UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934
For the transition period from__________ to __________
Commission file number: 333-189414
UA GRANITE CORPORATION
(Exact name of registrant as specified in its charter)
| Nevada | 80-0899451 | |
| (State or other jurisdiction | (I.R.S. Employer Identification No.) | |
| of incorporation or organization) |
| 31C Principal Torre Alta, San Felipe, Puerto Plata, Dominican Republic EH009E3 |
| (Address of principal executive offices and zip code) |
| (809) 223-2353 |
| (Registrant's telephone number, including area code) |
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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 | | Accelerated filer | | Non-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
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
| Class | Outstanding at February 20, 2018 | |
| Common stock, $0.00001 par value | 5,650,000 |
UA Granite Corporation
Form 10-Q
For the Quarterly Period Ended September 30, 2017
INDEX
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| 4 | ||
| 5 | ||
| 7 | ||
| 7 | ||
| PART II – OTHER INFORMATION | ||
| 9 | ||
| 9 | ||
| 9 | ||
| 9 | ||
| 9 | ||
| 9 | ||
| 9 | ||
| 10 | ||
2
FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "believe," "estimate," "anticipate," "intend," "continue," or similar terms, variations of such terms or the negative of such terms. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth in our Annual Report on Form 10-K filed on July 13, 2017.
As used in this Form 10-Q, "we," "us," and "our" refer to UA Granite Corporation, a Nevada corporation, which is also sometimes referred to as the "Company" herein.
YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING
STATEMENTS
The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents incorporated by reference, completely and with the understanding that our actual future results may be materially different from what we expect or hope.
3
PART I. FINANCIAL INFORMATION
UA GRANITE CORPORATION
FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2017
4
UA GRANITE CORPORATION
FINANCIAL STATEMENTS
TABLE OF CONTENTS
SEPTEMBER 30, 2017
| F - 2 | |
| F - 3 | |
| F - 4 | |
| F - 5 | |
| F – 6 |
F-1
UA Granite Corporation
September 30, 2017 and March 31, 2017
(unaudited)
| September 30, 2017 | March 31, 2017 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 0 | $ | 0 | ||||
| Total Assets | $ | 0 | $ | 0 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable and Accrued Liabilities | 42,334 | 592 | ||||||
| Accounts Payable - Related Party | 37,970 | 37,970 | ||||||
| Due to Directors | 20,173 | 14,923 | ||||||
| Total Liabilities | 100,477 | 53,485 | ||||||
| Stockholders' Equity (Deficit) | ||||||||
| Common Stock (75,000,000 shares authorized, par value 0.00001) 5,650,000 and 5,650,000 shares issued and outstanding) at September 30, 2017 and March 31, 2017, respectively | 57 | 57 | ||||||
| Additional Paid in Capital | 34,166 | 31,963 | ||||||
| Accumulated deficit | (134,700 | ) | (85,505 | ) | ||||
| Total Stockholders' Equity (Deficit) | (100,477 | ) | (53,485 | ) | ||||
| Total Liabilities and Stockholders'Equity (Deficit) | $ | 0 | $ | 0 | ||||
(The Accompanying Notes are an Integral Part of These Financial Statements)
F-2
UA Granite Corporation
For the Three and Six Month Periods Ended September 30, 2017 and 2016
(unaudited)
Three Month Period Ended September 30, 2017 | Six Month Period Ended September 30, 2017 | Three Month Period Ended September 30, 2016 | Six Month Period Ended September 30, 2016 | |||||||||||||
| Operating Expenses | ||||||||||||||||
Legal and accounting | $ | 41,134 | $ | 42,792 | $ | 2,966 | $ | 4,216 | ||||||||
Consulting | - | - | 2,400 | 3,590 | ||||||||||||
General and administrative | 1,200 | 4,200 | 2,730 | 5,869 | ||||||||||||
