Forward-Looking Statements
This Quarterly Report on Form 10-Q of Chee Corp. (the "Company") contains
certain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.
These might include statements regarding the Company's financial position,
business strategy and other plans and objectives for future operations, and
assumptions and predictions related thereto. These statements are generally
accompanied by words such as "intend", "anticipate", "believe", "estimate",
"potential(ly)", "continue", "forecast", "predict", "plan", "may", "will",
"could", "would", "should", "expect" or the negative of such terms or other
comparable terminology. The Company believes that the assumptions and
expectations reflected in such forward-looking statements are reasonable, based
on information available to it on the date hereof, but the Company cannot
provide assurances that these assumptions and expectations will prove to have
been correct or that the Company will take any action that the Company may
presently be planning. These forward-looking statements are inherently subject
to known and unknown risks and uncertainties. Actual results or experience may
differ materially from those expected, anticipated or implied in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, available cash reserves,
competition from other similar businesses, and market and general economic
factors. This discussion should be read in conjunction with the condensed
financial statements and notes thereto included in Item 1 of this Quarterly
Report on Form 10-Q. The Company does not intend to update or revise any
forward-looking statements to reflect new information, future events or
otherwise.
Overview
Chee Corp. was incorporated on October 26, 2016 under the laws of the State of
Nevada.
Effective September 4, 2020, Farm House Partners, LLC, an Arizona limited
liability company, purchased 4,500,000 shares of the Company's common stock from
Da Wei Jiang pursuant to a Stock Purchase Agreement, representing 78.8% of the
issued and outstanding shares of common stock of the Company. Farm House
Partners, LLC is owned 67% by Klusman Family Holdings, LLC, an Arizona limited
liability company, and 17% by Debbie Rasmussen, the wife of Michael Witherill.
The amount of consideration for the purchase of such shares of common stock was
a cash payment of $283,973, which was financed through short-term borrowings
from two unaffiliated third parties.
14
As a condition of closing of the transaction, Zhang Shufang, the sole director
and officer of the Company, resigned from all of his positions and Aaron Klusman
and Michael Witherill were appointed as directors of the Company. In addition,
Aaron Klusman was appointed as Chairman and Chief Executive Officer of the
Company and Michael Witherill was appointed Vice-Chairman, Secretary, and
Treasurer of the Company. The effective date of the resignation and appointments
was September 18, 2020.
On March 2, 2021, Michael Witherill resigned as Chief Financial Officer,
Secretary, and Treasurer of the Company, and Rick Gean was appointed as Chief
Financial Officer, Secretary, and Treasurer of the Company. On April 27, 2021,
John Morgan was appointed as a director of the Company. Mr. Morgan is also a
director of Rivulet Media, Inc., a public company subject to the periodic
reporting requirements of the Securities and Exchange Commission
Business
As described above, the Company underwent a change in control transaction
effective September 4, 2020, as a result of which new management of the Company
terminated the Company's existing business operations and decided to reorient
the Company's business activities into commercial real estate.
On December 15, 2020, the Company entered into a binding Letter of Intent with
Klusman Family Holdings, LLC, and Aaron Klusman, pursuant to which the Company
agreed to purchase 100% of the membership interest in Klusman Family Holdings,
LLC from Aaron Klusman, who is also Chief Executive Officer, Chairman of the
Board, and a Director of the Company, for consideration consisting of payments
totaling $1,500,000 and the issuance of 10,945,250 shares of common stock of the
Company. Klusman Family Holdings, LLC is engaged in the business of acquiring,
leasing, and managing real property in Arizona. The transaction is currently
anticipated to close subsequent to July 31, 2021, although there can be no
assurances that the Company will be able to complete this transaction. Upon
closing, the Company expects that this transaction would be accounted for as a
reverse recapitalization.
As of April 30, 2021, the Company had not yet commenced any business activities
in commercial real estate.
The Company's future business activities will be subject to significant risks
and uncertainties, including the need for and availability of additional
capital.
