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EX-32 - CERTIFICATION - STAR WEALTH GROUP INC.exhibit32.htm
EX-31 - CERTIFICATION - STAR WEALTH GROUP INC.exhibit31.htm



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 June 30, 2016


[   ] 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



Terafox Corp.

(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)


R24 Flat C 5/F

Wah Mow Factory Building

5-7 Ng Fong Street, San Po Kang

Kowloon, Hong Kong

(Address of principal executive offices)


+852 9560 0946

(Issuer telephone number)


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 þ       No o


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  o       No þ


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o

Large accelerated filer o

Non-accelerated filer o

Smaller reporting company þ


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ       No o


State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:   6,440,000 common shares issued and outstanding as of August 19, 2016.






TERAFOX CORP.


QUARTERLY REPORT ON FORM 10-Q


TABLE OF CONTENTS



PART 1 - FINANCIAL INFORMATION

3

ITEM 1.  FINANCIAL STATEMENTS

3

Condensed Balance Sheets as of June 30, 2016 (unaudited) and September 30, 2015

3

Condensed Statements of Operations for the three and nine month periods ended June 30, 2016

and 2015 (unaudited)

4

Condensed Statement of Cash Flows for the nine month periods ended June 30, 2016

and 2015 (unaudited)

5

Notes to Condensed Unaudited Financial Statements

6

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

16

ITEM 4.  CONTROLS AND PROCEDURES

16

PART II.  OTHER INFORMATION

16

ITEM 1.  LEGAL PROCEEDINGS

16

ITEM 1A.  RISK FACTORS

16

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

16

ITEM 3.  DEFAULTS UPON SENIOR SECURITES

16

ITEM 4.  MINE SAFETY DISCLOSURES

16

ITEM 5.  OTHER INFORMATION

16

ITEM 6.  EXHIBITS

17

SIGNATURES

18






2




PART 1 - FINANCIAL INFORMATION


Item 1.  Financial Statements



TERAFOX CORP.

CONDENSED BALANCE SHEETS

(UNAUDITED)

 

 

June 30, 2016

(unaudited)  

 

 

September 30, 2015

(audited)

 

 

 





 

ASSETS

 





 

Current Assets

 





 

Cash and cash equivalents

$

-


$

  254

 

     Assets of discontinued operations

 




10,000

 

     Total Current Assets

 

-



10,254

 

 

 





 

Total Assets

$

-


$

10,254

 

 

 





 

LIABILITIES AND SHAREHOLDERS’ DEFICIT

 





 

 

 





 

Current Liabilities

 





 

Liabilities of discontinued operations

$

-


$

6,420

 

Accounts payable

 

1,490


 

-

 

Loan

 

11,326


 

-

 

Loans from related parties

 

20,627


 

14,325

 

       Total Current Liabilities

 

33,443



20,745

 

 

 





 

Total Liabilities

 

33,443



20,745

 

 

 





 

Shareholders’ Deficit

 





 

Common stock, par value $0.001; 75,000,000 shares authorized, 6,440,000 shares issued and outstanding respectively

 

6,440



6,440

 

Additional paid-in capital

 

26,208



21,479

 

Accumulated deficit

 

(66,091)



(38,410)

 

Total Shareholders’ Deficit

 

(33,443)



(10,491)

 

 

 





 

Total Liabilities and Shareholders’ Deficit

$

-


$

10,254

 

















See accompanying notes to condensed unaudited financial statements.



