Notes to Financial Statements
June 30, 2018
NOTE 1 – NATURE OF BUSINESS
Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada.
On November 25, 2016, pursuant to a stock purchase agreement reached by and between Ilia Tomski, the Company’s President and CEO at the time, and Kido Inter Co. Ltd. (“Kido”) which is wholly owned by Ms. Somporn Phatchan, Kido acquired 25,000,000 shares of common stock of the Company, representing 70.62% ownership, for a cash consideration of $246,000. On November 25, 2016, Ilia Tomski resigned his official position as President and CEO of the Company, and on the same day the shareholders of the Company voted Ms. Somporn Phatchan as Director and CEO of the Company, and Eng Wah Kung as Chief Financial Officer and Director.
On December 17, 2016, the Company acquired 100% equity interest in Astral Investments Limited (“Astral”), a British Virgin Islands (“BVI”) company incorporated and owned by Ms. Somporn Phatchan, with a consideration of $50,000. On the same day, Ms. Somporn Phatchan, on behalf of Astral, paid MOP25,000 (appropriately $3,205) to owners of Star Alliance Macau Ltd. (“SA Macau”) to take over its ownership.
On January 6, 2017, the Board of Directors of the Company adopted an amendment to its Articles changing the Company’s name to Star Alliance International Corp. from Asteriko Corp. On January 10, 2017, the Company additionally amended its Articles to effectuate a Forward Stock Split of 5:1 (the “Stock Split”). The Financial Industry Regulatory Authority (“FINRA”) gave final approval for the above changes on March 17, 2017. All share information has been retroactively restated to reflect the Stock Split in these financial statements.
On February 2, 2017, Astral acquired 100% equity interest in Star Alliance Inter Co., Ltd. (“SA Thailand”), a Thailand company incorporated and owned by Ms. Somporn Phatchan, with a consideration of THB10,000,000 (approximately $285,489).
The Company originally intended to provide travel and adventure packages to MICE (Meeting, Incentive, Convention, Events) tourists primarily in the Asia region. Services and products provided by SA Thailand would initially include pre-arranged tours, customized packages according to clients’ specifications, travel consultation, and as time progresses making reservations for lodging amongst other related services. However, as the business plan did not bring any revenues, the management determined that this business plan did not work well, which led to the disposal transaction mentioned as below.
On June 30, 2017, pursuant to a stock purchase agreement entered into by and between Ms. Somporn Phatchan and the Company, all common shares of Astral were sold to Ms. Somporn Phatchan for a consideration of $1. Starting from the same day, Astral, SA Macau and SA Thailand are no longer wholly owned subsidiaries of the Company.
On July 31, 2017, Ms. Somporn Phatchan resigned from her positions as the CEO and Director of the Company. On the same day, the shareholders voted Dr. Kok Chee Lee, as CEO and Director of the Company, who resigned subsequently on January 17, 2018. On the same day, Sreyneang Jin was appointed as CEO and Director. On April 30, 2018, Sreyneang Jin announced her resignation as CEO and Director of the Company and Richard Carey was appointed as the new CEO and Chairman of the Board of Director.
On May 16, 2018, Eng Wah Kung and David E. Price resigned from their positions as CFO and Director, and Secretary of the Board, respectively. On May 17, 2018, Mr. Richard Carey, the Company’s sole Director, appointed Alexei Tchernov as CEO and Director, Franz Allmayer as Vice President and Director, John C. Baird as CFO and Director and Themis Glatman as Secretary and Director.
NOTE 2 – SIGNIFICANT AND CRITICAL ACCOUNTING POLICIES AND PRACTICES
Basis of Presentation
The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules of the Securities and Exchange Commission (“SEC”).
Principles of Consolidation
On June 30, 2017, the Company disposed of Astral, SA Macau and SA Thailand. The accompanying balance sheets present the financial position of Star Alliance International Corp. only. The related statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for the year ended June 30, 2017 contain the result of operations and cash flows of Star Alliance International Corp., and the subsidiaries that were disposed of on June 30, 2017. All significant inter-company transactions have been eliminated in the preparation of these financial statements.
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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the years ended June 30, 2018 or 2017.
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the year ended June 30, 2018.
Foreign Currency Translation
The accompanying financial statements are presented in United States dollars (USD). The functional currencies of SA Macau and SA Thailand were Hong Kong Dollars (HKD) and Thai Baht (THB), respectively. The financial statements were translated into USD from HKD or THB at period-end exchange rates for assets and liabilities, and weighted average exchange rates for expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.
