UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2021
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___ to ___
Commission file number: 000-33399
NOVA STAR INNOVATIONS, INC.
(Exact name of registrant as specified in its charter)
Wyoming (State or other jurisdiction of incorporation or organization) | 90-0369457 (I.R.S. Employer Identification No.) |
2157 S. Lincoln Street, Salt Lake City, Utah (Address of principal executive offices) | 84106 (Zip Code) |
(801) 323-2395
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
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 ☐
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 ☐
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.
Large accelerated filer ☐
Non-accelerated filer ☑ | Accelerated filer ☐ Smaller reporting company ☑ Emerging growth company ☑ |
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 ☑ No ☐
The number of shares outstanding of the registrant's common stock as of August 13, 2021 was .
TABLE OF CONTENTS
| PART I - FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited) | 3 |
| Condensed Balance Sheets (Unaudited) | 4 | |
| Condensed Statements of Operations (Unaudited) | 5 | |
| Condensed Statements of Stockholders' Deficit (Unaudited) | 6 | |
| Condensed Statements of Cash Flows (Unaudited) | 7 | |
| Notes to the Unaudited Condensed Financial Statements | 8 | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 9 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 11 |
| Item 4. | Controls and Procedures | 11 |
| PART II - OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 12 |
| Item 1a. | Risk Factors | 12 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 12 |
| Item 3. | Defaults upon Senior Securities | 12 |
| Item 4. | Mine Safety Disclosures | 12 |
| Item 5. | Other Information | 12 |
| Item 6. | Exhibits | 12 |
| Signatures | 13 | |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOVA STAR INNOVATIONS, INC.
Condensed Financial Statements
June 30, 2021
(Unaudited)
| 3 |
Nova Star Innovations, Inc.
Condensed Balance Sheets
(Unaudited)
| JUNE 30, 2021 | DEC 31, 2020 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 1,365 | $ | 2,015 | ||||
| Prepaid expense | 500 | - | ||||||
| Total current assets | 1,865 | 2,015 | ||||||
| TOTAL ASSETS | $ | 1,865 | $ | 2,015 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable - related party | $ | 9,000 | $ | 6,000 | ||||
| Accounts payable | - | 500 | ||||||
| Notes payable - related party | 138,450 | 138,450 | ||||||
| Notes payable | 104,726 | 99,176 | ||||||
| Accrued interest - related party | 67,131 | 61,593 | ||||||
| Accrued interest | 60,401 | 56,369 | ||||||
| Total current liabilities | 379,708 | 362,088 | ||||||
| Total liabilities | 379,708 | 362,088 | ||||||
| STOCKHOLDERS' DEFICIT | ||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding | 18,000 | 18,000 | ||||||
| Additional paid-in capital | 9,000 | 9,000 | ||||||
| Accumulated deficit | (404,843 | ) | (387,073 | ) | ||||
| Total stockholders' deficit | (377,843 | ) | (360,073 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 1,865 | $ | 2,015 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
Nova Star Innovations, Inc.
Condensed Statements of Operations
(Unaudited)
| FOR THE THREE MONTHS ENDED JUNE 30, 2021 | FOR THE THREE MONTHS ENDED JUNE 30, 2020 | FOR THE SIX MONTHS ENDED JUNE 30, 2021 | FOR THE SIX MONTHS ENDED JUNE 30, 2020 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 2,800 | 2,700 | 8,200 | 8,200 | ||||||||||||
| Total expenses | 2,800 | 2,700 | 8,200 | 8,200 | ||||||||||||
| Loss from operations | (2,800 | ) | (2,700 | ) | (8,200 | ) | (8,200 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense - related party | (2,769 | ) | (2,599 | ) | (5,538 | ) | (5,188 | ) | ||||||||
| Interest expense | (2,048 | ) | (1,783 | ) | (4,032 | ) | (3,566 | ) | ||||||||
| Total other income (expense) | (4,817 | ) | (4,382 | ) | (9,570 | ) | (8,754 | ) | ||||||||
| Loss before income taxes | (7,617 | ) | (7,082 | ) | (17,770 | ) | (16,954 | ) | ||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net loss | $ | (7,617 | ) | $ | (7,082 | ) | $ | (17,770 | ) | $ | (16,954 | ) | ||||
| Basic and diluted net loss per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| Weighted average shares outstanding | 18,000,000 | 18,000,000 | 18,000,000 | 18,000,000 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
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| Nova Star Innovations, Inc. | ||||||||||||||||||||
| Condensed Statements of Stockholders' Deficit | ||||||||||||||||||||
| For the three and six months ended June 30, 2021 and 2020 | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Stockholders' | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance - December 31, 2019 | 18,000,000 | 18,000 | $ | 9,000 | $ | (355,537 | ) | $ | (328,537 | ) | ||||||||||
| Net loss for the quarter ended March 31, 2020 | - | - | - | (9,872 | ) | (9,872 | ) | |||||||||||||
| Balance - March 31, 2020 | 18,000,000 | 18,000 | $ | 9,000 | $ | (365,409 | ) | $ | (338,409 | ) | ||||||||||
| Net loss for the quarter ended June 30, 2020 | - | - | - | (7,082 | ) | (7,082 | ) | |||||||||||||
| Balance - June 30, 2020 | 18,000,000 | 18,000 | $ | 9,000 | $ | (372,491 | ) | $ | (345,491 | ) | ||||||||||
| Balance - December 31, 2020 | 18,000,000 | 18,000 | $ | 9,000 | $ | (387,073 | ) | $ | (360,073 | ) | ||||||||||
| Net loss for the quarter ended March 31, 2021 | - | - | - | (10,153 | ) | (10,153 | ) | |||||||||||||
| Balance - March 31, 2021 | 18,000,000 | 18,000 | $ | 9,000 | $ | (397,226 | ) | $ | (370,226 | ) | ||||||||||
| Net loss for the quarter ended June 30, 2021 | - | - | - | (7,617 | ) | (7,617 | ) | |||||||||||||
| Balance - June 30, 2021 | 18,000,000 | 18,000 | $ | 9,000 | $ | (404,843 | ) | $ | (377,843 | ) | ||||||||||
| 6 |
Nova Star Innovations, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| FOR THE SIX MONTHS ENDED JUNE 30, 2021 | FOR THE SIX MONTHS ENDED JUNE 30, 2020 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (17,770 | ) | $ | (16,954 | ) | ||
| Adjustments to reconcile net loss to cash used by operating activities: | ||||||||
| Expenses paid by related party | 3,000 | 3,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in prepaid expenses | (500 | ) | - | |||||
| Increase (decrease) in accounts payable | (500 | ) | 2,500 | |||||
| Increase in accrued interest - related party | 5,538 | 5,188 | ||||||
| Increase in accrued interest | 4,032 | 3,566 | ||||||
| Net cash used by operating activities | (6,200 | ) | (2,700 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Net cash provided (used) by investing activities | - | - | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable - related party | - | 3,000 | ||||||
| Proceeds from notes payable | 5,550 | - | ||||||
| Net cash provided by financing activities | 5,550 | 3,000 | ||||||
| Increase (decrease) in cash | (650 | ) | 300 | |||||
| Cash and cash equivalents at beginning of period | 2,015 | 315 | ||||||
| Cash and cash equivalents at end of period | $ | 1,365 | $ | 615 | ||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for Income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
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Nova Star Innovations, Inc.
