Notes
to the Financial Statements
March
31, 2017 and 2016
Note
1.
|
ORGANIZATION
AND NATURE OF BUSINESS
|
Addentax
Group Corp. (“the Company”, “we”, “us” or “our”) was incorporated in Nevada on
October 28, 2014, and the Company was engaged in the field of producing images on multiple surfaces using heat transfer technology.
On
November 21, 2016, our former sole officer and director, who was the holder of an aggregate of 6,000,000 shares of Common Stock
of the Company, representing approximately 86.7% of the issued and outstanding shares of Common Stock of the Company, sold all
6,000,000 of his shares of Common Stock. Of this amount 3,800,000 shares of Common Stock were purchased from our current sole
officer and director.
The
Company is exploring other business opportunities.
The
Company is working on a field of producing images on a multiple surfaces, such as glass, leather, plastic, ceramic, textile, and
others using three-dimensional (3D) sublimation vacuum heat transfer machine. The 3D sublimation vacuum heat transfer machine
does not require technical skills for product production. A set of printing machines includes the machine itself and all raw materials
for setting up and testing, and raw materials for production process. Materials for images can be varied, such as ceramics, glass,
crockery, metal, clothing, caps, bags, leather products and other products. The Company’s products are intended for individuals,
business owners associated with the sale of souvenirs, and business owners intending to order souvenirs in the corporate style.
The Company also intends to conclude a contract of carriage with local shipping companies for delivery of its goods to cities,
such as Meknes, Rabat, Kenitra and across the world.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. As of March 31, 2017, the Company
has a loss from operations, an accumulated deficit and has no revenues from continuing operations. The Company intends to fund
operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital
and other cash requirements for the year ending March 31, 2018.
The
ability of the Company to emerge from an early stage is dependent upon, among other things, obtaining additional financing to
continue operations, and development of its business plan. In response to these problems, management intends to raise additional
funds through public or private placement offerings.
These
factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note
3.
|
SUMMARY
OF SIGNIFCANT ACCOUNTING POLICIES
|
Basis
of presentation
The
accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United
States of America (“US GAAP”). The Company’s fiscal year end is March 31.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
Basic
Income (Loss) Per Share
The
Company computes income (loss) per share in accordance with FASB ASC 260,
“Earnings per Share.”
Basic loss
per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding
common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding
during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. During the year
ended March 31, 2017 and 2016 there were no potentially dilutive debt or equity instruments issued or outstanding.
Discontinued
Operations
The
Company follows ASC 205-20,
“Discontinued Operations,”
to report for disposed or discontinued operations.
Reclassifications
Certain
prior year amounts have been reclassified to conform with the current year presentation.
Recent
Accounting Pronouncements
The
FASB has issued Accounting Standards Update (ASU) No. 2017-09,
Compensation—Stock Compensation (Topic 718) — Scope
of Modification Accounting.
ASU 2017-09 applies to entities that change the terms or conditions of a share-based payment award.
The FASB adopted ASU 2017-09 to provide clarity and reduce diversity in practice as well as cost and complexity when applying
the guidance in Topic 718,
Compensation—Stock Compensation,
to the modification of the terms and conditions of a
share-based payment award. The amendments provide guidance on determining which changes to the terms and conditions of share-based
payment awards require an entity to apply modification accounting under Topic 718. Effective for all entities for annual periods,
including interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including
adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet
been issued. The Company does not anticipate the adoption of ASU 2017-09 will have a material impact on its consolidated financial
statements.
The
FASB has issued Accounting Standards Update (ASU) No. 2017-01,
Business Combinations (Topic 805): Clarifying the Definition
of a Business,
clarifying the definition of a business. The amendments affect all companies and other reporting organizations
that must determine whether they have acquired or sold a business. The definition of a business affects many areas of accounting
including acquisitions, disposals, goodwill, and consolidation. The amendments are intended to help companies and other organizations
evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments provide
a more robust framework to use in determining when a set of assets and activities is a business. They also provide more consistency
in applying the guidance, reduce the costs of application, and make the definition of a business more operable. For public companies,
the amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods.
The Company does not anticipate the adoption of ASU 2017-01 will have a material impact on its consolidated financial statements.
We
have reviewed all other recently issued, but not yet effective, accounting pronouncements and we do not believe any of these will
have a material impact on the Company.
Note
4.
|
SHAREHOLDER’S
EQUITY
|
On
December 28, 2016, The Company filed Amended and Restated Articles of Incorporation with the Secretary of State of the State of
Nevada to increase the authorized shares of common stock, $0.001 par value from 150,000,000 to 1,000,000,000.
On
July 12, 2016, the Company approved a 1 for 2 forward stock split of the Company’s issued and outstanding common stock.
All relevant information relating to numbers of shares and per share information have been retroactively adjusted to reflect the
reverse stock split for all periods presented.
During
the year ended March 31, 2017, the Company issued 37,000 shares of common stock for $554.
During
the year ended March 31, 2016, the Company issued 883,000 shares of common stock for $13,245, with net proceeds of $13,093 after
bank charges applied against issuance proceeds.
As
at March 31, 2017 and 2016, the Company had 6,920,000 and 6,883,000 shares of common stock issued and outstanding, respectively.
Note
5.
|
RELATED
PARTY TRANSACTIONS
|
The
Company will continue to rely on advances from related parties until when it can support its operations through generating revenue,
attaining adequate financing through sales of its equity securities or traditional debt financing. There is no formal written
commitment by the shareholders to continue to support the company’s operation. The amounts due to the related party represents
advances or amounts paid on behalf of the Company in satisfaction of liabilities. These advances are considered temporary in nature
and have not been formalized by promissory notes. This loan is unsecured, non-interest bearing and due on demand.