3







TERAFOX CORP.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three month period ended

Nine month period ended

 

 

June 30, 2016

June 30, 2015

June 30, 2016

June 30, 2015

 

 

 

 

 

 

Revenues

 

$                      -

$                        -

$                    -

$                            -

Cost of goods sold

 

-

-

-

-

Gross profit

 

-

-

-

-

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

General and administrative expenses

 

33,443

2,823

42,484

27,814

Total operating expenses

 

33,443

2,823

42,484

27,814

 

 

 

 

 

 

Loss from continuing operations

 

(33,443)

(2,823)

(42,484)

(27,814)

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

      Income (loss) from discontinued

 

 

 

 

 

      operations

 

-

(1,500)

14,803

(2,500)

 

 

 

 

 

 

Loss before taxes

 

(33,443)

(4,323)

(27,681)

(31,314)

 

 

 

 

 

 

Provision for Income Taxes

 

-

-

-

-

 

 

 

 

 

 

Net Income (Loss)

 

$          (33,443)

$             (4,323)

$        (27,681)

$                (31,314)

 

 

 

 

 

 

Net Income (Loss) Per Share: Basic and Diluted

 

 

 

 

 

From continuing operations

 

$              (0.01)

$               (0.00)*

$            (0.01)

$                    (0.01)

From discontinued operations

 

0.00

(0.00)*

0.01

(0.00)*

Net Loss Per Share: Basic and Diluted

 

$              (0.01)

$               (0.00)*

$            0.00*

$                    (0.01)

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding: Basic and Diluted

 

6,440,000

6,436,484

6,440,000

5,108,773



‘* denotes income (loss) per share of less than $0.01 / (0.01)














See accompanying notes to condensed unaudited financial statements.



4




TERAFOX CORP.

CONDENSED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

 

Nine Month Period Ended

 

 

June 30, 2016

June 30, 2015

 

 

 

 

Cash flows from operating activities:

 

 

 

           Net income (loss) for the period

 

$                  (27,681)

$                 (31,314)

           (Income) loss from discontinued operations

 

(14,803)

2,500

Adjustments to reconcile net loss to net cash (used in) continuing operating activities:

 

-

-

Changes in operating assets and liabilities of continuing operations:

 

-

-

           Increase in accounts payable

 

1,490

100

Net cash used in operating activities – continuing operations

 

(40,994)

(28,714)

 

 

 

 

Income (loss) from discontinued operations

 

14,803

(2,500)

Adjustments to reconcile net loss to net cash (used in) discontinued operating activities:

 

 

 

               Depreciation expense

 

744

-

               Gain in settlement of rent payable

 

(8,157)

-

Changes in operating assets and liabilities of discontinued operations :

 

 

 

                Inventory

 

(340)

-

                Rent payable

 

1,737

2,500

Net cash used in operating activities – discontinued operations

 

8,787

-

 

 

 

 

Cash flows used in operating activities

 

(32,207)

(28,714)

 

 

 

 

Cash flows from investing activities:

 

 

 

Net cash used in investing activities – continuing operations

 

-

-

Net cash used in investing activities – discontinued operations

 

-

-

Cash flows provided by investing activities

 

-

-

 

 

 

 

Cash flows from financing activities

 

 

 

Loans from related parties

 

20,627

-

Loan

 

11,326

 

Proceeds from sale of common stock

 

-

23,919

Cash flows used in financing activities

 

31,953

23,219

 

 

 

 

Net increase (decrease) in cash

 

(254)

(4,795)

 

 

 

 

Cash, beginning of the period

 

254

7,649

 

 

 

 

Cash, end of the period

 

$                             -

$                      2,854

Supplemental Cash Flow Information:

 

 

 

Interest paid

 

$                             -

$                              -

Income taxes paid

 

$                             -

$                              -

Non Cash Investing and Financing Activities

 

 

 

       Inventory purchase by way of loan from director

 

$                        466

$                             -

        Forgiveness of rent payable

 

$                     8,157

$                             -

        Forgiveness of loan from director

 

$                   14,791

$                             -

        Transfer of equipment and inventory to director

 

10,062

$                           -

 

 

 

 

See accompanying notes to condensed unaudited financial statements.



5






TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)


NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS


Terafox Corp. (“Terafox”, “the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada on February 26, 2014 to produce flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine.


