From time to time, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand. As of September 30, 2017 and June 30, 2016, the advance balance was $10,713 and $10,713, respectively.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements and Associated Risks.
The following discussion should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the MD&A are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Quarterly Report on Form 10-Q.
Frontera Group Inc. is an emerging growth company under the Jumpstart Our Business Startups Act and will remain an "emerging growth company" until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary of its initial public offering, (c) the date on which Frontera Group has, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (d) the date on which Frontera Group is deemed a "large accelerated filer" (with at least $700 million in public float) under the Securities and Exchange Act of 1934 (the "EXCHANGE ACT").
For so long as Frontera Group remains an "emerging growth company" as defined in the JOBS Act, it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. Frontera Group cannot predict if investors will find its shares of common stock less attractive because Frontera Group will rely on some or all of these exemptions. If some investors find Frontera Group's shares of common stock less attractive as a result, there may be a less active trading market for its shares of common stock and its stock price may be more volatile.
If Frontera Group avails itself of certain exemptions from various reporting requirements, its reduced disclosure may make it more difficult for investors and securities analysts to evaluate Frontera Group and may result in less investor confidence.
The recently enacted JOBS Act is intended to reduce the regulatory burden on "emerging growth companies". Frontera Group meets the definition of an "emerging growth company" and so long as it qualifies as an "emerging growth company," it will not be required to:
· have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
· comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
· submit certain executive compensation matters to shareholder advisory votes, such as say-on-pay and say-on-frequency; and
· disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEOs compensation to median employee compensation.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, Frontera Group is choosing to "opt out" of such extended transition period, and as a result, Frontera Group will comply with new or revised accounting standards on
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the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that its decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Notwithstanding the above, we are also currently a smaller reporting company, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company, at such time are we cease being an emerging growth company, we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
Results of operations for the three-month periods ended September 30, 2017 and 2015.
Revenue
Our gross revenue for the three-month periods ended September 30, 2017 and 2016 was $0 and $0 respectively. Our cost of revenues for the three-month period ended September 30, 2016 was $0 (September 30, 2016: $0) resulting in a gross profit of $0 and $0, respectively. We did not perform any consulting services during the three months ended September 30, 2017 and 2016 resulting in a decrease in revenues.
Costs and Expenses
Professional fees and Transfer Agent Fees.
The professional fees increased to $3,000 for the three months ended September 30, 2017 as compared to $0 for the three months ended September 30, 2016 was due to that we incurred audit and legal fee in the three months ended September 30, 2017. We incurred $600 and $665 in transfer agent fees for the three months ended September 30, 2017 and 2016, respectively.
Net Loss
During the three months ended September 30, 2016 we incurred a net loss of $3,600 as compared to a net loss of $665 during the three months ended September 30, 2015. The significant increase in net loss was due to that we incurred audit and legal fee in the three months ended September 30, 2017.
Liquidity and Capital Resources
|
|
|
| |
|
|
As of
|
|
As of
|
|
|
September 30,
|
|
June 30,
|
|
|
2017
|
|
2017
|
|
|
|
|
|
Total assets
|
$
|
1,766
|
$
|
7,825
|
Total liabilities
|
|
(20,454)
|
|
(22,913)
|
Working capital deficiency
|
$
|
(18,688)
|
$
|
(15,088)
|
Liquidity
If we are not successful in expanding our clientele base, maintaining profitability and positive cash flow, additional capital may be required to maintain ongoing operations. We have explored and are continuing to explore options to
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provide additional financing to fund future operations as well as other possible courses of action. Such actions include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans and cash advances from our directors or other third parties, and other similar actions. There can be no assurance that we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, our directors, or other third parties, or any of the actions discussed above. If we cannot sustain profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.
Cash Flows
The table below, for the period indicated, provides selected cash flow information:
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|
|
| |
|
|
For the Three Months
Ended
September 30, 2017
|
|
For the Three Months
Ended
September 30, 2016
|
|
|
|
|
|
Net cash used in operating activities
|
$
|
(6,059)
|
$
|
(6,015)
|
Cash used in investing activities
|
|
-
|
|
-
|
Cash provided by financing activities
|
|
-
|
|
-
|
Net increase (decrease) in cash
|
$
|
-
|
$
|
-
|
Cash Flows from Operating Activities
During the three months ended September 30, 2017 we used $6,059 in operating activities compared to $6,015 used in operating activities during the three months ended September 30, 2016.
Cash Flows from Investing Activities
We did not generate or use any cash from investing activities during the three-month periods ended September 30, 2017 and 2016.
Cash Flows from Financing Activities
During the three months ended September 30, 2017, we neither generated or used funds in financing activities.
Management expects to keep operating costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek, in addition to equity financing, other sources of financing (e.g. bank loan, line of credit, shareholder loan) on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all.
If we are unable to generate profits sufficient to cover our operating costs or to obtain additional funds for our working capital needs, we may need to cease or curtail operations. Furthermore, there is no assurance the net proceeds from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Companys operations.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
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