ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and the related notes and other financial information included elsewhere in this
Prospectus. Some of the information contained in this discussion and analysis or
set forth elsewhere in this Prospectus, including information with respect to
our plans and strategy for our business and related financing, includes
forward-looking statements that involve risks and uncertainties. You should
review the "Risk Factors" section of this Prospectus for a discussion of
important factors that could cause actual results to differ materially from the
results described in or implied by the forward-looking statements contained in
the following discussion and analysis.
Our cash balance was $11,284 as of June 30, 2015. We believe our cash balance is
not sufficient to fund our limited levels of operations for any period of time.
We have been utilizing funds received from our President and Director from the
purchase of shares. He has no commitment, arrangement or legal obligation to
advance or loan funds to the company. In order to implement our plan of
operations for the next twelve month period, we require a minimum of $25,000
(approximately $10,000 of which are legal and registration fees for a public
company) of funding from this offering. Being a development stage company, we
have very limited operating history. After twelve months period we may need
additional financing, for which we currently don't have any arrangements. Our US
office is located at 616 Corporate Way, Suite 2-6834, Valley Cottage, NY 10989.
Our principal executive office is located at 353 Bathurst Glen Dr., Thornhill,
ON L4J 9A3 Canada. Our phone number is (845) 512-5020.
Our independent registered public accountant has issued a going concern opinion.
This means that there is substantial doubt that we can continue as an on-going
business for the next twelve months unless we obtain additional capital to pay
our bills. From inception to June 30, 2015 we have generated revenues of $3,808;
no significant additional revenue is anticipated until we complete our initial
business development. There is no assurance we will ever reach that stage.
To meet our need for cash we are attempting to raise money from this offering.
We believe that we will be able to raise enough money through this offering to
expand our proposed operations, however there is no guarantee that we will stay
in business after doing so. At the present time, we have not made any
arrangements to raise additional cash, other than through this offering.
We are an "emerging growth company" as defined in the JOBS Act, and we may take
advantage of certain exemptions from various reporting requirements that are
applicable to other public companies that are not "emerging growth companies"
including, but not limited to: not required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act; reduced
disclosure obligations regarding executive compensation in our periodic reports
and proxy statements; exemptions from the requirements of holding an annual
non-binding advisory vote on executive compensation and nonbinding stockholder
approval of any golden parachute payments not previously approved. In addition,
Section 107 of the JOBS Act also provides that an "emerging growth company" can
take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In
other words, an "emerging growth company" can delay the adoption of certain
accounting standards until those standards would otherwise apply to private
companies. We are choosing to "opt out" of such extended transition period, and
as a result, we will comply with new or revised accounting standards on the
relevant dates on which adoption of such standards is required for non-emerging
growth companies. Section 107 of the JOBS Act provides that our decision to opt
out of the extended transition period for complying with new or revised
accounting standards is irrevocable.
RESULTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2015
For fiscal year ended June 30, 2015, we have generated revenue of $569 compared
with revenue of $3,239 for the period from inception to June 30, 2014.
9
For fiscal year ended June 30, 2015, our operating expenses were comprised of
professional fees of $16,536, general and administrative expenses of $1,504 and
imputed interest expense of $400 compared with $2,678 of professional fees and
$3,155 General/Admin expenses for the period from inception April 17, 2014 to
June 30, 2014.
Since inception, we sold 7,080,000 shares of common stock.
ACTIVITIES TO DATE
A substantial portion of our activities to date focused on becoming a reporting
public company to raise more capital to finance our business activities. Our
President has also developed Plan of Operations. We have established the company
office and provided information session and consulting about our services to one
prospective customer.
