The Company leases office space from Mr. Wei-Rur Chen which the term for the agreement is from November 2015 to November 2020 with amount rent of $45,000. Rent payments were $11,460 and $10,842 for the three months ended March 31, 2017 and 2016 respectively.

The Company conducted business with a related party company Anteya Technology Corp. The Company owns 13.68% of the outstanding common stock of Anteya Technology Corp as of March 31, 2017.2018. All transactions were at market-based prices.

Mr. Wei-Rur Chen made various advances to the Company.Company as personal loan. This personal loan carried no interest and was payable upon request. For the 3 months ended March 31, 2018, advances from Mr. Chen totaled $96,475, and repayment to Mr. Chen totaled $157,963 and the net repayment to Mr. Chen was $61,488. The balance of advance from Mr. Chen was $145,289$380,115 as of March 31, 2017. The advanceare non-interest bearing and due on demand.2018,

COLORSTARS GROUP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 11 - Commitments

The company leases offices in Taiwan. The main office is relocated in New Taipei City with monthly rental of NTD$120,000, and the term is from 11-7-2015 to 10-6-2020. The company rented a branch office located in Taipei City with a monthly rental of NTD$160,000 on 11-11-2017, and the term is from 12-1-2017 to 11-30-2019. However this branch office is closed on April 10, 2018 and the lease is cancelled. The minimum future rental payments due under non-cancelable operating leases with remaining terms at March 31, 20172018 are as follows:

Note 12 - Issuance of New Shares and Proceeds

The Company issued a total of 12,000,000 shares of Company common stock to 23 investors at a price per share of US $0.034188 for a total proceeds of US $410,256.38 on February 5, 2018. Part of this total proceeds of $199,967 was collected and deposited by the Company in the reporting period ended December 31, 2017 and was recorded as current liabilities. Upon the issuance of these new shares the current liabilities were reduced by the same amount for this reporting period. The proceeds were used for the repayment of the short-term loan and some of the shareholder's personal loan to the Company and fund for operations.

COLORSTARS GROUP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1213 - Subsequent Events

The Company evaluated all events subsequent to March 31, 20172018 through the date of the issuance of the financial statements, there are no no other significant or material transactions to be reported except as follows:

On October 5, 2017,September 17, 2018, the U.S. Securities and Exchange Commission (“Commission”) announced the temporary suspension of trading in the securities of the Company, completedcommencing at 9:30 a.m. EDT on September 18, 2018 and terminating at 11:59 p.m. EDT on October 1, 2018. The Commission temporarily suspended trading in the salesecurities of the Company due to a totallack of 12,825,625 sharescurrent and accurate information about the Company because it has not filed certain periodic reports with the Commission. This order was entered pursuant to Section 12(k) of Company common stockthe Securities Exchange Act of 1934 (“Exchange Act”) and was accompanied by an Order Instituting Administrative Proceedings and Note of Hearing pursuant to 13 investors at a price per shareSection 12(j) of US $0.0264the Exchange Act. The stated purpose of the order and hearing is for the Commission to determine whether it is necessary and appropriate to continue the suspension in the trading of the securities of the Company for a totalperiod not exceeding twelve months, or to revoke the registration of US $337,961.13 in proceedsthe Company’s securities pursuant to Section 12 of the Company.Exchange Act.

On November 13, 2017, the Company completed the sale of a total of 10,000,000 shares of Company common stock to 11 investors at a price per share of US $0.033 for a total of US $330,000 in proceeds to the Company.

On February 5,October 18, 2018, the Company completedhad a pre-hearing telephone conference with the sale of a total of 12,000,000 shares ofCommission regarding the Proceeding. During the pre-hearing conference, it was agreed that the Commission’s motion for summary disposition against the Company common stockwould be due on November 15, 2018; the Company’s opposition brief would be due on December 13, 2018; and that the Commission’s reply brief would be due on December 20, 2018. The Commission has offered the Company the alternative to 23 investors at a price per share of US $0.034188 for a total of US $410,256.38 in proceedsconsent to the Company.revocation of the registration of the Company’s securities pursuant to Section 12 of the Exchange Act to avoid the time and cost associated with contesting the Proceeding. If the Company were to consent to the revocation of its registration, the Company would then need to file a registration statement (with two years of audited financials) with the Commission and cause that registration statement to become effective in order to reinstate the registration of the Company’s securities. It is the Company’s understanding from the pre-hearing conference with the Commission that the only remedy the Commission has for delinquent filers such as the Company, even if the filer becomes current by the date of the hearing, is the revocation of the registration of the Company’s securities pursuant to Section 12 of the Exchange Act. Therefore, the Company cannot provide any assurances that it will be able to avoid the revocation of the registration of the Company’s securities pursuant to Section 12 of the Exchange Act due to the Company becoming delinquent in its filings. If the registration of the Company’s securities is revoked, the Company intends to file a registration statement with the Commission to reinstate the registration of the Company’s securities. The Company cannot provide any assurances as to the timing of the filing and effectiveness of such a registration statement.

