Notes to the Condensed Financial Statements
Note 1
Organization and Operations
Frontera Group Inc. (the
Company
) was incorporated under the laws of the State of Nevada on November 21, 2013, Frontera Group Inc. was an export management company providing business development and market consultancy services that assist small and medium-sized businesses in entering new markets in Central and South America. The Company currently has no operations and is a shell company.
Note 2
Summary of Significant Accounting Policies
Basis of Accounting and Presentation
The accompanying financial statements have been prepared using the accrual basis in accordance with accounting principles generally accepted in the United States of America.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of June 30, 2018 and June 30, 2017, the Company does not have any cash equivalents.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Earnings (loss) per Share
Earnings (loss) Per Share is the amount of earnings (loss) attributable to each share of common stock. Earnings (loss) per share ("EPS") is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board (
FASB
) Accounting Standards Codification. Pursuant to Accounting Standards Codification (
ASC
) Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS is computed by dividing net income (loss) available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period.
The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangements, stock options or warrants. When the Company has a loss, dilutive shares are not included as they would be antidilutive.
There were no potentially dilutive debt or equity instruments issued and outstanding at any time during the year ended June 30, 2018 and 2017.
Income Taxes
The Company accounts for income taxes in accordance with the FASB ASC Section 740,
Income Taxes
(
ASC 740
), which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are also recognized for operating losses that are available to offset future taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company accounts for uncertain tax positions in accordance with ASC Section 740-10, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also prescribes direction on de-recognition, classification, and accounting for interest and payables in the financial statements. The Company classifies interest expense and any related penalties related to income tax
uncertainties as a component of income tax expense. No interest or penalties have been recognized as of
June 30, 2018 and 2017
. The Company does not expect any significant changes in unrecognized tax benefits within twelve months of the reporting date.
Fair Value of Financial Instruments
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The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820
Fair Value Measurements and Disclosures
which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value as follows:
●
Level 1 - quoted prices in active markets for identical assets or liabilities
●
Level 2 - inputs other than quoted prices in
level 1
that are observable either directly or indirectly.
●
Level 3 - inputs based on prices or valuation techniques that are both unobservable and significant to the
fair value markets.
The Company did not identify any assets or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts payable and advances from officers, approximated their fair value due to the short maturity of these financial instruments. There were no changes in methods or assumptions during the periods presented.
Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, will have a material effect on the accompanying financial statements.
Note 3
Going Concern
As reflected in the accompanying financial statements, the Company has a deficit of $
154,443
at
June 30, 2018
, a net loss of $
20,307
for
the year
ended June 30, 2018 and net cash used in operating activities of $
16,884
for the
year
ended
June 30, 2018
. These factors raise substantial doubt about the Company
s ability to continue as a going concern.
The Company is attempting to commence operations and generate sufficient revenue; however, the Company
s cash position is not sufficient to support the Company
s daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company
s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
The financial statements do not include any adjustments
to reflect the possible future effects on
the recoverability and classification of asset or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
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Note 4
Related Party Transactions
Advances
from
officer
From time to time, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand. As June 30, 2018 and June 30, 2017, the advance balance was $10,713.
Note 5
Stockholders
(Deficit)
Shares authorized
Upon formation, the total number of shares of all classes of stock which the Company was authorized to issue seventy-five million (75,000,000) shares of common stock, par value $0.001 per share. On February 23, 2016, the Company increased its authorized common shares to one billion (1,000,000,000), and decreased the par value to $0.00001 per share.
Common stock
On March 12, 2016, the Company sold 300,000,000 common shares at $0.00003 per share for total proceeds of $9,000. The 300,000,000 shares of common stock were issued to Nanjing Dayu Xianneng Foods, Co, Ltd. The control person that Nanjing Dayu Xianneng Foods Co. Ltd is Mr. Daobing Xia.
Note 6
Income Tax Provision
Deferred Tax Assets
As of June 30, 2018 and 2017, the Company had net operating loss (
NOL
) carry
forwards for Federal income tax purposes of $154,443 and $134,136, respectively that may be offset against future taxable income which begin to expire in 2037. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company
s net deferred tax assets was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a full valuation allowance. In addition, due to the change in control of the Company on January 12, 2016 and March 12, 2016, the carry-forward losses generated through these dates will be significantly limited in their use.
The provision (benefit) for income taxes consisted of the following for the years ended June 30, 2018 and 2017:
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2018
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2017
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Adjustment due to enacted tax rate change
|
$
|
17,438
|
$
|
-
|
Deferred
|
|
(4,265)
|
|
(8,089)
|
Change in valuation allowance
|
|
(13,173)
|
|
8,089
|
Income tax provision (benefit)
|
$
|
-
|
$
|
-
|
Deferred tax assets (liabilities) are comprised of the following:
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June 30,
2018
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June 30,
2017
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Net operating loss carryforwards
|
$
|
32,433
|
$
|
45,606
|
Valuation allowance
|
|
(32,433)
|
|
(45,606)
|
Net deferred tax assets
|
$
|
-
|
$
|
-
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The following table reconciles the effective income tax rates with the statutory rates for the years ended June 30:
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2018
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2017
|
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U.S. federal statutory rate
|
|
21.0%
|
|
34.0%
|
Change in valuation allowance
|
|
(21.0)%
|
|
(34.0)%
|
Effective income tax rate
|
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-%
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-%
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On December 22, 2017, the U.S. Tax Cuts and Jobs Act was enacted. The tax reform introduced many changes, including lowering the U.S. corporate tax rate from variable rates depending on corporate income subject to tax to a flat rate of 21%.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.
We follow ASC 740
Accounting for Uncertainty in Income Taxes
. Under ASC 740, tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. We had no liabilities for unrecognized tax benefits at June 30, 2018 and 2017.
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Our policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended June 30, 2018 and 2017, we did not recognize any interest or penalties in our statement of operations, nor did we have any interest or penalties accrued in our balance sheet at June 30, 2018 and 2017 relating to unrecognized tax benefits.
The tax years 2016 to 2018 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject.
Note 7
Subsequent Events
The Company has evaluated all events that occurred after the balance sheet date through November 21, 2018 when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no reportable subsequent events to be adjusted for and / or disclosed.
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