NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2023
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Starguide Group, Inc. was incorporated in the State of Nevada on February 21, 2017 and established a fiscal year end of January 31. We are still in the development stage and as of today we have no revenues, have minimal assets and have incurred losses since inception. We were formed to engage in the distribution of Indian traditional art and crafts from India to individuals and wholesalers around the world. As of today, we have not identified any party to sell our products. Initially, our sole officer and director, Vicky Sharma will market our products. We intend to hire salespersons with good knowledge and connections in our market. The salesperson’s job would be to find potential customers, and to set up agreements with them. We intend to focus on direct marketing efforts whereby our representative will directly contact. We plan to advertise our service and products on different websites and social networks using context ad. We plan to use internet catalogs and use many online marketing tools to direct traffic to our website and identify potential customers. In addition, we are going to issue monthly printed catalog and send it to our clients.
On May 16, 2022, Vicky Sharma, the previous majority shareholder of the Company, entered into a stock purchase agreement for the sale of 2,000,000 shares of Common Stock of the Company to Northeast International Holdings Limited.
As a result of the acquisition, Northeast International Holdings Limited holds approximately 68% of the issued and outstanding shares of Common Stock of the Company, and as such it is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company.
Also on May 16, 2022, the previous sole officer and director of the company, Vicky Sharma, resigned his positions with the Company. Upon such resignations, Lu Mei Xian was appointed as Chief Executive Officer, Treasurer and Secretary, and sole Director of the Company.
The Company intends to be an incubator of Software as a Service (Saas) startups and is in active discussions with multiple SaaS businesses. The Company’s goal is to identify and locate SaaS businesses with the potential to grow, and to bring them under the Starguide corporate umbrella.
On December 8, 2022, the Company acquired 80% shares in Live Investments Holdings, a corporation organized in Great Britain located in London, in exchange for sixteen thousand dollars ($16,000) on closing. Live Investments Holdings Ltd. owns 100% of Live Lead Tech Ltd, a cloud-based lead generation software corporation organized in Great Britain located in London. As a result of the acquisition of a majority of the issued and outstanding shares of Live Investments Holdings Ltd, the Company have now assumed Live Investments Holdings Ltd’s business operations as a majority-owned subsidiary and on a consolidated basis.
NOTE 2 – GOING CONCERN UNCERTAINTY
As reflected in the accompanying consolidated financial statements, the Company’s current liabilities exceeded its current assets by $172,304, has an accumulated deficit of $95,664, shareholders’ deficit of $57,662 as of April 30, 2023. For the period ended April 30, 2023, the Company suffered a net loss of $18,582 and negative operating cash flow of $9,797. These factors among others raise substantial doubt about our ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital and implement its business plan. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management believes that the current actions to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. There are no assurances that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended April 30, 2023 are not necessarily indicative of the results that may be expected for the year ending January 31, 2024. Notes to the unaudited condensed interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2023 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended January 31, 2023 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on May 15, 2023.
Basis of Consolidation
These consolidated financial statements include the accounts of the Company and its 80% owned subsidiaries of Live Investments Holdings Ltd. which owns 100% of Live Lead Tech Ltd. All material intercompany balances and transactions have been eliminated.
Foreign Currency Translations
The Company’s functional and reporting currency is the U.S. dollar. The functional currency of Live Investments Holdings Ltd. and Live Lead Tech Ltd. is the Great British Pounds (GBP). All transactions initiated GBP are translated into U.S. dollars in accordance with ASC 830-30, ”Translation of Financial Statements,” as follows:
| 1) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. |
| | |
| 2) | Equity at historical rates. |
| | |
| 3) | Revenue and expense items at the average rate of exchange prevailing during the period. |
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income. Gains and losses from foreign currency transactions are included in earnings in the period of settlement.
| | Three Months Ended | | | Three Months Ended | |
| | April 30, | | | April 30, | |
| | 2023 | | | 2022 | |
Spot GBP: USD exchange rate | | | 1.2547 | | | | n/a | |
Average GBP: USD exchange rate | | | 1.2219 | | | | n/a | |
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.
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. The Company had no cash equivalents at April 30, 2023 and January 31, 2023.
Reclassification
Certain amounts from prior period have been reclassified to conform to the current period presentation. These reclassifications had no impact on reported operating and net loss.
Related Parties
We follow ASC 850, “Related Party Disclosures”, for the identification of related parties and disclosure of related party transactions. (see Note 6)
Fair Value of Financial Instruments
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures,” which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including accounts payable and accrued liabilities. are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 - | quoted prices in active markets for identical assets or liabilities |
| |
Level 2 - | quoted prices for similar assets and liabilities in active markets or inputs that are observable |
| |
Level 3 - | inputs that are unobservable (for example cash flow modeling inputs based on assumptions) |
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606,”Revenue Recognition” following the five steps procedure:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Company’s revenue derives from marketing, subscription fees and one-time license keys. During the three months ended April 30, 2023, the Company recognized revenue of $1,786, comprised of marketing revenue of $1,649, subscription fees of $110 and one-time license key revenue of $27.
