Item 1. Financial Statements.
TRAQER CORP.
INTERIM FINANCIAL STATEMENTS
For the Three Months Ended February 28, 2018
(Unaudited)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Traqer Corp.
Results of Review of Interim Financial Information
We have reviewed the condensed balance sheet of Traqer Corp. (the “Company”) as of February 28, 2018, and the related condensed statements of income and comprehensive income for the three-month and six-month periods ended February 28, 2018, and condensed statements of cash flows for the six-month period then ended, and the related notes (collectively referred to as the interim financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
San Mateo, California
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/s/ WWC, P.C.
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April 15, 2018
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Certified Public Accountants
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TRAQER CORP.
BALANCE SHEETS
(Unaudited)
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February 28,
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August 31,
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|
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2018
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|
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2017
|
|
|
|
|
|
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(Audited)
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ASSETS
|
|
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|
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|
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Current assets
|
|
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|
|
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Prepaid expense
|
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$
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5,000
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|
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$
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-
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Total assets
|
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$
|
5,000
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|
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$
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-
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|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
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Current liabilities
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|
|
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|
|
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Accounts payable & accrued liabilities
|
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$
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10,656
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|
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$
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12,000
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Related party payable
|
|
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52,755
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|
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-
|
|
|
|
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63,411
|
|
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12,000
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|
|
|
|
|
|
|
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Total liabilities
|
|
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63,411
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|
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12,000
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|
|
|
|
|
|
|
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Commitments and Contingencies
|
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Stockholders’ deficiency
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Common stock, $0.001 par value, 2,000,000,000 shares authorized, 5,761,500 shares issued and outstanding, respectively
|
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5,762
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|
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5,762
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Additional paid-in capital
|
|
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293,013
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|
|
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293,013
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Accumulated deficit
|
|
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(357,186
|
)
|
|
|
(310,775
|
)
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Total stockholders’ deficiency
|
|
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(58,411
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)
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|
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(12,000
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)
|
|
|
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|
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Total liabilities and stockholders’ deficiency
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$
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5,000
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|
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$
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-
|
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See accompanying notes to financial statements.
TRAQER CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the
three-month
periods
ended
February 28,
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|
|
For the
six-month
periods ended
February 28,
|
|
|
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2018
|
|
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2017
|
|
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2018
|
|
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2017
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|
|
|
|
|
|
|
|
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REVENUE
|
|
|
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|
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Service revenue, net
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$
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-
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$
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1,273
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$
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-
|
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$
|
2,318
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|
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|
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|
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OPERATING EXPENSES
|
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Software development
|
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|
-
|
|
|
|
-
|
|
|
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-
|
|
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10,000
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|
General and administrative
|
|
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2,758
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|
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|
791
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|
|
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4,959
|
|
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14,521
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Professional fees
|
|
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30,952
|
|
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26,594
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|
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41,452
|
|
|
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62,023
|
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Total Operating Expenses
|
|
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33,710
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|
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27,385
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|
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46,411
|
|
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88,544
|
|
|
|
|
|
|
|
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|
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Net loss before provision for income taxes
|
|
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(33,710
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)
|
|
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(26,112
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)
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|
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(46,411
|
)
|
|
|
(86,226
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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OTHER INCOME/(EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Gain on settlement of accounts payable
|
|
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-
|
|
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11,682
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|
|
|
-
|
|
|
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11,682
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Total Other Income/(Expense)
|
|
|
-
|
|
|
|
11,682
|
|
|
|
-
|
|
|
|
11,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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NET LOSS
|
|
$
|
(33,710
|
)
|
|
$
|
(14,430
|
)
|
|
$
|
(46,411
|
)
|
|
$
|
(74,544
|
)
|
|
|
|
|
|
|
|
|
|
|
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|
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Net loss per share - basic and diluted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
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(0.01
|
)
|
|
|
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|
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|
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|
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Weighted average number of shares outstanding during the period - basic and diluted
|
|
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5,761,500
|
|
|
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5,761,500
|
|
|
|
5,761,500
|
|
|
|
5,761,500
|
|
See accompanying notes to financial statements.
