GUOCHUN INTERNATIONAL INC. - Annual Report: 2021 (Form 10-K)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2021

[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission file number 333-229830

CHARMT, INC.

(Exact name of registrant as specified in its charter)

66 West Flagler Street

Suite 900 - #3040

Miami, FL 330130

Tel: (251) 2629446

Email: headquarters@charmt.net

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the A  

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ( )   No (X)      

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ( )   No (X)      

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X)   No ( )      

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ( )   No (X)      

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “emerging growth company” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes (X)    No ( )       

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $0 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 3,870,600 common shares issued and outstanding as of February 10, 2022.

2

CHARMT, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

3

PART I

Item 1. Description of Business

Forward-looking statements

Statements made in this Form 10-K that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Financial information contained in this report and in our unaudited financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

DESCRIPTION OF BUSINESS

Charmt intends to develop and publish mobile applications on the iOS, Google Play, Amazon and Ethereum platforms. The Company also plans to maintain a portfolio of its products and track the user download statistics. Charmt intends to generate revenues through the sale of branded advertisements and via consumer transactions, including in-app purchases. The management of the Company plans to distribute the application all over the world using various platforms. The Company was founded in 2018. Currently its mailing address is 66 West Flagler Street, Suite 900 #3040, Miami, FL 33130.

Mobile App Market

The proliferation of easy-to-use touch-based smartphones and tablets has created a market with unique characteristics and explosive growth for mobile apps. Portability enables using wherever and whenever the user has spare time, and many apps are specifically tailored to provide short use sessions for such occasions. Compared to PC application, the mobile apps market has low barriers to entry. Whereas many successful PC apps have budgets for production and marketing in the tens of millions and often take years to develop, mobile apps can be created in a matter of weeks. Currently, there are over 800,000 mobile apps in Apple’s App Store.

Within the global app economy, Charmt currently expects to participate in the sub-sectors of 1) app store transactions relating to mobile apps and 2) mobile in-app advertising. The market for app store transactions relating to mobile apps is expected to grow from $50 billion to $105 billion as compared to 2016, representing a CAGR of 16%. At the same time, the mobile in-app advertising market is expected to nearly triple in size from $72 billion in 2018 to $201 billion, representing a CAGR of 23%. 

Products

The Company is currently developing a new kind of messenger. Charmt’s app is intended to be a unique product with high production value and high revenue potential. It is going to be developed and published on both original and licensed IP. This title requires significant development investment and has, in the opinion of management, the potential to become well-known and a long-lasting, successful mobile app franchise.

Voice-changing messenger

Charmt’s first product is our investment in the vast market of applications for communication and amusement. It is intended to provide the fun of changing your voice while speaking with other people along with full functionality of similar messaging apps. As of this date, we have developed the system requirements specification that describes the entire potential and unique features of the messenger.

A user will be able to download our app and easily create an account linking his/her phone number. Security of the personal data use is provided by text message authorization. Charmt automatically synchronizes contacts from your cell phone memory and a user can see if any of them launched the app already. If not, he/she can invite other people to the app using the link sent by a regular text message. Our potential users will be able to call any of their contacts via audio or video connection and use the sound filter to alter their voice.

4

The management of the company considers our product to be unique and combine entertainment and convenience for everyday use. Expected users can either utilize Charmt as a regular messenger that enables people to exchange messages and numerous types of files or use it as a means of having fun changing their voices to be completely unrecognizable when communicating.

As of December 31, 2021, the voice-changing application has not been developed yet. The management of the Company considers using blockchain technology for developing the intended product due to its growing popularity with messaging applications. It provides encrypted P2P-connection(‘peer-to-peer’) which enables exceptional level of security without any access to users’ personal data by any third-parties. Apart from blockchain technologies, we also consider using crypto-collectibles or regular types of cryptocurrency in order to allow people to make in-app purchases. Our intended in-app purchases are planned to consist of various options for changing the sound of user’s voices.  

Marketing 

We plan to acquire most of our users through unpaid channels. We are aiming to build a large community of users through cross promotion, editorial featuring, the viral and sharing features provided by social networks, and app store optimization strategies. We are committed to connecting with our users and we plan to leverage various forms of social media, including Facebook, Twitter, YouTube, Instagram and Discord to communicate with them. We also want to use traditional advertising activities, primarily mobile advertising spending on Facebook, Apple and Google.

