NOTES
TO FINANCIAL STATEMENTS
FOR
YEARS ENDED AUGUST 31, 2017 AND AUGUST 31, 2016
NOTE
1 – ORGANIZATION AND BUSINESS DESCRIPTION
Fellazo
Corp. (“the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada
on May 28, 2014.
During
the year ending August 31, 2017 the Company had commenced 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 Sungei Besi, 43300 Seri Kembangan, Selangor
Darul Ehsan, Malaysia.
NOTE
2 – SETTLEMENT OF ASSETS AND LIABILITIES
On
September 9, 2016, as a result of a private transaction, the control block of voting stock of the Company, represented by 3,000,000
shares of common stock (the “Shares”), has been transferred from Galina Hripenco to Wong Kong-Yew, and a change of
control of the Company occurred. Upon the change of control of the Company, which occurred on September 9, 2016, the existing
director and officer resigned immediately. Accordingly, Galina Hripenco, serving as the sole director and as the only officer,
ceased to be the Company’s President and Principal Accounting Officer. At the effective date of the transfer, Wong Kong-Yew
consented to act as the new President, CEO, CFO, Treasurer, Secretary and Chairman of the Board of Directors of the Company, Yap
Kit Chuan consented to act as the new Director of the Company, and Huang Minxi consented to act as the new Director of the Company.
As
a result of the “Assignment Of Rights And Assumption of Liabilities Agreement” entered into by the Company with the
previous sole-director of the Company, Ms. Galina Hripcenco where all rights and obligations in the Assets and Liabilities of
the Company is transferred to Ms. Hripcenco for a consideration that Ms. Hripcenco shall retire all shares of the Company to the
treasury of the Company (Exhibit No. 99.1).
All
existing equipment ($6,973), cash ($76), balance of inventory ($704) and pre-paid expenses ($1,300) were given to Ms. Galina Hripcenco
for a total amount of $9,053.
The
director loan due to Ms. Galina Hripcenco totaling $28,204 was also waived.
As
a result of the transaction, the net amount of $19,151 was deemed to have been given as a capital contribution.
NOTE
3 – GOING CONCERN
The
Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and settlement of liabilities and commitments in the normal course of business. As at August 31, 2017, the Company has a working
capital deficit of $301,919 and has not yet established a stabilized source of revenue sufficient to cover operating cost for
the foreseeable future. These factors, among others, raise substantial doubt about the Company’s ability to continue as
a going concern.
However
the Company had commenced its transformation 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.
We
believe that the transformation would bring a significant growth potential to the Company which would generate more than sufficient
revenue and liquidity to sustain the Company for the next twelve months and a significant future growth. In addition there will
be in-flow of funds and capital injections by the Directors to facilitate this transformation exercise.
The
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern
NOTE
4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United
States of America. The Company’s year-end is August 31st.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.
Revenue
Recognition
The
Company will recognize revenue in accordance with ASC topic 605 “Revenue Recognition”. The Company recognizes revenue
when there is persuasive evidence of an arrangement, prices are fixed or determinable, products are fully delivered and collection
is reasonably assured.
Fair
Value Of Financial Instruments
AS
topic 820 “Fair Value Measurements and Disclosures” establishes a three-tier fair value hierarchy, which prioritizes
the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs
used in measuring fair value are observable in the market.
These
tiers include:
Level
1: defined as observable inputs such as quoted prices in active markets;
Level
2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level
3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The
carrying value of cash and the Company’s loan from shareholder approximates its fair value due to their short-term maturity.
Inventories
Inventories
are stated at the lower of cost or market. Cost is principally determined using the first-in, first out (FIFO) method. As at August
31, 2017 the Company do not maintain any stock.
Equipment
The
Company’s equipment is stated at cost. Depreciation is provided for using straight-line method over the estimated useful
life of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and
replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related
accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.
Income
Taxes
We
use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.”
Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and
(ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s
financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the
enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available
positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC
Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements
and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions
for any of the reporting periods presented.
Basic
Income (Loss) Per Share
The
Company computes income (loss) per share in accordance with FASB ASC 260 “Earnings per Share”. Basic loss per share
is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common
shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Recent
Accounting Pronouncements
“In
February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize
(i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted
basis, and (ii) 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. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors;
however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard
will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The
Company is currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations,
cash flows or financial condition.
In
April 2016, the FASB issued ASU 2016–10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations
and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments
in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation
guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts
with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise
to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied
at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments
in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement
necessary to comply with Topic 606. The Company is currently reviewing the provisions of this ASU to determine if there will be
any impact on our results of operations, cash flows or financial condition.
The
Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not
have a material effect on the financial position, results of operations or cash flows of the Company.
NOTE
5 –EQUIPMENT
All
existing equipment as at August 31, 2016 were given to Ms. Galina Hripcenco during the Settlement of Assets & Liabilities
on September 9, 2016. The Company do not maintain any equipment thereafter.
|
|
August
31, 2017
|
|
|
August
31, 2016
|
|
|
Estimated
Life Span
|
Cutting
plotter
|
|
|
-
|
|
|
|
2,639
|
|
|
5
Years
|
Less:
accumulated depreciation
|
|
|
|
|
|
|
(572
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital
Printing Machine
|
|
|
-
|
|
|
|
5,164
|
|
|
5
Years
|
Less:
accumulated depreciation
|
|
|
|
|
|
|
(258
|
)
|
|
|
|
|
|
-
|
|
|
|
6,973
|
|
|
|
NOTE
6 – LOAN FROM DIRECTOR
For
the year ended August 31, 2016, the loan proceeds from our previous director was amount to $24,075. This loan is unsecured, non-interest
bearing and due on demand. As of August 31, 2016, our previous director has loaned to the Company $28,204. The loan has been waived
by our previous director upon change of control on September 9, 2016.
