FRONTERA GROUP INC. - Annual Report: 2018 (Form 10-K)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

 

For the fiscal year ended June 30, 2018

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 333-198524

 

 

FRONTERA GROUP INC.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada		46-4429598
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
701 S Carson Street, Suite 200 Carson City, NV		89701
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number including area code: 909-374-5750

 

Securities registered under Section 12(b) of the Exchange Act:

 

Title of each class		Name of each exchange on which registered
Common Stock
$0.00001 par value		None

 

Securities registered under Section 12(g) of the Exchange Act:

 

None

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act     

Yes [   ]   No [ X ]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. [   ]

 

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

 

Indicate by check mark whether the registrant (1) 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 [    ]

 

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 [ X ]   No [   ]

 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this From 10-K.  [   ]

 

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.   

 

Large accelerated filer [   ]                                                                                        Accelerated filer [   ]

Non-accelerated filer [   ] (Do not check if a smaller reporting company)               Smaller reporting company [ X ]

Emerging growth company [X ]

Emerging Growth Company Status

We may qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or “JOBS Act” and we may be only subject to reduced public company reporting requirements. We may be allowed to provide in this prospectus more limited disclosures than an issuer that would not so qualify. Furthermore, for as long as we remain an emerging growth company, we will qualify for certain limited exceptions from investor protection laws such as the Sarbanes Oxley Act of 2002 and the Investor Protection and Securities Reform Act of 2010. Please read Risk Factor and “Emerging Growth Company Status.”

 

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. [X]

 

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

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal quarter

 

As of December 31, 2017 the aggregate market value of voting stock held by non-affiliates of the registrant, based on the price at which the common equity was sold, was $820,000.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Articles of Incorporation, Bylaws, Subscription Agreement and Management Consultant Agreements are incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 3, 2014.

 

 

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TABLE OF CONTENTS

	Part I
Item 1.	Business
Item  1.A	Risk Factors
Item 2.	Properties
Item 3.	Legal Proceedings
Item 4.	Mine Safety Disclosures
	Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.	Selected Financial Data
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9 A.	Controls and Procedures
	Part III
Item 10.	Directors, Executive Officers and Corporate Governance
Item 11.	Executive Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13.	Certain Relationships and Related Transactions, and Director Independence
Item 14.	Principal Accounting Fees and Services.
	Part IV
Item 15.	Exhibits, Financial Statement Schedules.
	Signatures

 

 

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FRONTERA GROUP INC.

FORWARD LOOKING STATEMENTS

This Annual Report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. 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, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which 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. These risks include, by way of example and not in limitation:

·

the uncertainty of profitability based upon our history of losses;

·

risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;

·

risks related to our international operations and currency exchange fluctuations; and

·

other risks and uncertainties related to our business plan and business strategy.

 

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. 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 financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares in our capital stock.

 

As used in this annual report, the terms “we”, “us”, “our”, the “Company” and “Frontera Group” mean Frontera Group Inc. unless otherwise indicated.

 

Item 1.   BUSINESS

 

Our Business

 

Frontera Group Inc. is a management company providing business development and market consultancy services. Our target clients are various business who are looking for assistance in the areas of marketing, sales and logistics as they expand their business operations. We specifically target these types of companies because of experience of our management in providing marketing and consulting services.

 

We generate revenue by providing consulting services to small and medium businesses.  We acquire customers through direct marketing and referrals.

However, currently we have no business operations and have not generated any revenue.

 

Our current services include:

 

Market and Competitor Research

 

Breaking into new markets is inherently risky due to the unfamiliarity of the competition and consumer demand. Our comprehensive market and competitor research allows our customers to have insight into their new target market. Our customers are better able to price their products and services competitively and position their brand effectively. Market research services include market, economic and political overview, logistics and cost environment, partnership identification, competitor research including availability of distribution channels, competitor promotional strategies and identification of specific differentiation opportunities. Market and competitor research is the first step for a client's launch into a new market. These services are billed on a project basis, with the scope determined in collaboration with the client. Research can be done as a one-off service prior to a new launch, or as an on-going project with a smaller scope to monitor competition in a particular market.