On February 14,November 10, 2018, Ms. Chiu Mei-YingMr. Hsui-Fu Liu resigned as a Director and the Secretary of the Company. Her resignations wereCompany . His resignation was not the result of any disagreements with the Company. Effective February 21,

On November 29, 2018, the remaining two directors on the Board of Directors of the Company appointed Mr. Wilson ChenMichael Chung to the Board of Directors to fill the vacancy created by the resignation of Ms. Chiu Mei-Ying.Mr. Liu Hsiu-Fu.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Forward Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes”, “project”, “expects”, “anticipates”, “estimates”, “intends”, “strategy”, “plan”, “may”, “will”, “would”, “will be”, “will continue”, “will likely result”, and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

(a)Business Overview.

ColorStars Group (“we”, “us”, “our”, the “Company”) was initially incorporated in the Province of Ontario, Canada on January 21, 2005. On November 3, 2005, we converted to a Nevada corporation. We arehave historically operated as a vertically integrated lighting company that develops light emitting diodes (“LED”) based lighting products for general consumer applications as well as LED lighting products for professional lighting installations. Our LED lighting application development activity rangeshas historically ranged from LED packaging to optical lens and heat management, from retrofit LED lamps and bulbs to lighting fixtures designed for general and special lighting applications. TheDue to evironmental changes in 2018 adversely affecting the LED lighting market, in 2018 the Company intendsbegan to phase out of the LED lighting market and change its business model into a holding company due to environmental changes in 2018 adversely affecting the LED lighting market. The Company’s business model commencing in 2018 is to acquire various operatingand operate other companies. There is no assurance that the Company will be able to acquire any operating companies.

(b)Significant Business Transactions Overview.

On July 24, 2005, we entered into an acquisition agreement with ColorStars, Inc., a Taiwanese corporation (“ColorStars Taiwan”), pursuant to which, on February 14, 2006, the shareholders of ColorStars Taiwan were issued shares of our Company in exchange for their shares of ColorStars Taiwan. This resulted in ColorStars Taiwan becoming a wholly owned subsidiary of the Company. Specifically, for each share of common stock outstanding of ColorStars Taiwan (1,500,000 shares of ColorStars Taiwan were issued and outstanding at such time), 20 shares of our common stock were issued in exchange for each such share (the aggregate of 30,000,000 shares of our common stock).

On March 20, 2009, ColorStars Taiwan acquired 50.4% of the outstanding common shares of Fin-Core Corporation, a Taiwanese corporation (“Fin-Core”) for a cash consideration of US $468,262. This resulted in Fin-Core becoming a subsidiary of ours. The purchase price for the common shares of Fin-Core was determined through private negotiations between the parties and was not based upon any specific criteria of value. Fin-Core is principally engaged in the design and manufacturing of thermal management devices, the design and manufacturing of electrical and lighting devices and trade, and the import and export of electrical and lighting devices.

On July 7, 2010, ColorStars Taiwan sold 30.4% of its common shares of Fin-Core to Meiloon Industrial Co., Ltd., a publicly traded company on the Taiwan Stock Exchange, for a cash offering of US $429,000. As a result of this transaction, ColorStars Taiwan owned only 20% of the outstanding common shares of Fin-Core.

On August 5, 2009, ColorStars Taiwan acquired a 51% equity interest in Jun Yee Industrial Co., Ltd., a Taiwanese corporation (“Jun Yee”) for a cash consideration of US $536,000. The purchase price for the equity interest in Jun Yee was determined through private negotiations between the parties and was not based upon any specific criteria of value. Upon acquiring the equity interest, Jun Yee became a subsidiary of ours. The principal activity of Jun Yee is the manufacturing of LED light.