Effective March 16, 2015, a change of control occurred with respect to the Company. Pursuant to a Securities Purchase Agreement entered into by and among the Company, Mr. Aleksey Gagauz (“Seller”) and Yik Kei Ong (“Buyer,” as nominee/agent for Smart Mate Limited, a Republic of Seychelles company), Seller assigned, transferred and conveyed to Buyer, as nominee/agent 4,000,000 shares of common stock of Company (“Common Stock”). As a result of the transaction, Smart Mate Limited owns 4,000,000 shares of common stock of the Company (or 62% of the total issued and outstanding shares of common stock of the Company).

 

On the closing of the above transaction, Mr. Gagauz, the sole officer and director of the Company, resigned in all officer capacities from the Company and Yik Kei Ong was appointed temporary Chief Executive Officer and Chief Financial Officer of the Company and a temporary Director of the Company. Effective immediately after the closing, Mr. Ong resigned in all capacities and Mr. Brian Patrick Foley then was appointed Chief Executive Officer and sole Director of the Company, and Mr. Jennie Pascual Ednalagium was appointed as the Company’s Chief Financial Officer, Secretary and Treasurer of the Company.


Similarly, effective immediately after the closing the Company permanently ceased its previous operating activities of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine.


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.



On August 3, 2016, Mr. Brian Patrick Foley resigned as Chief Executive Officer and sole Director of the Company, and Mr. Jennie Pascual Ednalagium resigned as the Company’s Chief Financial Officer, Secretary and Treasurer of the Company. Prior to Mr. Foley’s resignation as Director, the Board of Directors appointed Chi Yeuk Lau as the Company’s sole director and acting Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company.



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 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 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.











TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)




NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES


Basis of presentation  

The accompanying unaudited financial statements of Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading.  Operating results for the three and nine months ended June 30, 2016 are not necessarily indicative of the final results that may be expected for the year ended September 30, 2016.  For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended September 30, 2015 included in our Form 10-K filed with the SEC.


Accounting Basis

The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting).  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.


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 June 30, 2016 ($254 at September 30, 2015).


Inventory

Inventories are stated at the lower of cost or market determined on a first-in, first out basis.  


Following the termination of all its previous operating activities effective March 13, 2016, the Company transferred its remaining inventory to a former director of the Company.

  

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 June 20, 2016, the Company’s financial instruments consisted of accounts payable and amounts 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.




TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)




NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED


Fixed Assets

Fixed assets are stated at net book value, cost less depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriated accounts and the resultant gain or loss is included in net income.


Following the termination of all its previous operating activities effective March 13, 2016, the Company transferred its sole fixed asset to a former officer and director of the Company.


Depreciation is provided using the straight-line method over the estimated useful lives of the asset estimated at 6 years. We recognized a depreciation expense of $0 (2015 - $0) and $744 (2015- $0) during the three and nine months ended June 30, 2016 which has been included in the results from discontinued activities.


Accounting for the Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the assets. The Company did not record any impairment charges related to long-lived assets during three and none month periods ended June 30, 2016 and 2015.


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.


Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification No. 605, “Revenue Recognition” (“ASC-605”), ASC-605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product or servicers has not been delivered or provided or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.


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 and nine months ended June 30, 2016 and 2015.



8



TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)




NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)


Comprehensive Income

The Company has which established standards for reporting and display of comprehensive income, its components and accumulated balances.  When applicable, the Company would disclose this information on its Statement of Stockholders’ Equity.  Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has not had any transactions that are required to be reported in other comprehensive income.


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- DISCONTINUED OPERATIONS


Effective March 16, 2016, the Company permanently ceased its previous operating activities of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine.


