Startech Labs, Inc. - FORM 10-Q

Attached files

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EX-32.1 - EX-32.1 - Startech Labs, Inc.	laab_ex321.htm
EX-31.1 - EX-31.1 - Startech Labs, Inc.	laab_ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	For the quarterly period ended February 29, 2020

or

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _______ to _________

Commission File Number 333-190658

Startech Labs, Inc.

(Exact name of registrant as specified in its charter)

Nevada

N/A

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

244 Madison Avenue, New York City, NY		10016-2817
(Address of principal executive offices)		(Zip Code)

(802) 255-4212

(Registrant’s telephone number, including area code)

_____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ¨ YES x NO

Indicate by check mark whether the registrant has submitted electronically, 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 x NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ¨ YES x NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ¨ YES ¨ NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

55,147,380 common stock issued and outstanding as of April 7, 2020

FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults Upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	21
SIGNATURES		22

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

STARTECH LABS, INC.

(formerly UPPERSOLUTION.COM)

BALANCE SHEETS

(Unaudited)

	February 29,			May 31,
	2020			2019
ASSETS
Current Assets

Total Assets	$	-		$	-

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities	$	1,269		$	3,747
Accrued interest		17,958			-
Due to related parties		-			81,859
Convertible notes		110,320			-
Total Current Liabilities		129,547			85,606

Total Liabilities		129,547			85,606

STOCKHOLDERS' DEFICIT
Common Stock: $0.001 par value, 75,000,000 shares authorized, 148,433 shares issued and outstanding		148			148
Additional paid-in capital		125,999			71,465
Stock payable		38,500,000			-
Accumulated deficit		(38,755,694	)		(157,219	)
Total Stockholders' Deficit		(129,547	)		(85,606	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	-		$	-

The accompanying notes are an integral part of these unaudited financial statements.

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STARTECH LABS, INC.

(formerly UPPERSOLUTION.COM)

STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	February 29,			February 28,			February 29,			February 28,
	2020			2019			2020			2019

Revenues	$	-		$	-		$	-		$	-
Cost of Goods Sold		-			-			-			-
Gross Profit		-			-			-			-

Operating Expenses
General and administration		450			450			2,350			1,350
Professional		4,411			4,799			23,633			27,370
Stock based compensation		38,500,000			-			38,500,000			-
Total operating expenses		38,504,861			5,249			38,525,983			28,720

Net loss from operations		(38,504,861	)		(5,249	)		(38,525,983	)		(28,720	)

Other expense
Interest expense		(11,811	)		-			(72,492	)		-
Total other expense		(11,811	)		-			(72,492	)		-

Net loss before taxes		(38,516,672	)		(5,249	)		(38,598,475	)		(28,720	)
Provision for income taxes					-			-			-
Loss from Continued Operations		(38,516,672	)		(5,249	)		(38,598,475	)		(28,720	)

Discontinued operations
Income (Loss) from discontinued operations		-			(3,951	)		-			(3,396	)
Income from Discontinued Operations, Net of Tax Benefits		-			(3,951	)		-			(3,396	)

Net loss	$	(38,516,672	)	$	(9,200	)	$	(38,598,475	)	$	(32,116	)

Net Loss Per Common Share – Basic and Diluted
Continuing operations	$	(259.49	)	$	(0.04	)	$	(260.04	)	$	(0.19	)
Discontinued operations	$	-		$	(0.03	)	$	-		$	(0.02	)
Net loss	$	(259.49	)	$	(0.06	)	$	(260.04	)	$	(0.22	)

Weighted Average Common Shares Outstanding		148,433			148,433			148,433			148,433

The accompanying notes are an integral part of these unaudited financial statemen

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STARTECH LABS, INC.