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Marketing Strategy Development

 

Essential to the success of entering a new market is an appropriate and effective marketing strategy. After establishing a budget and target market, we develop a marketing plan that can help our clients reach their potential customers. A core part of our marketing services is the design and deployment of specialized reports that capture, measure and analyze target market data to provide insights into market opportunities, value proposition, positioning and messaging development. The result is a custom Business Development plan that addresses overall marketing strategy for a launch to a new market.

 

Translation Services

 

Launching a product in a new market often requires adaptation of packaging, corporate identity documents, and marketing materials to a new language. Our translation services ensure complete compatibility with local culture and market conditions for any corporate communication materials.

 

Trade show and commercial event management

 

An important part of a product or service launch is effective presentation at industry and consumer trade shows. We ensure an effective presentation at trade shows by developing target market appropriate booth design and sales material, as well as helping to manage staffing and logistics. We also consult and manage other commercial events, such as marketing events, product demos, and public relations events.

 

Administration and On-Going Business services

 

We provide services offering ongoing assistance. The scope of services depends on customer requirements. We can provide one-off consultations regarding marketing or distribution strategies, resulting in short-term engagements. For customers who require extra support, we can act as broker of record for a line of products in a specific geographic area. We customarily charge the client a flat monthly fee, with an additional commission depending on a portion of sales made in the target market.

On August 9, 2017, the Company entered into separate Operating Management Agreements with three Chinese companies including Nanjing Xingfeng Agriculture Ecology Co, Ltd., Guoyang Huadu Properties Co, Ltd., and Xingguo Red World Camellia Oil Co., Ltd. Under these operating management agreements, for the term of 10 years, the Company will serve as the consultant for these companies to manage their business operations. The services the Company is to provide includes advice and assistance relating to development of the general business operations; advice on investment, financing, acquisition, disposition and allocation of major assets; advice and assistance in relation to the staffing, including assistance in the recruitment and employment of management personnel, administrative personnel and staff; advice and assistance in relation to research and development and strategic planning. In addition, the Company has the right to acquire equity ownership in these companies during the term of these agreements. The Company will receive 20% of their post-tax net profit as annual compensation under the agreement.

Patent, Trademark, License and Franchise Restrictions and Contractual Obligations and Concessions

 

We do not own, either legally or beneficially, any patents or trademarks.

 

Research and Development Activities

 

Other than time spent researching our proposed business we have not spent any funds on research and development activities to date. We do not currently plan to spend any funds on research and development activities in the future.

Compliance with Environmental Laws

 

We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business. 

 

Employees

 

As of the date of this Annual Report we have one employee, Gan Ren, who is the sole officer of the Company.

 

Reports to Securities Holders

 

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We provide an annual report that includes audited financial information to our shareholders. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including filing Form 10K annually and Form 10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549.

 

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

 

Item 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2.    PROPERTIES

 

We do not hold ownership or leasehold interest in any property and pay our office rent on a monthly basis.

 

Item 3.    LEGAL PROCEEDINGS

 

We are not currently a party to any legal proceedings, and we are not aware of any pending or potential legal actions.

 

Item 4.    MINE SAFETY DISCLOSURES

 

Not applicable to our Company.

PART II

 

 

Item 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

There is a limited public market for our common shares.  Our common stock has been quoted on the OTCQB Board since April 22, 2015, under the symbol “FRTG”.  Because we are quoted on the OTCQB Board, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

 

Holders.

 

As of November 8, 2018, there were approximately 12 record holders of 307,280,150 shares of the Company's common stock.

 

Dividends.

 

The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company's business.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

None.

 

Recent sales of unregistered securities.

  

On March 12, 2016, the Company issued 300,000,000 shares of common stock to Nanjing Dayu Xianneng Foods Co, Ltd for the Purchase Price of US $ 0.00003 per share, total of US$ 9,000.00. The issuance of these shares is pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of1933.

 

Issuer Purchases of Equity Securities

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We did not repurchase any of our equity securities during the years ended June 30, 2018 and 2015.

 

Item 6. SELECTED FINANCIAL DATA

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission.

 

Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.

“Emerging Growth Company” Status

Frontera Group Inc. is an “emerging growth company” under the Jumpstart Our Business Startups Act and will remain an "emerging growth company" until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary of its initial public offering, (c) the date on which Frontera Group has, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (d) the date on which Frontera Group is deemed a "large accelerated filer" (with at least $700 million in public float) under the Securities and Exchange Act of 1934 (the "EXCHANGE ACT").