On November 26, 2010, ColorStars Taiwan entered into two related stock purchase agreements whereby ColorStars Taiwan sold all of its shares of Jun Yee common stock to Mr. Ming-Chun Tung and Ms. Ming-Fong Tung. Pursuant to the stock purchase agreement entered into with Mr. Ming-Chun Tung, ColorStars Taiwan sold 265,000 shares of its Jun Yee common stock to Mr. Ming-Chun Tung at a price per share of NTD $23 (USD $0.76) for a total purchase price of NTD $6,095,000 (USD $200,427). Furthermore, pursuant to the stock purchase agreement entered into with Ms. Ming-Fong Tung, ColorStars Taiwan sold 500,000 shares of its Jun Yee common stock to Ms. Ming-Fong Tung at a price per share of NTD $23 (USD $0.76) for a total purchase price of NTD $11,500,000 (USD $378,165). As a result of the transactions consummated above, Jun Yee is no longer our subsidiary.

In October 2011, Fin-Core decided to increase its capital by issuing 3,000,000 new shares at par value of NTD10 per share. The Company was entitled to subscribe for up to 600,000 shares for NTD 6,000,000. However, the Company chose not to participate in the subscription of any newly issued shares of Fin-Core. As a result, on November 4, 2011, the Company’s equity interest in Fin-Core decreased to 11.43% from 20% after issuance of 3,000,000 new shares.

On Dec. 20, 2012, Fin-Core Corporation decreased its total shares from 7,000,000 to 500,000. The Company’s invested cost and percentage of shareholding were unchanged after the share consolidation. The Company held 57,143 shares in Fin-Core after the consolidation.

On December 28, 2012, Fin-Core increased its total shares to 1,100,000 shares with a new capital injection. The Company decided to not participate in the new share subscription and kept its total shares at 57,143. As a result, on December 31, 2012, the Company’s equity interest in Fin-Core decreased to 5.19%. As a result of the consolidation and subsequent increase in outstanding shares, Fin-Core is no longer deemed our subsidiary.

In 2004, ColorStars, Inc. based in Taiwan acquired 20% of the outstanding common shares of Anteya Technology Corporation. Anteya provides the OEM service to us for the TRISTAR, EZSTAR, R4, LUXMAN, and HB series of product lines. On August 16, 2012, Anteya increased its share capital from 5,000,000 shares to 6,500,000 shares, and we subscribed for 300,000 additional shares at par value. The Company now holds a total of 1,300,000 shares in Anteya representing a total investment of NTD $27,304,000 (USD $910,492). The Company did not subscribe additional shares in Anteya when Anteya increased its outstanding shares from 6,500,000 shares to 9,500,000 shares. As a result, the Company’s equity position in Anteya decreased from 20% to 13.68% as of June 30, 2016.

On October 13, 2008 we acquired 2,800 shares in a German company, Phocos AG. On May 27, 2013, the Company sold its 2,800 shares of Phocos AG to MUUS Horizen Fund 1, LP for $30 EU per share ($84,000 EU in total). The Company has no remaining stake in Phocos AG.

(c)Material Transactions During the Reporting Period.

None.

Results of Operations

Comparison of Three Months Ended March 31, 20172018 to Three Months Ended March 31, 20162017

Net Sales.Net sales decreased to $1,185 for the three months ended March 31, 2018, from $16,328 for the three months ended March 31, 2017, from $122,009 for the three months ended March 31, 2016.2017. The decrease in sales was due to global competition and lack of new products launching this period.

Cost of Goods Sold.Cost of goods sold decreased to $597 for the three months ended March 31, 2018, from $12,562 for the three months ended March 31, 2017 from $82,051 for the three months ended March 31, 2016.2017. The decrease in cost of goods sold was primarily due to the decrease in overalllack of sales.

Gross Profit.Gross profit decreased to $588 for the three months ended March 31, 2018, from $3,766 for the three months ended March 31, 2017 from $39,958 for the three months ended March 31, 2016.2017. The decrease in gross profit was primarily due to decrease in overallthe lack of sales.

Gross Profit Percentage.Gross profit percentage decreasedincreased to 23.06%49.6% for the three months ended March 31, 20172018, from 32.75%23.1% for the three months ended March 31, 2016.2017. The decreaseincrease in gross profit percentage was primarily due to lowerhigh margin in the sales of old product lines from the inventory.items sold for smaller quantities.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreasedincreased to $36,608 for the three months ended March 31, 2018, from $36,308 for the three months ended March 31, 2017 from $72,815 for the three months ended March 31, 2016.2017. The decreaseis only minor increase in selling, general and administrative expenses as the activities for the period is primarily related to closing the California sales office.very similar.

Research and Development Expenses. Research and development (R&D) expenses remained constant atwere $0 for the three months ended March 31, 2017 as compared to2018, from $0 for the three months ended March 31, 2016.2017. The lack of research and development expenditure was due to overall lack of profitability.