(formerly UPPERSOLUTION.COM)

STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED FEBRUARY 29, 2020 AND 2019

(Unaudited)

					Additional
	Common stock				paid-in		Stock		Accumulated
	Shares		Amount		capital		Payable		Deficit			Total

Balance, May 31, 2019		148,433	$	148	$	71,465	$	-	$	(157,219	)	$	(85,606	)
Beneficial conversion feature		-		-		45,746		-		-			45,746
Net loss for the period		-		-		-		-		(65,119	)		(65,119	)
Balance, August 31, 2019		148,433	$	148	$	117,211	$	-	$	(222,338	)	$	(104,979	)
Beneficial conversion feature		-		-		8,788		-		-			8,788
Net loss for the period		-		-		-		-		(16,684	)		(16,684	)
Balance, November 30, 2019		148,433	$	148	$	125,999	$	-	$	(239,022	)	$	(112,875	)
Stock based compensation		-		-		-		38,500,000		-			38,500,000
Net loss for the period		-		-		-		-		(38,516,672	)		(38,516,672	)
Balance, February 29, 2020		148,433	$	148	$	125,999	$	38,500,000	$	(38,755,694	)	$	(129,547	)

					Additional
	Common stock				paid-in		Stock		Accumulated
	Shares		Amount		capital		Payable		Deficit			Total

Balance, May 31, 2018		148,433	$	148	$	71,465	$	-	$	(118,356	)	$	(46,743	)
Net loss for the period		-		-		-		-		(8,915	)		(8,915	)
Balance, August 31, 2018		148,433	$	148	$	71,465	$	-	$	(127,271	)	$	(55,658	)
Net loss for the period		-		-		-		-		(14,001	)		(14,001	)
Balance, November 30, 2018		148,433	$	148	$	71,465	$	-	$	(141,272	)		(69,659	)
Net loss for the period		-		-		-		-		(9,200	)		(9,200	)
Balance, February 28, 2019		148,433	$	148	$	71,465	$	-	$	(150,472	)		(78,859	)

The accompanying notes are an integral part of these unaudited financial statements.

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STARTECH LABS, INC.

(formerly UPPERSOLUTION.COM)

STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	February 29,			February 28,
	2020			2019

Cash Flows from Operating Activities:
Net loss	$	(38,598,475	)	$	(32,116	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt		-			3,951
Stock-based compensation		38,500,000			-
Amortization of debt discount		54,534			-
Changes in operating assets and liabilities:
Accounts receivable		-			(555	)
Accounts payable		(2,478	)		(5,910	)
Accrued interest		17,958			-
Net Cash Used in Operating Activities		(28,461	)		(34,630	)

Cash Flows from Financing Activities:
Due to related party		-			34,630
Proceeds from issuance of convertible notes		28,461			-
Net Cash Provided by Financing Activities		28,461			34,630

Net Change in Cash and Cash Equivalents		-			-
Cash and Cash Equivalents, beginning of period		-			-
Cash and Cash Equivalents, end of period	$	-		$	-

Supplemental Disclosure Information:
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	-

Non-Cash Disclosure:
Beneficial conversion feature	$	54,534		$	-

The accompanying notes are an integral part of these unaudited financial statements.

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STARTECH LABS, INC.

(formerly UPPERSOLUTION.COM)

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29,2020

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization, Nature of Business and Trade Name

UpperSolution.com (the Company) was incorporated in the State of Nevada on April 20, 2013 with the principal business objective of creating an independent and unbiased mobile app that enables consumers to find the best cellular rate plan for their need and getting real-time notifications when a new cellular plan is available.

The Company’s activities are subject to significant risks and uncertainties including failing to secure additional funding to operationalize the Company’s apps before another company develops similar apps.

On January 10, 2018, the Company, Analog Nest Technologies, Inc., and the shareholders of Analog Nest Technologies, Inc. closed a transaction pursuant to that certain Share Exchange Agreement (the “Share Exchange Agreement”), whereby the Company acquired 100% of the outstanding shares of common stock of Analog Nest (the “Analog Nest Stock”) from the Analog Nest Shareholders. In exchange for the Analog Nest Stock the Company issued 100,000 shares of its common stock. The Company’s Director and Chief Executive Officer held all of the shares of Analog Nest Technologies, Inc. at the time of the transaction.

