NOTES
TO THE UNAUDITED FINANCIAL STATEMENTS
FEBRUARY
28, 2019
NOTE
1 – ORGANIZATION AND BUSINESS OPERATIONS
Organization
and Description of Business
Luboa
Group, Inc. (the “Company”), formerly known as Sunrise Tours, Inc., was incorporated under the laws of the State of
Nevada on March 19, 2013 (“Inception”). On January 20, 2016, the Company filed a Certificate of Amendment with the
Secretary of State of Nevada and changed its corporate name to “Luboa Group Inc.” Concurrent with the change of corporate
name, the Company also changed its principal business plan from developing and offering special services such as 3D virtual tours
for companies which would like to promote their venues on the Internet and electronic media, to developing specialized agricultural
products and a carbon emission trading platform in Asia. However, as of February 28, 2019, no definitive agreement had been entered
into in connection with the business plan. The Company’s principal headquarters is located in Shenzhen, China. From Inception
through February 28, 2019, the Company accumulated losses of approximately $215,402.
In
June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-10, “Development Stage Entities.” The amendments in this update remove the definition of a development stage
entity from the Master Glossary of the ASC thereby removing the financial reporting distinction between development stage entities
and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities
to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial
statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the
entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior
years it had been in the development stage. The amendments in this update are applied retroactively. The adoption of ASU 2014-10
removed the development stage entity financial reporting requirements for the Company.
NOTE
2 – GOING CONCERN
The
Company has incurred loss since Inception, resulting in accumulated deficit of approximately $215,402 as of February 28, 2019,
and further losses are anticipated in the development of its business plan.
The
ability to continue as a going concern is dependent upon the ability to obtain additional financing, and generate revenue from
current and planned business operations, and control costs. The Company is in the development stage and has generated no operating
income. The Company plans to fund its future operations by joint venturing or obtaining additional financing from investors and/or
lenders. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt
about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability
of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting
principles in the
United States of America (“GAAP”)
and are presented in US dollars.
Cash
and Cash Equivalents
For
purposes of the accompanying statement of cash flows, the Company considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents. The Company’s funds are deposited in insured institutions. At February
28, 2019, the Company did not have any bank deposit.
Basic
and Diluted Income (Loss) Per Share
The
Company computes income (loss) per share in accordance with ASC 260, “Earnings per Share,” which requires presentation
of both basic and diluted earnings per share on the face of the statement of operations. 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.
For
the six month periods ended February 28, 2019 and 2018, there were no potentially dilutive debt or equity instruments issued or
outstanding and any such shares would have been excluded from the computation because they would have been anti-dilutive as the
Company incurred losses in these years.
Fair
Value of Financial Instruments
ASC
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 a shareholder approximates its fair value due to their short-term maturity.
Income
Taxes
The
Company accounts for income taxes pursuant to ASC 740, “Income Taxes.” Under ASC 740, deferred income taxes are provided
on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred
tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.
ASC
740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC
740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not
to be sustained upon audit by the relevant taxing authority. As of February 28, 2019, there were no unrecognized tax benefits.
Revenue
Recognition
The
Company will recognize revenue in accordance with ASC 605, “Revenue Recognition.” ASC-605 requires that four basic
criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred;
(3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and
(4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the
collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the
product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that
the product has been delivered or no refund will be required.
Advertising
Costs
The
Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense
of $0 during six month periods ended February 28, 2019 and 2018.
Recent
Accounting Pronouncements
Management
has reviewed all the recently issued, but not yet effective, accounting pronouncements, and does not believe any of these pronouncements
will have a material impact on the Company.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP 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.
Stock-Based
Compensation
As
of February 28, 2019, the Company had not issued any stock-based payments to its employees.
Stock-based
compensation is accounted for at fair value in accordance with ASC 718, when applicable. To date, the Company has not adopted
a stock option plan and has not granted any stock options.
NOTE
4 – COMMON STOCK
As
of February 28, 2019, the Company had 75,000,000 shares of common stock authorized with a par value of $0.001 per share.
On
September 23, 2013, the Company issued 9,000,000 shares at $0.001 per share for total proceeds of $9,000.
For
the year ended August 31, 2015, the Company issued 2,600,000 shares at $0.01 per share for total proceeds of $26,000.
As
at February 28, 2019, 11,600,000 shares of common stock were issued and outstanding. See Note 7 (Change of Control) regarding
the January 14, 2016 transaction resulting in the ownership change as of approximately 77.59% of these common shares. See Note
7 for the January 7, 2019 ownership change transaction with respect to certain 93.09% of the company’s common shares.
