• The company's ability to continue as a going concern is dependent on raising capital and achieving profitable operations.

Risks

• The company's securities may be prohibited from trading if the PCAOB cannot inspect its auditor for three consecutive years, or two years if the Accelerating Holding Foreign Companies Accountable Act or the America COMPETES Act becomes law.
• The company's operations are subject to economic, political, and legal developments in China.
• The Chinese government may intervene in or influence the operations of the company's PRC subsidiaries.
• The company faces risks related to the COVID-19 pandemic and its impact on the global economy.
• The company has a limited operating history and limited resources.
• The company is dependent on key personnel and may face conflicts of interest.
• The company may be unable to obtain additional financing to complete a business combination.
• The company faces intense competition for business combination opportunities.
• The company has identified material weaknesses in its internal controls over financial reporting.

Future Outlook

The company intends to use the proceeds of financing and earnings for the acquisition of operating entities in the PRC and does not expect to pay any cash dividends in the foreseeable future. The company plans to seek additional capital through a private placement of its common stock or obtain further loans from related parties as needed.

Management Comments

• Management has plans to seek additional capital through a private placement of its common stock or obtain further loans from related parties as needed.
• Management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2023 based on criteria established in Internal ControlIntegrated Framework issued by COSO.

Industry Context

The company's focus on acquiring a business in China aligns with a broader trend of companies seeking growth opportunities in the Chinese market. However, the company faces significant regulatory and operational risks associated with doing business in China, as well as competition from other entities seeking similar opportunities.

Comparison to Industry Standards

• As a development-stage company with no revenue, Zhanling International's financial performance is not directly comparable to established companies in any specific industry.
• The company's lack of revenue and accumulated deficit are typical for early-stage companies focused on acquisitions.
• The material weaknesses identified in internal controls are a concern and need to be addressed to meet industry standards for public companies.
• The company's reliance on related-party loans is not uncommon for early-stage companies but may raise concerns about financial independence.

Management Changes

Corporate Governance

Related Party Transactions

• The company owed $29,047 to Ms. NingNing Xu for funds advanced as of December 31, 2023.
• Former CEO, Mr. Liang Zhao, waived related party payable of $35,937 as a capital contribution during the year 2023.
• Former CMO, Mr. Xiangchen Li, waived related party payable of $372 as a capital contribution during the year 2023.

Stakeholder Impact

• Shareholders face the risk of dilution if the company raises additional capital through equity financing.
• Shareholders may experience a decline in the value of their investment if the company is unable to complete a business combination or achieve profitable operations.
• Employees may be impacted by changes in leadership and the company's financial instability.
• Creditors face the risk of non-payment if the company is unable to raise sufficient capital or generate revenue.

Next Steps

• The company plans to seek additional capital through a private placement of its common stock or obtain further loans from related parties.
• The company intends to remediate the identified material weaknesses in its internal controls.
• The company will continue to evaluate potential business opportunities.

Key Dates

Keywords

Zhanling International, Odenza Corp, business combination, China, financial reporting, internal controls, PCAOB, audit, leadership change, going concern