The Hong Kong Monetary Authority (“HKMA”), Hong Kong’s central bank, maintains a Linked Exchange Rate System since 1983. The HKMA operates Convertibility Undertakings on both the strong side and the weak side of the Linked Rate of US$1: HK$7.8. Thus, the consistent exchange rate used has been 7.80 HKD per each USD.
Exchange gains or losses arising from foreign currency transactions are included in the determination of total comprehensive loss for the respective periods. We have not entered into any material transactions that are either originated, or to be settled, in currencies other than the HKD, THB, or USD. Accordingly, transaction gains or losses have not had, and are not expected to have a material effect on our results of operations.
All foreign currency translations incurred in subsidiaries that were acquired during the year ended June 30, 2017 and disposed of on June 30, 2017 and the exchange losses and accumulated other comprehensive income were recorded as changes in additional paid-in capital in the accompanying financial statements as the disposal transaction was between entities under common control.
Stock-based Compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, “
Compensation – Stock Compensation
.” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company accounts for stock-based compensation in accordance with the provision of ASC 505-50,
Equity Based Payments to Non-Employees
, which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest.
Fair Value of Financial Instruments
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and 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, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The Company’s financial instruments are consisted principally of accrued expenses and short term debt. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature.
Income Tax Provision
The Company follow ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.
On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law by the President of the United States. TCJA is a tax reform act that among other things, reduced corporate tax rates to 21 percent effective January 1, 2018. FASB ASC 740, Income Taxes, requires deferred tax assets and liabilities to be adjusted for the effect of a change in tax laws or rates in the year of enactment, which is the year in which the, change was signed into law. Accordingly, the Company adjusted its deferred tax assets and liabilities at June 30, 2018, using the new corporate tax rate of 21 percent. See Note 7.
The Company adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty income taxes. ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures. We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.
Net income (loss) per common share
Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through contingent share arrangements, stock options and warrants. There were no potentially dilutive common shares outstanding for the years ended June 30, 2018 and June 30, 2017.
Recently Issued Accounting Pronouncements
In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is only required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The guidance is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The new guidance must be applied prospectively to awards modified on or after the adoption date. The future impact of ASU 2017-09 will be dependent on the nature of future stock award modifications.
In January 2017, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) 2017-01,
Business Combinations (Topic 805) Clarifying the Definition of a Business
. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual periods beginning after December 15, 2017 and should be applied prospectively on or after the effective date. The Company is in the process of evaluating the impact of this accounting standard update.
In November 2016, the FASB issued ASU 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash,
which requires restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In October 2016, the FASB issued ASU 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory
, which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In August 2016, the FASB issued ASU 2016-15
, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments
. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its statements of cash flows.
In March 2016, the FASB issued ASU 2016-09,
Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting
. ASU 2016-09, which amends several aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
. ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is in the process of evaluating the impact of this accounting standard update on its financial statements.
In March 2016, April 2016 and December 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-08, Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue Gross Versus Net) (Topic 606), ASU 2016-10 Revenue from Contracts with Customers, Identifying Performance Obligations and Licensing, and ASU 2016-20, Technical Corrections and Improvements to Topic 606 Revenue From Contracts with Customers, respectively accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in these ASUs are effective for the Company’s fiscal year beginning July 1, 2018 and early adoption is not permitted. The Company is currently evaluating the potential effect of this standard on its financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company 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 shown in the accompanying financial statements, the Company has an accumulated deficit of $633,572 and negative working capital of $94,833 as of June 30, 2018. For the year ended June 30, 2018 the Company had a net loss of $93,936. Due to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern.
The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. 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 its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
During the year ended June 30, 2016, the Company entered into an office lease agreement with Ms. Jinda Anandtametin, a third-party individual, through SA Thailand, which originally covered the period from July 1, 2016 to June 30, 2019. The monthly payment was THB400,000 (approximately $5,722). The Company ceased to be responsible for the lease as of June 30, 2017, when Astral was sold to Ms. Somporn Phatchan, CEO and Director of the Company who was appointed on November 25, 2016 and resigned on July 31, 2017.
On June 8, 2017, Stal Business Services Sdn Bhd (“SBSSB”), a wholly owned company by Kok Chee Lee, CEO and Director of the Company appointed on July 31, 2017, entered into an office lease agreement with ADA Shared Services Sdn Bhd. The office is offered to be used by the Company for free until December 31, 2017.