Total Operating Expenses | 42,334 | 46,992 | 8,096 | 13,675 | ||||||||||||
| Other Expense | ||||||||||||||||
| Imputed interest expense | 1,160 | 2,203 | 770 | 1,537 | ||||||||||||
Net Loss | $ | (43,494 | ) | $ | (49,195 | ) | $ | (8,866 | ) | $ | (15,212 | ) | ||||
Net Loss Per Common Share – Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted Average Number of Common Shares Outstanding | 5,650,000 | 5,650,000 | 5,650,000 | 5,650,000 | ||||||||||||
(The Accompanying Notes are an Integral Part of These Financial Statements)
F-3
UA Granite Corporation
For the Six Month Periods Ended September 30, 2017 and 2016
(unaudited)
Six Month Period Ended September 30, 2017 | Six Month Period Ended September 30, 2016 | ||||||||
| Operating Activities | |||||||||
| Net loss | $ | (49,195 | ) | $ | (15,212 | ) | |||
| Adjustment to reconcile net loss to net cash used by operating activities: | |||||||||
| Imputed interest | 2,203 | 1,537 | |||||||
| Changes in operating assets and liabilities: | |||||||||
| Accounts payable and accrued liabilities | 41,742 | 857 | |||||||
| Net Cash Used in Operating Activities | (5,250 | ) | (12,818 | ) | |||||
| Financing Activities | |||||||||
| Proceeds from related parties | - | 12,485 | |||||||
| Proceeds from director | 5,250 | 900 | |||||||
| Net Cash Provided by Financing Activities | 5,250 | 13,385 | |||||||
| Increase (Decrease) in Cash | - | 567 | |||||||
| Cash - Beginning of Period | - | 95 | |||||||
| Cash - End of Period | $ | 0 | $ | 662 | |||||
| Supplemental Disclosure of Cash Flow information | |||||||||
| Interest | $ | - | $ | - | |||||
| Income taxes | $ | - | $ | - | |||||
(The Accompanying Notes are an Integral Part of These Financial Statements)
F-4
UA Granite Corporation
From March 31, 2016 to September 30, 2017
(unaudited)
| Common Stock | Additional Paid | Accumulated | ||||||||||||||||||
| Shares | Amount | in Capital | Deficit | Total | ||||||||||||||||
| Balances at March 31, 2016 | 5,650,000 | $ | 57 | $ | 28,470 | $ | (65,095 | ) | $ | (36,568 | ) | |||||||||
| Imputed interest | - | - | 3,493 | - | 3,493 | |||||||||||||||
| Net loss | - | - | - | (20,410 | ) | (20,410 | ) | |||||||||||||
| Balances at March 31, 2017 | 5,650,000 | $ | 57 | $ | 31,963 | $ | (85,505 | ) | $ | (53,485 | ) | |||||||||
| Imputed interest | - | - | 2,203 | - | 2,203 | |||||||||||||||
| Net loss | - | - | - | (49,195 | ) | (49,195 | ) | |||||||||||||
| Balances at September 30, 2017 | 5,650,000 | $ | 57 | $ | 34,166 | $ | (134,700 | ) | $ | (100,477 | ) | |||||||||
(The Accompanying Notes are an Integral Part of These Financial Statements)
F-5
UA Granite Corporation
September 30, 2017
(unaudited)
NOTE 1 – NATURE OF OPERATIONS
DESCRIPTION OF BUSINESS AND HISTORY
UA Granite Corporation (the "Company") was incorporated on February 14, 2013 in the State of Nevada.
The Company does not have any revenues and has incurred losses since inception. Currently, the Company has no operations, has been issued a going concern opinion and relies upon the sale of our securities and loans from its sole officer and director to fund operations.
GOING CONCERN
These financial statements have been prepared on a going concern basis, which implies the Company will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and 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. As at September 30, 2017 the Company has a working capital deficiency, has not generated revenues and has accumulated losses since inception. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company's fiscal year-end is March 31.
USE OF ESTIMATES
The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us differ materially and adversely from our estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.