Discontinued Operations and Reclassifications
Prior to the change in control transaction described above, the Company was in
the early stages of developing and financing a business plan to distribute 3D
goods and accessories in China. As a result of the change in control
transaction, the Company's former business operations have been presented as
discontinued operations as of April 30, 2021, and for the three months ended
April 30, 2021. Comparative amounts as of January 31, 2021, and for the three
months ended April 30, 2020 have been reclassified to conform to the current
year's presentation. These changes did not impact the Company's net loss,
shareholders' equity (deficiency) or operating cash flows for any reported
period.
Going Concern
The Company's financial statements have been presented on the basis that the
Company is a going concern, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. As reflected in
the accompanying financial statements, the Company has suffered losses from
operations and negative operating cash flows since inception. During the three
months ended April 30, 2021, the Company incurred a net loss of $164,550. The
Company has financed its working capital requirements during this period
primarily through borrowings from related parties. Accordingly, management has
concluded that these matters raise substantial doubt about the Company's ability
to continue as a going concern.
At April 30, 2021, the Company did not have sufficient cash resources available
to fund its operations and will therefore need to raise additional funds in the
short-term. However, there can be no assurances that the Company will be
successful in this regard.
As a result, management has concluded that there is substantial doubt about the
Company's ability to continue as a going concern. In addition, the Company's
independent registered public accounting firm, in their report on the Company's
financial statements for the year ended January 31, 2021, has also expressed
substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon the
Company's ability to raise additional funds and implement its business plan, and
to ultimately achieve sustainable operating revenues and profitability. The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
The development and expansion of the Company's business subsequent to April 30,
2021 will be dependent on many factors, including the capital resources
available to the Company. No assurances can be given that any future financing
will be available or, if available, that they will be on terms that are
satisfactory to the Company or adequate to fund the development and expansion of
the Company's business operations to a level that is commercially viable and
self-sustaining. There is also significant uncertainty as to the affect that the
coronavirus pandemic may have on the availability, amount, and type of financing
in the future.
15
If cash resources are insufficient to satisfy the Company's ongoing cash
requirements, the Company would be required to scale back or discontinue its
operations, obtain funds, if available, although there can be no certainty,
through strategic alliances that may require the Company to relinquish rights to
any assets, or to discontinue its operations entirely.
Recent Accounting Pronouncements
Information with respect to recent accounting pronouncements is provided at Note
2 to the condensed financial statements for the three months ended April 30,
2021 and 2020.
Concentration of Risk
Information with respect to concentration of risk is provided at Note 2 to the
condensed financial statements for the three months ended April 30, 2021 and
2020.
Critical Accounting Policies and Estimates
The discussion and analysis of financial condition and results of operations
presented below is based on the Company's condensed financial statements for the
three months ended April 30, 2021 and 2020, which have been prepared in
conformity with accounting principles generally accepted in the United States of
America ("GAAP"). Certain accounting policies and estimates are particularly
important to the understanding of the Company's financial position and results
of operations and require the application of significant judgment by management
or can be materially affected by changes from period to period in economic
factors or conditions that are outside of the Company's control. As a result,
these issues are subject to an inherent degree of uncertainty. In applying these
policies, management uses its judgment to determine the appropriate assumptions
to be used in the determination of certain estimates. Those estimates are based
on the Company's historical operations, the future business plans and the
projected financial results, the terms of existing contracts, trends in the
industry, and information available from other outside sources. For a more
complete description of the Company's significant accounting policies, see Note
2 to the condensed financial statements.
Results of Operations
At April 30, 2021, the Company had no revenue-generating operations and is
dependent on periodic infusions of debt and/or equity capital to fund its
operating requirements. As described above, the Company is attempting to enter
into the commercial real estate business but has not yet acquired any interests
in commercial real estate, and there can be no assurances that the Company will
be successful in this regard.
Operating Expenses
The Company generally recognizes operating costs and expenses as they are
incurred in the appropriate category in the Company's statement of operations.
The Company's operating costs and expenses may also include non-cash components
related to depreciation and amortization of property and equipment and
stock-based compensation.
General and administrative costs and expenses consist of accounting fees, audit
fees, legal fees, transfer agent fees, and other general corporate expenses.