Analog Nest was incorporated in the State is a mobile application company focused on utility/entertainment apps for Google’s Android and Apple’s iOS platforms.

On June 26, 2019, a majority of our stockholders and our board of directors approved a change of name of our company to “Startech Labs, Inc.” and a reverse stock split of our issued and outstanding shares of common stock on a ninety-five (95) old for one (1) new basis. The name change and reverse stock split became effective on July 17, 2019.

Disposal of business

On December 1, 2018, the Company disposed of its mobile application company subsidiary, Analog Nest Technologies, Inc.

The company is currently evaluating future business opportunities.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies of Startech Labs, Inc. (the Company) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

In the opinion of the company’s management, the accompanying unaudited interim financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the company as of February 29, 2020 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended February 29, 2020 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto included in the company’s Annual Report on Form 10-K for the year ended May 31, 2019 filed with the SEC on August 21, 2019.

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Use of Estimates

The preparation of financial statements in accounting principles generally accepted in the United States of America 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. A change in managements’ estimates or assumptions could have a material impact on the Company’s financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. The Company’s financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current year presentation.

Revenue Recognition

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company recognizes revenue from the sale of products and services in accordance with ASC 606,”Revenue Recognition”. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

	•	identify the contract with a customer;

	•	identify the performance obligations in the contract;

	•	determine the transaction price;

	•	allocate the transaction price to performance obligations in the contract; and

	•	recognize revenue as the performance obligation is satisfied.

We are currently seeking new business opportunities with established business entities for merger with or acquisition of a target business.

Income Taxes

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes.

Basic and Diluted Net Loss Per Share

Net loss per share is calculated in accordance with Codification topic 260, “Earnings Per Share” for the periods presented. Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share has not been presented because there are no dilutive items. Diluted net loss per share is based on the assumption that all dilutive stock options, warrants, and convertible debt are converted or exercised by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during periods of net profit, only when the average market price of the common stock during the period exceeds the exercise or conversion price of the items.

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For the nine months ended February 29, 2020 and February 28, 2019, respectively, the following convertible notes were excluded from the computation of diluted net loss per shares as the result of the computation was anti-dilutive:

February 29,

2020

February 28,

2019

(Shares)

Convertible notes payable

116,126

Fair Value of Financial Instruments

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as 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, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.

As of February 29, 2020, and May 31, 2019, the carrying value of accounts payable and loans that are required to be measured at fair value, approximated fair value due to the short-term nature and maturity of these instruments.

Discontinued Operations

The Company follows ASC 205-20,” Discontinued Operations,” to report for disposed or discontinued operations.

Recent Accounting Pronouncements

Management has considered all other recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

NOTE 3 – GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.

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Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

The Company has incurred net losses since inception on April 20, 2013 through February 29,2020 totaling $38,755,694 and has negative working capital at February 29,2020. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the Business paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital.

Historically, it has mostly relied upon funds from the sale of shares of stock and from acquiring loans to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.

In the past year, the Company funded operations by using cash proceeds received through related party proceeds. For the coming year, the Company plans to continue to fund the Company through related party issuances, debt and securities sales and issuances until the company generates enough revenues through the operations as stated above.

NOTE 4 – COMMON STOCK

The Company has authorized seventy-five million (75,000,000) shares of common stock with a par value of $0.001.

On June 26, 2019, a majority of our stockholders and our board of directors approved a reverse stock split of our issued and outstanding shares of common stock on a ninety-five (95) old for one (1) new basis. The reverse stock split became effective on July 17, 2019. The reverse stock split has been retrospectively reflected in the financial statements for the year ended May 31, 2019.

As of February 29,2020, and May 31, 2019, 148,433 shares of common stock were issued and outstanding.