F-6
UA Granite Corporation
Notes to the Financial Statements
September 30, 2017
(unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with original maturities of three months or less when acquired, to be cash equivalents. We had no cash equivalents at September 30, 2017 or March 31, 2017.
INCOME TAXES
The Company accounts for income taxes under the provisions issued by the FASB which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company computes tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
LOSS PER COMMON SHARE
The Company reports net loss per share in accordance with provisions of the FASB. The provisions require dual presentation of basic and diluted loss per share. Basic net loss per share excludes the impact of common stock equivalents. Diluted net loss per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of September 30, 2017 and March 31, 2017, there were no common stock equivalents outstanding.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Pursuant to ASC No. 820, "Fair Value Measurements and Disclosures", the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of September 30, 2017. The Company's financial instruments consist of cash. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.
F-7
UA Granite Corporation
Notes to the Financial Statements
September 30, 2017
(unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued
RECENTLY ISSUED ACCOUNTING STANDARDS
| a) | Recently Adopted Accounting Standards |
In June 2014, ASU guidance was issued to resolve the diversity of practice relating to the accounting for stock based performance awards that the performance target could be achieved after the employee completes the required service period. The update is effective prospectively or retrospectively for annual reporting periods beginning after December 15, 2015.
The adoption of the pronouncement did not have a material effect on the Company's consolidated financial statements.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. This ASU was effective for annual periods beginning after December 15, 2014. Early adoption is permitted. Accordingly, we have elected to adopt ASU No. 2014-10 on April 1, 2015.
| b) | Recent Accounting Pronouncements |
In May 2014, ASU guidance was issued related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods and is to be retrospectively applied. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.
In January 2015, an ASU was issued to simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. This ASU is effective for annual periods beginning after December 15, 2015, including interim periods within those annual periods. An entity may apply this ASU prospectively or retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company does not expect the amendments in this ASU to have any impact on its financial statements.
F-8
UA Granite Corporation
Notes to the Financial Statements
September 30, 2017
(unaudited)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued
RECENTLY ISSUED ACCOUNTING STANDARDS – Continued
In November 2015, an ASU was issued to simplify the presentation of deferred income taxes. The amendments in this ASU require that deferred tax liabilities and assets be classified as non-current in a classified balance sheet as compared to the current requirements to separate deferred tax liabilities and assets into current and non-current amounts. This ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Earlier application is permitted. This ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company is currently evaluating this guidance and the impact it will have on its financial statements.
In February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. Earlier application is permitted. The Company is currently evaluating this guidance and the impact it will have on its financial statements.
In March 2016, an ASU was issued to reduce complexity in the accounting for employee share-based payment transactions. One of the simplifications relates to forfeitures of awards. Under current GAAP, an entity estimates the number of awards for which the requisite service period is expected to be rendered and base the accruals of compensation cost on the estimated number of awards that will vest. This ASU permits an entity to make an entity-wide accounting policy election either to estimate the number of forfeitures expected to occur or to account for forfeitures in compensation cost when they occur. This ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Earlier application is permitted. The Company is currently evaluating this guidance and the impact it will have on its financial statements.
F-9
UA Granite Corporation
Notes to the Financial Statements
September 30, 2017
(unaudited)
NOTE 3 -INCOME TAXES
Deferred income taxes arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The company does not have any uncertain tax positions.
The Company currently has net operating loss carry forwards aggregating $134,700 (2017: $85,505), which expire through 2030. The deferred tax asset related to the carry forwards has been fully reserved.