Management expects general and administrative costs and expenses to increase in
future periods as the Company develops its business operations and adds
personnel, and incurs additional costs related to its increased operation as a
public company including higher legal, accounting, insurance, compliance,
compensation, and other costs.
16
The Company's condensed statements of operations as discussed herein are
presented below.
Three Months Ended
April 30,
2021 2020
Revenues $ - $ -
General and administrative costs and expenses:
Compensation to officers, directors, affiliates, and other
related parties 96,000 -
Other 88,313 6,687
Total costs and expenses (184,313 ) (6,687 )
Loss from operations (184,313 ) (6,687 )
Other income (expense):
Interest income, related party 25,801 -
Interest expense, related party (6,038 ) -
Total other income (expense), net 19,763 -
Loss from continuing operations (164,550 ) (6,687 )
Income (loss) from discontinued operations - (505 )
Net loss $ (164,550 ) $ (7,192 )Net income (loss) per common share - basic and diluted
Loss from continuing operations
$ (0.02 ) $ (0.00 )
Income (loss) from discontinued operations (0.00 ) 0.00
Net loss $ (0.02 ) $ (0.00 )
Weighted average common shares outstanding - basic and
diluted 7,207,250 5,707,250
Three Months Ended April 30, 2021 and 2020
Revenues. The Company did not have any operating revenues for the three months
ended April 30, 2021 and 2020.
General and Administrative.
Officers, Directors, Affiliates and Other Related Parties.
For the three months ended April 30, 2021, general and administrative costs
associated with officers, directors, affiliates, and other relates parties were
$96,000, which consisted of compensation costs.
Other.
For the three months ended April 30, 2021, other general and administrative
costs were $88,313, which consisted of $23,580 of accounting fees, $30,433 of
legal services, $17,650 of consulting fees and professional services, $7,479 of
payroll expense, and $9,171 of other costs.
For the three months ended April 30, 2020, general and administrative costs were
$6,687, which consisted of $5,500 of accounting and $1,187 of other costs.
Loss from Continuing Operations. For the three months ended April 30, 2021, the
Company had a loss from continuing operations of $164,550, as compared to a loss
from continuing operations of $6,687 for the three months ended April 30, 2020.
Interest Income. For the three months ended April 30, 2021, the Company had
interest income of $25,801 related to the notes receivable from Klusman Family
Holdings, LLC, a related party. The Company had no interest income for the three
months ended April 30, 2020.
Interest Expense. For the year three months ended April 30, 2021, the Company
had interest expense of $6,038 related to the unsecured promissory notes payable
to Lawrence Silver and Farm House Partners, LLC, a related party. The Company
had no interest expense for the three months ended April 30, 2020.
Loss from Continuing Operations. For the three months ended April 30, 2021, the
Company had a loss from continuing operations of $164,550, as compared to a loss
from continuing operations of $6,687 for three months ended April 30, 2020.
17
Income (Loss) from Discontinued Operations. For the three months ended April 30,
2020, the Company had a loss from discontinued operations of $505. The Company
did not have any income (loss) from discontinued operations for the three months
ended April 30, 2021.
Net Loss. For the three months ended April 30, 2021, the Company had a net loss
of $164,550, as compared to a net loss of $7,192 for the three months ended
April 30, 2020.
Liquidity and Capital Resources - April 30, 2021
At April 30, 2021, the Company had a working capital deficit of $577,670 as
compared to working capital of $822,681 at January 31, 2021, reflecting a
decrease in working capital of $1,400,351 for the three months ended April 30,
2021. The decrease in working capital during the three months ended April 30,
2021 was primarily the result of unsecured loans made to Klusman Family Holdings
and expenditures related to operating the operations of the Company. At April
30, 2021, the Company did not have sufficient cash available to fund its
investing and operating activities and will need to raise additional funds in
the short-term. However, there can be no assurances that the Company will be
successful in this regard.
The Company underwent a change in control transaction effective September 4,
2020, as a result of which new management of the Company terminated the
Company's existing business operations and decided to reorient the Company's
business activities into commercial real estate.
As of April 30, 2021, the Company had not yet commenced any business activities
in commercial real estate.