Notes to the Unaudited Condensed Financial Statements
June 30, 2021
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 June 30, 2021 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, 2020 audited financial statements as reported in its Form 10-K. The results of operations for the period ended June 30, 2021 are not necessarily indicative of the operating results for the full year ended December 31, 2021.
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 six months ended June 30, 2021, a shareholder invoiced the Company $3,000 for consulting, administrative and professional services and out-of-pocket costs provided or paid on behalf of the Company. As of June 30, 2021 and December 31, 2020, the Company owed the shareholder $9,000 and $6,000, respectively.
The Company has some shareholder notes payable that bear interest at 8% and are due on demand. No advances or repayments were made during the six months ended June 30, 2021. Notes payable at June 30, 2021 and December 31, 2020 were $138,450 and $138,450, respectively. Accrued interest at June 30, 2021 and December 31, 2020 was $67,131 and $61,593, respectively.
NOTE 4 - NOTES PAYABLE
During the six months ended June 30, 2021, an unrelated party loaned the Company $5,550. The notes bear interest at 8% and are due on demand. Notes payable at June 30, 2021 and December 31, 2020 were $104,726 and $99,176, respectively. Accrued interest at June 30, 2021 and December 31, 2020 was $60,401 and $56,369, 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.
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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 complete 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.
| 9 |
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 June 30, 2021 we had cash of $1,365 compared to $2,015 cash at December 31, 2020. Our total liabilities increased to $379,708 at June 30, 2021 compared to $362,088 at December 31, 2020. The increase in total liabilities during the six-month period ended June 30, 2021 represents expenses paid by related and third parties 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 2021 or 2020. General and administrative expense for the six months ended June 30, 2021 ("2021 six-month period") was the same amount compared to the six months ended June 30, 2020 ("2020 six-month period"). We did not record a significant change in general and administrative expense for the three months ended June 30, 2021 ("2021 second quarter") compared to the three months ended June 30, 2020 ("2020 second quarter")
Total other expense increased 9.3% for the 2021 six-month period compared to the 2020 six-month period and increased 9.9% for the 2021 second quarter compared to the 2020 second quarter. Total other expense represents interest expense related to notes payable and notes payable - related party.
Our net loss increased 4.8% for the 2021 six-month period compared to the 2020 six-month period. Our net loss increased 7.6% for the 2021second quarter compared to the 2020 second quarter. Management expects net losses to continue until we acquire or merge with a business opportunity.
Commitments and Obligations
At June 30, 2021 we recorded notes payable of $104,726 and notes payable to a related party of $138,450 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 June 30, 2021 on all notes payable was $127,532.
During the six-month period ended June 30, 2021 a shareholder paid for or performed professional services totaling $3,000. At June 30, 2021, we owe the shareholder an aggregate of $9,000 in accounts payable - related party.
At June 30, 2021 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.
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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 June 30, 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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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
| No. | Description |
| 31.1 | Principal Executive Officer Certification |
| 31.2 | Principal Financial Officer Certification |
| 32.1 | Section 1350 Certification |
Part II Exhibits
| No. | Description |
| 3(i) | Wyoming Articles of Domestication of Nova Star Innovations, Inc., dated September 13, 2016 (Incorporated by reference to exhibit 3(i) to Form 10Q, filed November 3, 2016) |
| 3(ii) | Bylaws of Nova Star Innovations, Inc. Incorporated by reference to exhibit 3(ii) to Form 10Q, Filed November 3, 2016) |
| 101.INS** | XBRL Instance Document |
| 101.SCH** | XBRL Taxonomy Extension Schema Document |
| 101.CAL** | XBRL Taxonomy Calculation Linkbase Document |
| 101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB** | XBRL Taxonomy Label Linkbase Document |
| 101.PRE** | XBRL Taxonomy Presentation Linkbase Document |
** 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. | |
| 12 |
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.
Date: August 13, 2021 | NOVA STAR INNOVATIONS, INC.
By: /s/ Mark S. Clayton Mark S. Clayton President and Director Principal Financial Officer |
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