The Company has deferred income tax assets, which have been fully reserved, as follows as of September 30, 2017:
| Sep 30, 2017 | Mar 31, 2017 | |||||||
| Deferred tax assets | $ | 43,927 | $ | 27,884 | ||||
| Valuation allowance for deferred tax assets | (43,927 | ) | $ | (27,884 | ) | |||
| Net deferred tax assets | $ | - | - | |||||
F-10
UA Granite Corporation
Notes to the Financial Statements
September 30, 2017
(unaudited)
NOTE 4 – FAIR VALUE MEASUREMENTS
The Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
| • | Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
| • | Level 2 | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| • | Level 3 | Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and July include the Company's own data.) |
The following presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2017 and March 31, 2017:
Level 1: None
Level 2: None
Level 3: None
Total Gain (Losses): None
F-11
UA Granite Corporation
Notes to the Financial Statements
September 30, 2017
(unaudited)
NOTE 5 - RELATED PARTY TRANSACTIONS
A director has advanced funds to us for our legal, audit, filing fees, general office administration and cash needs. As of September 30, 2017, the director has advanced a total of $20,173. The advances are without specific terms of repayment. Imputed interest of $402 and $271 was charged to additional paid in capital during the three month period ended September 30, 2017 and September 30, 2016, respectively.
A related entity has advanced funds to us for our legal, audit, filing fees, general office administration and cash needs. As of September 30, 2017, the related entity has advanced a total of $37,970. The advances are without specific terms of repayment. Imputed interest of $757 was charged to additional paid in capital during the three month period ended September 30, 2017.
NOTE 6 - COMMON STOCK
On February 14, 2013, the Company issued 5,000,000 common shares to Myroslav Tsapaliuk, the
founder of the Company.
On December 12, 2013, the Company issued 650,000 common shares in a registered offering to
subscribers for total proceeds of $26,001.
As of September 30, 2017, the Company has issued 5,650,000 common shares.
NOTE 7 – 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 events to disclose.
F-12
The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.
Overview
We were incorporated in the State of Nevada on February 14, 2013, with an initial intent to engage in the business of marketing and distributing finished granite products. As a result of our lack of funding to implement our original business plan, our Board of Directors has determined it is in the best interests of the Company for us to consider other business alternatives. Accordingly, our Board of Directors has begun to analyze strategic alternatives available to our Company to allow us to continue as a going concern. Such alternatives include raising additional debt or equity financing or consummating a merger or acquisition with a partner that may involve a change in our business plan. We are currently in the process of evaluating business opportunities, and have minimal business operations.
Our Board of Directors believes that it must consider all viable strategic alternatives in order to develop a plan of operations that is in the best interests of our stockholders. Such strategic alternatives include a merger, acquisition, share exchange, asset purchase, or similar transaction in which our present management may no longer be in control of our Company and our business operations may be replaced by that of our transaction partner. We believe we would be an attractive candidate for such a business combination due to the perceived benefits of being a publicly registered company, thereby providing a transaction partner access to the public marketplace to raise capital. We can provide no assurance that we will be successful in identifying suitable business opportunities, or that we will be able to obtain adequate financing to carry out such opportunities, if and when such opportunities arise, or that we will be able to obtain adequate financing to commence business operations and generate revenues from such operations.
We are a development-stage company with no revenues and no assets. As a result, we have incurred losses since inception. Our limited operations to date have consisted of the formation of the Company, the raising of capital, and maintaining compliance with our public company reporting requirements. Our auditors have issued a going concern opinion, which means our auditors believe there is substantial doubt regarding our ability to continue as a going concern for the next twelve months. This is because we have not generated any revenues to date, and no revenues are anticipated until we are able to identify a suitable business opportunity and implement our business plan.
Our plan of operations over the next twelve months is to identify and carry out a suitable business opportunity. We will not be able to pursue any new business opportunities without obtaining additional financing to fund our ongoing operations. Our management team is actively seeking new sources of financing while also evaluating potential business opportunities. In order to maintain our corporate operations while we evaluate new business opportunities, we anticipate that we will need debt or equity financing of at least $50,000 over the next twelve months. Should we be successful in identifying a new business opportunity, we will require additional financing to evaluate and engage in such opportunity. The amount of such additional necessary financing will depend on the nature and type of opportunity identified, and is not determinable at this time.