The components of the discontinued operations are as follows:


 

Three Months Ended June 30, 2016

Three Months Ended June 30, 2015

Nine Months Ended June 30, 2016

Nine Months Ended June 30, 2015

 

 

 

 

 

Revenue

$                            -

$                              -

$                    10,100

$                             -

 

 

 

 

 

Cost of goods sold

-

-

973

-

 

 

 

 

 

Gross profit

-

-

9,127

-

 

 

 

 

 

Operating expenses:

 

 

 

 

     General & administrative

-

1,500

2,481

2,500

     Gain on settlement liability

-

-

(8,157)

-

 

 

 

 

 

Total operating (income) expenses

-

1,500

(5,676)

2,500

 

 

 

 

 

Income (loss) from discontinued operations

$                          -

$                   (1,500)

$                  14,803

$                  (2,500)


Effective February 9, 2016, the landlord of our production facility forgave a balance of rent payable due to him of $8,157 and terminated our outstanding lease with him. Accordingly, there was no balance of rent payable outstanding as of June 30, 2016. We recognized this gain on forgiveness on this debt as in the income statement as part of income from discontinued activities


Effective March 16, 2016, following our permanent cessation of our previous operating activities of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine, we transferred our equipment with a net book value of $9,257 and inventory with a cost of $806 to our former director and former controlling shareholder. As the transfer was to a related party, the loss on the assets transferred has been recognized in additional aid in capital rather than in the income statement  





9



TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)




NOTE 5- FIXED ASSETS


Effective August 2014, the Company purchased an industrial flatbed printing machine model S-SUN C4300.


We started using the machine to generate revenue in October 2015 and consequently commenced depreciation the cost of the flatbed printing machine from that date over an estimated useful life of 6 years.

 Effective March 16, 2016, following our permanent cessation of our previous operating activities of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine, we transferred our equipment with a net book value of $9,257 to our former director and former controlling shareholder. As the transfer was to a related party, the loss on the transfer of the asset transferred has been recognized in additional aid in capital rather than in the income statement  


We recognized a depreciation expense of $327 (2015 - $0) and $744 (2015- $0) during the three and nine months ended June 30, 2016.



June 30, 2016

September 30, 2015

Fixed assets:

 

 

Equipment

$                             -

$                     10,000

Less: accumulated depreciation

-

0

Net fixed assets

$                             -

$                     10,000



NOTE 6 - LOAN


During the three months ended June 30, 2016, an unaffiliated third party advanced $11,326 to provide working capital for the Company. The loan is unsecured, non-interest bearing and due on demand.


The total balance due under the loan as of June 30, 2016 was $11,326.



NOTE 7 – LOANS FROM RELATED PARTIES


Former Officer and Director of the Company


As of September 2015, a former officer and director of the Company had loaned $14,325 to the Company. The loan was unsecured, non-interest bearing and due on demand.


During the six months ended March 31, 2016, the same former officer and director increased his loan to the Company by $466 through payment of a supplier on our behalf for the purchase of inventory.


Effective March 16, 2016, the former officer and director forgave all amounts due to him which amounted to $14,791. The gain on the forgiveness of the loan has been recognized in additional paid in capital rather than in the income statement as the loan was with a related party.


Principal Shareholder


During the three months ended June 30, 2016, the Company’s principal shareholder advanced $20,627 to provide working capital for the Company. The loan is unsecured, non-interest bearing and due on demand.


The total balance due under the loan as of June 30, 2016 was $20,627.




10



TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)




NOTE 8 – SHAREHOLDERS’ DEFICIT


Common Stock


The Company has 75,000,000, $0.001 par value shares of common stock authorized.


On June 27, 2014, the Company issued 4,000,000 shares of common stock to a former officer and director for cash proceeds of $4,000 at $0.001 per share.


During January 2015, the Company has issued 285,000 shares of common stock for cash proceeds of $2,759 at $0.01 per share.


During February 2015, the Company has issued 1,275,000 shares of common stock for cash proceeds of $12,400 at $0.01 per share.


During March 2015, the Company has issued 720,000 shares of common stock for cash proceeds of $7,160 at $0.01 per share.