Stock Payable for compensation

During the nine months ended February 29, 2020, the Company recorded stock payable for 55,000,000 outstanding common shares of $38,500,000 based on stock trading price at $0.70 per share to the Company’s Chief Executive Officer as compensation for the payment of salary for the year 2019. The common shares were subsequently issued on March 9, 2020. (see Note 8)

NOTE 5 – RELATED PARTY TRANSACTIONS

On June 1, 2019, the Company issued convertible notes to three un-affiliated parties for an aggregate amount of $81,859 to replace the full amount of related party advances that had been provided to the Company through May 31, 2019. The convertible notes are due on demand, bear interest at 25% per annum and are convertible at $0.95 per share for the Company common stock.

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NOTE 6 – CONVERTIBLE NOTES

	February 29,			May 31,
	2020			2019
Convert Notes - June 2019	$	81,859		$	-
Convert Notes - August 2019		14,716			-
Convert Notes - November 2019		8,789			-
Convert Notes - February 2020		4,956			-
		110,320			-
Less current portion of convertible notes payable		(110,320	)		-
Long-term convertible notes payable	$	-		$	-

On June 1, 2019, the Company issued convertible notes to three unaffiliated parties for an aggregate amount of $81,859 to replace the full amount of related party advances that had been provided to the Company through May 31, 2019. The convertible notes are due on demand, bear interest at 25% per annum and are convertible at $0.95 per share for the Company common stock. The total debt discount from the beneficial conversion features of $38,775 was expensed upon issuance of the notes.

On August 31, 2019, the Company issued a convertible note to an unaffiliated party of $14,717 for paying operating expenses on behalf of the Company. The convertible note is due on demand, bears interest at 25% per annum and is convertible at $0.95 per share for the Company common stock. The debt discount from the beneficial conversion of $6,971 was expensed upon issuance of the note.

On November 30, 2019, the Company issued a convertible note to an unaffiliated party of $8,789 for paying operating expenses on behalf of the Company. The convertible note is due on demand, bears interest at 25% per annum and is convertible at $0.95 per share for the Company common stock. The debt discount from the beneficial conversion of $8,788 was expensed upon issuance of the note.

On February 29, 2020, the Company issued a convertible note to an unaffiliated party of $4,956 for paying operating expenses on behalf of the Company. The convertible note is due on demand, bears interest at 25% per annum and is convertible at $0.95 per share for the Company common stock. The debt discount from the beneficial conversion of $0 was expensed upon issuance of the note.

During the nine months ended February 29,2020, the Company incurred note interest expense of $17,958.

As of February 29,2020, the convertible notes payable and accrued note interest payable was $110,320 and $17,958, respectively.

NOTE 7 – DISCONTINUED OPERATIONS

On December 1, 2018, the Company disposed of its subsidiary that focused on online mobile applications. The change of the business qualified as a discontinued operation of the Company and accordingly, the Company has excluded results of the operations from its Consolidated Statements of Operations to present this business in discontinued operations.

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The following table shows the results of operations which are included in the income from discontinued operations:

	For the Three Months Ended					For the Nine Months Ended
	February 29,					February 29,
	2020		2019			2020		2019

Revenues	$	-	$	-		$	-	$	555
Cost of Goods Sold		-		-			-		-
Gross Profit		-		-			-		555

Operating Expenses
General and administration		-		3,951			-		3,951
Total operating expenses		-		3,951			-		3,951

Income from operations		-		(3,951	)		-		(3,396	)
Provision for income taxes				-			-		-
Income from discontinued operations	$	-	$	(3,951	)	$	-	$	(3,396	)

NOTE 8 – SUBSEQUENT EVENT

On March 9, 2020, the Company issued 55,000,000 shares of restricted common stock valued at $38,500,000 based on stock trading price at $0.70 per share to the Company’s Chief Executive Officer as compensation for the payment of the salary for the year 2019.