Prepaid Expense
Prepaid expense relates to prepayment of one-month rent for an office premise of $570.
Property, Plant and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:
Office Equipment | 3 years |
| |
Computer Equipment | 5 years |
| |
Computer Software | 7 years |
Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.
The long-lived assets of the Company are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the three months ended April 30, 2023 and 2022, no impairment losses have been identified.
Impairment of tangible and intangible assets
Tangible and intangible assets (excluding goodwill) are assessed at each reporting date for indications that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. The asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or a group of assets exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the group of assets.
Goodwill
We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.
Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated primarily through the use of a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.
On December 8, 2022, the Company acquired 80% shares in Live Investments Holdings, which generated goodwill of $26,319. The Company has accounted for the transaction in accordance with ASC 805 “Business Combination.”
Based on the Company’s analysis of goodwill as of April 30, 2023, no indicators of impairment exist. No impairment loss on goodwill was recognized for the three months ended April 30, 2023.
Net Income (Loss) per Share
The Company computes basic and diluted net loss per share amounts in accordance with ASC Topic 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 shares of common stock outstanding during the reporting period. Diluted loss per share reflects the potential dilution that could occur if convertible notes to issue common stock were converted resulting in the issuance of common stock that could share in the loss of the Company. For the three months ended April 30, 2023 and 2022, the Company did not have any dilutive instruments
Lease
The Company entered into an office lease agreement in Great Britain for an one-year term starting from December 2022 and expired in November 2023.
In accordance with ASC 842, “Leases,” we determine if an arrangement is a lease at inception.
The office lease meets the definition of a short-term lease because the lease term is 12 months or less without an automatic extension clause. Consequently, consistent with Company’s accounting policy election, the Company does not recognize the right-of-use asset and the lease liability arising from this lease.
Recently Issued Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. We adopted the new standard effective February 1, 2021 and there was no material impact on the Company’s financial statements.
Management has considered all recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 4 – PROPERTY AND EQUIPMENT
As of April 30, 2023 and January 31, 2023, the property and equipment consisted of the following:
| | April 30, | | | January 31, | |
| | 2023 | | | 2023 | |
Office Equipment | | $ | 800 | | | $ | 800 | |
Computer Equipment | | | 2,852 | | | | 2,800 | |
Computer Software | | | 82,266 | | | | 80,774 | |
| | | 85,918 | | | | 84,374 | |
Accumulated depreciation | | | (4,330 | ) | | | (1,172 | ) |
| | $ | 81,589 | | | $ | 83,202 | |
Depreciation expense for the three months ended April 30, 2023 and 2022 amounted to $3,067 and $67, respectively.
NOTE 5 – ACCOUNTS PAYABLE AND ACCRUED LIABILITES
Accounts payable and accrued liabilities at April 30, 2023 and January 31, 2023 consisted of the following:
| | April 30, 2023 | | | January 31, 2023 | |
Trade payable | | $ | 13,451 | | | $ | 3,122 | |
Due to former director | | | 2,982 | | | | 2,982 | |
| | $ | 16,433 | | | $ | 6,104 | |
NOTE 6 – RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, the Company has been relying on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by officers, directors, or shareholders. 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. These loans are due on demand and non-interest bearing.
During the three months ended April 30, 2023 and 2022, the former director of the Company, who resigned on May 16, 2022, advanced $0 and $2,982 to the Company to support business operation costs, respectively. In pursuant to the loan waiver agreement entered on February 7, 2022, loan amount of $10,667 was forgiven during the three months ended April 30, 2022. As of April 30, 2023 and January 31, 2023, the amount due to the former director was $2,982.
During the three months ended April 30, 2023, Northeast International Holdings Limited, majority shareholder of the Company upon the change of control on May 16, 2022, advanced $7,670 to the Company to support operating cost. As of April 30, 2023 and January 31, 2023, the amount due to the majority shareholder of the Company was $153,922 and $144,336, respectively.
During the three months ended April 30, 2023, the Company incurred net management salary of $1,152 from February to April 2023 of $5,152, offset by reversal of over-accrued amount of $4,000 during the year ended January 31, 2023.
As of April 30, 2023 and January 31, 2023, the amount due to the director of Live Investments Holding Ltd. was $3,235 and $7,165, respectively.
As of April 30, 2023 and January 31, 2023, the total amount due to related parties was $157,157 and $151,501, respectively.
NOTE 7 – EQUITY
Authorized Stock
The Company’s authorized common stock consists of 75,000,000 shares at $0.001 par value.
Common Stock
As of April 30, 2023 and January 31, 2023, the issued and outstanding common stock was 2,868,000 shares.
NOTE 8 – RISKS AND UNCERTAINTIES
In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position at April 30, 2023. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company in the future. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this financial statements. These estimates may change, as new events occur and additional information is obtained.
NOTE 9 – SUBSEQUENT EVENTS
In accordance with ASC 855, “Subsequent Events,” the Company has analyzed its operations subsequent to April 30, 2023 to the date these financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.