ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our
common stock is currently quoted on the OTC Pink under the trading symbol “RTTO”. Our common stock did not trade prior
to June 30, 2019.
Trading
in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that
may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market
for our common stock in the future.
Holders
As
of June 30, 2019, we had 56,446,489 shares of our Common Stock par value, $.0001 issued and outstanding. There were 305 beneficial
owners of our Common Stock.
Transfer
Agent and Registrar
The
transfer agent for our capital stock is Vstock Transfer, LLC, with an address at 18 Lafayette Place, Woodmere, NY 11598 and telephone
number is 212-828-8436.
Penny
Stock Regulations
The
Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security
that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within
the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited investors (generally those with assets in excess
of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).
For
transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such
securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction,
other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure
document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose
the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and,
if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed
control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict
the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the
secondary market.
In
addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry
Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain
information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for
at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy
our common stock, which may limit the investors’ ability to buy and sell our stock.
Dividend
Policy
Any
future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion
of our board of directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions
to declare or pay dividends on our shares of Common Stock. In addition, we currently have no plans to pay such dividends. Our
board of directors currently intends to retain all earnings for use in the business for the foreseeable future.
Equity
Compensation Plan Information
Currently,
there is no equity compensation plan in place.
Unregistered
Sales of Equity Securities
On July 9, 2018, Rito Group Corp. (the
“Company”) completed the issuance and sale of an aggregate of 10,000 shares at a price of $1.50 per share with each
share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”)
in a private placement to Chu Ka Yan Ada (the “investor”), pursuant to the Subscription Agreements dated as of July
9, 2018 between the Company and the investor. The net proceeds to the Company amounted to $15,000. The $15,000 in proceeds went
directly to the Company as working capital.
On July 12, 2018,
Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 20,000 shares at a price of $1.50
per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”) in a private placement to Leung Mee Yee Minnie (the “investor”), pursuant to the Subscription Agreements
dated as of July 12, 2018 between the Company and the investor. The net proceeds to the Company amounted to $30,000. The $30,000
in proceeds went directly to the Company as working capital.
On July 17, 2018,
Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 100,000 shares at a price of $2.00
per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”) in a private placement to Yan Wai Ko Cedric (the “investor”), pursuant to the Subscription Agreements
dated as of July 17, 2018 between the Company and the investor. The net proceeds to the Company amounted to $200,000. The $200,000
in proceeds went directly to the Company as working capital.
On August 16, 2018, Rito Group Corp. (the
“Company”) completed the issuance and sale of an aggregate of 15,000 shares at a price of $2.00 per share with each
share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”)
in a private placement to Chen Yuzhen (the “investor”), pursuant to the Subscription Agreements dated as of August
16, 2018 between the Company and the investor. The net proceeds to the Company amounted to $ 30,000. The $30,000 in proceeds went
directly to the Company as working capital.
On September 27, 2018, Rito Group Corp.
(the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at a price of $2.00 per share with
each share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”)
in a private placement to Lei Wai Wan (the “investor”), pursuant to the Subscription Agreements dated as of September
27, 2018 between the Company and the investor. The net proceeds to the Company amounted to $15,000. The $15,000 in proceeds went
directly to the Company as working capital.
On
November 14, 2018, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Wong Sik Ming (the “investor”), pursuant to the Subscription
Agreements dated as of November 14, 2018 between the Company and the investor. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
December 12, 2018, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Chan Sai Hei (the “investor”), pursuant to the Subscription
Agreements dated as of December 12, 2018 between the Company and the investor. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
December 17, 2018, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to To Yin Yu (the “investor”), pursuant to the Subscription
Agreements dated as of December 17, 2018 between the Company and the investor. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
December 24, 2018, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Mak Wing Po (the “Investor A”), pursuant to the Subscription
Agreements dated as of December 24, 2018 between the Company and the Investor A. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
December 25, 2018, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Wong Wing Wah (the “Investor B”), pursuant to the
Subscription Agreements dated as of December 25, 2018 between the Company and the Investor B. The net proceeds to the Company
amounted to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
December 31,2018, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Yeung Wing Yan (the “Investor”), pursuant to the
Subscription Agreements dated as of December 31, 2018 between the Company and the Investor . The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
January 11,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Lai Kwai Chun (the “Investor”), pursuant to the Subscription
Agreements dated as of January 11, 2019 between the Company and the Investor . The net proceeds to the Company amounted to $30,000.
