NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED MAY 31, 2015 and 2014
(Currency
expressed in United States Dollars (“US$), except for number of shares)
1.
DESCRIPTION OF BUSINESS AND ORGANIZATION
Band Rep Management Inc. (“BNRM”
or the “Company”) was incorporated in the State of Nevada as a for-profit Company on May 4, 2012 and established a
fiscal year end of May 31. It is a development-stage company that intends to find and manage new music talents and bands for a
25% take of the earnings. The Company is currently in the development stage as defined under FASB ASC 915-10, “Development
Stage Entities". All activities of the Company to date relate to its organization, initial funding and share issuances.
The Company has not yet commenced any
significant operations and, in accordance with ASC Topic 915, the Company is considered a development stage company. The Company
is in the initial development stage and has incurred losses since inception.
On February 6, 2014, the Company
approved a 187:1 forward split of the common stock.
2. GOING
CONCERN UNCERTAINTIES
These financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and
the discharge of liabilities in the normal course of business for the foreseeable future.
For the year ended May 31,
2015, the Company has incurred a net loss of $26,017 and experienced negative operating cash flows of $32,467 with an accumulated
deficit of $167,805 as of that date. The continuation of the Company is dependent upon the continuing financial support of its
shareholders. Management believes this funding will continue, and is also actively seeking new investors. Management believes the
existing stockholders will provide the additional cash to meet the Company’s obligations as they become due. However, there
is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
These and other factors raise
substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification
of liabilities that may result in the Company not being able to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
l
Basis
of presentation
These accompanying financial
statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US
GAAP”).
l
Use of estimates and assumptions
In preparing these financial statements,
management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and
revenues and expenses during the years reported. Actual results may differ from these estimates.
l
Shell company
The Company has not operated
or commenced any significant business with no nominal assets. It is currently considered as a shell company.
l
Cash and cash equivalents
Cash and cash equivalents are
carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid
investments with an original maturity of three months or less as of the purchase date of such investments.
BAND REP
MANAGEMENT, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED MAY 31, 2015 and 2014
(Currency
expressed in United States Dollars (“US$), except for number of shares)
l
Income taxes
The Company
adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification. Paragraph 740-10-25-13
addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in
the financial statements. Under paragraph 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax
position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position
should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon
ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties
on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to
its liabilities for unrecognized income tax benefits according to the provisions of paragraph 740-10-25-13.
The estimated future tax effects
of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well
as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded
on its balance sheets and provides valuation allowances as management deems necessary.
l
Uncertain tax positions
The Company did not take any
uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions of Section
740-10-25 for the years ended May, 31 2015 and 2014.
l
Net loss per share
The Company calculates
net loss per share in accordance with ASC Topic 260, “
Earnings per Share.
” Basic loss per share is computed
by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted loss per share
is computed similar to basic loss per share except that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common
shares were dilutive.
There were no potentially outstanding dilutive shares for the years ended May 31, 2015 and 2014.
l
Related parties
The Company follows
subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to section
850-10-20 the related parties include a) affiliates of the Company; b) entities for which investments in their equity securities
would be required, absent the election of the fair value option under the Fair Value Option Subsection of section 825–10–15,
to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and
Income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management
of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its
own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting
parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements
shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation
of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a) the nature
of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts
were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary
to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for
each of the periods for which income statements are presented and the effects of any change in the method of establishing the
terms from that used in the preceding period; and d) amount due from or to related parties as of the date of each balance sheet
presented and, if not otherwise apparent, the terms and manner of settlement.
