MAKH GROUP CORP. (the Company, we or us) was incorporated under the laws of the State of Nevada on August 13, 2014 (Inception) and has adopted a December 31 fiscal year end. The Company intends to provide business-consulting services in China.
The Company has incurred a loss since Inception (August 13, 2014) resulting in an accumulated deficit of $48,482 as of March 31, 2017 and further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the Companys ability to continue as a going concern. Management believes that the Companys capital requirements will depend on many factors including the success of the Companys development efforts and its efforts to raise capital. Management also believes the Company needs to raise additional capital for working capital purposes. There is no assurance that such financing will be available in the future. The conditions described above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and, or, the private placement of common stock.
The accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2016.
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. The Companys year -end is December 31.
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. GAAP 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 period. Actual results could differ from those estimates.
The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Companys financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Companys financials properly reflect the change. The Company currently does not have any recent accounting pronouncements that they are studying and feel may be applicable.
For the three months periods ended March 31, 2017 and 2016 there were no potentially dilutive debt or equity instruments issued or outstanding and any such shares would have been excluded from the computation because they would have been anti-dilutive as the Company incurred losses in these years.
Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
As of March 31, 2017 the Company had net operating loss carry forwards of $48,482 that may be available to reduce future years taxable income through 2036. However, the Companys ability to use the net operating loss carryovers may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The Company adopted the provisions of ASC 740-10-50, formerly FIN 48, and Accounting for Uncertainty in Income Taxes. The Company had no material unrecognized income tax assets or liabilities as of March 31, 2017.
In support of the Companys efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
As of March 31, 2017, the amount outstanding was $12,875. The loan is non-interest bearing, due upon demand and unsecured.
The Companys sole shareholder and director donated office space free of charge and will devote approximately 20 hours a week to the Companys operations without payments. The revenue earned during the three months ended were a result of the directors donated consulting hours to an independent third party.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q 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.
GENERAL
Our company plans to provide consulting services for selection of production plants and products in China. We plan to represent the interests of our future clients and act as our clients authorized representative throughout the entire territory of China. Our principal office address is located at Zheng Road (5# Plant) Shushan Industrial Park,Hefei, China 230031.
Service
We offer the following set of services:
1) Search for production plants and business partners in China
2) Search for products and materials in China
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3) Services of a business interpreter
4) Assistance with legal support for transactions in China. Search for legal counsels and auditors.
5) Development of logistic schemes of product delivery from China
6) Market analysis and marketing research in China
7) Arrangement of business tours and excursions of product plants in China (including virtual ones) and exhibitions.
8) Assistance with organization of contacts and business meetings between clients and Chinese commercial and industrial companies, plants and factories.
9) Consultations on registration and conducting business in China.
We plan to render our services in an integrated manner, and if desired, a client can select any one of the aforementioned services.
RESULTS OF OPERATION
As of March 31, 2017, we have accumulated a deficit of $48,482. We anticipate that we will continue to incur substantial losses in the next 12 months. Our financial statements have been prepared assuming that we will continue as a going concern. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Three Month Period Ended March 31, 2017 compared to Three Month Period Ended March 31, 2016
Revenue
During the three months ended March 31, 2017 Company has not generated any revenue. During the three months ended March 31, 2016 the Company has generated $1,500 in revenue.
Operating Expenses
During the three month period ended March 31, 2017, we incurred total general and administrative expenses of $9,636 compared to $5,655 during the three months period ended March 31, 2016. General and administrative and professional fee expenses incurred generally related to corporate overhead, financial and administrative contracted services, such as legal and accounting, developmental costs, and marketing expenses.
Net Loss
Our net loss for the three months period ended March 31, 2017 was $9,636 compared to $4,155 during the three months period ended March 31, 2016 due to the factors discussed above.
Three Months Period Ended March 31, 2017 compared to Three Month Period Ended March 31, 2016
Revenue
During the Three months ended March 31, 2016, the Company generated $1,500 in revenue compared to $0 during the Three months period ended March 31, 2017. The Company provided consulting services according to an agreement with
PECGIN & SCERTIZ, LLC
. dated March 1, 2016. The service included:
1) Searching for production plants and business partners in China.
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2) Arrangement of business tours of product plants in China.
3) Development of logistic schemes of product delivery from China
4) Market analysis and marketing research in China
LIQUIDITY AND CAPITAL RESOURCES
As at March 31, 2017 our current assets were $4,168 compared to $6,874 in current assets at December 31, 2016. The decrease in cash was due to an increase Company expenses and the increase in prepaid expenses for a prepayment of an annual fee. As at March 31, 2017, our current liabilities were $20,450 compared to $ 13,520 as of December 31, 2016.
Stockholders equity was $6,646 as of December 31, 2016 compared to stockholders deficit of $16,282 as of March 31, 2017.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the three month period ended March 31, 2017, net cash flows used in operating activities was $3,457, consisting of net loss of $9,636,prepaid expenses of $2,499 and a $3,680 increase in accrued expenses.
Cash Flows from Investing Activities
We neither used, nor provided cash flows from investing activities during the three month period ended March 31, 2017.
Cash Flows from Financing Activities
Cash flows provided by financing activities during the three month period ended March 31, 2017 were $3,250, consisting of loans from our director.
PLAN OF OPERATION AND FUNDING
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 twelve 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 inventory; (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
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial
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condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
GOING CONCERN
The independent auditors' report accompanying our December 31, 2016 financial statements contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.