The $30,000 in proceeds went directly to the Company as working capital.
On
January 15,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Cheng Sung Kuen Betty (the “Investor”), pursuant
to the Subscription Agreements dated as of January 15, 2019 between the Company and the Investor . The net proceeds to the Company
amounted to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
January 30,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 37,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Lui Tin Shing (the “Investor A”), pursuant to the
Subscription Agreements dated as of January 30, 2019 between the Company and the Investor A. The net proceeds to the Company amounted
to $75,000. The $75,000 in proceeds went directly to the Company as working capital.
On
January 31,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Qi Wen Juan (the “Investor B”), pursuant to the Subscription
Agreements dated as of January 31, 2019 between the Company and the Investor B. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
January 31,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Or Sau Bing (the “Investor C”), pursuant to the Subscription
Agreements dated as of January 31, 2019 between the Company and the Investor C. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
February 8,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares
at a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Lai Hoi Lam (the “Investor”), pursuant to the Subscription
Agreements dated as of February 8, 2019 between the Company and the Investor A. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On February 21,2019, Rito Group Corp. (the
“Company”) completed the issuance and sale of an aggregate of 7,500 shares at a price of $2.00 per share with each
share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”)
in a private placement to Mak Wing Po (the “Investor”), pursuant to the Subscription Agreements dated as of February
21, 2019 between the Company and the Investor. The net proceeds to the Company amounted to $15,000. The $15,000 in proceeds went
directly to the Company as working capital.
On February 25,2019,
Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at a price of $2.00
per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”) in a private placement to Chui Lok Wah (the “Investor”), pursuant to the Subscription Agreements dated
as of February 25, 2019 between the Company and the Investor. The net proceeds to the Company amounted to $15,000. The $15,000
in proceeds went directly to the Company as working capital.
On
March 18,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Chan Koon Long (the “Investor A”), pursuant to the
Subscription Agreements dated as of March 18, 2019 between the Company and the Investor A. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
March 20,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Ng Ying Ping (the “Investor B”), pursuant to the
Subscription Agreements dated as of March 20, 2019 between the Company and the Investor B. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
March 20,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares at
a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Lo Sin Yung Agnes (the “Investor C”), pursuant to
the Subscription Agreements dated as of March 20, 2019 between the Company and the Investor C. The net proceeds to the Company
amounted to $30,000. The $30,000 in proceeds went directly to the Company as working capital.
On March 20,2019,
Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 10,705 shares at a price of $2.00
per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”) in a private placement to Hau Yuen Ping Tany (the “Investor D”), pursuant to the Subscription Agreement.
On
March 27,2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2.00 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Fung King Shu (the “Investor A”), pursuant to the
Subscription Agreements dated as of March 27, 2019 between the Company and the Investor A. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On March 29,2019,
Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at a price of $2.00
per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”) in a private placement to Cheung Kwok Sin (the “Investor B”), pursuant to the Subscription Agreements
dated as of March 29, 2019 between the Company and the Investor B. The net proceeds to the Company amounted to $15,000. The $15,000
in proceeds went directly to the Company as working capital.
On
April 3, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 10,000 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Leung Sui Ping (the “investor A”), pursuant to the Subscription
Agreements dated as of April 3, 2019 between the Company and the investor A. The net proceeds to the Company amounted to $20,000.
The $20,000 in proceeds went directly to the Company as working capital.