PLAN OF OPERATIONS
We expect that working capital requirements will continue to be funded through a
combination of our existing funds and further issuances of securities. Our
working capital requirements are expected to increase in line with the growth of
our business. Existing working capital, further advances and debt instruments,
and anticipated cash flow are expected to be adequate to fund our operations
over the next six months. We have no lines of credit or other bank financing
arrangements. Generally, we have financed operations to date through the
proceeds of the private placement of equity and debt instruments. In connection
with our business plan, management anticipates additional increases in operating
expenses and capital expenditures relating to: (i) acquisition of software; (ii)
developmental expenses associated with a start-up business; and (iii) marketing
expenses. We intend to finance these expenses with further issuances of
securities, and debt issuances. Thereafter, we expect we will need to raise
additional capital and generate revenues to meet long-term operating
requirements. Additional issuances of equity or convertible debt securities will
result in dilution to our current shareholders. Further, such securities might
have rights, preferences or privileges senior to our common stock. Additional
financing may not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, we may not be
able to take advantage of prospective new business endeavors or opportunities,
which could significantly and materially restrict our business operations.
OFF BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
MATERIAL COMMITMENTS
As of the date of this Annual Report, we do not have any material commitments.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve
months.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2015, the Company had $11,284 cash and current liabilities of
$6,883. The net operating capital of the Company is not sufficient for the
Company to remain operational in a short term.
10
Since inception, we have sold 5,000,000 shares of common stocks to our president
and director, at a price of $0.001 per share and 2,080,000 shares of common
stock to our investors at a price of $0.01 per share for the aggregated proceeds
of $25,800. Our president and director also provided $5,000 long term loan to
the company (non interest bearing with no fixed term of repayment).
We are attempting to raise funds to proceed with our plan of operation. Our
current cash on hand will be used to pay the fees and expenses of this offering.
We will have to utilize funds from our sole officer and director. However, he
has no formal commitment, arrangement or legal obligation to advance or loan
funds to the company. We cannot guarantee that we will be able to sell all the
shares required to satisfy our 12 months financial requirement. If we are
successful, any money raised will be applied to the items set forth in the Use
of Proceeds section of this prospectus. In the long term we may need additional
financing. We do not currently have any arrangements for additional financing.
Obtaining additional funding will be subject to a number of factors, including
general market conditions, investor acceptance of our business plan and initial
results from our business operations. These factors may impact the timing,
amount, terms or conditions of additional financing available to us. There is no
assurance that any additional financing will be available or if available, on
terms that will be acceptable to us.
GOING CONCERN CONSIDERATION
Our auditors have issued a "going concern" opinion, meaning that there is
substantial doubt if we can continue as an on-going business for the next twelve
months unless we obtain additional capital. The Company's cash position may not
be sufficient to support its daily operations. No substantial revenues are
anticipated until we have completed the financing from this offering and
implemented our plan of operations. Our only source for cash at this time is
investments by others in this offering. We must raise cash to implement our
strategy and stay in business. If we sell at least 25% of the shares in the
offering we believe that we will have the resources to operate for the next 12
months, including for the costs associated with becoming a publicly reporting
company. The company anticipates over the next 12 months the cost of being a
reporting public company will be approximately $15,000.
LIMITED OPERATING HISTORY AND NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. We are in start-up stage operations and have not
generated any revenues. We cannot guarantee 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Asteriko Corp.
June 30, 2015
Index to the Financial Statements
Report of Independent Registered Public Accounting Firm ..................... 13
Report of Independent Registered Public Accounting Firm ..................... 14
Balance sheets at June 30, 2015 and 2014 .................................... 15
Statements of operations for the year ended June 30, 2015 and for
the period from April 17, 2014 (inception) through June 30, 2014............. 16
Statements of cash flows for the year ended June 30, 2015 and for
the period from April 17, 2014 (inception) through June 30, 2014............. 17
Statement of Shareholder's equity for the year ended June 30, 2015 and
for the period from April 17, 2014 (inception) through June 30, 2014......... 18
Notes to the financial statements ........................................... 19
|
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Asteriko Corp.
