NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE
1 - ORGANIZATION AND BUSINESS DESCRIPTION
Velt
International Group Inc. (“Velt” or the “Company”) is a Nevada corporation formed on February 7, 2011.
Our current principal executive office is located at 273 E. Hillcrest Drive, Thousand Oaks, CA 91360. Tel: 313-713-3244. The Company’s
common stock are currently traded on the Over the Counter Pink Sheet (“OTCPINK”) under the symbol “VIGC”.
The
Company has set up a completed and mature mobile application system (the “mobile app”) which supports third party
payment function, online booking and other management functions. This mobile app allows users to get special discounts when the
users purchase from merchants listed in the app through its online payment systems and will rely on big data management to create
a large consumer base that will mostly connect with traditional retailers and some of the online stores.
The
Board of the Directors approved the stock split of the Company’s issued and outstanding common stock whereby each twenty
shares of common stock was converted into one share of common stock. The stock split became effective FINRA on May 21, 2018. Pursuant
to the stock split, each issued and outstanding share of the common stock was exchanged for one-twentieth of a share. As
a result, each stockholder now owns a reduced number of shares of the Company’s common stock. The number of the Company’s
authorized shares of common stock was not affected by the stock split and the shares of common stock retain a par value of $0.001
per share. All share and per share amounts in the financial statements and notes thereto have been restated for all periods presented
to give retroactive effect to the stock split.
On
November 19, 2018, the Company’s principal shareholder, Mr. Chin Kha Foo (“Mr. Foo”), entered into a Stock Purchase
Agreement (the “SPA”) to transfer 60% of the Company’s issued and outstanding shares to Rural Asset Management
Services, Inc., a Malaysian company (“RAM”). On December 14, 2018, RAM became the principal shareholder of the Company
and
Mr. Ali Kasa was appointed to be the Company’s President, CEO, CFO, and Secretary
of the Company due to the change in control of the Company.
RAM
is an equity investment company with portfolio of interest in biotechnology, healthcare, cancer treatment research and technology,
ICT and Crypto Currency. RAM has invested to companies located in Malaysia, Australia and the USA.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“US GAAP”) for interim financial information and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s
most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting
of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the
interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative
of the results to be expected for the full year. Notes to the unaudited interim financial statements which would substantially
duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the
Form 10-K, have been omitted.
Use
of Estimates
The
preparation of the financial statements in conformity with US GAAP requires management to make estimates, judgements and assumptions
that affect certain amounts reported in the financial statements and footnotes. Accordingly, actual results could differ from
those estimates.
Recent
Accounting Pronouncements
Management
believes that none of the recently issued accounting pronouncements will have a material impact on the financial statements.
Concentration
of Credit Risk
The
Company maintains its cash in bank accounts which, at times, may exceed the federally insured limits. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant credit risk on cash in bank.
Cash
The
Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
As of December 31, 2018 and September 30, 2018, the Company had cash of $60 and $127, respectively.
Earnings
Per Share
Basic
earnings per share is computed by dividing net income (loss) attribute to stockholders of common stock by the weighted-average
number of common shares outstanding for the period. Diluted net earnings per share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding plus equivalent shares.
The
Company only issued one type of shares, i.e., common shares and does not have any potentially dilutive instrument as of December
31, 2018 and 2017.
Property
and equipment
Property
and equipment are carried at cost and, less accumulated depreciation. Depreciation has been determined using a straight-line method
over the estimated useful lives of the related assets, which are 5 years. The cost of repairs and maintenance is expensed as incurred;
major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation
are removed from the accounts, and any resulting gains or losses are included in income in the year of disposal. The Company examines
the possibility of decreases in the value of property and equipment when events or changes in circumstances reflect the fact that
their recorded value may not be recoverable.
As
of December 31, 2018, the Company’s property and equipment consists of computer equipment with a cost of $7,378 and accumulated
depreciation of $1,443. As of September 30, 2018, the Company has property and equipment at a cost of $7,378 and accumulated depreciation
of $1,074. During the three months ended December 31, 2018 and 2017, the depreciation expenses were $369 and nil, respectively.
Revenue
Recognition
Revenue
is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration
we expect to be entitled to in exchange for those products and services. We enter into contracts that include products and services,
which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net
of allowances for returns and any taxes collected from customers.