Depreciation and Amortization.Depreciation and amortization decreased to $470 for the three months ended March 31, 2018, from $2,057 for the three months ended March 31, 2017 from $8,481 for the three months ended March 31, 2016.2017.. The decrease in depreciation and amortization was mainly due to some assets were of end of life value for the decrease of asset values over time.period.

Interest Expense. Interest expense increased to $5,090($11,364) for the three months ended March 31, 20172018, from $2,272$(5,090) for the three months ended March 31, 2016.2017. The increase in interest expense was due to increase in long term loan and loss from froeign exchange fluctuation.full repayment of the long-term loan.

Net Income (loss). For the three months ended March 31, 2017,2018, we incurred a net loss of $(49,248)$(67,411) as compared to a net loss of $(2,220)$(49,248) for the three months ended March 31, 2016.2017. The decrease in net loss was primarily a result of less revenue for the period along with the profit margin not being enough to cover the operating cost.lack of total sales and increase in interest expense and loss in foreign exchange.

Financial Condition, Liquidity and Capital Resources

Our historical revenues are primarily derived from the sale of LED devices and systems. Although our historical financial results are mainly dependent on sales, general and administrative, compensation and other operating expenses, our financial results have also been dependent on the level of market adoption of LED technology as well as general economic conditions. As the LED lighting business has become very competitive, during 2017 the Company began planninghas been seeking for a transformation into a holding company to seek investment opportunities in other business lines.lines or investment opportunities.

Net cash provided by (used in) operating activities.During the three months ended March 31, 2017,2018, net cash used inby operating activities was ($66,175)$(249,607) compared with $(36,919)$(66,175) used in operating activities for the three months ended March 31, 2016.2017. The cash flow used by operating activities in the three months ended March 31, 2018 was primarily the repayment of the long-term loan and interest, and the net loss in operations. The cash flow used in operating activities in the three months ended March 31, 2017 was primarily the result of loss in operations. The cash flow used in operating activities in the three months ended March 31, 2016 was primarily the result of the Company’s increase in accounts payable payments and operating net loss.

Net cash provided by (used in) financing activities. During the three months ended March 31, 2017,2018, net cash provided by financing activities was $60,958$261,232 compared with $30,000$60,958 provided by investing activities for the three months ended March 31, 2016.2017. The cash flow provided by financing activities in the three months ended March 31, 2018 was primarily the proceeds from issuance of new shares. The cash flow provided by financing activities in the three months ended March 31, 2017 was primarily from the advance of shareholders.

The Company needneeds to raise additional capital from external sources or from shareholder loans to support its operation. There is no assurance that the Company will be able to obtain funding with acceptable terms.

We currently have an outstanding short-term loan with Bank SinoPac of Taiwan. We entered into one written, short-term loan agreements with this bank on February 25, 2015. The loan is secured by real property of Tsui-Ling Lee, spouse of Wei-Rur Chen, our president and CEO. The terms of the loan agreement are described in further detail in the chart below:

Recent Developments

There are no recent developments to report.

Inflation

At this time, we do not believe that inflation and changes in price will have a material effect on operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Related Party Transactions

The Company leases office space from Mr. Wei-Rur Chen. The Company leases office space from Mr. Wei-Rur Chen which the term for the agreement is from November 2015Please refer to November 2020 with amount rent of $45,000. Rent payments were $11,460 and $10,842 for the three months ended March 31, 2017 and 2016, respectively. Mr. Wei-Rur Chen owns one hundred percent (100%) interestNote 10 in the lease agreement. Mr. Wei-Rur Chen is the President, Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of the Company, as well as beneficial owner of more than five percent (5%) of the Company’s common stock.

The Company also conducted business with aStatement protion above for all related party company Anteya Technology Corp. The Company owns 13.68% of the outstanding common stock of Anteya Technology Corp as of March 31, 2017. All transactions were at market-based prices.transactions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As we are a smaller reporting company, we are not required to provide the information required by this item.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures.

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. As required by exchange Act Rule 13a-15(b), as of the end of the period covered by this report, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of that date.

Changes in internal control over financial reporting.

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

There are no legal proceedings that have occurred within the past five years concerning our directors or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or finding of securities or commodities law violations.

Item 1A. Risk Factors.

As we are a smaller reporting company, we are not required to provide the information required by this item.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

(a)Unregistered Sales of Equity Securities.

None.

(b)Use of Proceeds.

Not applicable.

(c)Purchases by the Issuer and Affiliated Purchasers of Equity Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

INDEX TO EXHIBITS

SIGNATURES

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