During April 2015, the Company has issued 160,000 shares of common stock for cash proceeds of $1,600 at $0.01 per share.


There were 6,440,000 shares of common stock issued and outstanding as of June 30, 2016 and September 2015.


Additional Paid in Equity


Effective March 16, 2016, following our permanent cessation of our previous operating activities of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine, we transferred our equipment with a net book value of $9,257 and inventory with a cost of $806 to our former director and former controlling shareholder. As the transfer was to a related party, the loss on the assets transferred has been recognized in additional aid in capital rather than in the income statement  


Further, on March 16, 2016, a former officer and director forgave all amounts due to him which amounted to $14,791. The gain on the forgiveness of the loan has been recognized in additional paid in capital rather than in the income statement as the loan was with a related party.


NOTE 9 – COMMITMENTS AND CONTINGENCIES


Legal


We were not subject to any legal proceedings during the three and nine months ended June 30, 2016 and none are threatened or pending to the best our knowledge and belief.


Contractual


Production Space


On July 1, 2014, the Company has entered in a two-year production space lease agreement started February 1, 2015. Annual rental fees for first year will be $6,000 and $5,400 for the second year. On September 3, 2014, by mutual agreement the parties have decided that the lease agreement will terminate on October 31, 2015. On August 31, 2015, the Company signed a new two years Lease Agreement. For the first and second year of the Agreement, the annual rental fee is $3,360 with monthly price of $280.


Effective February 9, 2016, our landlord forgave a balance of rent payable due to him of $8,157 and terminated our outstanding lease with him. Accordingly, there was no balance of rent payable outstanding as of June 30, 2016.




TERAFOX CORP.

NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2016 AND 2015

(UNAUDITED)




NOTE 9 – COMMITMENTS AND CONTINGENCIES (CONTINUED)


Office Space


The Company’s office space has been, and continues to be, provided by an officer of the Company without charge. There is no obligation for the officer to continue this arrangement.  Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.


NOTE 10 – INCOME TAXES


As of June 30, 2016, the Company had net operating loss carry forwards of approximately $66,091 ($38,410 as of September 30, 2015) that may be available to reduce future years’ taxable income in varying amounts through 2031.


Following the Company’s change of control effective May 16, 2016, due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $32,648 for Federal income tax reporting purposes may be subject to annual limitations.


Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.


The provision for Federal income tax consists of the following:


 

Nine Months Ended

 

June 30, 2016

June 30, 2015

Federal income tax (liability) benefit attributable to:

 

 

Current Operations

$                  9,912

$               10,647

Less: brought forward tax losses / (valuation allowance)

(9,912)

(10,647)

Net provision for Federal income taxes

$                          0

$                         0


The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:


 

June 30, 2016

September 30, 2015

Deferred tax asset attributable to:

 

 

Net operating loss carryover

$                   22,471

$                     13,059

Less: valuation allowance

(22,471)

(13,059)

Net deferred tax asset

$                            0

$                               0



NOTE 11 – SUBSEQUENT EVENTS


The Company evaluated subsequent events from June 30, 2016 through the date these financial statements were issued. There have been no subsequent events after June 30, 2016 for which disclosure is required other than as disclosed below.


On August 3, 2016, Mr. Brian Patrick Foley resigned as Chief Executive Officer and sole Director of the Company, and Mr. Jennie Pascual Ednalagium resigned as the Company’s Chief Financial Officer, Secretary and Treasurer of the Company. Prior to Mr. Foley’s resignation as Director, the Board of Directors appointed Chi Yeuk Lau as the Company’s sole director and acting Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company.




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ITEM 2.

MANAGEMENT’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD LOOKING STATEMENT NOTICE


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


Terafox Corp. (“Terafox”, “the Company”, “we”, “us” or “our”) was incorporated in the State of Nevada on February 26, 2014 to produce flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine.