TRAQER CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the six-month
periods ended
February 28,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
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CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(46,411
|
)
|
|
$
|
(74,544
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
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Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
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Increase in accounts receivable
|
|
|
-
|
|
|
|
(720
|
)
|
Increase in prepaid expenses
|
|
|
(5,000
|
)
|
|
|
-
|
|
(Decrease)/increase in accounts payable
|
|
|
(1,345
|
)
|
|
|
(13,051
|
)
|
Increase in accounts payable - related party
|
|
|
-
|
|
|
|
25,016
|
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Increase in deferred revenue
|
|
|
-
|
|
|
|
2,248
|
|
Net Cash Used In Operating Activities
|
|
|
(52,755
|
)
|
|
|
(61,051
|
)
|
|
|
|
|
|
|
|
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
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Proceeds from notes payable - related party
|
|
|
-
|
|
|
|
58,000
|
|
Increase in related party payable
|
|
|
52,755
|
|
|
|
-
|
|
Net Cash Provided By Financing Activities
|
|
|
52,755
|
|
|
|
58,000
|
|
|
|
|
|
|
|
|
|
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NET INCREASE IN CASH
|
|
|
-
|
|
|
|
(3,051
|
)
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
$
|
-
|
|
|
$
|
4,385
|
|
|
|
|
|
|
|
|
|
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
-
|
|
|
$
|
1,334
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
See accompanying notes to financial statements.
TRAQER CORP.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Organization
Traqer Corp. (the “Company”) was originally organized in the State of Nevada on April 4, 2014. The Company was formed to become a provider of a cloud-based, volunteer tracking software solution aimed for organizations, non-profits and corporations. The Company has ceased operations and been reorganized as a vehicle to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation. As of the date of this report, the Company did not have substantial operations.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
NOTE 2 – GOING CONCERN
The Company had an accumulated deficit of $357,186 as of February 28, 2018, and cash used in operations of $52,755 for the six-month period ended February 28, 2018. Losses have principally occurred as a result of the lack of a source of recurring revenues and the substantial resources required for research and development and marketing of the Company’s products which included the general and administrative expenses associated with its organization and product development. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties. Management plans to obtain additional funding and implement its strategic plan to allow the opportunity for the Company to continue as a going concern, but there is no guarantee the Company will be successful.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
Stock-Based Compensation
The measurement and recognition of compensation expense for all share-based payment awards made to employees and directors is recognized in the financial statements, based on their fair value. The Company measures share-based compensation to consultants and recognizes the fair value of the award over the period the services are rendered or goods are provided.
Basic and Diluted Loss Per Share
Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted 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. There are no dilutive securities issued for the periods presented in the accompanying financial statements.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Foreign Currency
The Company has determined that the functional currency of the Company is U.S. Dollars. Foreign currency transaction gains and losses are included in the statement of operations as other income (expense).
Revenue Recognition
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 recognizes revenue from setup fees initially as deferred revenue and amortizes the amounts received over the term of the agreements. Revenue from the sale of software subscriptions are recognized over twelve months. Revenue from monthly subscription fees are recorded during the month the membership is earned.
New Accounting Pronouncements
There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company’s financial statements.
