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 December 31, 2019
¨ 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: 333-200675
STAR WEALTH GROUP INC.
(Exact name of small business issuer as specified in its charter)
Nevada
2750
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Number)
Rm 1316, 13/F, Tower A, New Mandarin Plaza
Science Museum Road,
Tsim Sha Tsui, Kowloon,
Hong Kong.
(Address of principal executive offices)
+852 6519 7111
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange 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,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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 ☐
As of April 20, 2020, there were 7,234,465 shares of common stock, $0.0001 par value per share, outstanding.
Star Wealth Group Inc. (“we” or the “Company”) was incorporated in the State of Nevada on February 26, 2014 under the name Terafox Corp. On December 13, 2017, we changed our name to Star Wealth Group Inc. From inception until first fiscal quarter of 2015, the Company’s principal business consisted of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, and plastic, using an automated industrial flatbed printing machine. Effective March 16, 2015, a change of control occurred with respect to the Company and the Company ceased its operations. Consequently, the Company is a shell company seeking to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders.
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of December 31, 2019 and the results of operations and cash flows for the three months then ended. The results of operations for the three months ended December 31, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the audited financial statements and related notes thereto included in the Company’s Form 10-K for the years ended September 30, 2019 and 2018 filed with the SEC on January 3, 2020.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company currently has no business or recurring income which raises substantial doubt about its ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company’s ability to merge with or acquire an entity with profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.
The extent of the impact of the Coronavirus (“COVID-19”) outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions, and the impact of COVID-19 on the overall economy, all of which are highly uncertain and cannot be predicted. If the overall economy is impacted for an extended period, the Company’s future operating results may be materially adversely affected.
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Basis of presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The Company has adopted a September 30 fiscal year end.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had no cash balances at December 31, 2019 or September 30, 2019.
Fair Value of Financial Instruments
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Accounting Standards Codification (“ASC”) 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs which reflect a reporting entity’s own assumptions about the assumptions that market participants would use for pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
As of December 31, 2019 and September 30, 2019, the Company’s financial instruments consisted of prepaid expenses, accounts payable, and loans due to related parties. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There were no such common stock equivalents outstanding during the three months ended December 31, 2019 or 2018.
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued, but not yet effective, accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 4 – PREPAID EXPENSES
The outstanding balance of prepaid expenses related to the OTCQB annual membership that was prepaid for the period of January 1, 2019 to December 31, 2020. As of December 31, 2019 and September 30, 2019, the balance of prepaid expenses was $8,000 and $11,000, respectively.
NOTE 5 – LOANS FROM RELATED PARTIES
Principal Shareholder
During the three months ended December 31, 2019 and 2018, the Company’s current principal shareholder and a Company affiliated with the Company’s current principal shareholder advanced a total of $0 and $11,100, respectively, to provide working capital for the Company. The loans were unsecured, non-interest bearing and due on demand.
The total balance due under the loans as of December 31, 2019 and September 30, 2019 was $49,484.
NOTE 6 – COMMON STOCK
Common Stock
The Company has 75,000,000, $0.001 par value shares of common stock authorized and 49,248,800 shares issued and outstanding at December 31, 2019 and September 30, 2019. There were no common stock transactions during the three months ended December 31, 2019 or 2018.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Legal
We were not subject to any legal proceedings during the three months ended December 31, 2018 and none are threatened or pending to the best our knowledge and belief.
NOTE 8 – SUBSEQUENT EVENTS
The Company evaluated subsequent events from December 31, 2019 through the date the financial statements were issued. There have been no subsequent events after December 31, 2019 for which disclosure is required.
Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
GENERAL
We were incorporated in the State of Nevada on February 26, 2014 under the name Terafox Corp. On December 13, 2017, we changed our name to Star Wealth Group Inc. From inception until first fiscal quarter of 2015, the Company’s principal business consisted of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, and plastic, using an automated industrial flatbed printing machine. Effective March 16, 2015, a change of control occurred with respect to the Company and the company ceased its operations.
Consequently, the Company is now a shell company seeking to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders.
RESULTS OF OPERATIONS
Three Months Ended December 31, 2019 Compared To The Three Months Ended December 31, 2018
During the three months ended December 31, 2019 and December 31, 2018, we did not have any revenue from operations. During the three months ended December 31, 2019, we incurred operating expenses, consisting of professional fees and general and administrative expenses in the amount of $4,180, compared to $16,111 incurred during the three months ended December 31, 2018. The reduction was primarily related to a decrease in general and administrative expenses inured in the current year, including professional fees related to the Company’s public filings.
During the three months ended December 31, 2019, we recorded a net loss of $4,180 compared with net loss of $16,111 for the three months ended December 31, 2018. The difference is due to the reasons discussed above.
As of December 31, 2019, our working capital deficit was $44,003 compared with a working capital deficit of $39,823 as at September 30, 2019.
There were 49,248,800 shares of common stock issued and outstanding as of December 31, 2019 and September 30, 2019, respectively.
CASH FLOWS
The following is a summary of the Company’s cash flows provided by (used in) operating, investing, and financing activities for the three months ended December 31, 2019 and 2018:
Three Months
Ended December 31, 2019
Three Months
Ended December 31, 2018
Net Cash Used in Operating Activities
$
-
$
(11,100
)
Net Cash Used in Investing Activities
-
-
Net Cash Provided in Financing Activities
-
11,100
Net Change in Cash
$
-
$
-
Operating Activities
During the three months ended December 31, 2019, the Company incurred a net loss of $4,180 which, after adjusting for a decrease in prepaid expenses of $3,000 and an increase in accounts payable of $1,180, resulted in net cash of $0 being used in operating activities during the period. By comparison, during the three months ended December 31, 2018, the Company incurred a net loss of $16,111 which, after adjusting for a decrease in prepayments of $5,561 and a decrease in accounts payable of $550, resulted in net cash of $11,100 being used in operating activities during the period.
Investing Activities
The Company neither generated nor used funds in investing activities during the three months ended December 31, 2019 or 2018.
Financing Activities
During the three months ended December 31, 2019, the Company had no financing activities. By comparison, during the three months ended December 31, 2018, the Company received $11,100 by way of advances from a related party entity.
The Company is dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. No assurances can be given that the Company will be successful in locating or negotiating with any target company or that the related parties will continue to fund the Company’s working capital needs. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company currently has no assets, no business or recurring income which raises substantial doubt about its ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company’s ability to merger with or acquire an entity with profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that this series of events will be satisfactorily completed.
The extent of the impact of the Coronavirus ("COVID-19") outbreak on the financial performance of the Company will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions, and the impact of COVID-19 on the overall economy, all of which are highly uncertain and cannot be predicted. If the overall economy is impacted for an extended period, the Company’s future operating results may be materially adversely affected.
OFF-BALANCE SHEET ARANGEMENTS
As of the date of this Quarterly Report, we do not have 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 that are material to investors.
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2019. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Control over Financial Reporting
Management also confirmed that there was no change in our internal control over financial reporting during the three-month period ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
We know of no material, existing or pending legal proceedings against our Company, 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 interest.
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.
STAR WEALTH GROUP INC.
Date: April 21, 2020
By:
/s/ Bum Chul Kim
Name:
Bum Chul Kim
Title:
Chief Executive Officer and
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
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