Other than loans from stockholders, we do not believe debt financing is an attractive means of financing for our business development currently because we do not have tangible assets to secure any such debt financing at this time. Rather, we anticipate financing in the foreseeable future to be in the form of stockholder loans and equity financing from the sale of our common stock. However, we do not currently have any financing arrangements in place, and cannot provide prospective investors with any assurance that we will be able to procure sufficient financing to fund our plan of operations. Accordingly, we will require continued financial support from our stockholders and creditors until we are able to generate sufficient net cash flow from active operations on a sustained basis.
Results of Operations
During the three and six month periods ended September 30, 2017, we focused on exploring potential business opportunities and satisfying our ongoing obligations as a public reporting company.
From February 14, 2013 (the date of our inception) to September 30, 2017, we have not earned any revenues. We expect to continue to incur losses over the next twelve months, or until we are able to identify, develop and carry out a new business opportunity that enables us to generate revenues.
Comparison of Three Month Periods Ended September 30, 2017 and September 30, 2016
Our operations for the three month periods ended September 30, 2017 and September 30, 2016 can be summarized as follows:
Three Month Period Ended September 30, 2017 | Three Month Period Ended September 30, 2016 | |||||||
| Operating Expenses | ||||||||
Legal and accounting | $ | 41,134 | $ | 2,966 | ||||
Consulting | - | 2,400 | ||||||
General and administrative | 1,200 | 2,730 | ||||||
Total Operating Expenses | 42,334 | 8,096 | ||||||
| Other Expenses | ||||||||
| Imputed interest expense | 1,160 | 770 | ||||||
Net Loss | $ | (43,494 | ) | $ | (8,866 | ) | ||
5
During the three month period ended September 30, 2017, we incurred $42,334 in operating expenses compared with $8,096 in operating expenses during the three month period ended September 30, 2016. The increase/decrease in operating expenses was can be attributed to increased legal and accounting expenses.
We incurred a net loss of $43,494 for the three month period ended September 30, 2017, compared to a net loss of $8,866 for the three month period ended September 30, 2016. The increase in net loss over the comparable three month periods ended September 30, 2017 and 2016 can be attributed to the increase in operating expenses related to increased legal and accounting expenses.
Comparison of Six Month Periods Ended September 30, 2017 and September 30, 2016
Our operations for the six month periods ended September 30, 2017 and September 30, 2016 can be summarized as follows:
Six Month Period Ended September 30, 2017 | Six Month Period Ended September 30, 2016 | |||||||
| Operating Expenses | ||||||||
Legal and accounting | $ | 42,792 | $ | 4,216 | ||||
Consulting | - | 3,590 | ||||||
General and administrative | 4,200 | 5,869 | ||||||
Total Operating Expenses | 46,992 | 13,675 | ||||||
| Other Expenses | ||||||||
| Imputed interest expense | 2,203 | 1,537 | ||||||
Net Loss | $ | (49,195 | ) | $ | (15,212 | ) | ||
During the six month period ended September 30, 2017, we incurred $46,992 in operating expenses compared with $13,675 in operating expenses during the six month period ended September 30, 2016. The increase in operating expenses was can be attributed to increased legal and accounting expenses.
We incurred a net loss of $49,195 for the six month period ended September 30, 2017, compared to a net loss of $15,212 for the six month period ended September 30, 2016. The increase in net loss over the comparable six month periods ended September 30, 2017 and 2016 can be attributed to the increase in operating expenses related to increased legal and accounting expenses.
Liquidity and Capital Resources
As of September 30, 2017 and March 31, 2017, we had cash of $0 and total assets of $0.
As of September 30, 2017, we had total liabilities, or a working capital deficit, of $100,477, compared to total liabilities, or a working capital deficit, of $53,485 as of March 31, 2017. The increase in our total liabilities, or working capital deficit, is due to an increase in accounts payable and accrued liabilities, as we had limited cash flows to repay outstanding obligations as they became due.
As of September 30, 2017, our accumulated deficit was $134,700, compared to an accumulated deficit of $85,505 as of March 31, 2017.