Effective March 16, 2015, a change of control occurred with respect to the Company. Pursuant to a Securities Purchase Agreement entered into by and among the Company, Mr. Aleksey Gagauz (“Seller”) and Yik Kei Ong (“Buyer,” as nominee/agent for Smart Mate Limited) (the “Purchase Agreement”), Seller assigned, transferred and conveyed to Buyer, as nominee/agent 4,000,000 shares of common stock of Company (“Common Stock”).

 

On the closing of the above transaction, Mr. Gagauz, the sole officer and director of the Company, resigned in all officer capacities from the Company and Yik Kei Ong was appointed temporary Chief Executive Officer and Chief Financial Officer of the Company and a temporary Director of the Company. Effective immediately after the closing, Mr. Ong resigned in all capacities and Mr. Brian Patrick Foley then was appointed Chief Executive Officer and sole Director of the Company, and Mr. Jennie Pascual Ednalagium was appointed as the Company’s Chief Financial Officer, Secretary and Treasurer of the Company.


Similarly, effective immediately after the closing the Company permanently ceased its previous operating activities of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine.


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.


On August 3, 2016, Mr. Brian Patrick Foley resigned as Chief Executive Officer and sole Director of the Company, and Mr. Jennie Pascual Ednalagium resigned as the Company’s Chief Financial Officer, Secretary and Treasurer of the Company. Prior to Mr. Foley’s resignation as Director, the Board of Directors appointed Chi Yeuk Lau as the Company’s sole director and acting Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company.







RESULTS OF OPERATIONS


THREE MONTH PERIOD ENDED JUNE 30, 2016 COMPARED TO THE THREE MONTH PERIOD ENDED JUNE 30, 2015


Continuing Operations


During the three months ended June 30, 2016, we incurred general and administrative expenses relating to continuing activities of $33,443, compared to $2,823 incurred in general and administrative expenses relating to continuing activities during the three months ended June 30, 2015, an increase of $30,620. The increase primarily related to a substantial increase in legal fees relating to the change of control that were incurred in the current year, but not in the prior year.


Discontinued Operations


During the three months ended June 30, 2016, we recognized no revenue or expense in respect of our discontinued operations as we discontinued our printing business effective March 17, 2016.


By comparison, during the three months ended June 30, 2015, we have not commenced generating sales as yet in respect of the printing business and accordingly generated no sales, incurred no cost of sales and incurred general and administrative expenses of $1,500.


NINE MONTH PERIOD ENDED JUNE 30, 2016 COMPARED TO THE NINE MONTH PERIOD ENDED JUNE 30, 2015


Continuing Operations


During the nine months ended June 30, 2016, we incurred general and administrative expenses relating to continuing activities of $42,484, compared to $27,814 incurred in general and administrative expenses relating to continuing activities during the nine months ended June 30, 2015, an increase of $14,670. The increase primarily related to a substantial increase in legal fees relating to the change of control that were incurred in the current year, but not in the prior year


Discontinued Operations


We discontinued the printing business effective March 17, 2016.


During the period from October 1, 2015 to the discontinuance of operations effective March 17, 2016, we generated revenue of $10,100, incurred cost of sales of $973 and incurred general and administrative expenses of $2,481 in respect of our former business of producing flyers, posters and printing images on multiple surfaces, such as glass, leather, plastic, using automated industrial flatbed printing machine.


By comparison, during the nine months ended June 30, 2015, we have not commenced generating sales as yet in respect of the printing business and accordingly generated no sales, incurred no cost of sales and incurred general and administrative expenses of $2,500.


Effective February 9, 2016, the landlord of our production facility forgave a balance of rent payable due to him of $8,157 and terminated our outstanding lease with him. We recognized this gain on forgiveness on this debt as in the income statement as part of income from discontinued activities.


We recognized no similar gain or loss during the nine months ended June 30, 2015.


