NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization
Nuts and Bolts International, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on August 21, 2013 to create and publish electronic non-fiction books (“eBooks”) through the internet. The Company was formed to create and distribute high quality, multimedia eBooks for the hobby and do-it-yourself consumer markets. These operations were carried on through the Company’s wholly-owned subsidiary Nuts & Bolts Publishing, LLC. These operations have been discontinued and the Company’s subsidiary has been dissolved.
In connection with the Change of Control, on February 29, 2016, effective April 14, 2016, the Company filed with the State of Nevada a Certificate of Amendment to the Articles of Incorporation changing the Company’s name from Nuts and Bolts International, Inc. to Trendmaker Inc. Limited.
On February 29, 2016, the Company entered into a Stock Purchase Agreement (the “SPA”) with the former director and officer of the Company (the “Seller”), and the current director and officer (the “Purchaser”), under which the Purchaser purchased 5,000,000 shares of common stock, par value $0.0001 per share, of the Company (the “Shares”), for an aggregate purchase price of $155,000, payable in full to the Seller (a “Change of Control”). The Shares represent all of the Seller’s interest in and to any securities of the Company, and make up 77.67% of the issued and outstanding shares of common stock of the Company. The SPA closed and the Change of Control occurred on February 29, 2016. Following the change of control, the Company elected to terminate its previous business plan to engage in eBook publishing, and adopt a new business plan related to acting as an investment holding company and providing management and consulting services.
The Company is now acting as an investment holding company and providing management and consulting services to Trendmaker Pte, Ltd., a Singapore entity and related party whose subsidiaries include Phyto Science Sdn Bhd (a Malaysia entity) and Phytoscience Trendmaker Pvt Ltd (an Indian entity).
(B) Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Significant estimates include valuation of in kind contribution of services, valuation of deferred tax assets. Actual results could differ from those estimates.
(C) Cash and Cash Equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At July 31, 2016 and July 31, 2015, the Company had no cash equivalents.
(D) Loss Per Share
Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC No. 260, “Earnings Per Share.” As of July 31, 2016 and July 31, 2015, there were no common share equivalents outstanding.
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
(E) Income Taxes
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, 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 bases. 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. Under ASC 740-10-25, the 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.
The net deferred tax liability in the accompanying balance sheets includes the following amounts of deferred tax assets and liabilities:
|
|
July 31,
2016
|
|
|
July 31,
2015
|
|
Deferred tax liability:
|
|
|
|
|
|
|
Deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Net Operating Loss Carryforward
|
|
|
111,708
|
|
|
|
62,568
|
|
Valuation allowance
|
|
|
(111,708
|
)
|
|
|
(62,568
|
)
|
New deferred tax asset
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2016
|
|
|
July 31,
2015
|
|
Federal
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
State and Local
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
|
|
$
|
-
|
|
|
$
|
-
|
|
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
The Company’s income tax expense differed from the statutory rates (federal 34% and state 6.9%) as follows:
|
|
July 31,
2016
|
|
|
July 31,
2015
|
|
Expected tax expense (benefit) - Federal
|
|
$
|
(43,653
|
)
|
|
$
|
(44,776
|
)
|
Expected tax expense (benefit) - State
|
|
|
(9,516
|
)
|
|
|
(9,760
|
)
|
Non-deductible expenses
|
|
|
4,010
|
|
|
|
5,248
|
|
Change in valuation allowance
|
|
|
49,159
|
|
|
|
49,288
|
|
Actual tax expense (benefit)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
111,708
|
|
|
$
|
62,568
|
|
Total deferred tax assets
|
|
|
111,708
|
|
|
|
62,568
|
|
Less: valuation allowance
|
|
|
(111,708
|
)
|
|
|
(62,568
|
)
|
Net deferred tax asset recorded
|
|
$
|
-
|
|
|
$
|
-
|
|
As of July 31, 2016, the Company has a net operating loss carry forward of approximately $289,771 available to offset future taxable income through July 31, 2036. The valuation allowance was established to reduce the deferred tax asset to the amount that will more likely than not be realized. This is necessary due to the Company’s continued operating loss and the uncertainty of the Company’s ability to utilize all of the net operating loss carryforwards before they will expire through the year 2036.
The net change in the valuation allowance for the year ended July 31, 2016 was an increase of $49,159, and an increase of $49,288 for the year ended July 31, 2015.
The Company’s federal income tax returns for the years ended July 31, 2016 and July 31, 2015 remain subject to examination by the Internal Revenue Service through 2020.
(F) Property and Equipment
Property and equipment is recorded at cost and depreciated or amortized using the straight-line method over the estimated useful life of the asset or the underlying lease term for leasehold improvements, whichever is shorter.
Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in other income.
(G) Revenue Recognition
The Company will recognize revenue on arrangements in accordance with FASB ASC No. 605, ”Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The Company has generated revenue from the sale of eBooks which will sell from $2.00 to $10.00, totaling $111 during the year ended July 31, 2016.
(H) Fair Value of Financial Instruments
The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities.
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
We adopted accounting guidance for financial and non-financial assets and liabilities (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
(I) Recent Accounting Pronouncements
In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. We are 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 August 2015, FASB issued Accounting Standards Update (“ASU”) No.2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” defers the effective date ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are 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.
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial statements.
All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable
NOTE 2
PROPERTY AND EQUIPMENT
Property and equipment consist of the following at July 31, 2016 and 2015:
|
|
July 31,
|
|
|
July 31,
|
|
|
Estimated
|
|
|
|
|
2016.
|
|
|
|
2015.
|
|
|
Useful Life.
|
|
Computer Equipment
|
|
|
626
|
|
|
|
896
|
|
|
5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated Depreciation
|
|
|
(626
|
)
|
|
|
(270
|
)
|
|
|
|
Property and Equipment, Net
|
|
$
|
-
|
|
|
$
|
626
|
|
|
|
|
Depreciation expense was $356 and $180 for the years ending July 31, 2016 and 2015, respectively.