BAND REP
MANAGEMENT, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED MAY 31, 2015 and 2014
(Currency
expressed in United States Dollars (“US$), except for number of shares)
l
Commitments and contingencies
The Company follows subtopic
450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of
the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one
or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company
or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings
or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of
the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered
remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management
does not believe, based upon information available at this time, that these matters will have a material adverse effect on the
Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will
not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
l
Fair value of financial instruments
The Company follows paragraph
825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has
adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure
the fair value of its financial instruments. Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a
framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37
of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques
used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted)
in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair
value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting Standards Codification are described below:
Level 1
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
|
Level 2
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
|
Level 3
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
Financial assets
are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar
techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one
level described above, the categorization is based on the lowest level input that is significant to the fair value measurement
of the instrument.
The carrying amounts
of the Company’s financial assets and liabilities, such as cash and accounts payable and accrued expenses, approximate their
fair values because of the short maturity of these instruments.
Transactions involving related parties cannot be presumed to be
carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations
about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms
equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
BAND REP
MANAGEMENT, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED MAY 31, 2015 and 2014
(Currency
expressed in United States Dollars (“US$), except for number of shares)
l
Recent accounting pronouncements
In May 2014, the
FASB issued ASU No. 2014-09, “
Revenue from Contracts with Customers
(Topic 606)” which amended the existing
accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of
promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those
goods or services. The guidance was effective for fiscal years beginning after December 15, 2016 and for interim periods within
those fiscal years. In recent re-deliberations, the FASB approved a one-year deferral of the effective date of this guidance,
such that it will be effective on January 1, 2018. Early adoption is not permitted. The amendments may be applied retrospectively
to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application.
The Company is currently in the process of evaluating the impact of adoption of the ASU on its condensed consolidated financial
statements, but does not expect the impact to be material.
In June 2014, the
FASB issued ASU 2014-12, “
Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target
Could Be Achieved After the Requisite Service Period (Topic 718)”. ASU 2014-12 requires that a performance target that affects
vesting and that could
be achieved after the requisite service period be treated as a performance condition. As such, the
performance target should not be reflected in estimating the grant-date fair value of the award. ASU 2014-12 is effective for
annual reporting periods beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the potential
impacts of the new standard on its existing share-based compensation plans, but does not expect the impact to be material.
In August
2014, the FASB issued ASU 2014-15, “
Presentation of Financial Statements - Going Concern
(Subtopic 205-40): Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. ASU 2014-15 addresses management’s
responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern
and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that
are known and reasonably knowable at the date that the financial statements are issued. This guidance is effective for fiscal
years ending after December 15, 2016 and for interim periods within those fiscal years, with early adoption permitted. The Company
is currently in the process of evaluating the impact of adoption of the ASU on its condensed consolidated financial statements,
but does not expect the impact to be material.
In April 2015, the FASB issued
ASU 2015-03, “
Simplifying the Presentation of Debt Issuance Costs
(Subtopic 835-30)” which requires debt issuance
costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount
of that debt liability, consistent with debt discounts or premiums. ASU 2015-03 is effective for annual reporting periods beginning
after December 15, 2015, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption
of the ASU on its condensed consolidated financial statements, but does not expect the impact to be material.
In July 2015, the FASB issued
ASU 2015-11, “
Simplifying the Measurement of Inventory.
” Under this ASU, inventory will be measured at the “lower
of cost and net realizable value” and options that currently exist for “market value” will be eliminated. The
ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable
costs of completion, disposal, and transportation.” No other changes were made to the current guidance on inventory measurement.
ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. The Company
is currently in the process of evaluating the impact of adoption of the ASU on its condensed consolidated financial statements,
but does not expect the impact to be material.
The Company has reviewed all
recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the results of its operations.
4. AMOUNT DUE TO A DIRECTOR
As of May 31, 2015, the balance
represented temporary advances made by a director, Xiaoying Lei to the Company for its working capital purposes, which were unsecured,
interest free and with no fixed terms of repayment.
BAND REP
MANAGEMENT, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED MAY 31, 2015 and 2014
(Currency
expressed in United States Dollars (“US$), except for number of shares)
5. STOCKHOLDERS’ DEFICIT
The Company is authorized
to issue an aggregate of 200,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized
or issued.