We have audited the accompanying balance sheet of Asteriko Corp. as of June 30,
2015 and the related statements of operations, stockholders' deficit and cash
flows for the year ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of Asteriko
Corp. as of June 30, 2014, were audited by other auditors whose report dated
July 25, 2014 included an explanatory paragraph as to an uncertainty with
respect to the Company's ability to continue as a going concern.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, 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. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Asteriko Corp. as of June 30,
2015 and the results of its operations and cash flows for the period described
above in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company suffered a net loss from operations and has a
net capital deficiency, which raises substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
--------------------------------
www.mkacpas.com
Houston, Texas
September 1, 2015
|
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholder
Asteriko Corp.
We have audited the accompanying balance sheet of Asteriko Corp. (the "Company")
as of June 30, 2014 and the related statements of operations, stockholder's
equity and cash flows for the period from April 17, 2014 (inception) through
June 30, 2014. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, 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. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of June 30, 2014
and the results of its operations and its cash flows for the period from April
17, 2014 (inception) through June 30, 2014 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company had a deficit at June 30, 2014, a net loss and
net cash used in operating activities for the period from April 17, 2014
(inception) through June 30, 2014. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regards to these matters are also described in Note 3. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/LI AND COMPANY, PC
---------------------------------
Li and Company, PC
Skillman, New Jersey
July 28, 2014
|
14
Asteriko Corp.
Balance Sheets
At June 30, 2015 and June 30, 2014
June 30, 2015 June 30, 2014
------------- -------------
ASSETS
Current Assets
Cash $ 11,284 $ 10,000
Accounts Receivable -- 713
-------- --------
Total Current Assets 11,284 10,713
-------- --------
Fixed Assets
Property and Equipment, Net 1,334 677
-------- --------
Total Assets $ 12,618 $ 11,390
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts Payable $ 279 $ 2,500
Related party loans 1,604 1,484
Note payable - Related party 5,000 5,000
-------- --------
Total Liabilities 6,883 8,984
-------- --------
Stockholders' Equity (Deficit)
Common Stock, $0.001 par value, 75,000,000 shares authorized;
7,080,000 shares issued and outstanding, respectively 7,080 5,000
Additional paid-in capital 19,120 --
Accumulated deficit (20,465) (2,594)
-------- --------
Total Stockholders' Equity (Deficit) 5,735 2,406
-------- --------
Total Liabilities and Stockholders' Equity (Deficit) $ 12,618 $ 11,390
======== ========
|
The accompanying notes are an integral part of
these condensed financial statements.
15
Asteriko Corp.
Statements of Operations
For the year ended June 30, 2015 and for the period
April 17, 2014 (inception) to June 30, 2014
Period from
April 17, 2014
Year ended (inception) to
June 30, 2015 June 30, 2014
------------- -------------
Revenues $ 569 $ 3,239
---------- ----------
Expenses
General and Administrative 1,504 3,155
Imputed Interest Expense 400 --
Professional Fees 16,536 2,678
---------- ----------
Total Expense 18,440 5,833
---------- ----------
LOSS FROM OPERATIONS (17,871) (2,594)
---------- ----------
INCOME TAX EXPENSE -- --
---------- ----------
NET LOSS $ (17,871) $ (2,594)
========== ==========
Basic and diluted net loss per common share $ (0.00) $ (0.00)
========== ==========
Weighted-average number of common shares
outstanding 5,860,274 5,000,000
|
The accompanying notes are an integral part of
these condensed financial statements.
16
Asteriko Corp.
Statements Of Cash Flows
For the year ended June 30, 2015 and for the period
April 17, 2014 (inception) to June 30, 2014
Period from
April 17, 2014
Year ended (inception) to
June 30, 2015 June 30, 2014
------------- -------------
Cash flows from operating activities:
Net loss $(17,871) $ (2,594)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation expense 130 11
Imputed Interest Expense 400 --
Changes in operating assets and liabilities:
Accounts Receivable 713 (713)
Accounts payable (479) 2,500
Advances from shareholders (1,604) 1,484
-------- --------
Net cash provided by (used in) operating activities (18,729) 688
-------- --------
Cash flows from investing activities:
Purchase of property and equipment (787) (688)
-------- --------
Net cash used in investing activities (787) (688)
-------- --------
Cash flows from financing activities:
Proceeds from notes payable - related party -- 5,000
Common stock issued for cash 20,800 5,000
-------- --------
Net cash provided by financing activities 20,800 10,000
-------- --------
Net increase (decrease) in cash 1,284 10,000
Cash, beginning of the period 10,000 --
-------- --------
Cash, end of the period $ 11,284 $ 10,000
======== ========
Supplemental disclosures of cash flow information
Cash paid for:
Interest $ -- $ --
Income Taxes $ -- $ --
|
The accompanying notes are an integral part of
these condensed financial statements.