NOTE 4 – RELATED PARTY TRANSACTIONS
On July 31, 2017, Bess Audrey Lipschutz and Shlomit Chaya Frommer (together, the “former majority shareholders”) and Jiang, Limei; Ao, Xiaomi; Jiang, Lixin; Chen, Haopeng; Chen, Zhongsheng; Zhong, Ruiming; Lai, Zhiming; Chen, Liming; Fu, Xiaobin; Zheng, Zhenyuan; Li, Hongling; Mai, Zhangying; Zeng, Huaxiu; Mai, Lichan; Chen, Lin; Liu, Zhenping; and Jiang, Shimin, respectively (collectively, the “new shareholders”) entered into two Stock Purchase Agreements (together, the “Purchase Agreement”), pursuant to which the former majority shareholders sold to the new shareholders, and the new shareholders purchased from the former majority shareholders, 5,000,000 aggregate shares of the Company’s common stock (the “Shares”), which Shares represent 86.78% of the issued and outstanding shares of the Company’s common stock. The purchase was completed on July 31, 2017. According to the Stock Purchase Agreements, the former majority shareholders have waived all indebtedness by Traqer Corp. for any advances, loans, fees, costs, or expenses made or paid in the amount of $286,110 (including but not limited to the indebtedness identified in the financial statements of Traqer Corp. as of July 31, 2017 and listed in the transactions above), have been waived and are forever discharged. The waiver was recorded as a shareholders’ contribution to additional paid in capital. If there are any liabilities disclosed or undisclosed, the former majority shareholders are liable for such debts and the Company will not be liable.
The Company underwent a change of control in July 2017. As of February 28, 2018, there were advances of $52,755 from the current shareholder for the purpose of operating the Company.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
On August 1, 2016, Ajay Movalia accepted an appointment to serve on the Board of Directors of the Company. In connection with Mr. Movalia’s appointment as a director, the Company and Mr. Movalia entered into a director agreement whereby Mr. Movalia will receive 3,000 shares of common stock valued at the fair market value of the common stock on the date of grant at $30 ($0.01 per share).
NOTE 6 – COMMON STOCK
The Company originally had 200,000,000 shares of common stock with a par value of $0.001 per share.
On November 2, 2017, the Company amended its articles of incorporation to increase the authorized shares from 200,000,000 shares to 2,000,000,000.
NOTE 7 –
SUBSEQUENT EVENTS
The Company has evaluated subsequent events from February 28, 2018 through the date the financial statements were available to be issued. There was no subsequent event at the report date.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following is management’s discussion and analysis of the consolidated financial condition and results of operations of Traqer Corp. (“Traqer”, the “Company”, “we”, and “our”) for the quarter ended February 28, 2018. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements. The following information should be read in conjunction with the consolidated interim financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Report”).
Overview
We were incorporated on April 4, 2014 under the laws of the state of Nevada. We were formed to become a provider of a cloud-based, volunteer tracking software solution aimed for organizations, non-profits and corporations. Since inception, our operations have been limited to forming the Company and raising capital resources. We have only generated nominal revenues to date. On July 31, 2017, the then major stockholders of the Company owning a total of 86.78% of the issued and outstanding shares of common stock of the Company sold all of their shares to a group of buyers, resulting in a change of control of the Company. As a result of such change of control, the Company ceased operations and was reorganized as a vehicle to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation. We have so far identified a target company and conducted due diligence investigation of the target company. We qualify as a “shell company” under Rule 12b-2 promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Exchange Act because we currently have no or nominal assets (other than cash) and no or nominal operations.
Recent Developments
On November 27, 2017, we entered into an exchange agreement with Donggao International Group Shares Limited, a Seychelles International Business Company (“Donggao”), and holders of all outstanding capital stock of Donggao. Pursuant to terms of such exchange agreement, we will acquire 100% of the outstanding capital stock of Donggao, and in exchange, we will issue to the former shareholders of Donggao, an aggregate of 300,000,000 shares of the Company’s common stock. Following the exchange transaction, Donggao will become our wholly-owned subsidiary. We expect to close the exchange transaction as soon as possible upon satisfaction or waiver of all closing conditions but in no event later than the earlier of (i) 180 days after the date of the exchange agreement and (ii) 30 days after satisfaction or waiver of all closing conditions. We, however, cannot make any assurances that the exchange transaction will be consummated. If it fails to consummate, our business purpose will be to continue to seek the acquisition of, or merger with, an existing company.