Employees

As of the date, we have no employees other than our sole director, Mr. Gediminas Knyzelis. The Company plans to rely extensively on third-party consultants and vendors for certain development and marketing activities.

Item 1A.  Risk Factors

Not applicable to smaller reporting companies.

Item 1B. Unresolved Staff Comments

Not applicable to smaller reporting companies.

Item 2.  Description of Property

We do not own any real estate or other properties.  

Item 3.  Legal Proceedings

We know of no legal proceedings to which we are a party or to which any of our property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against us.

Item 4.  Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Market Information 

We are planning to get our securities quoted on the OTC Markets. OTC securities are not listed or traded on the floor of an organized national or regional stock exchange.  Instead, OTC securities transactions are conducted through a telephone and computer network connecting dealers in stocks.  OTC issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.

As of December 31, 2021, no shares of our common stock have traded.

5

Number of Holders

As of December 31, 2021, the 3,870,600 issued and outstanding shares of common stock were held by 35 shareholders.

Dividends

No cash dividends were paid on our shares of common stock during the fiscal year ended December 31, 2021. 

Recent Sales of Unregistered Securities

The Company has 75,000,000 $0.001 par value shares of common stock authorized.

On August 2, 2018 the Company issued 3,000,000 shares of common stock to a director for cash proceeds of $3,000 at $0.001 per share par value. Par value was used because the Company had just begun and the stock had no value beyond par value at this stage.

Purchase of our Equity Securities by Officers and Directors

On August 2, 2018, the Company offered and sold 3,000,000 restricted shares of common stock to our president and director, Gediminas Knyzelis, for a purchase price of $0.001 per share, for aggregate offering proceeds of $3,000, pursuant to Section 4(2) of the Securities Act of 1933 as he is in possession of all material information relating to us. Further, no commissions were paid to anyone in connection with the sale of these shares and general solicitation was not made to anyone.

Other Stockholder Matters

None.

Item 6. Selected Financial Data

Not applicable to smaller reporting companies.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in the forward-looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Results of Operations for the years ended December 31, 2021 and 2020

Revenue and cost of revenue

The Company did not have any revenues or costs of revenue for the years ended December 31, 2021 and 2020.

Operating expenses

Total operating expenses for the years ended December 31, 2021 and 2020 were $31,619 and $23,952, respectively. The operating expenses for the year ended December 31, 2021 included $8,750 in audit fees; $456 in bank charges; $325 in legal fees; $650 in business licenses and permits; $21,022 in transfer agent and EDGAR agent fees. The operating expenses for the year ended December 31, 2020 included $8,750 in audit fees; $735 in bank charges; $2,339 in legal fees; $650 in business licenses and permits; $10,470 in transfer agent and EDGAR agent fees; $997 in rent expense; and $12 in foreign exchange loss.

Net Income/Loss

The net loss for the years ended December 31, 2021 and 2020 was $31,619 and $23,952, respectively.

6

Liquidity and Capital Resources and Cash Requirements

At December 31, 2021, the Company had cash of $1,075. At December 31, 2020, the Company had cash of $1,432.

For the year ended December 31, 2021, the Company used $36,519 of cash in operating activities.

For the year ended December 31, 2021, the Company generated $36,162 of cash in financing activities.

For the year ended December 31, 2020, the Company used $20,363 of cash in operating activities.

For the year ended December 31, 2020, the Company generated $21,725 of cash in financing activities.

As of the date of this report, the current funds available to the Company will not be sufficient to continue maintaining a reporting status. The Company’s sole director, Gediminas Knyzelis, has concluded a verbal agreement with Charmt Inc. in order to fund completion of the registration process and to maintain the reporting status with SEC.

Management believes that current trends toward lower capital investment in start-up companies pose the most significant challenge to the Company’s success over the next year and in future years. Additionally, the Company will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. The Company’s management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act of 2002. This additional corporate governance time required of management could limit the amount of time management has to implement its business plan and impede the speed of its operations.

Limited operating history; need for additional capital

There is no historical financial information about us upon which to base an evaluation of our performance. We are in a start-up stage of operations and have generated no revenues since inception. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk   

Not applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data   

7

CHARMT INC.

FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2021 AND DECEMBER 31, 2011

Table of Contents

8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Charmt, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Charmt, Inc. (the “Company”) as of December 31, 2021 and 2020 and the related statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Charmt, Inc. as of December 31, 2021 and 2020 and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

Explanatory Paragraph – Going Concern

The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

/s/ Michael T. Studer CPA P.C.

