NOTES TO THE FINANCIAL STATEMENTS
July 31, 2018
(Unaudited)
NOTE 1 – ORGANIZATION AND OPERATIONS
Boxxy Inc. (the “Company”)
was incorporated in Nevada on April 19, 2017. We are a development stage company that intends to develop an online beauty sample
subscription service. We will mail this box once per month. Generally, subscriber will receive the box with 6-8 samples and
1-2 bonus items. This samples maybe cosmetics, hair care, body care, face care, fragrances, nail polish, skin care, bath and body,
treatments products, etc. We are not going to pay for the samples we are getting from our supplier partners.
NOTE 2 – RESTATEMENTS
Restatement for the year ending April
30, 2017
In preparation of current period financial
statements, the Company discovered omitted transactions on a newly opened bank account. Specifically, a deposit of $100 by the
sole director and officer of the Company and bank charges of $12 were omitted during the year ended April 30, 2017.
The correction of this issue includes recording
the $100 deposit by the sole director and officer of the Company as a Loan from director and the $12 bank charges as operating
expenses.
A summary of the changes to the financial
statements originally reported is as follows:
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Originally
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Reported
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Adjustment
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Restated
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Current assets
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Cash
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$
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–
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(a)
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88
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$
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88
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Prepaid Expense
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160
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|
|
|
|
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–
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|
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160
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Total Current Assets
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160
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88
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|
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248
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Total Assets
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160
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88
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248
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Liabilities
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Current Liabilities
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Accrued Expense
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3,500
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–
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–
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Loan from director
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11,419
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(a)
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100
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11,519
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Total Liabilities
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14,419
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100
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14,519
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Stockholders’ Deficit
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Common stock, par value $0.001; 75,000,000 shares authorized, 3,000,000 shares issued and outstanding, respectively;
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3,000
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–
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–
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Additional paid-in capital
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–
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–
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–
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Subscription receivables
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–
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–
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–
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Accumulated deficit
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(17,759
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)
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(a)
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(12
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)
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(17,771
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)
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Total Stockholders' Deficit
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(14,759
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)
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(12
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)
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(14,771
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)
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Total Liabilities and Stockholders’ Deficit
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$
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160
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88
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$
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248
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Revenues
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$
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–
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–
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$
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–
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Operating Expenses
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12,992
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(a)
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12
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13,004
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Total Operating Expenses
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12,992
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12
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13,004
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Net loss from operations
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(12,992
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)
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(12
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)
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(13,004
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)
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Provision for income taxes
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–
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–
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–
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Net Loss
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$
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(12,992
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)
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(12
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)
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$
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(13,004
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)
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______________________
(a) To record $100 deposit by the sole
director and officer of the Company as a Loan from director and the $12 bank charges as operating expenses.
NOTE 3- SIGNIFICANT AND CRITICAL ACCOUNTING
POLICIES AND PRACTICES
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 (“US GAAP”)
and are presented in US dollars.
Interim Financial Information
The unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information
and the requirements of Form 10-Q and Rule 8-03 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and disclosure required by accounting principles generally accepted in the United States
of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the
opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of
operations and cash flows for the interim periods have been included.
These consolidated financial statements
should be read in conjunction with the audited financial statements for the year ended April 30, 2018, as not all disclosures required
by generally accepted accounting principles for annual financial statements are presented. The interim consolidated financial statements
follow the same accounting policies and methods of computations as the audited financial statements for the year ended April 30,
2018.
Development Stage Company
The Company is a development stage company
as defined in ASC 915 “Development Stage Entities.”. The Company is devoting substantially all of its efforts on establishing
the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered
as part of the Company's development stage activities.
The Company has elected to adopt application
of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements. Upon adoption, the Company no longer presents or discloses inception-to-date information and other remaining disclosure
requirements of Topic 915.
Fiscal Year-End
The Company elected April 30 as its fiscal
year ending date.
Use of Estimates and Assumptions
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 of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value Measurements
The Company adopted the provisions of ASC Topic 820, “Fair
Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes
a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including
cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term
nature of these instruments.
ASC 820 defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value
hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical
assets or liabilities
Level 2 — quoted prices for similar assets and liabilities
in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example cash
flow modeling inputs based on assumptions)
The Company has no assets or liabilities valued at fair value
on a recurring basis.
Cash and Equivalents
The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.
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.
Advertising
The Company will expense its advertising when incurred. There
has been no advertising since inception.
Start-Up Costs
In accordance with ASC 720, “Start-up Costs”, the
Company expenses all costs incurred in connection with the start-up and organization of the Company.
Revenue Recognition
In 2014, the FASB issued guidance on revenue
recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize
revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step
model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts
or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction
price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance
obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect
the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the
new guidance did not require any significant change to its revenue recognition processes.
The Company’s online beauty sample
subscription services are considered to be one performance obligation; therefore, revenue is recognized when services have been
provided as each performance obligation is satisfied.
Income Taxes
Income taxes are provided in accordance with ASC No. 740, Accounting
for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting
and net operating loss carry-forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax
assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Earnings per Share
The Company has adopted ASC No. 260, “Earnings Per Share”
which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly
held common stock. Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common
shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the
Company.
