UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2020

For the transition period from ___ to ___

For the transition period from ___ to ___

Commission file number: 000-33399

(801) 323-2395

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨☑ No x☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨☑ No x☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x☑ No ¨☐

The number of shares outstanding of the registrant’s common stock as of June 23,September 16, 2020 was 18,000,000.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NOVA STAR INNOVATIONS, INC.

Condensed Financial Statements

SeptemberJune 30, 20192020

(Unaudited)

(Unaudited) 

Nova Star Innovations, Inc.

Condensed Balance Sheets

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statements.

Nova Star Innovations, Inc.

Condensed Statements of Operations

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statements.

Nova Star Innovations, Inc.

Condensed Statements of Stockholders' Deficit

For the nine months ended September 30, 2018 and 2019Cash Flows

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed financial statements.

Nova Star Innovations, Inc.

Condensed Statements of Cash Flows

(Unaudited)

Nova Star Innovations, Inc.Inc.

Notes to the Unaudited Condensed Financial Statements

SeptemberJune 30, 20192020

NOTE 1 – CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the period ended SeptemberJune 30, 20192020 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 20182019 audited financial statements as reported in its Form 10-K. The results of operations for the period ended SeptemberJune 30, 20192020 are not necessarily indicative of the operating results for the full year ended December 31, 2019.2020.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has limited assets, has incurred losses since inception, has negative cash flows from operations, and has no revenue-generating activities. Its activities have been limited for the past several years and it is dependent upon financing to continue operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plan to acquire or merge with other operating companies. The COVID-19 pandemic could have an impact on our ability to obtain financing to fund our operations.  The Company is unable to predict the ultimate impact at this time.

NOTE 3 – RELATED PARTY TRANSACTIONS

During the ninesix months ended SeptemberJune 30, 2019,2020, a shareholder invoiced the Company $4,500$3,000 for consulting, administrative and professional services and out-of-pocket costs provided or paid on behalf of the Company. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, the Company owed the shareholder $11,100$9,000 and $6,600,$6,000, respectively.

During the ninesix months ended SeptemberJune 30, 2019,2020, a shareholder loaned the Company $1,500.  The notes bear interest at 8% and are due on demand. Notes payable – related party at September 30, 2019 and December 31, 2018 were $122,850 and $121,350, respectively.  Accrued interest – related party at September 30, 2019 and December 31, 2018 was $48,650 and $41,320, respectively.

NOTE 4 – NOTES PAYABLE 

During the nine months ended September 30, 2019, a third party loaned the Company $4,000.$3,000. The notes bear interest at 8% and are due on demand. Notes payable at SeptemberJune 30, 20192020 and December 31, 20182019 were $89,176$132,450 and $85,176,$129,450, respectively. Accrued interest at SeptemberJune 30, 20192020 and December 31, 20182019 was $47,136$56,295 and $41,914,$51,107, respectively.

NOTE 4 – NOTES PAYABLE

A third party has loaned the Company $89,176. The notes bear interest at 8% and are due on demand. Notes payable at June 30, 2020 and December 31, 2019 were $89,176. Accrued interest at June 30, 2020 and December 31, 2019 was $52,485 and $48,919, respectively.

NOTE 5 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and has determined that there are no such events that would have a material impact on the financial statements.

In this report references to “Nova Star,” “the Company,” “we,” “us,” and “our” refer to Nova Star Innovations, Inc.

FORWARD LOOKING STATEMENTS

The U. S. Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “intend,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

We have not recorded revenues and are dependent upon financing to continue basic operations. Management intends to rely upon advances or loans from management, significant stockholders or third parties to meet our cash requirements, but we have not entered into written agreements guaranteeing funds and, therefore, no one is obligated to provide funds to us in the future. These factors raise substantial doubt as to our ability to continue as a going concern. Our plan is to combine with an operating company to generate revenue. At this time management is unsure what effect the COVID-19 pandemic will have on our search for companies to combine with.

As of the date of this report, our management has not had any discussions with any representative of any other entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Any business combination or transaction may likely result in a significant issuance of shares and substantial dilution to present stockholders of the Company.

We anticipate that the selection of a business opportunity will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of securities. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

If we obtain a business opportunity, then it may be necessary to raise additional capital. We anticipate that we will sell our common stock to raise this additional capital. We expect that we would issue such stock pursuant to exemptions to the registration requirements provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions to the registration requirements of the Securities Act of 1933. We do not currently intend to make a public offering of our stock. We also note that if we issue more shares of our common stock, then our stockholders may experience dilution in the value per share of their common stock.