In order to execute on our business strategy, we will require additional working capital. We require a minimum of approximately $50,000 to proceed with our plan of operations over the next twelve months. As we had cash and working capital in the amount of $0 as of September 30, 2017, we do not have sufficient working capital to enable us to carry out our operations for the next twelve months. We plan to complete private placement sales of our common stock in order to raise the funds necessary to pursue our plan of operations and to fund our working capital deficit in order to enable us to pay our accounts payable and accrued liabilities. We currently do not have any arrangements in place for the completion of any private placement financings, and there is no assurance that we will be successful in completing any private placement financings.
Any future sale of additional equity and/or debt securities will result in dilution to current stockholders. We may also seek additional loans where the incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand business operations and could harm our overall business prospects.
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Cash Used in Operating Activities
During the six month period ended September 30, 2017, we used $5,250 in cash for operating activities, compared to $12,818 in cash used for operating activities during the six month period ended September 30, 2016. The decrease in the amount of cash used for operating activities relates primarily to a decrease in cash provided by financing activities to support our ongoing operations.
Cash Used in Investing Activities
We expect to use cash for investing activities in future periods, when available. However, until we are able to identify and carry out a suitable business opportunity, we do not anticipate using cash flows in investing activities.
Cash Flows from Financing Activities
During the six month period ended September 30, 2017, we received $5,250 in cash from financing activities, compared to $13,385 in cash received from financing activities during the six month period ended September 30, 2016. The proceeds received from financing activities during the six month period ended September 30, 2017 were financings provided by management (our sole director and executive officer) to support our day-to-day activities, and the proceeds received from financing activities during the six month period ended September 30, 2016 were provided by unsecured loans from management and related parties to support our day-to-day activities.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
Critical Accounting Policies
Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 2 of the notes to our financial statements for the quarterly period ended September 30, 2017. We believe the accounting policies utilized in preparing our financial statements conform to the generally accepted accounting principles in the United States ("US GAAP").
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. We based our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. By their nature, these estimates are subject to an inherent degree of uncertainty, and actual results could differ from such estimates. The actual results experienced by our Company may differ materially and adversely from our Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
As a "smaller reporting company", we are not required to provide the information required by this Item.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported, within the time period specified in the rules and forms of the Securities and Exchange Commission (the "SEC"). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer) to allow for timely decisions regarding required disclosure.
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Our management, with the participation and under the supervision of our Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined by Rule 13a-15(e) or 15d-15(e) of the Exchange Act) as of September 30, 2017. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2017 in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our interim financial statements will not be prevented or detected on a timely basis.
In performing the above-referenced evaluation, our management identified the following material weaknesses:
| · | Lack of Appropriate Independent Oversight and Audit Committee. We do not have a formal audit committee with a financial expert, and therefore lack the board oversight role within the financial reporting process. |
| · | Failure to Segregate Duties. We rely on one individual, our sole executive officer, to fill the role of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), rather than segregating duties among two or more members of management. This results in our sole executive officer being responsible for a broad range of duties that cannot be properly reconciled under a one-person management structure. |
| · | Insufficient Accounting Resources and Lack of Formal Policies and Procedures Necessary to Adequately Review Significant Accounting Transactions. Our Company has insufficient internal accounting resources and personnel with sufficient knowledge of US GAAP rules and procedures to oversee our financial reporting and procedures. We utilize a third party independent contractor for the preparation of our financial statements. Although the financial statements and footnotes prepared by such third party independent contractor are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day-to-day operations of our Company, and may not be provided information from management on a timely basis to allow for adequate reporting and consideration of certain accounting transactions. |
Our management team will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis, and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds permit.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ending September 30, 2017 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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Not applicable.
None.
| Exhibit No. | Description | |
* Filed herewith.
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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.
| UA GRANITE CORPORATION | |||
| Date: February 21, 2018 | By: | /s/Angel Luis Reynoso Vasquez | |
| Angel Luis Reynoso Vasquez | |||
| Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | |||
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