The
Company’s contracts with customers may include multiple performance obligations. Revenue relating to agreements that provide
more than one performance obligation is recognized based upon the relative fair value to the customer of each performance obligation
as each obligation is earned. The Company derives its revenues the follows:
Mobile
Apps:
Revenue
from the mobile apps is recognized when control has transferred to the customer which typically occurs when the mobile apps either
upon delivery of the key code to the customer or upon the deployment of the mobile app to the App Store.
Maintenance
Services:
The
Company offers maintenance and function improvements services related to the mobile apps for customers. Maintenance service is
considered distinct and is recognized ratably over the maintenance term.
During
the three months ended December 31, 2018 and 2017, the Company recognized revenue of nil from the mobile apps and maintenance
services.
Going
Concern
The
Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going
concern. These adverse conditions are negative financial trends, specifically negative working capital, recurring operating losses,
accumulated deficit and other adverse key financial ratios.
The
Company did not generate sufficient revenues to cover its operating expense during the three months ended December 31, 2018. The
Company plans to continue obtaining funding from the majority shareholder and the President of the Company to support the Company’s
normal business operating. There is no assurance, however, that the Company will be successful in raising the needed capital and,
if funding is available, that it will be available on terms acceptable to the Company.
The
financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
NOTE
3 - RELATED PARTY TRANSACTIONS
Loans
from shareholders
On
May 24, 2018, the Company issued a promissory note of $249,975, bearing interest rate at 6% and due in twelve months, to Mr. Foo
in exchange for cash. On July 17, 2018 and July 25, 2018, the Company made repayments of $100,000 and $90,000 to Mr. Foo, respectively.
As of September 30, 2018, the outstanding balance for the promissory note was $59,975. The Company borrowed from Mr. Foo to support
its operation and the amount bears no interest and due on demand. The outstanding balance of the borrowings as of September 30,
2018 was $160,955.
On
December 14, 2018, Mr. Foo agreed to forgive the Company’s debt of $224,790, which includes the promissory note of $59,975,
accrued interest of $3,860, and the borrowings of $160,955. As of December 31, 2018, the Company has debt forgiveness of $224,790
recorded in additional paid-in capital.
The
Company borrowed from RAM to support its operation and the amount bears no interest and due on demand. As of December 31, 2018,
total outstanding balance of the borrowings was $3,722.
NOTE
4 - INCOME TAXES
The
Company recorded no income tax expense or benefit during the three months ended December 31, 2018 and 2017 since the Company incurred
net operating losses and recorded a full valuation allowance against net deferred tax assets for all periods presented. As of
December 31, 2018 and September 30, 2018, the aggregate balances of our gross unrecognized tax benefits were $133 thousand and
$207 thousand, respectively, of which a valuation allowance recognized against the unrecognized tax benefits.
In
December 2017, the Tax Reform Act was signed into law making significant changes to the Internal Revenue Code. Changes include,
but are not limited to, a corporate tax rate decrease from 35% to 21 % effective for tax years beginning after December 31, 2017,
the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax
on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. There is no material impact on the
Company’s financial statements as a result of the Tax Reform Act.
NOTE
5 - COMMITMENTS AND CONTINGENCIES
The
Company has no commitment or contingency as of December 31, 2018 and September 30, 2018.
NOTE
6 - SUBSEQUENT EVENTS
On
January 8, 2019, the Board of Directors authorized the issuance of 1,000,000 shares of the Company’s common stock to its
President for services rendered. The Company relied upon Section 4(2) and Regulation D of the Securities Act of 1933, as amended,
for the issuance of these securities. No commissions were paid regarding the share issuance and the share certificates were issued
with a Rule 144 restrictive legend.
On
January 16, 2019, under the Company’s 2019 Equity Incentive Plan, the Company issued an aggregate of 700,000 shares of its
common stock to three consultants for services rendered to the Company. The Company relied upon Section 4(2) and Regulation D
of the Securities Act of 1933, as amended, for the issuances of the securities listed above. No commissions were paid regarding
the share issuance and the share certificates were issued with a Rule 144 restrictive legend. The shares were subsequently registered
in an S-8 filed with the SEC on January 30, 2019.
