Arem Pacific (ARPC) Risk Analysis
Risk Overview Q2, 2023
Source: the company's latest filing for the period ended Jun 30, 2023, filed Oct 16, 2023
Risk Change Over Time
- Accounting & Financial Operations - Risk 1We had material weaknesses in our internal controls in financial reporting as of June 30, 2023, and such material weaknesses could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management identified material weaknesses in our internal controls and concluded that our internal control over financial reporting were not effective as of June 30, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The specific material weaknesses we identified in our internal control over financial reporting for the fiscal years ended June 30, 2023, related to: - lack of sufficient accounting personnel qualified in US GAAP and SEC reporting; and Although we have provided additional training to our accounting personnel relating to US GAAP and SEC reporting requirements to partially address the foregoing material weaknesses, we do not believe such weaknesses have been remediated, and we can provide no assurance that they will be remediated in a timely manner. Any failure to maintain effective internal controls could adversely impact our ability to report our financial results on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis as required by the SEC, we could face severe consequences from those authorities.
- Accounting & Financial Operations - Risk 2Our Auditor's Report on our consolidated financial statements for the fiscal years ended June 30, 2023, which is contained in this Annual Report, has been prepared assuming that we will continue as a "going concern" by reason of our losses, net current liabilities and our negative stockholders' deficit, and there is no assurance that we will not continue to experience losses in our business. As a result, we may be unable to continue as a going concern.
We incurred net losses of US$53,666 during the year ended June 30 2023. We had net current liabilities at June 30, 2023 of US$76,323, and we had at June 30, 2023 a negative net stockholders' deficit of US$45,092. These events or conditions indicate that a material uncertainty exist that may cast significant doubt on our ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis in view of the Company being able to obtain continued financial support from its sole director, CEO and CFO or its ability to obtain external financing, as to which no assurance can be given. The validity of the going concern basis on which the consolidated financial statements have been prepared depends on our ability to operate as a going concern and assumptions are premised on future events, the outcome of which are inherently uncertain. Management's plans in regard to these matters are described in Note 1.3 of our consolidated financial statements, though our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Risk Highlights Q2, 2023
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 18
- Share Price & Shareholder Rights - Risk 1Our shareholders and prospective investors' ownership in the Company may be diluted in the future.
In the future, we may issue additional authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present shareholders or potential investors. We expect to need to issue a substantial number of shares of our common stock or other securities convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, raising additional capital in the future to fund our operations and other business purposes.
- Share Price & Shareholder Rights - Risk 2There is no active trading market for our shares of common stock.
Small trading volumes are generally understood to depress market prices. As a result, you may not always be able to resell shares of our common stock publicly at the time and prices that you feel are fair or appropriate, even if we are successful in obtaining public quotations of our common stock on a qualified quotation medium.
- Share Price & Shareholder Rights - Risk 3Our sole director and executive officer, Mr. Xin Jin, and our former President, Mr. Thomas Tang, and Mr. Yew Nic Kien Cheon, a business consultant to the Company, own a significant percentage of our capital stock, and they may be in a position to control decisions of the Company that our other shareholders do not consider to be in their best interests.
As of the date of this Annual Report, the foregoing persons beneficially own in the aggregate approximately 26.87% of our issued and outstanding shares of common voting stock. See the caption "Security Ownership of Certain Beneficial Owners and Management" in Part III, Item 12 hereof. As a result, they may have the ability to substantially control elections to our board of directors, the outcome of issues requiring approval by our shareholders and other corporate actions. This concentration of ownership may also have the effect of delaying or preventing a change in control of our Company that may be favored by other shareholders; and could prevent transactions in which shareholders might otherwise recover a premium for their shares over current market prices. This concentration of ownership and influence in management and board decision making could also harm the price of our capital stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock, whether by making a tender offer or attempting to obtain control of our Company. We have established a "Series" of 10,000,000 shares of Series A Preferred Stock. The Series A Preferred Stock shares has superiority voting rights equal to 1,000 votes per share. In the event that such votes do not total 51% of all votes, than regardless of the provisions of this Series, in any such case, the votes cast by Series A Preferred stock shall be equal to 51% of all votes cast at any meeting of shareholders, or any issue put to the shareholders for voting, and the Company may state that any such action was had by majority vote of all shareholders. Furthermore, the holders of Series A Preferred Stock have the right to the majority of the directors to the Board of the Company and to further amend the Certificate of Incorporation to ensure the furtherance of the Company and its operations as such holders determine. Management could issue one (1) share of this Series to control the approval on these and other matters affecting the Company and its shareholders without any vote of the shareholders. See Exhibit 4 in Part IV, Item 15, for a description of the Company's securities and this Series.
- Share Price & Shareholder Rights - Risk 4Our common stock is subject to the "penny stock" rules of the SEC, which may make it more difficult for shareholders to sell our common stock.
The SEC has adopted Rule 15g-9, which established the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person's account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of the Company's common stock if and when such shares are eligible for sale and may cause a decline in the market value of its stock.
- Share Price & Shareholder Rights - Risk 5If an active market for our common stock develops, there is a significant risk that the Company's common stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our control, including, but not limited to:
- variations in our quarterly operating results;- announcements that our revenue or income are below analysts' expectations;- general economic slowdowns; and - sales of large blocks of our common stock by insiders and others.
See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.