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to the December 31, 2019 to the date these financial statements were issued and has determined that it does not have other material subsequent events to disclose in these financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

As used in this quarterly report, the terms “we”, “us”, “our company”, mean Startech Labs, Inc., a Nevada corporation, unless otherwise indicated.

Overview

We were incorporated in the State of Nevada on April 20, 2013 under the name UpperSolution.com with the principal business objective of creating an independent and unbiased mobile app that enables consumers to find the best cellular rate plan for their need and getting real-time notifications when a new cellular plan is available.

On January 10, 2018, our company, Analog Nest Technologies, Inc. (“Analog Nest”) and the shareholders of Analog (the “Analog Nest Shareholders”) closed a transaction pursuant a share exchange agreement dated January 10, 2018, whereby our company acquired 100% of the outstanding shares of common stock of Analog Nest (the “Analog Nest Stock”) from the Analog Nest Shareholders. In exchange for the Analog Nest Stock our company issued 100,000 shares of our common stock to the Analog Nest Shareholders.

Analog Nest was incorporated in the State of Nevada on September 8, 2017 as a mobile application (“app”) company focused on utility/entertainment apps for Google’s Android and Apple’s iOS platforms. In December 2017, Analog Nest acquired the following apps: Old Fart Booth, Old Fart Booth Pro, Ugly Face Booth, Ugly Santa Booth, Baldy – Bald Photo Booth, Fatty – Make Funny Fat Faces, Slender Man Scary Prank, Anime Booth, Anime Booth Free, Minecart Mayhem, Pimp My Pet, Pimp My Dog, Cavity Detector – Scary Prank, Mustacher, Alex From Target, A Farm Animal Salon, Mustacher Pro, Pimp My Cat, and Animal Dress Up Salon.

We have not declared bankruptcy, been involved in receivership or any similar proceeding.

Our office is located at 244 Madison Avenue, New York, NY 10016-2817 and our telephone number is (802) 255-4212. We do not own any property and we do not have a corporate website.

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Our Current Business

We are in the business of the creation and development of utility/entertainment apps for Google’s Android and Apple’s iOS platforms, through our wholly owned subsidiary, Analog Nest.

Product Lines

Analog Nest operates primarily in the computer/software applications industry and specifically in the development of Android and iOS apps for mobile devices. In the past five years the number of total apps on the Google Play Store has increased from around 200,000 in 2011 to around 1.6 million in 2015 and currently about 2 million apps in the Apple’s App store as well. The Google Play Store and Apple’s App Store are generally referred to herein as an “App Store”.

Analog Nest generates revenue from selling certain apps in the App Stores and from displaying advertisements in certain applications. Approximately eighty percent (80%) of Analog Nest revenue is generated from the sales of Apps and the remaining revenue comes for advertising.

Results of Operations

The following summary of our operations should be read in conjunction with our unaudited financial statements for the nine months ended February 29, 2020 and February 28, 2019.

Three months ending February 29, 2020 compared to three months ending February 28, 2019:

	Three Months Ended
	February 29,			February 28,
	2020			2019			Change
Revenue	$	-		$	-		$	-
Operating Expenses
General and administrative expenses		450			450			-
Professional fees		4,411			4,799			(388	)
Stock- based compensation		38,500,000			-			38,500,000
Other income (expense)		(11,811	)		-			(11,811	)
Loss from continued operations		(38,516,672	)		(5,249	)		(38,511,423	)
Income (Loss) from discontinued operations		-			(3,951	)		3,951
Net Loss	$	(38,516,672	)	$	(9,200	)	$	(38,507,472	)

Revenue

We have not generated any revenues for the three months ended February 29, 2020 and February 28, 2019.

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Operating expense

Operating expenses for three months ended February 29, 2020 included general and administrative expenses of $450, professional fees of $4,411 and stock-based compensation of $38,500,000, respectively. Operating expenses for three months ended February 28, 2019 included general and administrative expenses of $450, and professional fees of $4,799, respectively. The increase in operation expenses was mainly attributed to the increase in stock-based compensation incurred during the three months ended February 29, 2020.