On May 30, 2012,
the sole director purchased 6,000,000 shares of the common stock in the Company at $0.001 per share for $6,000.
On July 31, 2013,
the Company issued 267,500 Common shares at $0.020 per share for $5,350. On February 6, 2014 the Company approved a 187:1 forward
split of the common stock.
On February 7, 2014,
the Company redeemed 5,679,144 shares belonging to the President for no cash. All shares have been retroactively restated.
As of
May 31, 2015 and 2014, the Company had a total of 110,022,572 shares of its common stock issued and outstanding.
6. INCOME TAXES
The Company is incorporated
in the State of Nevada and is subject to United States of America tax law.
As of May 31, 2015,
the Company incurred $69,132 of cumulative net operating losses which can be carried forward to offset future taxable income.
The net operating loss carryforwards begin to expire between 2033 and 2034, if unutilized. The Company has provided for a full
valuation allowance against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards
as the management believes it is more likely than not that these assets will not be realized in the future.
The following table
sets forth the significant components of the aggregate deferred tax assets of the Company as of May 31, 2015 and 2014:
|
|
As of May 31,
|
|
|
|
2015
|
|
|
2014
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
24,196
|
|
|
$
|
15,090
|
|
Less: valuation allowance
|
|
|
(24,196
|
)
|
|
|
(15,090
|
)
|
Deferred tax assets
|
|
$
|
–
|
|
|
$
|
–
|
|
Management believes
that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company
provided for a full valuation allowance against its deferred tax assets as of May 31, 2015. In 2015, the valuation allowance increased
by $9,106, primarily relating to net operating loss carryforwards from the local tax regime.
The Company is delinquent in filing
its United States corporation income tax returns for the periods from inception to 2014. The Company does not expect any tax to
be due upon filing of these delinquent returns.
BAND REP
MANAGEMENT, INC.
NOTES TO
FINANCIAL STATEMENTS
FOR THE
YEARS ENDED MAY 31, 2015 and 2014
(Currency
expressed in United States Dollars (“US$), except for number of shares)
7. RELATED PARTY TRANSACTIONS
On November 14,
2014, the Company received advances from Sergio Galli, the former Director, in the amount of $25,830, to pay for general operating
expenses. The amount due to Sergio Galli was unsecured and non-interest bearing with no set terms of repayment. On November 14
2014, Sergio Galli forgave all the outstanding amounts due to him.
On November 14, 2014, Xiaoying Lei, the new director paid $3,491
transfer agent fees for the Company and such payment was classified as due to related parties. The amount due to Xiaoying Lei
is unsecured and non-interest bearing with no set terms of payment.
During the three months ended
February 28, 2015, Xiaoying Lei, the new director paid off the entire amount of $17,171 of the Company’s accounts payables
and accrued liabilities and $21,121 was recorded as due to related party.
Since November 14,
2014, the Company utilized office space occupied by a director at no charge. Such costs are immaterial to the financial statements
and accordingly are not reflected herein.
8.
CHANGE OF CONTROL
On November 14,
2014, Sergio Galli, who was the controlling shareholder of the Company, sold all of his 60,000,072 shares of common stock to Lei
Xiaoying for an aggregated price of $ 160,000.00. The sold 60,000,072 shares of common stock represented approximately 54.53%
of the total issued and outstanding common stock of the Company. As result of this share purchase transaction, Lei Xiaoying became
the controlling shareholder of the Company. Lei Xiaoying used personal funds for the transaction.
On November 14, 2014, Lei Xiaoying
became the President, Board Director, Secretary, Treasurer, Chief Executive Officer and Chief Financial Officer of the Company.
9. SUBSEQUENT EVENTS
In accordance with
ASC Topic 855, “
Subsequent Events
”, which establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events
or transactions that occurred after May 31, 2015 up through the date the Company issued this financial statements. During the
period, the Company did not have any material recognizable subsequent events.