NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2018
(UNAUDITED)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
We were incorporated in the State of Nevada on February 26, 2014 under the name Terafox Corp. On December 13, 2017, we changed our name to Star Wealth Group Inc. From inception until first fiscal quarter of 2015, the Company’s principal business consisted of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine. Effective March 16, 2015, a change of control occurred with respect to the Company and the company ceased its operations. Consequently, the Company is a shell company seeking to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders.
In the opinion of management, all adjustments necessary for a fair statement of the results for the interim periods have been made, and all adjustments are of a normal recurring nature and amount.
The interim financial statements are condensed and should be read in conjunction with the company’s latest annual financial statements and the interim disclosures.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company currently has no business or recurring income which raises substantial doubt about its ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company’s ability to merger with or acquire profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
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.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a September 30 fiscal year end.
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.
6
STAR WEALTH GROUP INC.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2018
(UNAUDITED)
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had no cash balances at December 31, 2018 ($0 at December 31, 2017).
Fair Value of Financial Instruments
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Accounting Standards Codification (“ASC”) 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs which reflect a reporting entity’s own assumptions about the assumptions that market participants would use for pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
As of December 31, 2018, the Company’s financial instruments consisted of prepaid expenses, accounts payable, accruals and amounts due to related parties. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no such common stock equivalents outstanding during the three months ended December 31, 2018 and 2017.
7
STAR WEALTH GROUP INC.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2018
(UNAUDITED)
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Comprehensive Income
The Company has which established standards for reporting and display of comprehensive income, its components and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any transactions that are required to be reported in other comprehensive income.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued, but not yet effective, accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 4 – PREPAID EXPENSES
As of December 31, 2018, the balance of prepaid expenses was $7,833 (2017 - $13,394).
The outstanding balance of prepaid expenses related to the OTCQB annual membership that was paid in full during the year ended September 30, 2017, but relates to the year ending August 31, 2018.
NOTE 5 – LOANS FROM RELATED PARTIES
Principal Shareholder
During the three months ended December 31, 2018, the Company’s current principal shareholder and a Company affiliated with the Company’s current principal shareholder advanced a total of $11,100 to provide working capital for the Company. The loans were unsecured, non-interest bearing and due on demand.
The total balance due under the loans as of December 31, 2018 was $105,609.
NOTE 6 – COMMON STOCK
Common Stock
The Company has 75,000,000, $0.001 par value shares of common stock authorized.
During fiscal year ended September 30 2016, the Company issued a total of 2,440,000 shares of common stock for cash proceeds of $24,400 at $0.01 per share.
On June 5, 2017, a total of $116,485 was owed by the Company to its principal shareholder and pursuant to a loan conversion agreement, the parties discharged the entire loan amount in exchange for the issuance of 23,297,000 shares of common stock of the Company.
There were 29,737,000 shares of common stock issued and outstanding as of September 30 and December 31, 2018.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Legal
8
STAR WEALTH GROUP INC.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 2018
(UNAUDITED)
We were not subject to any legal proceedings during the three months ended December 31, 2018 and none are threatened or pending to the best our knowledge and belief.
NOTE 8 – SUBSEQUENT EVENTS
The Company evaluated subsequent events from December 31, 2018 through January 29, 2019. There have been no subsequent events after September 30, 2018 for which disclosure is required.
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ITEM 2.
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MANAGEMENT’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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FORWARD LOOKING STATEMENT NOTICE
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
GENERAL
We were incorporated in the State of Nevada on February 26, 2014 under the name Terafox Corp. On December 13, 2017, we changed our name to Star Wealth Group Inc. From inception until first fiscal quarter of 2015, the Company’s principal business consisted of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine. Effective March 16, 2015, a change of control occurred with respect to the Company and the company ceased its operations.
Consequently, the Company is now a shell company seeking to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders.
RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED DECEMBER 31, 2018 COMPARED TO THE THREE MONTH PERIOD ENDED DECEMBER 31, 2017
Continuing Operations
During the three months ended December 31, 2018 and December 31, 2017, respectively, we did not have any revenue from operations. During the three months ended December 31, 2018, we incurred operating expenses, consisting of professional fees and general and administrative expenses, relating to continuing activities in the amount of $16,111, compared to $25,942 incurred during the three months ended December 31, 2017. The reduction was primarily related to a decrease in general and administrative expenses inured in the current year, including professional fees.
During the three months ended December 31, 2018, we recorded a net loss of $25,942 compared with net loss of $27,715 for the three months ended December 31, 2016. The difference is due to the reasons discussed above.
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LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2018, our working capital deficit was $98,237 compared with a working capital deficit of $82,126 as at September 30, 2018. The increase for the current period is mainly due to an increase in loans from related parties. As of December 31, 2018, the amount due to related parties was $105,609 compared with $94,500 as of September 30, 2018.
On June 5, 2017, the Company and Smart Mate Limited, a Seychelles company and the Company’s largest shareholder (Smart Mate”), entered into a Loan Conversion Agreement pursuant to Smart Mate converted its outstanding loans to the Company in exchange for common stock of the Company. On June 5, 2017, a total of $116,485 was owed to Smart Mate by the Company, and pursuant to the Loan Conversion Agreement, Smart Mate discharged the loan amount in exchange for receiving 23,297,000 shares of common stock of the Company.
There were 29,737,000 shares of common stock issued and outstanding as of September 30, 2018 and December 31, 2018, respectively.
GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company currently has no assets, no business or recurring income which raises substantial doubt about its ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company’s ability to merger with or acquire profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.
OFF-BALANCE SHEET ARANGEMENTS
As of the date of this Quarterly Report, we do not have any 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 investors.