The Company's future business activities will be subject to significant risks
and uncertainties, including the need for and availability of additional
capital, and the Company's business, financial condition, results of operations
and cash flows may be impacted by a number of factors, many of which will be
beyond the Company's control.
No assurances can be given that any future financing will be available or, if
available, that it will be on terms that are satisfactory to the Company or
adequate to fund the development and expansion of the Company's business
operations to a level that is commercially viable and self-sustaining. There is
also significant uncertainty as to the affect that the coronavirus pandemic may
have on the availability, amount and type of financing in the future.
If cash resources are insufficient to satisfy the Company's ongoing cash
requirements, the Company would be required to scale back or discontinue its
operations, obtain funds, if available, although there can be no certainty,
through strategic alliances that may require the Company to relinquish rights to
any assets, or to discontinue its operations entirely.
Operating Activities. For the three months ended April 30, 2021, operating
activities utilized cash of $201,108, as compared to utilizing cash of $9,692
for the three months ended April 30, 2020, to fund the Company's ongoing
operating expenses.
Investing Activities. For the three months ended April 30, 2021, the Company's
investing activities consisted of providing advances to Klusman Family Holdings,
LLC, a related party, aggregating $1,210,000 and an earnest money deposit of
$100,000 with respect to a pending transaction. For the three months ended April
30, 2020, the Company had no investing activities.
Financing Activities. For the three months ended April 30, 2021, financing
activities consisted of the proceeds from loans from related parties of $98,000
and the issuance of a note payable for $500,000. For the three months ended
April 30, 2020, the Company had no financing activities.
Discontinued Operating Activities. For the three months ended April 30, 2020,
discontinued operations provided cash of $9,760. The Company did not have any
discontinued operating activities for the three months ended April 30, 2021.
Off-Balance Sheet Arrangements
At April 30, 2021, the Company did not have any transactions, obligations or
relationships that could be considered off-balance sheet arrangements.
Impact of COVID-19 on the Company
The global outbreak of COVID-19 has led to severe disruptions in general
economic activities, as businesses and governments have taken broad actions to
mitigate this public health crisis. Although the Company has not experienced any
significant disruption to its business to date, these conditions could
significantly negatively impact the Company's business in the future.
18
The extent to which the COVID-19 outbreak ultimately impacts the Company's
business, future revenues, results of operations and financial condition will
depend on future developments, which are highly uncertain and cannot be
predicted, including, but not limited to, the duration and spread of the
outbreak, its severity and longevity, the actions to curtail the virus and treat
its impact (including an effective vaccine), and how quickly and to what extent
normal economic and operating conditions can resume. Even after the COVID-19
outbreak has subsided, the Company may be at risk of experiencing a significant
impact to its business as a result of the global economic impact, including any
economic downturn or recession that has occurred or may occur in the future.
As a result of the impact of COVID-19 on capital markets, the availability,
amount, and type of financing available to the Company in the near future is
uncertain and cannot be assured and is largely dependent upon evolving market
conditions and other factors.
The Company intends to continue to monitor the situation and may adjust its
current business plans as more information and guidance become available.
Trends, Events and Uncertainties
There can be no assurances that the Company will ever achieve sustainable
revenues sufficient to support its operations. Even if the Company is able to
generate revenues, there can be no assurances that the Company will be able to
achieve profitability or positive operating cash flows. There can be no
assurances that the Company will be able to secure additional financing on
acceptable terms or at all. If cash resources are insufficient to satisfy the
Company's ongoing cash requirements, the Company would be required to scale back
or discontinue its operations, or obtain funds, if available (although there can
be no certainty), through strategic alliances that may require the Company to
relinquish rights to certain of its programs, or to curtail or discontinue its
operations entirely.
Other than as discussed above and elsewhere in the accompanying condensed
financial statements, the Company is not currently aware of any trends, events
or uncertainties that are likely to have a material effect on the Company's
financial condition in the near term, although it is possible that new trends or
events may develop in the future that could have a material effect on the
Company's financial condition.
© Edgar Online, source Glimpses
CHEE CORP. 