Michael T. Studer CPA P.C.

Freeport, New York

February 8, 2022

We have served as the Company’s auditor since 2019.

9

Charmt, Inc.

Balance Sheets

As of December 31, 2021 and 2020

See accompanying notes, which are an integral part of these financial statements

10

Charmt, Inc.

Statements of Operations for the years ended December 31, 2021 and December 31, 2020

See accompanying notes, which are an integral part of these financial statements

11

Charmt, Inc.

Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and December 31, 2020

See accompanying notes, which are an integral part of these financial statements

12

Charmt, Inc.

Statements of Cash Flows for the years ended December 31, 2021 and December 31, 2020

See accompanying notes, which are an integral part of these financial statements

13

Charmt, Inc.

Notes to the Financial Statements

For the years ended December 31, 2021 and December 31, 2020

Note 1 – Nature of Business

Charmt, Inc. (the “Company”) was incorporated in the State of Nevada on August 2, 2018. The Company is developing a messenger application. It is being designed to provide a chance to alter the speaker’s voice while talking with other people and full functionality of similar messaging apps. The Company intends to develop and publish mobile applications on the iOS, Google Play, Amazon and Ethereum platforms. Charmt, Inc. intends to generate revenues through the sale of branded advertisements and via consumer transactions, including in-app purchases. The management of the Company plans to distribute the application all over the world using various platforms.

The Company's address is 66 West Flagler Street, Suite 900 - #3040, Miami, FL 33130.

Note 2 – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2021, the Company had cash of $1,075 and negative working capital of ($44,253). For the year ended December 31, 2021, the Company had no revenues and a net loss of $31,619. These factors raise substantial doubt regarding the Company`s ability to continue as a going concern.

Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. There is no assurance that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 3 – Summary of Significant Accounting Policies

Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts payable, and advances payable to sole officer and director. The carrying amounts of these financial instruments approximates fair value because of the short period of time between the origination of such instruments and their expected realization.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Net Income (Loss) per Common Share

Net income (loss) per common share is computed pursuant to FASB Accounting Standards Codification (“ASC”) 260, “Earnings Per Share”.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per common share is computed by dividing net

14

Charmt, Inc.

Notes to the Financial Statements

For the years ended December 31, 2021 and December 31, 2020

income (loss) by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants.

There were no potentially dilutive common shares outstanding for the periods presented.

Revenue Recognition

The Company’s revenue recognition policies will follow FASB 606, “Revenue from Contracts with Customers”. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. An entity must also disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Foreign Currency

The Company’s functional and reporting currency is the U.S. dollar. Transactions may occur in foreign currencies and management follows ASC 830, “Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the Statement of Operations.

Reclassifications

Certain year 2020 expenses have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and therefore have not yet been adopted by the Company. The impact on the Company`s financial position and results of operations from adoption of these standards is not expected to be material.

15

Charmt, Inc.

Notes to the Financial Statements

For the years ended December 31, 2021 and December 31, 2020

Note 4 - Capital Stock

The Company has 75,000,000, $0.001 par value shares of common stock authorized. On August 2, 2018, the Company issued 3,000,000 shares of common stock to Gediminas Knyzelis (sole officer and director of the Company) at $0.001 per share for $3,000. The payment for the shares, which was due within 180 days upon the execution of the respective agreement, was collected on January 15, 2019.

From February 6, 2020 to June 30, 2020, the Company sold a total of 870,600 shares of its common stock in its public offering to 29 investors at a price of $0.025 per share for proceeds of $21,725.

There were 3,870,600 shares of common stock issued and outstanding as of December 31, 2021.

Note 5 - Commitments and Contingencies

Service Agreement

On June 27, 2018, Gediminas Knyzelis executed a Virtual Office Service Agreement on behalf of the Company for address and telephone service in Estonia. The agreement had an original term of one year from July 1, 2018 to June 30, 2019 and was renewed for an additional term of 2 years. The monthly cost per the agreement was 55 EUR (excluding VAT), or approximately $68 per the exchange rate as of December 31, 2020. The agreement was terminated on December 31, 2020. For year ended December 31, 2020, the Company incurred expenses of $682 under this service agreement.

Compensation Agreement

To date, the Company has not entered into any compensation agreements with Gediminas Knyzelis or others.