Liquidity and Capital Resources

We have not recorded revenues from operations since inception and have not established an ongoing source of revenue sufficient to cover our operating costs. We have relied primarily upon related parties to pay for our operating expenses. At SeptemberJune 30, 20192020 our cash was $315$615 compared to $115$315 at December 31, 20182019 and our total liabilities increased to $321,712$346,106 at SeptemberJune 30, 20192020 compared to $297,660$328,852 at December 31, 2018.2019. The increase in total liabilities during the ninesix month period ended SeptemberJune 30, 20192020 represents expenses paid by a related party, increase in accounts payable,and notes payable –related party and accrued interest.

We intend to obtain capital from management, significant stockholders and/or third parties to cover minimal operations; however, there is no assurance that additional funding will be available. Our ability to continue as a going concern during the long term is dependent upon our ability to find a suitable business opportunity and acquire or enter into a merger with such company. The type of business opportunity with which we acquire or merge will affect our profitability for the long term.

During the next 12 months we anticipate incurring additional costs related to the filing of Exchange Act reports. We believe we will be able to meet these costs through funds provided by management, significant stockholders and/or third parties. We may also rely on the issuance of our common stock in lieu of cash to convert debt or pay for expenses.

Results of Operations

We did not record revenues in either 20192020 or 2018.2019. General and administrative expense was $11,300$8,200 for the ninesix month period ended SeptemberJune 30, 2020 (“2020 six month period”) compared to $8,400 for the six month period ended June 30, 2019 (“2019 nine month period”) and $11,335 for the nine month period ended September 30, 2018 (“2018 ninesix month period”). General and administrative expense was $2,700 for the three month period ended June 30, 2020 (“2020 second quarter”) compared to $2,900 for the three month period ended SeptemberJune 30, 2019 (“2019 thirdsecond quarter”) compared to $2,800 for the three month period ended September 30, 2018 (“2018 third quarter”).

Total other expense representing interest expense on notes payable increased to $12,552$8,754 for the 2019 nine2020 six month period compared to $10,970$8,312 for the 2018 nine2019 six month period. Total other expense representing interest expense on notes payable increased to $4,240$4,382 for the 2020 second quarter compared to $4,192 for the 2019 third quarter compared to $3,971 for the 2018 thirdsecond quarter.

Our net loss increased to $23,852$16,954 for the 2019 nine2020 six month period compared to $22,305 for the 2018 nine month period.  Our net loss increased to $7,140$16,712 for the 2019 thirdsix month period and our net loss was $7,082 for the 2020 second quarter compared to $6,771$7,092 for the 2018 third2019 second quarter Management expects net losses to continue until we acquire or merge with a business opportunity.

Commitments and Obligations

During the nine month period ended SeptemberAt June 30, 2019, a third party loaned the Company $4,000.  At September 30, 20192020 we recorded notes payable of $89,176 and notes payable -to a related party of $122,850$132,450 representing services received, as well as cash advances received. All of the notes payable are non-collateralized, carry interest at 8% and are due on demand. Total accrued interest as of SeptemberJune 30, 20192020 on all notes payable was $95,786.
$108,780.

During the nine month periodsecond quarter ended SeptemberJune 30, 2019,2020 a shareholder paid for or performed professional services totaling $4,500.$3,000. At SeptemberJune 30, 2019,2020, we owe the shareholder an aggregate of $9,000 in accounts payable – related party was $11,100.party.

At June 30, 2020 we owe vendors $6,700.

At SeptemberJune 30, 2019 we owed $2,800 to vendors.

At September 30, 20192020 two lenders represent in excess of 95% of the Company’s accounts payable and notes payable.

Off-Balance Sheet Arrangements

We have not entered into 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 and would be considered material to investors.

Emerging Growth Company

We qualify as an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). A company qualifies as an emerging growth company if it has total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year and, as of December 8, 2011, had not sold common equity securities under a registration statement. Under the JOBS Act we are permitted to, and intend to, rely on exemptions from certain disclosure requirements

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow our management to make timely decisions regarding required disclosure. Our President, who serves as our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and he determined that our disclosure controls and procedures were not effective due to a control deficiency. During the period we did not have additional personnel to allow segregation of duties to ensure the completeness or accuracy of our information. Due to the size and operations of the Company we are unable to remediate this deficiency until we acquire or merge with another company.

Changes to Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of our internal control over financial reporting and determined that there were no changes made in our internal control over financial reporting during the quarter ended SeptemberJune 30, 20192020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

ITEM 1A.  RISK FACTORS

A smaller reporting company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Part I Exhibits

Part II Exhibits

_____________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.   

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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