NOTES TO THE AUDITED FINANCIAL STATEMENTS
FOR YEAR ENDED AUGUST 31, 2018
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
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, 2018 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.
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, 2018, the Company has a working capital deficit of $540,135 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.
In 2019, the Company is planning to commence it operations with heavy emphasis into healthcare - primarily bird-nest based health supplement and bird-nest related health products which include manufacturing and retail (retail chain and online). With our expertise in online applications platform, we would be developing an online network platform to market and sell our products and also a system to source and purchase raw materials we required.
Prime market for our produces at this stage would be East and South East Asia with focus into China’s upcoming consumer market.
We will also be sourcing funds from potential investors to finance purchases of raw materials needed to support our operations and surplus for potential buyers.
We believe this is 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.
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 as at 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 606 “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.
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
The Company has reviewed the recent updates for ASC 606 and 842 pronouncements. The Company is adopting these updates and does not believe that it may cause a material impact on its financial condition or the results of its operations.
NOTE 5 – STOCKHOLDERS EQUITY
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.
On May 25, 2018, our new President & CEO Mr. Yap Kit Chuan entered into a Share Purchase Agreement with ex-director Prof. Dr. Wong Kong Yew to transfer all shares-holdings of Prof. Dr. Wong Kong Yew (70,414,500 restricted shares) to Mr. Yap Kit Chuan at a token consideration of $250. The shares will remain as restricted shares after the transfer. Subsequently on June 19, 2018 our transfer agent, Globex Transfer, LLC registered the change and issued the new restricted share certificate.
No
|
|
Name
|
|
Affiliation
|
|
No. of Existing Shares
|
|
|
Existing Share-holdings
|
|
|
After Transfer of Shares
|
|
|
Shareholdings after Placement
|
|
1.
|
|
Yap Kit Chuan
|
|
President, CEO, Secretary &
Chairman of the Board of
Directors
|
|
|
1,525,000
|
|
|
|
2.03
|
%
|
|
|
71,939,500
|
|
|
|
95.92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
|
Huang Minxi
|
|
Director
|
|
|
1,295,500
|
|
|
|
1.73
|
%
|
|
|
1,295,500
|
|
|
|
1.73
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Wong Kong Yew
|
|
Ex-Director
|
|
|
70,414,500
|
|
|
|
93.89
|
%
|
|
|
0
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
73,235,000
|
|
|
|
97.65
|
%
|
|
|
73,235,000
|
|
|
|
97.65
|
%
|
NOTE 6 – 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)
|
During this final quarter we had terminated the appointment of Shah Faiz & Co., (now known as Azlan Shah & Partners) as our Escrow Agent, we had paid their services up to April 2018.
|
|
|
|
|
(3)
|
We had also ceased the appointment of Calvary Consultant Limited of Hong Kong as our consultant during the year, in future we would engage them only on case to case basis. As a result of the conversion, we had reversed accrued monthly expense from August 2017 through May 2018 totaling to $26,000.
|
NOTE 7 – 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 income (loss) as follows:
|
|
August 31,
2018
|
|
|
August 31,
2017
|
|
Income tax provision (benefit) at statutory rate of 21% (2018) and 34% (2017)
|
|
$
|
(50,025
|
)
|
|
$
|
(127,908
|
)
|
Change in valuation allowance
|
|
$
|
50,025
|
|
|
$
|
127,908
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred tax assets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities):
|
|
|
|
|
|
|
|
|
Net operating loss carry forward
|
|
$
|
238,216
|
|
|
$
|
376,201
|
|
Valuation allowance
|
|
$
|
(238,216
|
)
|
|
$
|
(376,201
|
)
|
Net differed tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
As of August 31, 2018 the Company had approximately $238,216 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 May 25, 2018, there is a major change in control of the Company, a transfer of 70,414,500 representing 93.89% of total outstanding shares from Wong Kong Yew to Yap Kit Chuan. 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.
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 8 – OTHER CREDITORS
Creditors’ Name
|
|
Services Provided
|
|
Amount
|
|
Swipypay Berhad (related party)
|
|
Management Agent
|
|
|
522,920
|
|
Malone Bailey, LLP
|
|
Auditor
|
|
|
11,046
|
|
Calvary Consultant Ltd
|
|
Consultant
|
|
|
6,500
|
|
Globex Transfer, LLC
|
|
Transfer Agent
|
|
|
300
|
|
|
|
Total
|
|
|
540,766
|
|
(1) Our Management Agent, Swipypay Berhad (a company established in Malaysia) based on latest record is 80% owned by Yap Kit Chuan, our President, CEO, CFO, Treasurer, Secretary and Director. Total outstanding amount due to our Management Agent was $522,920 and $275,671 as at August 31, 2018 and August 31, 2017 respectively and this outstanding amount is interest free.
(2) Our Management Agent had during the current financial year fully settled outstanding Loan due from Director of $13,785 on the Company’s behalf. This loan from Director were payments made on behalf of the Company during the financial year ending August 31, 2017 towards invoices from our auditor, consultant and share transfer agent (include bank charges) by our then President, CEO, CFO, Treasurer and Chairman of the Board of Directors, Prof. Dr. Wong Kong Yew.
This payment amount is included in the amount outstanding due to our Management Agent as at August 31, 2018.