During the year ended June 30, 2017, the Company incurred expenses of $187,650 for consulting and translation services provided by LWH Investments Ltd. (“LWH”), which fully owns LWH Advisory Ltd., the second largest shareholder of the Company as of the filing date.
From time to time, the CEO of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest-bearing and due on demand. For the year ended June 30, 2017, the Company had total cash borrowings of $683,665 from related parties. Included in this amount, the Company borrowed $7,000 of cash by issuing notes payable to Ilia Tomski, former President, and had cash borrowings for the aggregate amount of $676,665 from Ms. Somporn Phatchan, CEO and Director of the Company who resigned on July 31, 2017. Imputed interest expenses on the note payable issued to Ilia Tomski was $420 for the year ended June 30, 2017.
During the year ended June 30, 2017, the Company repaid to related parties in the total amount of $635,024, including repayments of $633,855 to Ms. Somporn Phatchan and $1,169 to Ilia Tomski.
During the year ended June 30, 2017, cash of $4,879 was distributed to related parties. On November 25, 2016, cash of $3,266 was distributed to Ilia Tomski, former President, with the change of major shareholder. On June 30, 2017, cash of $1,613 was distributed to Somporn Phatchan when Astral and its subsidiaries were disposed of.
Total operating expenses of $194,809 were paid by Ms. Somporn Phatchan on behalf of the Company during the year ended June 30, 2017.
Property and equipment and liabilities for the net amount of $23,089 were assumed by Ilia Tomski, former President when Kido acquired 25,000,000 shares of common stock from Ilia Tomski on November 25, 2016.
On December 17, 2016, the Company acquired 100% equity interest in Astral with a consideration of $50,000. The Company and Astral are under common control of Ms. Somporn Phatchan and the acquisition was accounted for as a transaction between entities under common control.
On February 2, 2017, Astral acquired 100% equity interest in SA Thailand with a consideration of THB10,000,000 (approximately $285,489). Astral and SA Thailand are under common control of Ms. Somporn Phatchan and the acquisition was accounted for as a transaction between entities under common control.
On June 30, 2017, pursuant to a stock purchase agreement, Ms. Somporn Phatchan purchased all shares of common stock of Astral for a consideration of $1. Non-cash assets and liabilities with a net amount of $206,392 were disposed of, which resulted in an increase in additional paid-in capital as the transaction was between entities under common control.
As of June 30, 2018, the amount due to a related party was $42,651 as operating expenses of $42,651 were paid by Kok Chee Lee, CEO and Director of the Company during the year ended June 30, 2018, on behalf of the Company. The borrowing is unsecured, non-interest-bearing and due on demand.
On May 14, 2018, pursuant to an agreement by and between Richard Carey, the Company’s new President and Chairman of the Board, and Kido, Mr. Richard Carey acquired 22,000,000 shares of common stock of the Company owned by Kido, representing 62.15% ownership of the Company which constitutes control. Mr. Richard Carey accepted the positions of President and Chairman of the Board on the same day.
In June 2018, Richard Carey, the Company’s Chairman, advanced the Company $300 to open a bank account. The advance is unsecured, non-interest bearing and due on demand.
Mr. Carey is using his personal office space at no cost to the Company.
NOTE 5 – COMMON STOCK
On November 25, 2016, Ilia Tomski, former President and CEO of the Company, consummated a sale of 25,000,000 shares of the Company’s common stock to Kido for an aggregate purchase price of $246,000, representing 70.62% of ownership of the Company. Kido is a wholly owned entity by Ms. Somporn Phatchan, CEO and Director of the Company who was appointed on November 25, 2016 and resigned on July 31, 2017. In connection with the stock purchase transaction, the Company distributed cash of $3,266 and property and equipment of $2,040 to Ilia Tomski and liabilities of $25,129 were assumed by Ilia Tomski which resulted in a forgiveness of net liabilities of $19,823.
On December 17, 2016, the Company acquired 100% equity interest in Astral, a BVI company incorporated and owned by Ms. Somporn Phatchan, with a consideration of $50,000. Since the Company and Astral are under common control of Ms. Somporn Phatchan, the acquisition was recorded as a transaction between entities under common control. Astral had no assets, liabilities, or any operations since its establishment on October 4, 2016. The consideration is of the same amount as Astral’s registered capital, neither of which was paid as of June 30, 2017.
On December 17, 2016, Ms. Somporn Phatchan, on behalf of Astral, paid MOP 25,000 (approximately $3,205) to owners of SA Macau to take over its ownership. SA Macau was incorporated on December 18, 2015 and had no assets, liabilities, or any operations since its establishment and prior to the takeover. The amount paid was recorded as compensation cost.