17
Asteriko Corp.
Statement of Stockholders Equity
For the year ended June 30, 2015 and for the period
April 17, 2014 (inception) to June 30, 2014
Common stock
par value $0.001 Total
----------------------- Additional Stockholder's
Number of Paid-in Accumulated Equity
Shares Amount Capital Deficit (Deficit)
------ ------ ------- ------- ---------
April 17, 2014 (inception) -- $ -- $ -- $ -- $ --
Issuance of common shares for
cash at $0.001 upon formation 5,000,000 5,000 5,000
Net Loss (2,594) (2,594)
---------- -------- -------- --------- ---------
Balance June 30, 2014 5,000,000 5,000 -- (2,594) 2,406
Issuance of common shares for
cash at $0.01 in December 2014 880,000 880 7,920 8,800
Issuance of common shares for
cash at $0.01 per share in
March 2015 1,200,000 1,200 10,800 12,000
Imputed Interest 400 400
Net Loss (17,871) (17,871)
---------- -------- -------- --------- ---------
Balance, June 30, 2015 7,080,000 $ 7,080 $ 19,120 $ (20,465) $ 5,735
========== ======== ======== ========= =========
|
The accompanying notes are an integral part of
these condensed financial statements.
18
Asteriko Corp.
June 30, 2015
Notes to the Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
Asteriko Corp. (the "Company") was incorporated on April 17, 2014 under the laws
of the State of Nevada. The Company provides customers with unique and
innovative solutions for their decorative needs. The company's initial product
is lattice panels designed for suspended ceilings.
NOTE 2 - SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
The Management of the Company is responsible for the selection and use of
appropriate accounting policies and the appropriateness of accounting policies
and their application. Critical accounting policies and practices are those that
are both most important to the portrayal of the Company's financial condition
and results and require management's most difficult, subjective, or complex
judgments, often as a result of the need to make estimates about the effects of
matters that are inherently uncertain. The Company's significant and critical
accounting policies and practices are disclosed below as required by generally
accepted accounting principles.
BASIS OF PRESENTATION
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
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(s)
of the financial statements and the reported amounts of revenues and expenses
during the reporting period(s).
Critical accounting estimates are estimates for which (a) the nature of the
estimate is material due to the levels of subjectivity and judgment necessary to
account for highly uncertain matters or the susceptibility of such matters to
change and (b) the impact of the estimate on financial condition or operating
performance is material. The Company's critical accounting estimate(s) and
assumption(s) affecting the financial statements was (were):
(i) ASSUMPTION AS A GOING CONCERN: Management assumes that the Company
will continue as a going concern, which contemplates continuity of
operations, realization of assets, and liquidation of liabilities in
the normal course of business.
(ii) VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS: Management assumes that
the realization of the Company's net deferred tax assets resulting
from its net operating loss ("NOL") carry-forwards for Federal income
tax purposes that may be offset against future taxable income was not
considered more likely than not and accordingly, the potential tax
benefits of the net loss carry-forwards are offset by a full valuation
allowance. Management made this assumption based on (a) the Company
has incurred recurring losses, (b) general economic conditions, and
(c) its ability to raise additional funds to support its daily
operations by way of a public or private offering, among other
factors.
19
These significant accounting estimates or assumptions bear the risk of change
due to the fact that there are uncertainties attached to these estimates or
assumptions, and certain estimates or assumptions are difficult to measure or
value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop
the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
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
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 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 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
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 accrued expenses approximate their fair values because of the short
maturity of these instruments.