NOTE 3
NOTES PAYABLE – RELATED PARTY
During the year ended July 31, 2016 the Company entered into a promissory note with a related party in the amount of $39,905. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on December 31, 2016 (See Note 6). The outstanding balance as of July 31, 2016 and 2015 was $39,905 and $100 respectively.
On October 13, 2013 the Company entered into a promissory note with a related party in the amount of $100. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. In connection with the change in control in February 2016, the former CEO forgave the full amount due of $100 (See Note 4).
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
NOTE 4
STOCKHOLDERS’ EQUITY
(A) Preferred Stock
The Company was incorporated on August 21, 2013. The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001 per share. Preferred stock may be issued in one or more series with rights and preferences are to be determined by the board of directors. As of July 31, 2016 and 2015, no shares of preferred stock have been issued.
(B) Common Stock
The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share.
On September 17, 2015, the Company issued 200,000 shares of common stock for $10,000 ($0.05/share).
(C) In kind contribution of services
For the year ended July 31, 2016, a shareholder of the Company contributed services having a fair value of $10,400 (See Note 6).
In connection with the change in control in February 2016, a company controlled by the CEO paid operating expenses on behalf of the Company totaling $94,890, which was recorded as an in-kind contribution of capital (See Note 6).
In connection with the change in control in February 2016, the former CEO forgave a note payable in the amount of $100 (See Notes 3 and 6).
For the year ended July 31, 2015, a shareholder of the Company contributed services having a fair value of $13,600 (See Note 6).
(D) Stock Split
On June 10, 2016, the Company declared a two for one stock forward stock split. All share and per share data has been retroactively restated.
NOTE 5
COMMITMENTS AND CONTINGENCIES
(A) Consulting Agreements
On April 1, 2016 the Company entered into a consulting agreement to receive administrative and other miscellaneous services. The Company is required to pay $2,500 a month. The agreement is to remain in effect unless either party desires to cancel the agreement.
On March 1, 2014 the Company entered into a consulting agreement to receive administrative and other miscellaneous services. The Company is required to pay $5,000 a month. The agreement is to remain in effect unless either party desires to cancel the agreement. In connection with the change in control in February 2016, the agreement was terminated.
(B)
Consulting Revenue – Related Party
On April 15, 2016, the Company entered into a consulting agreement to provide consulting services to Trendmaker Pte, Ltd, a related party.
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
NOTE 6
RELATED PARTY TRANSACTIONS
For the year ended July 31, 2016, a shareholder of the Company contributed services having a fair value of $10,400 (See Note 4(C)).
In connection with the change in control in February 2016, a company controlled by the CEO paid operating expenses on behalf of the Company totaling $94,890, which was forgiven and recorded in additional paid-in capital. (See Note 4(C)).
In connection with the change in control in February 2016, the former CEO forgave a note payable in the amount of $100 (See Notes 3 and 4).
On April 15, 2016, the Company entered into a consulting agreement to provide consulting services to Trendmaker Pte, Ltd, a related party.
During the year ended July 31, 2016 the Company entered into a promissory note with a related party in the amount of $39,905. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on December 31, 2016 (See Note 3).
For the year ended July 31, 2015, a shareholder of the Company contributed services having a fair value of $13,600 (See Note 4(C)).
On October 13, 2013 the Company entered into a promissory note with a related party in the amount of $100. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and is due on demand. In connection with the change in control in February, 2016, the former CEO forgave the full amount due of $100 (See Note 3).
NOTE 7
GOING CONCERN
As reflected in the accompanying financial statements, the Company has minimal operations, has negative working capital deficit of $54,150 and stockholder’s deficit of $54,150, used cash in operations of $153,286 and has a net loss of $137,907 for the year ended July 31, 2016. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
TRENDMAKER INC. LIMITED
(F/K/A NUTS AND BOLTS INTERNATIONAL, INC.)
NOTES TO FINANCIAL STATEMENTS
AS OF JULY 31, 2016 AND 2015 (Consolidated)
NOTE 8
SUBSEQUENT EVENT
Subsequent to July 31, 2016, the Company commenced a private placement offering of up to US$11,760,000, through the offer and sale of up to 14,000,000 shares of its authorized but previously unissued shares of common stock at a price of US$0.84 per share (the “Private Placement”). As of February 23, 2018, the Company had issued a total of 662,000 shares of its common stock in the Private Placement and received total gross offering proceeds of $556,080. The Company has entered into an agreement with Phyto Science Sdn Bhd, a Malaysia corporation with which it is affiliated (“Phyto Science”), to act as a finder in the introduction of potential private placement investors to the Company, and to provide marketing and administrative services and support to the Company in conjunction with the conduct of the Private Placement. As compensation for its services, Phyto Science is entitled to a fee equal to twenty-five percent (25%) of the gross offering proceeds received by the Company. In addition, under the terms of the agreement between the Company and Phyto Science, the remaining seventy-five percent (75%) of the offering proceeds (the “Net Proceeds”) from the Private Placement, are being held on the Company’s behalf by Phyto Science. For a period of twenty-four (24) months from August 16, 2016 (the effective date of the agreement between the Company and Phyto Science), the Net Proceeds held by Phyto Science are treated as a non-interest bearing loan. After the initial twenty-four (24) months period, any remaining funds held by Phyto Science will be treated as a loan from the Company to Phyto Science, and will bear interest at the rate of one percent (1%) per annum. The funds held by Phyto Science on the Company’s behalf are payable at any time, in whole or in part, upon not less than thirty (30) days prior written notice to Phyto Science.