On
April 5, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Leung Mee Yee Minnie (the “investor B”), pursuant to the
Subscription Agreements dated as of April 5, 2019 between the Company and the investor B. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
April 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Leung Lop Yan Larry (the “investor A”), pursuant to the
Subscription Agreements dated as of April 12, 2019 between the Company and the investor A. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
April 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Hau Yuen Ping Tany (the “investor B”), pursuant to the
Subscription Agreements dated as of April 12, 2019 between the Company and the investor B. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
April 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Ling Lai Ngor Lisa (the “investor C”), pursuant to the
Subscription Agreements dated as of April 12, 2019 between the Company and the investor C. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
April 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Tsang Hor Chiu (the “investor D”), pursuant to the Subscription
Agreements dated as of April 12, 2019 between the Company and the investor D. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
April 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares
at a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Yu Ka Wai (the “investor E”), pursuant to the Subscription
Agreements dated as of April 12, 2019 between the Company and the investor E. The net proceeds to the Company amounted to $30,000.
The $30,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to ShekYeuk Wong (the “investor A”), pursuant to the
Subscription Agreements dated as of April 30, 2019 between the Company and the investor A. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Lam Yuen (the “investor B”), pursuant to the Subscription
Agreements dated as of April 30, 2019 between the Company and the investor B. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares
at a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Chung Mei San (the “investor C”), pursuant to the
Subscription Agreements dated as of April 30, 2019 between the Company and the investor C. The net proceeds to the Company amounted
to $30,000. The $30,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Ng Chi Man (the “investor D”), pursuant to the Subscription
Agreements dated as of April 30, 2019 between the Company and the investor D. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Chan Ka Ling (the “investor E”), pursuant to the Subscription
Agreements dated as of April 30, 2019 between the Company and the investor E. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Leung Wai Tak (the “investor F”), pursuant to the Subscription
Agreements dated as of April 30, 2019 between the Company and the investor F. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares
at a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Leung Mee Yee Minnie (the “investor G”), pursuant
to the Subscription Agreements dated as of April 30, 2019 between the Company and the investor G. The net proceeds to the Company
amounted to $30,000. The $30,000 in proceeds went directly to the Company as working capital.
On
April 30, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares
at a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) in a private placement to Tam Po Yee (the “investor H”), pursuant to the Subscription
Agreements dated as of April 30, 2019 between the Company and the investor H. The net proceeds to the Company amounted to $30,000.
The $30,000 in proceeds went directly to the Company as working capital.
On
May 13, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Cheung Wing Yan Ava (the “investor A”), pursuant to the
Subscription Agreements dated as of May 13, 2019 between the Company and the investor A. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
May 13, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Wong Shuk Fan (the “investor B”), pursuant to the Subscription
Agreements dated as of May 13, 2019 between the Company and the investor B. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
May 13, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Stylian George (the “investor C”), pursuant to the Subscription
Agreements dated as of May 13, 2019 between the Company and the investor C. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
May 13, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Wong Sau Han Winnie (the “investor D”), pursuant to the
Subscription Agreements dated as of May 13, 2019 between the Company and the investor D. The net proceeds to the Company amounted
to $15,000. The $15,000 in proceeds went directly to the Company as working capital.
On
May 13, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 7,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Song Bing Bing (the “investor E”), pursuant to the Subscription
Agreements dated as of May 13, 2019 between the Company and the investor E. The net proceeds to the Company amounted to $15,000.
The $15,000 in proceeds went directly to the Company as working capital.
On
May 28, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 12,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Tang Kam Yau (the “investor”), pursuant to the Subscription
Agreements dated as of May 28, 2019 between the Company and the investor. The net proceeds to the Company amounted to $25,000.
The $25,000 in proceeds went directly to the Company as working capital.
On
June 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Ho ShukNim Elsa (the “investor A”), pursuant to
the Subscription Agreements dated as of June 12, 2019 between the Company and the investor A. The net proceeds to the Company
amounted to $30,000. The $30,000 in proceeds went directly to the Company as working capital.
