Notes to the Consolidated Financial Statements
For the Period Ended February 28, 2019
(Unaudited)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN
Fellazo Corp. (“the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada on May 28, 2014.
During the quarter ending February 28, 2019 the Company had continued its transformation process into an IT based company specialized in Mobile Application Developments with worldwide clientele and a portfolio investment company in primary industries such as healthcare, energy, development and capital market.
Our office is located at 8
th
Floor, Wisma Huazong, Lot 15285, 0.7km Lebuhraya SungeiBesi, 43300 Seri Kembangan, Selangor Darul Ehsan, Malaysia.
Acquisition Under Common Control
On January 2, 2019, the Company issued 11,264,000 shares of common stock to Yap Kit Chuan, the director, President, CEO, CFO, and the majority shareholder of the Company, who is also one of the shareholder of Fellazo Berhad (“FB”), a company incorporated in Malaysia, to acquire 49,000 common shares of FB. Before the acquisition, Yap owned 98% of the Company on June 19, 2018 and 80% of FB on April 17, 2018. After the acquisition which was concluded on February 22, 2019, the Company holds 49% of the shareholding of FB. The Company and FB were under common control before the acquisitionas a variable interest entity (VIE), and is consolidated in accordance to ASC-805-50, in which the assets and liabilities of FB have been presented at their carrying values at the date of common control on June 19, 2018.
Going Concern Uncertainties
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
As of February 28, 2019, the Company had an accumulated deficit of $739,979 and net loss of $88,824 and net cash used in operations of $37 for the six months ended February 28, 2019. Losses have principally occurred as a result of the substantial resources required for general and administrative expenses associated with our operations. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management believes that the actions presently being taken to obtain additional funding and implement its strategic plan provides the opportunity for the Company to continue as a going concern.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of February 28, 2019 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended February 28, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the financial statements for the year ended August 31, 2018, and related notes thereto included in the elsewhere in this filing.
Principles of Consolidation
The accompanying consolidated financial statements include the financial statements of the Company and its 49% owned subsidiary Fellazo Berhad, an entity under common control. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
Variable Interest Entities
The Company holds both the power to direct the most significant activities of FB, as well as an economic interest in FB and, as such, is deemed to be the primary beneficiary or consolidator of FB. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.
Foreign
Currency
Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is the United States Dollar (“USD”). The Company’s subsidiary in Malaysia maintains their books and records in their local currency, the Malaysia Ringgit (“RM”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the USD are translated into USD, in accordance with ASC 830, “Translation of Financial Statements”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
Exchange Rates
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2/28/2019
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8/31/2018
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2/28/2018
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Spot rate RM : USD exchange rate
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0.2459
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0.2434
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0.2553
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Average period RM : USD exchange rate
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0.2415
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N/A
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0.2444
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Reclassification
Certain amounts from prior periods have been reclassified to conform to the current period presentation.
Recent Accounting Pronouncements
In October 2018, FASB issued ASU No. 2018-17,
Consolidation - Targeted Improvements to Related Party Guidance for Variable Interest Entities (Topic 810).
ASU No. 2018-17 guidance eliminates the requirement that entities consider indirect interests held through related parties under common control in their entirety when assessing whether a decision-making fee is a variable interest. Instead, the reporting entity will consider such indirect interests on a proportionate basis. This pronouncement is effective for public entities for fiscal years ending after December 15, 2019, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements.
NOTE 3 – RELATED PARTY TRANSACTIONS
Our Management Agent, SwipypayBerhad (a company established in Malaysia) is 80% owned by our Director – Mr Yap Kit Chuan. Total outstanding amount due to our Management Agent was $597,997 and $502,226 as at February 28, 2019 and August 31, 2018 respectively. The additional amount of $95,771 incurred in the six months ended February 28 2019 consisted of operating expenses paid on behalf of the Company
On January 2, 2019, 11,264,000 shares of common stock were issued to Yap Kit Chuan, the director, President, CEO, CFO, and the majority shareholder for the acquisition of FB (see Note 1).
NOTE 4 - STOCKHOLDERS’ DEFICIT
The Company is authorized to issue 1,000,000,000 shares of common stock at a par value $0.001.
During the period ended February 28, 2018, there were no issuances of common stock.
On January 2, 2019, the Company issued 11,264,000 shares of common stock of the Company to our officer and majority shareholder for the acquisition of FB.
As of February 28, 2019 and August 31, 2018, 86,264,000 and 75,000,000 shares of common stock were issued and outstanding, respectively.
NOTE 5 - RESTATEMENT
Due to the acquisition of FB, an entity under common control since June 18, 2018 (see Note 1), the Company has disclosed the balance sheet as of August 31, 2018, to restate the information on a consolidated basis as follows:
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Acquired
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Originally
Reported
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Entity
under common control
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Restatement
Adjustment
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As
Restated
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ASSETS
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Current Assets
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|
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Cash and cash equivalent
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$
|
631
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|
|
$
|
1,872
|
|
|
$
|
-
|
|
|
$
|
2,503
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|
Total Current Assets
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|
|
631
|
|
|
|
1,872
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|
|
|
-
|
|
|
|
2,503
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TOTAL ASSETS
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$
|
631
|
|
|
$
|
1,872
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|
|
$
|
-
|
|
|
$
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2,503
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|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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Current Liabilities
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Accounts payable and accrued liabilities
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$
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-
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$
|
930
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|
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$
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17,847
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|
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$
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18,777
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Due to related party
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540,766
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(20,693
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)
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(17,847
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)
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|
502,226
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Total Current Liabilities
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540,766
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|
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|
(19,763
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)
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|
|
-
|
|
|
|
521,003
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TOTAL LIABILITIES
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540,766
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|
|
|
(19,763
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)
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|
-
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|
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|
521,003
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|
|
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Stockholders’ Deficit
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Preferred stock, $0.001 par value, 20,000,000 shares authorized;
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0 shares issued and outstanding
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|
-
|
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|
-
|
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|
-
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|
-
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Common stock, $0.001 par value, 1,000,000,000 shares authorized;
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75,000,000 shares issued and outstanding as of August 31, 2018
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75,000
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|
|
|
24,977
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|
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(24,977
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)
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75,000
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Additional paid-in capital
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36,116
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|
|
|
-
|
|
|
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11,270
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|
|
|
47,386
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Accumulated deficit
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(651,251
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)
|
|
|
(2,763
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)
|
|
|
2,377
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|
|
|
(651,637
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)
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Accumulated other comprehensive loss
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|
|
-
|
|
|
|
(579
|
)
|
|
|
295
|
|
|
|
(284
|
)
|
Total Fellazo Corp. Stockholders’ Deficit
|
|
|
(540,135
|
)
|
|
|
21,635
|
|
|
|
(11,035
|
)
|
|
|
(529,535
|
)
|
Non-controlling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
11,035
|
|
|
|
11,035
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|
Total Stockholders’ Deficit
|
|
|
(540,135
|
)
|
|
|
21,635
|
|
|
|
-
|
|
|
|
(518,500
|
)
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
631
|
|
|
$
|
1,872
|
|
|
$
|
-
|
|
|
$
|
2,503
|
|