On January 22, 2019, the Company executed
a Securities Purchase Agreement (the “SPA”) with Labrys Fund, LP (“Labrys”), pursuant to which Labrys
purchased a Convertible Promissory Note from the Company in the principal amount of $75,000.00 (the “Note”) dated
January 22, 2019. The Note bears interest at the rate of 12% per annum and must be repaid on or before July 22, 2019. The Note
may be prepaid at any time before July 22, 2019 without any prepayment penalties. The amounts under the Note may be converted
by Labrys at any time after 180 days from the date of the Note into shares of Company common stock at a conversion price equal
to 65% of the lowest trading price during the 20-day period prior to conversion (as determined in the Note). The Note contains
certain representations, warranties, covenants and events of default, and increases in the conversion discount and amount of the
principal and interest rates under the Note in the event of such defaults. The Company also issued 92,500 shares of the Company’s
common stock (the “Returnable Shares”) to Labrys as a commitment fee.
On January 22, 2019, the Company entered
into an Acquisition Agreement with THF Holdings Pty Ltd., an Australian corporation (“THF”) and Rural Asset
Management Services, Inc., THF’s sole shareholder (“Rural”), pursuant to which the Company acquired 100% of the
issued and outstanding capital stock of THF in exchange for 4,000,000 shares of the Company’s common stock, valued on January
22, 2019 at $1,000,000. THF is an Australian Cancer treatment and medical device company. Rural, is currently the majority shareholder
of the Company. As of February 13, 2019, the 4,000,000 shares have not been issued to THF yet.
On January 24, 2019, the Company entered into an Acquisition Agreement with THF International
(Hong Kong) Ltd., a Hong Kong company (“THF Hong Kong”) and the shareholders of THF Hong Kong (the “Shareholders”),
pursuant to which the Company acquired 100% of the issued and outstanding capital stock of THF Hong Kong in exchange for 8,000,000
shares of the Company’s common stock, valued at $2,000,000 on January 24, 2019. Through its two subsidiaries, THF Hong Kong
operates a cancer treatment clinic and medical device company and a management company, respectively, both of which are located
in South Africa. Rural Asset Management Services, Inc., a majority shareholder of the Company, owns 90% of THF Hong Kong.
As
of February 13, 2019, the 8,000,000 shares have not been issued to THF Hong Kong and the shareholders of THF Hong Kong yet.
On January 24, 2019, the Company entered
into an Acquisition Agreement with Natural Health Farm (Labuan) Inc. (“NHF”) and the shareholders of NHF
(the “Shareholders”), pursuant to which the Company acquired 100% of the issued and outstanding capital stock of NHF
in exchange for 40,000,000 shares of the Company’s common stock, valued at $10,000,000 on January 24, 2019. The Company
shall obtain a valuation report on the value of NHF and the exact purchase price in Company shares will be the valuation price
or $10,000,000, whichever is less. NHF is a Malaysian company concentrating on clinical life sciences and holds an exclusive license
for registering and commercializing Photosoft technology for treatment of all cancers in the Sub-Sahara African region. The technology
has been licensed in Australia, New Zealand, China, Malaysia and Sub-Sahara Africa. The human clinical trial efforts have started
in Australia and China conducted by Hudson Medical Institute, Australia. As of February 13, 2019, the 10,000,000 shares have not
been issued to NHF and the shareholders of NHF yet.
On
January 25, 2019, the Company issued 200,000 shares of its common stock to a consultant for services rendered to the Company.
The Company relied upon Section 4(2) and Regulation D of the Securities Act of 1933, as amended, for the issuances of the securities
listed above. No commissions were paid regarding the share issuance and the share certificates were issued with a Rule 144 restrictive
legend.
On January 29, 2019, the Company sold 90,910
shares in a private placement to a non-affiliated Hong Kong corporation for $20,100. The Company relied upon Section 4(2) and
Regulation S of the Securities Act of 1933, as amended, for the sale of the securities listed above. No commissions were paid
regarding the share issuance and the share certificates were issued with a Rule 144 restrictive legend.
On
January 30, 2019, the Company filed a registration statement under the Securities Act of 1933 for the 2019 Equity Incentive Plan.
The purpose of this Plan is to provide incentives to attract and retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, and any Parents and Subsidiaries that exist now or in the future, by
offering them an opportunity to participate in the Company’s future performance through the grant of Awards. The total number
of Shares reserved and available for grant and issuance pursuant to this Plan as of the date of adoption of the Plan by the Board
is 3,000,000 shares.
VELT
INTERNATIONAL GROUP INC.