NOTE
5 – INCOME TAXES
As
of February 28, 2019, the Company had net operating loss carry forwards of approximately $215,402 that may be available to reduce
future years’ taxable income through the 2035 and 2037 tax years. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly,
the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
NOTE
6 – LOAN FROM SHAREHOLDER
The
Company relies on advances from related parties until such time that the Company can support its operations or attains adequate
financing through sales of equity or debt securities. There is no formal written commitment for continued support from such related
parties. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature
and have not been formalized by a promissory note.
From
Inception through January 14, 2016, the Company’s then sole shareholder and director Alexander Karpetskiy loaned the Company
$15,066 to pay for incorporation costs and operating expenses. The loan was non-interest bearing, due upon demand and unsecured.
As of January 14, 2016, the amount outstanding was $14,429. As a result of the ownership change described in Note 7, the entire
unpaid balance of the loan was discharged by Mr. Karpetskiy as of January 14, 2016.
Since
January 14, 2016, a former director Hsin-Nan Lin who was also one of the Company’s major shareholders had loaned the Company
$152,241 to pay for operating expenses. As of November 30, 2018, the amount outstanding was $152,241. The loan is non-interest
bearing, due upon demand and unsecured. As a result of the January 7, 2019 change of control transaction described in Note 7,
Mr. Lin has released the Company of all of his loans lent to the Company. As of February 28, 2019, Mr. Jiang Feng had loaned the
Company $1,061 to pay for operating expenses.
NOTE
7 – CHANGE OF CONTROL
On
January 14, 2016 (the “Closing Date”), Mr. Karpetskiy entered into a Securities Purchase Agreement (the “SPA”)
with Hsin-Nan Lin, pursuant to which Mr. Lin acquired from Mr. Karpetskiy all 9 million shares of the Company’s common stock
owned by him. Pursuant to the SPA, all of the Company’s outstanding liabilities as of the Closing Date, including the outstanding
balance of Mr. Karpetskiy’s loan, were fully paid by utilizing cash on hand (or discharged in the case of Mr. Karpetskiy’s
loan). As a result, the Company was relieved of unpaid shareholder loan in the amount of $14,428, which is recorded by the Company
as additional paid-in capital as of August 31, 2016.
On
January 7, 2019, as a result of a private transaction, 9,000,000 shares of common stock (the “Shares”) of the Company
have been transferred from Hsin-Nan Lin to a group of purchasers, including Mr. Jiang Feng, the Company’s Chief Executive
Officer (the “Purchasers”). Furthermore, our former Chief Financial Officer and member of board of directors, Ms.
Chien-Hui Lin and Mr. Ta-Chin Lin also sold their shareholding of 1,000,000 shares and 799,000 shares respectively to Mr. Jiang
Feng. As a result, Mr. Jiang Feng becoming a 93.09% holder of the voting rights of the issued and outstanding share capital of
the Company on a fully-diluted basis of the Company, and becoming the controlling shareholder. The aggregate consideration paid
for the Shares, which represent 93.09% of the issued and outstanding share capital of the Company on a fully-diluted basis, was
$387,434.50. The consideration per share was $0.04. The source of the cash consideration for the Shares was personal funds of
the Purchasers and Mr. Jiang Feng. In connection with the transaction, Hsin-Nan Lin, Chien-Hui Lin and Ta-Chin Lin released the
Company from all debts owed.
NOTE
8 – SUBSEQUENT EVENTS
On
March 11, 2019, the Company filed the Amended and Restated Articles of Incorporation with the Secretary of State of the State
of Nevada, under which, among others, it (1) increased the number of authorized shares of common stock to 1,980,000,000 and (2)
created and authorized 20,000,000 shares of blank check preferred stock, par value $0.001 per share.
On
March 8, 2019, board of directors of the Company approved the adoption of the Company’s Amended and Restated Bylaws which
substantially revised the Company’s existing Bylaws.
On
April 1, 2019, the Company entered into a definitive Share Exchange Agreement (the “Share Exchange Agreement”) with
Bangtong Technology International Limited, a Seychelles International Business Company (“Bangtong International”),
and the shareholders of Bangtong International (the “Shareholders”). Pursuant to the Share Exchange Agreement, the
Shareholders have agreed to transfer all of the ordinary shares of Bangtong International held by them, constituting all of the
issued and outstanding capital stock of Bangtong International, in exchange for 100 million newly issued shares of the Company’s
common stock that will, in the aggregate, constitute approximately 89.6% of the issued and outstanding capital stock of the Company
on a fully-diluted basis as of and immediately after the consummation of the transactions contemplated by the Share Exchange Agreement.
NOTE
9 – CONDENSED UNAUDITED FINANCIAL STATEMENTS
The
results for the six months ended February 28, 2019 are not necessarily indicative of the results of operations for the full year.
These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2018 filed with the
Securities and Exchange Commission.