On
June 12, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 15,000 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Cheung Siu Cheong (the “investor B”), pursuant to the Subscription
Agreements dated as of June 12, 2019 between the Company and the investor B. The net proceeds to the Company amounted to $30,000.
The $30,000 in proceeds went directly to the Company as working capital.
On
June 27, 2019, Rito Group Corp. (the “Company”) completed the issuance and sale of an aggregate of 22,500 shares at
a price of $2 per share with each share consisting of one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) in a private placement to Chan Kin Wai (the “investor”), pursuant to the Subscription
Agreements dated as of June 27, 2019 between the Company and the investor. The net proceeds to the Company amounted to $45,000.
The $45,000 in proceeds went directly to the Company as working capital.
The
shares sold in the private placement were issued in reliance on an exemption from registration under Section 4(a)(2) and/or Regulation
S of the Securities Act of 1933, as amended (“Regulation S”). The bases for the availability of this exemption include
the facts that the sales of the stock were made to non-U.S. persons (as defined under Rule 902 section (k)(2)(i) of Regulation
S), pursuant to offshore transactions, and no directed selling efforts were made in the United States by the issuer, a distributor,
any of their respective affiliates, or any person acting on behalf of any of the foregoing.
Purchases
of Equity Securities by the Registrant and Affiliated Purchasers
We
have not repurchased any shares of our common stock during the fiscal year ended June 30, 2019.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated
financial statements and the notes to those financial statements appearing elsewhere in this Report.
Certain
statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve
risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth
strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of,
working capital. They are generally identifiable by use of the words “may,” “will,” “should,”
“anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,”
“ongoing,” “expects,” “management believes,” “we believe,” “we intend,”
or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties,
there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place
undue reliance on these forward-looking statements.
The
forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities
laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on
which the statements are made or to reflect the occurrence of unanticipated events.
Overview
Rito
Group Corp is a company that operates through its wholly owned subsidiary, Sino Union International Limited, a Company organized
under the laws of the British Colony, Anguilla. It should be noted that our wholly owned subsidiary, Sino Union International
Limited. owns 100% of Rito International Enterprise Company Limited, a Hong Kong Company. We are a development stage Company.
During the development stage, we have been searching for varieties of products to list under “Rito Online Mall”. We
found out that customers tend to buy products, which could improve their living quality. These products are more likely to be
healthy to the customers. One of our best-selling products are AgriGaia Biomimicry Farming products. The “Rito Online Mall”
provides a platform for merchants and customers to facilitate transactions and take advantage of the growth opportunity we have
identified in Hong Kong’s E-Commerce Industry. We also maintain our store-based physical location for display pieces of
the items available on our platform for consumers to look and test before purchasing the products online. Since our target for
this strategy are middle-class individuals of all age who want to improve life quality, the online shop mainly lists high quality
products with international brand recognition. Rito plans to open numerous showrooms in Asia, not strictly limited to Hong Kong,
so that we can reach an even larger market should our initial model within Hong Kong prove to public offering be as successful
as we project.
We
have incorporated a new company namely 深圳市汇图贸易有限公司
in China, with 100% equity interest owned by Rito International Enterprise Company Limited. At this time, we operate exclusively
through our wholly owned subsidiary and share the same business plan of our subsidiary which is the sale of miscellaneous retail
goods. To date the goods sold have been sold through the individual efforts of our management by selling to personal contacts.
Sino Union International Limited also shares the same business plan of Rito International Enterprise Company Limited.
As
of June 30, 2019, and 2018, our accumulated deficits were $3,973,702 and $2,461,274 respectively. Our stockholders’
deficit was $539,327 as of June 30, 2019 and stockholders’ deficit was $870,257 as of June 30, 2018. We have so far
generated $425,252 in revenue for the fiscal year ended 30 June 2019. Our net losses were principally attributed to general and
administrative expenses.