During
the year ended March 31, 2017, the Company’s officer and director advanced $19,322 for the payment of operating expenses.
The
Company’s previous sole officer and director, who was also a majority shareholder, advanced to the Company an amount of
$23,820. On November 21, 2016, this officer and director resigned all positions with the Company and forgave the $31,920 owing
to him, which was recorded as additional paid in capital.
As
at March 31, 2017 and 2016, the Company owed a related party $19,322 and $8,100, respectively.
Note
6.
|
DISCONTINUED
OPERATIONS
|
On
November 21, 2016, due to the Changes in Control of Registrant,
the Company decided to exit
the field of producing images on multiple surfaces using heat transfer technology.
For
the year ended March 31, 2017, the Company recorded a loss on the disposal of assets of $3,968. The change of the business qualified
as a discontinued operation of the Company and accordingly, the Company has excluded results of the operations from its Statements
of Operations to present this business in discontinued operations.
The
following table shows the results of operations of Addentax for the years ended March 31, 2017 and 2016 which are included in
the loss from discontinued operations:
|
|
Year Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Revenues
|
|
$
|
9,950
|
|
|
$
|
5,700
|
|
Cost of Goods Sold
|
|
|
(1,532
|
)
|
|
|
(713
|
)
|
Gross Profit
|
|
|
8,418
|
|
|
|
4,987
|
|
|
|
|
|
|
|
|
|
|
General and administrative expense
|
|
|
(29,410
|
)
|
|
|
(13,661
|
)
|
Depreciation
|
|
|
(534
|
)
|
|
|
(1,068
|
)
|
Loss on disposal of assets
|
|
|
(3,968
|
)
|
|
|
-
|
|
Total Expense
|
|
|
(33,912
|
)
|
|
|
(14,729
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
-
|
|
|
|
28
|
|
Loss from Discontinued Operations, Net of Tax Benefits
|
|
$
|
(25,494
|
)
|
|
$
|
(9,714
|
)
|
The
following table shows the carrying amounts of the major classes of assets and liabilities associated with the Addentax as of the
November 21, 2016.
|
|
November 21, 2016
|
|
Prepaid expenses
|
|
$
|
190
|
|
Inventory
|
|
|
2,031
|
|
Equipment, net of accumulated depreciation of $1,869
|
|
|
1,047
|
|
Website
|
|
|
700
|
|
Net assets
|
|
|
3,968
|
|
Loss on disposal of assets
|
|
$
|
3,968
|
|
The
following table presents the carrying amounts of the major classes of assets and liabilities associated reported as discontinued
operations on our accompanying balance sheets.
|
|
March 31, 2017
|
|
|
March 31, 2016
|
|
Assets from discontinued operations:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
10,052
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
1,330
|
|
Inventory
|
|
|
-
|
|
|
|
977
|
|
Equipment, net of accumulated depreciation of $1,869
|
|
|
-
|
|
|
|
1,581
|
|
Website
|
|
|
-
|
|
|
|
700
|
|
Total assets from discontinued operations
|
|
|
-
|
|
|
|
14,640
|
|
Current assets from discontinued operations
|
|
|
-
|
|
|
|
12,359
|
|
Non-current assets from discontinued operations
|
|
$
|
-
|
|
|
$
|
2,281
|
|
As
of March 31, 2017, the Company had net operating loss carry forwards of approximately $62,170 that may be available to reduce
future years’ taxable income in varying amounts through 2032. 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
provision for Federal income tax consists of the following:
|
|
Year ended March 31
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Federal Income Tax benefits (expenses) attributable to Current Operation
|
|
$
|
7,893
|
|
|
$
|
1,461
|
|
Tax Refund
|
|
|
-
|
|
|
|
(28
|
)
|
Valuation Allowance
|
|
|
(7,893
|
)
|
|
|
(1,433
|
)
|
Net Provision for Federal Income Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
cumulative tax effect at the expected rate of 15% of significant items comprising our net deferred tax amount is as follows:
|
|
March 31, 2017
|
|
|
March 31, 2016
|
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
9,326
|
|
|
$
|
1,433
|
|
Valuation Allowance
|
|
|
(9,326
|
)
|
|
|
(1,433
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
8.
|
SUBSEQUENT EVENTS
|
On
April 18, 2017 the Company issued a total of 500,000,000 common shares to the following:
Hengtian
Group Co., Ltd.: (Beneficial Owner: Ma Huizhu) 215,000,000 restricted common shares.
Hong
Zhida*: 30,000,000 restricted common shares.
Hui
Lian Group Ltd.: (Beneficial Owner: Ma Huijun) 255,000,000 restricted common shares.
The
500,000,000 common shares were issued pursuant to a Sale & Purchase Agreement (“S&P”) for the acquisition
of 100% of the shares and assets of Yingxi Industrial Chain Group Co., Ltd., a company incorporated under the laws of the Republic
of Seychelles. ATXG agreed to issue five hundred million (500,000,000) shares of ATXG to Yingxi Industrial Chain Group Co., Ltd.
to acquire the shares and assets for a cost of US$0.30 per share or a total cost of US$150,000,000.
*Hong
Zhida is the President, Secretary, Treasurer and a Director of the Company.
There
were 506,920,000 shares of common stock issued and outstanding as of June 28th, 2017.