Other expense

Other expense for three months ended February 29, 2020 included convertible note interest expense of $11,811.

Loss from continued operations

For the three months ended February 29, 2020, our company incurred loss from continued operations of $38,516,672, compared to $5,249 incurred during the three months ended February 28,2019. The increase in loss from continued operations was mainly attributed to the increase in stock-based compensation and other expense incurred during the three months ended February 29, 2020.

Loss from discontinued operations

On December 1, 2018, our company disposed of its mobile application company subsidiary, Analog Nest Technologies, Inc. During the three months ended February 29, 2020 and February 28, 2019, our company recorded loss from discontinued operations of $NIL and $3,951, respectively.

Net loss

Net loss totaled $38,516,672 for the three months ended February 29, 2020, compared to a net loss for the three months ended February 28, 2019 of $9,200.

Nine months ending February 29, 2020 compared to nine months ending February 28, 2019:

	For the Nine Months Ended
	February 29,			February 28,
	2020			2019			Change
Revenue	$	-		$	-		$	-
Operating Expenses
General and administrative expenses		2,350			1,350			1,000
Professional fees		23,633			27,370			(3,737	)
Stock - based compensation		38,500,000			-			38,500,000
Other income (expense)		(72,492	)		-			(72,492	)
Loss from continued operations		(38,598,475	)		(28,720	)		(38,569,755	)
Income (Loss) from discontinued operations		-			(3,396	)		3,396
Net Loss	$	(38,598,475	)	$	(32,116	)	$	(38,566,359	)

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Revenue

We have not generated any revenues for the nine months ended February 29, 2020 and February 28, 2019.

Operating expense

Operating expenses for nine months ended February 29, 2020 included general and administrative expenses of $2,350, professional fees of $23,633 and stock-based compensation of $38,500,000, respectively. Operating expenses for nine months ended February 28, 2019 included general and administrative expenses of $1,350 and professional fees of $27,370, respectively. The increase in operation expenses was mainly attributed to the increase in stock-based compensation incurred during the nine months ended February 29, 2020

Other expense

Operating expense for nine months ended February 29, 2020 included amortization of convertible note discount on beneficial conversion feature of $54,534 and convertible note interest expense of $17,958.

Loss from continued operations

For the nine months ended February 29, 2020, our company incurred loss from continued operations of $38,598,475, compared to $28,720 incurred during the nine months ended February 28, 2019. The increase in loss from continued operations was mainly attributed to the increase in stock-based compensation and other expense incurred during the nine months ended February 29, 2020.

Loss from discontinued operations

On December1,2018, our company disposed of its mobile application company subsidiary, Analog Nest Technologies, Inc. During the nine months ended February 29, 2020 and February 28, 2019, our company recorded loss from discontinued operations of $NIL and $3,396, respectively.

Net loss

Net loss totaled $38,598,475 for the nine months ended February 29, 2020, compared to a net loss for the nine months ended February 28,2019 of $32,116.

Liquidity and Capital Resources

Working Capital

	February 29,			May 31,
	2020			2019			Change
Current Assets	$	-		$	-			-
Current Liabilities	$	129,547		$	85,606			43,941
Working Capital Deficiency	$	(129,547	)	$	(85,606	)		(43,941	)

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The change in working capital deficiency during the nine months ended February 29,2020 was primarily a result of an increase of convertible notes and accrued interest payable.

	For the Nine Months Ended
	February 29,			February 28,
	2020			2019
Cash Flows used in Operating Activities	$	(28,461	)	$	(34,630	)
Cash Flows used in Investing Activities		-			-
Cash Flows from Financing Activities		28,461			34,630
Net Change in Cash and Cash Equivalents	$	-		$	-

Cash Flows

Cash Flow from Operating Activities

During the nine months ended February 29, 2020, our company used $28,461 in cash from operating activities, compared to $34,630 cash used in operating activities during the nine months ended February 28, 2019.