In January 2017, the Board of Directors of the Company approved a 5-for-1 forward stock split, whereby every one (1) share of the common stock was automatically reclassified and changed into five (5) shares (the “Stock Split”). The authorized number of shares and par value per share were not be affected by the Stock Split. All shares throughout these financial statements have been retroactively restated to reflect the Stock Split.
On February 2, 2017, Astral acquired 100% equity interest in SA Thailand, a Thailand company incorporated and owned by Ms. Somporn Phatchan, with a consideration of THB10,000,000 (approximately $285,489). Since Astral and SA Thailand are under common control of Ms. Somporn Phatchan, the acquisition was recorded as a transaction between entities under common control. SA Thailand had no assets, liabilities, or any operations except for the registered capital of $285,489 since its establishment on July 22, 2016 and prior to the acquisition. The consideration for the acquisition was not paid as of June 30, 2017.
During the year ended June 30, 2017, there was imputed interest expense in the amount of $420 bearing from notes payable to related party and recorded as additional contribution from shareholder. For the year ended June 30, 2016, there was imputed interest expense of $907 bearing from notes payable to related party and recorded as additional contribution from shareholder.
On June 30, 2017, pursuant to a stock purchase agreement entered into by and between the Company and Ms. Somporn Phatchan, owner of Kido which is a controlling shareholder of the Company, all shares of common stock of Astral were sold to Ms. Somporn Phatchan for a consideration of $1. Upon disposal, Astral and its subsidiaries had cash of $1,613 which was considered as distributed to shareholder. The net liabilities and accumulated other comprehensive loss disposed of, totaling $466,389, were recorded as a net increase in additional paid-in capital as the transaction was between entities under common control.
On June 30, 2018, the Company granted 50,000 shares of common stock for services rendered as of June 30, 2018. The shares were valued at $0.50 for total non-cash compensation expense of $25,000. As of June 30, 2018, the shares had not yet been issued by the transfer agent.
NOTE 6 – NOTE PAYABLE
On June 1, 2018, the Company executed a promissory note in the amount of $32,000 with the former Secretary of the Board for $30,128 of accrued expenses for services previously provided and an additional $1,872 for services rendered. The note is unsecured, bears interest at 5% per annum and matures on December 1, 2018. As of June 30, 2018, there is $132 of interest on the note. The note is past due and in default.
NOTE 7 – INCOME TAX
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used due to the new tax law recently enacted.
Net deferred tax assets consist of the following components as of June 30:
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2018
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2017
|
|
Deferred Tax Assets:
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|
|
|
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|
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NOL Carryover
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$
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127,772
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|
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$
|
183,476
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Less valuation allowance
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(127,772
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)
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(183,476
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)
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Net deferred tax assets
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$
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-
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$
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-
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The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended June 30, due to the following:
At June 30, 2018, the Company had net operating loss carry forwards of approximately $608,000 that maybe offset against future taxable income. No tax benefit has been reported in the June 30, 2018 or 2017 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax rate to 21% effective January 1, 2018.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2018, the Company had no accrued interest or penalties related to uncertain tax positions.
With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2013.
NOTE 8 – DISPOSAL OF SUBSIDIARIES
During the year ended June 30, 2017, Astral and its subsidiaries, SA Thailand and SA Macau suffered significant losses and did not bring profits as expected. The management decided to search for new business opportunities. On June 30, 2017, the Company entered into an agreement with Ms. Somporn Phatchan, the owner of Kido which is a controlling shareholder of the Company. Pursuant to the agreement, all shares of common stock of Astral were sold to Ms. Somporn Phatchan for a consideration of $1. The disposal resulted in a net increase of $466,389 in additional paid-in capital as the transaction was between entities under common control.
The Company is a shell with nominal operations. The disposal does not constitute a strategic shift that will have a major effect on the Company’s operations or financial results and as such, the disposal is not classified as discontinued operations in our financial statements.
NOTE 9 – SUBSEQUENT EVENTS
Subsequent to June 30, 2018, the Company borrowed $37,240 from the Chairman to pay for general operating expenses, of which $19,766 has been repaid. All advances are unsecured, non-interest bearing and due on demand.
On October 15, 2018, the Company executed a promissory note for $20,000, for amounts previously accrued and payable to the Company’s former attorney. The note is unsecured, bears interest at 8% and is due on October 15, 2019.