Subsequently
our President and Director, Prof. Dr. Wong Kong-Yew settled on behalf of the Company, invoices from our auditor, consultant and
share transfer agent (include bank charges) amounting to $13,785; this amount was taken-in as Loan from Director which is unsecured,
non-interest bearing and due on demand.
NOTE
7 – STOCKHOLDERS’ EQUITY
During
March 2016, the company issued a total of 275,000 common shares for cash contribution of $2,750 at $0.01 per share.
During
April 2016, the company issued a total of 1,545,000 common shares for cash contribution of $15,450 at $0.01 per share.
During
May 2016, the company issued a total of 65,000 common shares for cash contribution of $650 at $0.01 per share.
On
July 4, 2017, a private placement exercise was completed with issuance of the balance of shares (70,115,000 shares) within our
authorized capital to our existing directors for total cash consideration of $70,115. The cash was held in escrow as of August
31, 2017.
On
the 7th and 17th of August 2017, the Company had filed Schedule Pre-14C and Def-14c for an increase in our authorized capital
from 75,000,000 shares to 1,000,000,000 (one billion) shares of common stock at par value of $0.001 per share following a written
consent of majority shareholders on the matter on August 1, 2017.
Following
the above, on September 19, 2017 amendments to the Company’s Articles of Incorporation had been filed with the Nevada Secretary
of State thus increasing the Company’s authorized capital from 75,000,000 shares to 1,000,000,000 (one billion) shares of
common stock at par value of $0.001 per share.
NOTE
8 – COMMITMENTS AND CONTINGENCIES
|
(1)
|
Appointment
of Swipypay Berhad (Malaysian Co. Reg. No. 1073591-H) on March 1, 2017 as Management Agent for our Malaysia office located
at 8
th
Floor, Wisma Huazong, Lot 15285, 0.7km Lebuhraya Sungei Besi, 43300 Seri Kembangan, Selangor Darul Ehsan,
Malaysia at a monthly management fee of $5,000.
|
|
|
|
|
|
The
Appointment shall be back-dated to December 1
st
, 2016 to facilitate claims for bills and payroll paid on behalf
of the Company by the Agent during the Agent’s service trail-run period between December 1
st
, 2016 and February
28, 2017.
|
|
|
|
|
(2)
|
On
June 15, 2017, appointment of Shah Faiz & Co., (an Advocates & Solicitors firm registered with Malaysia Bar Council)
as Escrow Agent handling our share related transactions at a monthly retainer fee of RM500 (approximately $115) and a one
per centum (1%) on proceeds placed with them.
|
|
|
|
|
(3)
|
The
Company had engaged Calvary Consultant Limited of Hong Kong as our consultant effective from July 1, 2017 with monthly retainer
fee of HKD20,000 (approximately $2,600).
|
NOTE
9 – INCOME TAXES
The
Company’s income tax benefit differs from the expected income tax benefit by applying the U.S. Federal statutory rate of
34% to net loss as follows:
|
|
August
31, 2017
|
|
|
August
31, 2016
|
|
Income
tax benefit at statutory rate of 34%
|
|
$
|
(127,908
|
)
|
|
$
|
(10,892
|
)
|
Change
in valuation allowance
|
|
$
|
127,908
|
|
|
$
|
10,892
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
tax assets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
|
Net
operating loss carry forward
|
|
$
|
376,201
|
|
|
$
|
36,834
|
|
Valuation
allowance
|
|
$
|
(376,201
|
)
|
|
$
|
(36,834
|
)
|
Net
deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
As
of August 31, 2016 the Company had approximately $36,834 of federal and state net operating loss carryovers (“NOLs”),
which begin to expire in 2034. The NOLs may be subject to limitation under Internal Revenue Code Section 382 should be a greater
than 50% ownership change as determined under regulations. On September 9, 2016, there is a change in control of the Company.
The section 382 imposes an annual limitation on the amount of post-ownership change taxable income a corporation may offset with
pre-ownership change NOL carryforwards and certain recognized built-in losses. The limitation imposed by section 382 for any post-change
year would be determined by multiplying the value of our stock immediately before the ownership change (subject to certain adjustments)
by the applicable long-term tax-exempt rate, which is 2.08% for September 2016.
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion of
all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based
on the assessment, the Company has established a full valuation allowance against all of the deferred tax assets for every period
because it is more likely than not that all of the deferred tax assets will not be realized.
The
Company does not currently have any ongoing tax examinations.
NOTE
10 – SUBSEQUENT EVENTS
On
September 19, 2017 amendments to the Company’s Articles of Incorporation had been filed with the Nevada Secretary of State
to increase the Company’s authorized capital from 75,000,000 shares to 1,000,000,000 (one billion) shares of common stock
at par value of $0.001 per share.