Results
of Operations
For
the year ended June 30, 2019 compared with the year ended June 30, 2018
Revenue
The
Company generated revenue of $425,252 for the year ended June 30, 2019 as compared to revenue of $232,597 for the year ended June
30, 2018. The revenue mainly represented the direct sales to individuals, farming activities and online sales business.
General
and Administrative Expenses
General
and administrative expenses for the year ended June 30, 2019 amounted to $1,639,979 as compared to $902,844 for the year
ended June 30, 2018, an increase of $737,135. The expenses for the year ended June 30, 2019 were primarily consisted
of payroll expense, marketing fee, advertising and promotion, entertainment expenses, IT expenses and rental expenses. For the
year ended June 30, 2018, all general and administrative expenses were mainly related to marketing fee, advertising and promotion,
legal and professional fees, entertainment expenses, information technology development expenses, and payroll.
Net
Loss
The
net loss for the year was $1,512,428 for the year ended June 30, 2019 as compared to $822,152 for the year ended June 30, 2018.
The net loss mainly derived from the increase in payroll.
Liquidity
and Capital Resources
As
of June 30, 2019, we had working capital surplus of $372,961 consisting of cash and cash equivalents of $349,080 as compared
to working capital deficit of $680,251 consisting of cash and cash equivalents of $1,066,636 respectively as of June 30, 2018.
Net
cash used in operating activities for the year ended June 30, 2019 was $1,682,156 as compared to net cash used in operating
activities of $643,960 for the year ended June 30, 2018. The net cash used in operating activities for the year ended June 30,
2019 were mainly for payroll expense, marketing fee, advertising and promotion, entertainment expenses, IT expenses and rental
expenses. For the year ended June 30, 2018, the net cash used in operating activities were related to marketing fee, advertising
and promotion, professional fees, payroll and information technology development expenses.
Net
cash used in investing activities for the year ended June 30, 2019 and 2018 was $62,873 and $224,391, respectively. The
net cash used in investing activities for the year ended June 30, 2019 were mainly related to purchase of property, plant and
equipment.
Net
cash provided by financing activities for the year ended June 30, 2019 was $1,027,385 as compared to $1,855,810 for the
year ended June 30, 2018. The net cash provided by financing activities for the year ended June 30, 2019 were mainly attributed
from proceeds from private placements. The net cash provided by financing activities for the year ended June 30, 2018 were mainly
attributed from proceeds from issuance of shares in initial public offering.
The
revenues, if any, generated from our current business operations alone may not be sufficient to fund our operations or planned
growth. We will likely require additional capital to continue to operate our business, and to further expand our business. Sources
of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing,
bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period
required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when
required may have a negative impact on our operations, business development and financial results.
Critical
Accounting Policies and Estimates
Use
of estimates
In
preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts
of assets and liabilities in the balance sheets, and revenues and expenses during the periods reported. Actual results may differ
from these estimates.
Cash
and cash equivalents
Cash
and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions
and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Impairment
of long-lived assets
Long-lived
assets primarily include intangible assets. In accordance with the provision of ASC Topic 360-10-5, “Impairment or Disposal
of Long-Lived Assets”, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually
in the fourth quarter of each year, or more frequently if indicators of impairment exist, such as a significant sustained change
in the business climate. The recoverability of long-lived assets is measured at the reporting unit level. If the total of the
expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference
between the fair value and carrying amount of the asset. For the years ended June 30, 2019 and 2018, the Company recognized an
impairment charge of $nil and $nil, respectively for intangible assets.
Revenue
recognition
In
accordance with the Accounting Standard Codification Topic 605 “Revenue Recognition” (“ASC 605”), the
Company recognizes revenue when the following four criteria are met: (1) delivery has occurred or services rendered; (2) persuasive
evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related
accounts receivable is probable.