The cash used from operating activities for the nine months ended February 29,2020 was attributed to a net loss of $38,598,475, increased by a decrease in accounts payable of $2,478 and was offset by stock-based compensation of $38,500,000, amortization of debt discount of $54,534, and an increase in accrued interest of $17,958.

The cash used from operating activities for the nine months ended February 28,2019 was attributed to a net loss of $32,116, increased by an increase in accounts receivable of $555 and a decrease in accounts payable of $5,910 and was offset by bad debts of $3,951.

Cash Flow from Investing Activities

During the nine months ended February 29, 2020 and February 28, 2019, our company did not use any cash in investing activities.

Cash Flow from Financing Activities

During the nine months ended February 29,2020, our company received $28,461 from the issuance of convertible notes compared to $34,630 provided by loan from related parties during the nine months ended February 29,2019.

Off-Balance Sheet Arrangements

We have no 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 is material to stockholders.

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Off-Balance Sheet Arrangements

Going Concern

We have incurred net loss since our inception on April 20, 2013 through February 29, 2020 totaling $38,755,694 and have completed only the preliminary stages of our business plan. We anticipate incurring additional losses before realizing any revenues and will depend on additional financing in order to meet our continuing obligations and ultimately, to attain profitability. Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain. Accordingly, our independent auditors’ report on our financial statements for the year ended May 31, 2019 includes an explanatory paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the notes to our financial statements describing the circumstances leading to this disclosure. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.

Recently Issued Accounting Pronouncements

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation Of Disclosure Controls And Procedures

As required by Rule 13a-15/15d-15 under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as of February 29, 2020, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company’s management, our President (our Principal Executive Officer and Principal Accounting Officer). Based upon the results of that evaluation, our management has concluded that, as of February 29, 2020, our company’s disclosure controls and procedures were not effective and do not provide reasonable assurance that material information related to our company 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 the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions on required disclosure.

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Management’s Report On Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

	•	Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company;

	•	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and

	•	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our company’s assets that could have a material effect on the financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of February 29, 2020. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in INTERNAL CONTROL -- INTEGRATED FRAMEWORK.

Our management concluded that, as of February 29, 2020, our internal control over financial reporting was effective based on the criteria in INTERNAL CONTROL -- INTEGRATED FRAMEWORK issued by the COSO.

This quarterly report does not include an attestation report of our company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our company’s independent registered public accounting firm pursuant to rules of the SEC that permit our company to provide only management’s report in this quarterly report.

Changes In Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation described above during the quarter ended February 29, 2020 that has materially affected or is reasonably likely to materially affect our internal controls over financial reporting.

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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 beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

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Item 6. Exhibits

		INCORPORATED BY REFERENCE
EXHIBIT NUMBER	Exhibit Description	Form	Exhibit	Filing Date
(3)	(i) Articles of Incorporation, (ii) Bylaws
3.1*	Articles of Incorporation	10-K	3.1	August 21, 2019
3.2	By-Laws	S-1	3.2	August 16, 2013
3.3*	Certificate of Amendment	10-K	3.3	August 21, 2019
(31)	(i) Rule 13a-14(a)/15d-14(a) Certifications, (ii) Rule 13a-14/15d-14 Certifications
31.1*	Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer and Chief Financial Officer
(32)	Section 1350 Certifications
32.1**	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
(100)	Interactive Data File
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

_________

*Filed herewith.

**Furnished herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		STARTECH LABS, INC.
		(Registrant)

Dated: April 8, 2020		/s/ Kevin So
		Kevin So
		President, Chief Executive Officer, Secretary and Director
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Startech Labs, Inc. - FORM 10-Q - April 8, 2020

Attached files

Startech Labs, Inc. Reports