LIQUIDITY AND CAPITAL RESOURCES


As at June 30, 2016, following the complete termination of our existing business, the transfer of certain of our assets to our former director and the forgiveness of our outstanding liabilities by our former director and by a former landlord, we had no assets, liabilities of $33,443 and a shareholder deficit of 33,443.




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As of September 30, 2015, our total assets were $10,254 comprised of cash $ 254, and net fixed assets $10,000. Our total liabilities were $20,745 comprised of accounts payable of $6,420 and a loan from our director of $14,325. Stockholders’ equity was a deficit of $10,491.


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 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.


CASH FLOW FOR THE NINE MONTH PERIOD ENDED JUNE 30, 2016 COMPARED TO THE NINE MONTH PERIOD ENDED JUNE 30, 2015


CASH FLOWS FROM OPERATING ACTIVITIES


Continuing Operations


During the nine months ended June 30, 2016, we used $40,994 in continuing operating activities compared to $28,714 during the nine months ended June 30, 2015, an increase of $12,280. The increase primarily related to a substantial increase in legal fees relating to the change of control that were incurred in the current year, but not in the prior year.


Discontinued Operations


During the nine months ended June 30, 2016, we generated $8,787 from discontinued operating activities compared to $0 cash generated or used in operating activities during the nine months ended June 30, 2015. The Company has not begun to generate sales from its printing business during the nine months ended June 30, 2015 while during the nine months ended June 30, 2016, we generated sales of $10,100 and a gross profit of $9,127 from our former printing business.


CASH FLOWS FROM INVESTING ACTIVITIES


During the nine month periods ended March 31, 2016 and 2015, we did not have any cash flows relating to investing activities.


CASH FLOWS FROM FINANCING ACTIVITIES


During the nine month periods ended June 30, 2016 and 2015, we generated $31,953 and $23,919 respectively from financing activities.


During the nine months ended June 30, 2016, we received $20,627by way of loans from related parties and $11,326 by way of loan from un unrelated third party. During comparison, during the nine months ended June 30, 2010, we received $0 by way of loans from related or unrelated parties.


During the nine months ended June 30, 2015, we sold 2,440,000 shares at $0.01 per share to generate net proceeds of $23,919. By comparison, during the nine months ended June 30, 2016, we did not sell any shares of common stock


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.




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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.


ITEM 4.  CONTROLS AND PROCEDURES


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 June 30 2016. 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. Management also confirmed that there was no change in our internal control over financial reporting during the three-month period ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



PART II.  OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS


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.


ITEM 1A.  RISK FACTORS


As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.


ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


No unregistered equity securities were sold during the three and nine months ended June 30, 2016.


ITEM 3.  DEFAULTS UPON SENIOR SECURITES


No senior securities were issued or outstanding during the three and nine months ended June 30, 2016 or 2015.


ITEM 4.  MINE SAFETY DISCLOSURES


Not applicable to our Company.


ITEM 5.  OTHER INFORMATION


On August 3, 2016, Mr. Brian Patrick Foley resigned as Chief Executive Officer and sole Director of the Company, and Mr. Jennie Pascual Ednalagium resigned as the Company’s Chief Financial Officer, Secretary and Treasurer of the Company. Prior to Mr. Foley’s resignation as Director, the Board of Directors appointed Chi Yeuk Lau as the Company’s sole director and acting Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer of the Company.









ITEM 6.  EXHIBITS


The following exhibits are included as part of this report by reference:


Exhibit No.

 

Description

31.1

 

Certification of Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).

 

 

 

32.1

 

Certification of Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

 

 

 

101.INS

 

XBRL Instance Document

101.SCH

 

XBRL Taxonomy Extension Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

 

 

 






17






SIGNATURES


Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



 

 

 

 

 

 

TERAFOX CORP.

 

 

 

 

 

 

 

By:

/s/

Chi Yeuk Lau

 

 

 

Name:

Chi Yeuk Lau

 

 

 

Title:

Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

 

 

 

 

 

:

Date:  August 16, 2016

 

 

 

 








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