Revenue
is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
Revenue from trading of retail goods is recognized when title and risk of loss are transferred and there are no continuing obligations
to the customer. Title and the risks and rewards of ownership transfer to and accepted by the customer when the products are collected
by the customer at the Company’s office. Revenue is recorded net of sales discounts, returns, allowances, and other adjustments
that are based upon management’s best estimates and historical experience and are provided for in the same period as the
related revenues are recorded. Based on limited operating history, management estimates that there was no sales return for the
period reported.
The
Company derives its revenue from direct sales to individuals and online sales business. Generally, the Company recognizes revenue
when products are sold and accepted by the customers and there are no continuing obligations to the customer.
Cost
of revenue
Cost
of revenue includes the purchase cost of retail goods for re-sale to the customers.
Income
taxes
The
provision of income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC
740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis.
Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods
in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts.
The
Company did not have any unrecognized tax positions or benefits and there was no effect on the financial conditions or results
of operations for the year ended June 30, 2019 and period ended June 30, 2018. The Company conducts major businesses in Hong Kong
and is subject to tax in this jurisdiction. As a result of its business activities, the Company will file tax returns that are
subject to examination by the foreign tax authority.
Net
loss per share
The
Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share
is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss
per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional
common shares were dilutive.
Foreign
currencies 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 statements of operations.
The
reporting currency of the Company and its subsidiary in Anguilla is United States Dollars (“US$”). The Company’s
subsidiary in Hong Kong maintains its books and record in Hong Kong Dollars (“HK$”), which is functional currency
as being the primary currency of the economic environment in which the entity operates.
In
general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not the US$ are translated
into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the
balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting
from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive
income within the statement of changes in stockholders’ equity.
Translation
of amounts from HK$ into US$1 and from RMB into US$1 has been made at the following exchange rates for the respective periods:
|
|
As of and for the
year ended
June 30, 2019
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|
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As of and for the
year ended
June 30, 2018
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|
Year-end / average HK$: US$1 exchange rate
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|
|
7.75
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7.75
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Year-end / average CNY¥: US$1 exchange rate
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6.86
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|
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6.27
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Related
parties
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in making financial and operating decisions.
Companies are also considered to be related if they are subject to common control or common significant influence.
Fair
value of financial instruments:
The
carrying value of the Company’s financial instruments: cash and cash equivalents, accounts payable and accrued liabilities,
and amount due to a director approximate at their fair values because of the short-term nature of these financial instruments.
The
Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”),
with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value
hierarchy that prioritizes the inputs used in measuring fair value as follows:
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Level
1: Observable inputs such as quoted prices in active markets;
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Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
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|
|
|
Level
3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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Fair
value estimates are made at a specific point in time based on relevant market information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect the estimates.
Recent
accounting pronouncements
The Company has reviewed all recently issued,
but not yet effective, accounting pronouncements and do not believe the future adoption of such any pronouncements may be expected
to cause a material impact on its financial condition or the results of its operations, as follow:
In May 2014, the FASB issued Accounting
Standards Update No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes
the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue
when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after
December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted.
In August 2014, the FASB issued ASU 2014-15,
“Presentation of Financial Statements - Going Concern, Disclosure of Uncertainties about an Entity’s Ability to Continue
as a Going Concern” (“ASU 2014-15”), which establishes management’s responsibility to evaluate whether
there is substantial doubt about an entity’s ability to continue as a going concern and, if so, to provide related footnote
disclosures. ASU 2014-15 provides a definition of the term “substantial doubt” and requires an assessment for a period
of one year after the date that the financial statements are issued or available to be issued. Management will also be required
to evaluate and disclose whether its plans alleviate that doubt. The guidance is effective for the annual periods ending after
December 15, 2016 and interim periods thereafter with early adoption permitted. The Company is currently evaluating the impact
the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures.
In August 2015, the FASB issued an Accounting
Standards Update to defer by one year the effective dates of its new revenue recognition standard until annual reporting periods
beginning after December 15, 2017 (2018 for calendar-year public entities) and interim periods therein. Management is currently
assessing the impact of the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial
reporting.