Plan of Operation
Since inception, we have been a startup company and our operations have been limited to forming the Company and raising capital resource. We have had nominal revenues to date. Since our change of control on July 31, 2017, our principal business objective for the next 12 months and beyond such time has been reset to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings.
All of the sources of our cash to date have been provided by the principal stockholders of the Company who plan to support our operations until we raise additional funds in the future. Management’s plan includes obtaining additional funds by equity financing through a reverse merger transaction and/or related party advances, however there is no assurance of additional funding being available. The only professional fees we have incurred to date and intend to incur for the foreseeable future are for our attorneys and accountants.
Results of Operation
For the Three Months Ended February 28, 2018 as compared to the Three Months Ended February 28, 2017
Revenues
We had revenue of $0 and nominal revenue of $1,273 for the three months ended February 28, 2018 and 2017, respectively. Since our change of control in July of 2017, we have ceased generating revenues due to the fact that we have been reorganized as a vehicle to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation.
Operating Expenses
We incurred total operating expenses of $33,710 and $27,385 for the three months ended February 28, 2018 and 2017, respectively. For the three months ended February 28, 2018, $2,758 of the total operating expenses was general and administrative expenses. The remaining $30,952 were professional fees associated with public company reporting expenses.
Net Loss
During the three months ended February 28, 2018 and 2017, we incurred a net loss of $33,710 and $14,430, respectively.
For the Six Months Ended February 28, 2018 as compared to the Six Months Ended February 28, 2017
Revenues
We had revenue of $0 and nominal revenue of $2,318 for the six months ended February 28, 2018 and 2017, respectively. Since our change of control in July of 2017, we have ceased generating revenues due to the fact that we have been reorganized as a vehicle to investigate and acquire a target company or business seeking the perceived advantages of being a publicly held corporation.
Operating Expenses
We incurred total operating expenses of $46,411 and $88,544 for the six months ended February 28, 2018 and 2017, respectively. For the six months ended February 28, 2018, $4,959 of the total operating expenses was general and administrative expenses. The remaining $41,452 was professional fees associated with public company reporting expenses.
Net Loss
During the six months ended February 28, 2018 and 2017, we incurred a net loss of $46,411 and $74,544, respectively.
Liquidity and Capital Resources
As of February 28, 2018, the Company had a working capital deficit of $58,411, an accumulated deficit of $357,186 and did not earn any revenue to cover its operating costs.
The Company has nominal assets and has generated nominal revenues since inception. Since the change of control in July of 2017, the Company has ceased generating revenues. The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.
Cash Flows from Operating Activities
During the six months ended February 28, 2018 and 2017, the Company used cash in operating activities of $52,755 and $61,051, respectively. The cash used in operating activities during the six months ended February 28, 2018 and 2017, was primarily related to the Company’s net losses.
Cash Flows from Financing Activities
During the six months ended February 28, 2018 and 2017, the Company had cash provided by financing activities of $52,755 and $58,000, respectively. The cash provided by financing activities during the six months ended February 28, 2018 were advances from the current shareholder for the purpose of operating the Company.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
As a smaller reporting company, the Company is not required to provide this information.
Emerging Growth Company
We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Exchange Act to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved. We have also elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.
Item 4.
Controls and Procedures.
Disclosure of Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting, as of February 28, 2018, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that the Company’s internal control over financial reporting was not effective as of February 28, 2018.
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of February 28, 2018 and identified the following material weaknesses:
a)
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Lack of audit committee. The Company does not have a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
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b)
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Lack of proper segregation of duties due to limited personnel.
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c)
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Lack of a formal review process related to financial reporting that includes multiple levels of review.
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The Company’s management is committed to improving the Company’s internal controls and will: (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities; (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel; and (3) may consider appointing outside directors and audit committee members in the future.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, have discussed the material weakness noted above with the Company’s independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended February 28, 2018 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.