Recently Issued Accounting Pronouncements
In October 2017, the FASB issued ASU No.
2017-01, Clarifying the Definition of a Business, which narrows the existing definition of a business and provides a framework
for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The ASU requires
an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable
asset or a group of similar identifiable assets; if so, the set of transferred assets and activities (collectively, the set) is
not a business. To be considered a business, the set would need to include an input and a substantive process that together significantly
contribute to the ability to create outputs. The standard also narrows the definition of outputs. The definition of a business
affects areas of accounting such as acquisitions, disposals and goodwill. Under the new guidance, fewer acquired sets are expected
to be considered businesses. This ASU is effective October 1, 2018 on a prospective basis with early adoption permitted. The adoption
of this ASU did not have a material impact to the Company’s financial statements.
In October 2017, the FASB issued ASU No.
2017-04, Simplifying the Test for Goodwill Impairment. Under the new standard, goodwill impairment would be measured as the amount
by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill. This ASU
eliminates existing guidance that requires an entity to determine goodwill impairment by calculating the implied fair value of
goodwill by hypothetically assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting
unit had been acquired in a business combination. This ASU is effective prospectively to impairment tests beginning October 1,
2020, with early adoption permitted. The Company would apply this guidance to applicable impairment tests after the adoption date.
The Company has evaluated all the recent
accounting pronouncements and determined that there are no other accounting pronouncements that will have a material effect on
the Company’s financial statements.
NOTE 4 – GOING CONCERN
The Company’s financial statements
have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization
of assets, and liquidation of liabilities in the normal course of business.
As reflected in the financial statements,
the Company had an accumulated deficit of $49,622 and working capital deficit of $12,114 at July 31, 2018.
The Company is attempting to commence operations
and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support the Company’s
daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes
in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional
funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the
Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional
funds by way of a public or private offering.
The financial statements do not include
any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 5 – LOAN FROM DIRECTOR
The Company has received capital from the
director of the Company to pay for the Company expenses that are unsecured, non-interest bearing and due on demand. The outstanding
amounts were $10,619 and $10,619 as of July 31, 2018 and April 30, 2018, respectively.
NOTE 6 – LOAN PAYABLE
The Company has outstanding loans payable of $10,709 as of
July 31, 2018 and $6,573 as of April 30, 2018, respectively. The loans payable are unsecured with annual interest rate of
6%. The maturity date for loan payable of $6,573 is April 15, 2020, and the maturity date for loan payable of $3,736
is July 19, 2020, respectively. Interest expenses were $126 for the period ended July 31, 2018 and $nil for the year ended
April 30, 2018.
NOTE 7 – STOCKHOLDER’S EQUITY
The Company has 75,000,000, $0.001 par
value shares of common stock authorized.
At April 30, 2017, the Company issued 3,000,000
shares of common stock to a director for subscription of $3,000 at $0.001 per share, the subscription was received in May 2017.
From May 2017 to July 31, 2018, the Company
issued 600,000 common shares at $0.02 per share for a total price of $12,000.
In August and September 2017, the Company
issued 590,000 common shares at $0.02 per share for a total price of 11,800.
As of July 31, 2018, the Company had 4,190,000
shares issued and outstanding.
NOTE 8 - INCOME TAXES
The reconciliation of income tax benefit (expenses) at the U.S.
statutory rate of 21% for the period ended as follows:
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July 31,
|
|
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April 30,
|
|
|
|
2018
|
|
|
2018
|
|
Tax benefit (expenses) at U.S. statutory rate
|
|
$
|
726
|
|
|
$
|
3,863
|
|
Change in valuation allowance
|
|
|
(726
|
)
|
|
|
(3,863
|
)
|
Tax benefit (expenses), net
|
|
$
|
–
|
|
|
$
|
–
|
|
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax assets are as follows:
|
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July 31,
|
|
|
April 30,
|
|
|
|
2018
|
|
|
2018
|
|
Net operating loss
|
|
$
|
10,631
|
|
|
$
|
9,905
|
|
Valuation allowance
|
|
|
(10,631
|
)
|
|
|
(9,905
|
)
|
Deferred tax assets, net
|
|
$
|
–
|
|
|
$
|
–
|
|
The tax effects of temporary differences that give rise to significant
portions of the net deferred tax assets are as follows:
|
|
July 31,
|
|
|
April 30,
|
|
|
|
2018
|
|
|
2018
|
|
Balance-Beginning
|
|
$
|
9,905
|
|
|
$
|
6,042
|
|
Increase/(Decrease) in Valuation allowance
|
|
|
726
|
|
|
|
3,863
|
|
Balance-Ending
|
|
$
|
10,631
|
|
|
$
|
9,905
|
|
The Company has accumulated approximately $49,622 of net operating
losses (“NOL”) carried forward to offset taxable income, if any, in future years which begin to expire in fiscal 2036.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based
on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs
for every period because it is more likely than not that all of the deferred tax asset will not be realized.
NOTE 9 - COMMITMENT & CONTINGENCIES
The Company does not own or lease any real or personal property
and does not have any capital commitments.
NOTE 10 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events
through September 14, 2018 and the date that these financial statements were available to be issued. There have been no events
that would require adjustment to or disclose in the financial statements.
FORWARD LOOKING STATEMENTS
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.