In February 2016, the Financial Accounting
Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842)
. Under the new guidance, lessees will be required recognize the following for all leases (with the exception of short-term leases)
at the commencement date: 1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease,
measured on a discounted basis; and 2) A right-of-use asset, which is an asset that represents the lessee’s right to use,
or control the use of, a specified asset for the lease term. The new lease guidance simplified the accounting for sale and leaseback
transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with
a source of off-balance sheet financing. The amendments in this ASU are effective for fiscal years beginning after December 15,
2019, including interim periods within those years. The Company is evaluating this ASU and has not determined the effect of this
standard on its ongoing financial reporting.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments in ASU 2016-13 require the measurement
of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions,
and reasonable and supportable forecasts. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale
debt securities and purchased financial assets with credit deterioration. The amendment is effective for public entities
for annual reporting periods beginning after December 15, 2019, however early application is permitted for reporting periods beginning
after December 15, 2018. The Company does not anticipate ASU 2016-13 to have a material impact to the consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business.” ASU 2017-01
changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business.
If substantially all of the fair value is concentrated in a single asset or a group of similar assets, the acquired set is not
a business. If this is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum,
an input and a substantive process that together significantly contribute to the ability to create outputs. Determining whether
a set constitutes a business is critical because the accounting for a business combination differs significantly from that of an
asset acquisition. We early adopted ASU 2017-01 on January 1, 2017 on a prospective basis, and it has not had a material impact
to our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04,
“Simplifying the Test for Goodwill Impairment.” ASU 2017-04 removes Step 2 of the goodwill impairment test, which required
a hypothetical purchase price allocation. A goodwill impairment will be the amount by which a reporting unit’s carrying
value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 provides a more stream-lined approach
to evaluating goodwill impairment and we early adopted on January 1, 2017 on a prospective basis as a change in accounting principle.
See Note 4 to the consolidated financial statements for an update on goodwill impairment.
On September 29, 2017 the FASB issued “ASU
2017-13—Revenue recognition (Topic 605), Revenue from contracts with customers (Topic 606), Leases (Topic 840), and
Leases (Topic 842)”. This update addresses Transition Related to Accounting Standards Updates No. 2014-09, Revenue
from Contracts with Customers (Topic 606), and No. 2016-02, Leases (Topic 842). This Update also supersedes SEC paragraphs
pursuant the rescission of SEC Staff Announcement, “Accounting for Management Fees Based on a Formula”, effective
upon the initial adoption of Topic 606, Revenue from Contracts with Customers, and SEC Staff Announcement, “Lessor Consideration
of Third-Party Value Guarantees,” effective upon the initial adoption of Topic 842, Leases. The adoption of this standard
is not expected to have a material impact on the Company’s financial statements.
In
February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification
of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), which allows companies to reclassify
stranded tax effects resulting from the Tax Act, from accumulated other comprehensive income to retained earnings. The guidance
also requires certain new disclosures regardless of the election. ASU 2018-02 is effective for us in the first quarter
of fiscal 2020, and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2018-02
on our consolidated financial statements.
In
August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the
Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds
certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures
related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value,
clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU
2018-13 is effective for the Company for annual and interim reporting periods beginning July 1, 2020. The Company is currently
evaluating the impact ASU 2018-13 will have on its consolidated financial statements.
Going Concern
The accompanying financial statements have
been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
As of June 30, 2019, the Company suffered
an accumulated deficit of $3,973,702 and net loss of $1,512,428. The continuation of the Company as a going concern through June
30, 2019 is dependent upon improving the profitability and the continuing financial support from its stockholders. Management
believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations
as they become due.
These and other factors 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 effects on the recoverability
and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to
continue as a going concern.
Off-Balance
Sheet Arrangements
As
of June 30, 2019, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to our stockholders.