Note 6 - Income Taxes

The provision for (benefit from) income taxes differs from the amount of income tax determined by applying the United States federal income tax rate of 21% to pretax income (loss) for the year ended December 31, 2021 and December 31 2020 as follows:

At December 31, 2021, the Company has a net operating loss carryforward of $68,978. Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $14,485 attributable to the future utilization of the $68,978 net operating loss carryforward will be realized. Accordingly, the Company has recorded a 100% valuation allowance against the deferred tax asset at December 31, 2021.

16

Charmt, Inc.

Notes to the Financial Statements

For the years ended December 31, 2021 and December 31, 2020

At December 31, 2021 and December 31, 2020, deferred tax assets consist of:

All tax periods are subject to examination by taxing authorities.

Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

The Company has had no tax positions since inception.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A(T) Controls and Procedures

Management’s Report on Internal Controls over Financial Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2021, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

17

Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control- Integrated Framework issued by COSO.

System of Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company

Officers and Directors

The following table sets forth information regarding our directors and the members of our board of directors.

Mr. Knyzelis has served as our President, Treasurer, Director and Secretary since the inception of the Company in August 2018. Mr. Gediminas is a genuine creator and artistic mind with deep understanding of mobile application development. He also managed to draft the design of Charmt’s future product and is responsible for the main course of business. Mr. Gediminas Knyzelis previously worked as Project Manager at Lititco where he acquired significant experience at controlling various business processes. Mr. Knyzelis also worked as a Customer Service Manager at Latakko which enabled him to understand the customer needs.

18

Term of Office

The officers of the corporation shall be appointed annually by the board of directors at the first meeting of the board of directors held after each annual meeting of the shareholders. If officers are not appointed at such meeting, such appointment shall occur as soon as possible thereafter, or may be left vacant. Each officer shall hold office until a successor shall have been appointed and qualified or until said officer's earlier death, resignation, or removal.

Director Independence

Our board of directors is currently composed of one member Gediminas Knyzelis, and he does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market (the Company has no plans to list on the NASDAQ Global Market). The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to Mr. Knyzelis that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by directors and us with regard to our director's business and personal activities and relationships as they may relate to us and our management.

Involvement in Certain Legal Proceedings

No director, person nominated to become a director, executive officer, promoter or control person of Charmt Inc. has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.

Item 11. Executive Compensation

The following table sets forth information regarding each element of compensation that we paid or awarded to our named executive officers for fiscal 2021 and 2020:

Our sole director Mr. Knyzelis has not received monetary compensation since our inception to the date of this filing. We currently do not pay any compensation to any officer or any member of our board of directors.

19

Employment Agreements

The Company is not a party to any employment agreement and has no compensation agreement with any officer or director.

Director Compensation

The following table sets forth director compensation for the years ended December 31, 2021 and 2020:

We have not compensated our director for his service on our Board of Directors since our inception. There are no arrangements pursuant to which directors will be compensated in the future for any services provided as a director.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of the date of this report, the total number of shares owned beneficially by our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholders listed below have direct ownership of their shares and possesses sole voting and dispositive power with respect to the shares.

Item 13. Certain Relationships and Related Transactions

A total of 3,000,000 shares of common stock were issued to our sole director on August 2, 2018, all of which are restricted securities, as defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act. Under Rule 144, the shares can be publicly sold, subject to volume restrictions and restrictions on the manner of sale. Such shares can only be sold after six months provided that the issuer of the securities is, and has been for a period of at least 90 days immediately before the sale, subject to the reporting requirements of section 13 or 15(d) of the Exchange Act. Shares purchased in our public offering, which were immediately resalable, and sales of all of our other shares after applicable restrictions expire, could have a depressive effect on the market price, if any, of our common stock.

Item 14. Principal Accountant Fees and Services 

The following table sets forth fees invoiced by our independent registered accounting firm Michael T. Studer, CPA P.C, during the fiscal years ended December 31, 2021 and 2020:

20

It is the policy of the Board of Directors, which presently completes the functions of the Audit Committee, to engage independent accountants selected to conduct our financial audit and to confirm, prior to such engagement, that such independent accountants are independent of the company. All services of the independent registered accounting firms reflected above were pre-approved by the Board of Directors.

PART IV

Item 15. Exhibits

The following exhibits are included as part of this report by reference:

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, as amended, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized on February 11, 2022.

21