20
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.
Following table lists assets and liabilities measured and recognized at fair
market value as of:
Total
Level 1 Level 2 Level 3 Realized Loss
------- ------- ------- -------------
Description $ - $ - $ - $ -
Balance at June 30, 2014 $ - $ - $ - $ -
Description $ - $ - $ - $ -
Balance at June 30, 2015 $ - $ - $ - $ -
|
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less at the time of purchase to be cash equivalents.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment. Depreciation on property, plant and equipment is calculated on
the straight-line method after taking into account their respective estimated
residual values over the estimated useful lives of the assets as follows:
Office equipment 3 years
Tools and equipment 5 years
Maintenance and repair costs are expensed as incurred, whereas significant
renewals and betterments are capitalized.
Property, Plant and Equipment schedule as of June 30, 2015
2015 2014
-------- --------
Office equipment
* Cost $ 688 $ 688
* Depreciation (115) (11)
-------- --------
* Net 573 677
-------- --------
Tools and equipment
* Cost 787 --
* Depreciation (26) --
-------- --------
* Net 761 --
-------- --------
TOTAL $ 1,334 $ 677
======== ========
|
21
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 profit-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. amounts 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.
COMMITMENT 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 unasserted claims that may result in such proceedings, the Company
evaluates the perceived merits of any legal proceedings or unasserted 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 potential 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.
22
The Company did not have any commitments or contingencies as of June 30, 2015
and 2014.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
INCOME TAX PROVISION
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. 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 the statements
of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 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 Section 740-10-25,
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.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
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.
Management makes judgments as to the interpretation of the tax laws that might
be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
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 period from April 17, 2014 (inception) through June 30, 2015.
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NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed pursuant to section 260-10-45 of
the FASB Accounting Standards Codification. 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 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 period from
April 17, 2014 (inception) through June 30, 2015.
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments. The Company
reports the reporting currency equivalent of foreign currency cash flows, using
the current exchange rate at the time of the cash flows and the effect of
exchange rate changes on cash held in foreign currencies is reported as a
separate item in the reconciliation of beginning and ending balances of cash and
cash equivalents and separately provides information about investing and
financing activities not resulting in cash receipts or payments in the period
pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB Accounting
Standards Codification for the disclosure of subsequent events. The Company will
evaluate subsequent events through the date when the financial statements were
issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification,
the Company as an SEC filer considers its financial statements issued when they
are widely distributed to users, such as through filing them on EDGAR.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued
update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other
things, the amendments in this update removed the definition of development
stage entity from Topic 915, thereby removing the distinction between
development stage entities and other reporting entities from US GAAP. In
addition, the amendments eliminate the requirements for development stage
entities to (1) present inception-to-date information on the statements of
income, cash flows and shareholders equity, (2) label the financial statements
as those of a development stage entity; (3) disclose a description of the
development stage activities in which the entity is engaged and (4) disclose in
the first year in which the entity is no longer a development stage entity that
in prior years it had been in the development stage. The amendments are
effective for annual reporting periods beginning after December 31, 2014 and
interim reporting periods beginning after December 15, 2015, however entities
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are permitted to early adopt for any annual or interim reporting period for
which the financial statements have yet to be issued. The Company has elected to
early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented
inception-to-date information on the respective financial statements.
NOTE 3 - GOING CONCERN
The financial statements have been prepared assuming that the Company will
continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of
business.
As reflected in the financial statements, the Company had an accumulated deficit
at June 30, 2015, a net loss and net cash used in operating activities for the
period from April 17, 2014 (inception) through June 30, 2015. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.
Although the Company has recognized some nominal amount of revenues since
inception, the Company is devoting substantially all of its efforts on
establishing the business and its planned principal operations have not
commenced. The Company is attempting to commence operations and generate
sufficient revenue; however, the Company's cash position may not be sufficient
to support its daily operations. 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 its
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 financial statements do not include any adjustments related to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE 4 - STOCKHOLDER'S EQUITY
SHARES AUTHORIZED
Upon formation the total number of shares of all classes of stock which the
Company is authorized to issue is Seventy-Five Million (75,000,000) shares of
which Seventy-Five Million (75,000,000) shares shall be Common Stock, par value
$0.001 per share.
COMMON STOCK
On April 17, 2014, upon formation, the Company sold 5,000,000 shares of common
stock to the founder of the Company at $0.001 per share, or $5,000 in cash.
As of December 2014 Company issued additional 880,000 shares of common stock for
cash for the price of $0.01 per share for the total consideration of $8,800.
As of March 2014 Company issued additional 1,200,000 shares of common stock for
the price of $0.01 each for the total consideration of $12,000.
As of June 30, 2015 there were 7,080,000 total shares issued and outstanding for
the total equity value of $25,800.
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NOTE 5 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with whom the Company had transactions are:
FREE OFFICE SPACE
The Company has been provided office space by its Chief Executive Officer at no
cost. Management determined that such cost is nominal and did not recognize the
rent expense in its financial statement.
ADVANCES FROM STOCKHOLDER
From time to time, the Chairman, CEO and significant stockholder of the Company
advances funds to the Company for working capital purpose. Those advances are
unsecured, non-interest bearing and due on demand.
The Chairman, CEO and significant stockholder of the Company advanced $1,604 in
aggregate to the Company for the period from April 17, 2014 (inception) through
June 30, 2015, none of which has been repaid.
NOTE PAYABLE - CHIEF EXECUTIVE OFFICER
Our President and Director also provided $5,000 loan to the company. The loan is
unsecured, non-interest bearing and due on demand. We recorded imputed interest
$400 during the year ended June 30, 2015.
ISSUED SHARES TO RELATED PARTIES
On April 17, 2014, upon formation, the Company sold 5,000,000 shares of common
stock to Ilia Tomski, CEO of the Company at $0.001 per share, or $5,000 in cash.
On February 19, 2015, the Company sold 80,000 shares of common stock to Ksenia
Tomskaia, Treasurer of the Company at $0.001 per share, or $800 in cash.
NOTE 6 - INCOME TAX PROVISION
DEFERRED TAX ASSETS
At June 30, 2015, the Company had net operating loss ("NOL") carry-forwards for
Federal income tax purposes of $20,465 that may be offset against future taxable
income through 2034. No tax benefit has been recorded with respect to these net
operating loss carry-forwards in the accompanying consolidated financial
statements as the management of the Company believes that the realization of the
Company's net deferred tax assets of approximately $6,958 was not considered
more likely than not and accordingly, the potential tax benefits of the net loss
carry-forwards are offset by the full valuation allowance.
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
26
because of the uncertainty regarding its realization. The valuation allowance
increased approximately $6,958 for the period from April 17, 2014 (inception)
through June 30, 2015.
Components of deferred tax assets are as follows:
June 30, 2015 June 30, 2014
------------- -------------
Net deferred tax assets - Non-current:
Net operating loss carry forward $(20,465) $ (2,594)
Expected income tax benefit from NOL carry-forwards 6,958 882
-------- --------
Less valuation allowance (6,958) (882)
-------- --------
Deferred tax assets, net of valuation allowance $ -- $ --
======== ========
|
INCOME TAX PROVISION IN THE STATEMENT OF OPERATIONS
A reconciliation of the federal statutory income tax rate and the effective
income tax rate as a percentage of income before income taxes is as follows:
For the
period from
April 17, 2014
For the (inception)
year ended through
June 30, 2015 June 30, 2014
------------- -------------
Federal statutory income tax rate 34% 34%
Increase (reduction) in income tax provision resulting from:
Net operating loss ("NOL") carry-forwards (34) (34)
------- -------
Effective income tax rate 0% 0%
======= =======
|
NOTE 7 - SUBSEQUENT EVENTS
The Company has evaluated all events that occur after the balance sheet date
through the date 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 event(s) to be disclosed.
27