For so long as Frontera Group remains an "emerging growth company" as defined in the JOBS Act, it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. Frontera Group cannot predict if investors will find its shares of common stock less attractive because Frontera Group will rely on some or all of these exemptions. If some investors find Frontera Group's shares of common stock less attractive as a result, there may be a less active trading market for its shares of common stock and its stock price may be more volatile.

If Frontera Group avails itself of certain exemptions from various reporting requirements, its reduced disclosure may make it more difficult for investors and securities analysts to evaluate Frontera Group and may result in less investor confidence.

The recently enacted JOBS Act is intended to reduce the regulatory burden on "emerging growth companies". Frontera Group meets the definition of an "emerging growth company" and so long as it qualifies as an "emerging growth company," it will not be required to:

 

· have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

· comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

· submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and

· disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

 

In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

  

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In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, Frontera Group is choosing to "opt out" of such extended transition period, and as a result, Frontera Group will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that its decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 

Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, we will be required to provide additional disclosure in our SEC filings.  However, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.

Results of operations for the year ended June 30, 2018, and for the year ended June 30, 2017.

 

Revenue

 

Our gross revenue for the year ended June 30, 2018 and for the year ended June 30, 2017 was $0 and $0 respectively. Our cost of revenues for the year ended June 30, 2018 was $0 (June 30, 2017: $0) resulting in a gross profit of $0 (June 30, 2017: $0). All of our revenues derived from consulting services related to market research, feasibility studies and translation. The reason that we did not generate revenue in the year ended June 30, 2018 was that we changed management in January 2017 and our new management was conducting research on the business strategy and trying to engage new customers. So far we are still putting together the team to perform the services and have not been able to provide substantial services and received the compensation from our customers.

 

Costs and Expenses

 

The major components of our expenses for the year ended June 30, 2018, and for the year ended June 30, 2017 are outlined in the table below:

 

	For the Year  Ended June 30, 2018		For the Year Ended June 30, 2017
Professional fees $	17,050	$		21,300
General and administrative	3,257			2,490
$	20,307	$		23,790

 

During the year ended June 30, 2018, the Company incurred $20,307 in operating expenses compared to $23,790 for the year ended June 30, 2017. The decrease in operating expenses is due to the decrease in professional fees

 

Liquidity and Capital Resources

 

		As of		As of
		June 30, 2018		June 30, 2017
Total assets	$	216	$	7,825
Total liabilities		(26,286)		(22,913)
Working capital deficiency	$	(26,070)	$	(15,088)

 

Liquidity

 

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If we are not successful in expanding our clientele base, maintaining profitability and positive cash flow, additional capital may be required to maintain ongoing operations. We have explored and are continuing to explore options to provide additional financing to fund future operations as well as other possible courses of action. Such actions include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans and cash advances from our directors or other third parties, and other similar actions. There can be no assurance that we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, our directors, or other third parties, or any of the actions discussed above. If we cannot sustain profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.

 

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Cash Flows

 

The table below, for the period indicated, provides selected cash flow information:

 

		For the Year Ended June 30, 2018		For the Year Ended June 30, 2017
Net cash used in operating activities	$	(16,884)	$	(11,175)
Cash provided by financing activities		9,275		10,000
Net increase (decrease) in cash	$	(7,609)	$	(1,175)

 

Cash Flows from Operating Activities

 

Our cash used in operating activities as of June 30, 2018 of $16,884 (June 30, 2017: $11,175). The decrease is due to the increase in account payables.  

Cash Flows from Investing Activities

 

We did not generate any cash from investing activities during the year ended June 30, 2018.

Cash Flows from Financing Activities

 

During the year ended June 30, 2018, the Company received capital contribution from officer in the total amount of $9,275.

 

Management expects to keep operating costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek, in addition to equity financing, other sources of financing (e.g. line of credit, shareholder loan) on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all.   

 

If we are unable to generate profits sufficient to cover our operating costs or to obtain additional funds for our working capital needs, we may need to cease or curtail operations.  Furthermore, there is no assurance the net proceeds from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Company’s operations.

 

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 are material to stockholders.

 

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

 

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Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

FRONTERA GROUP INC.

 

June 30, 2018

 

Index to the Financial Statements

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Frontera Group Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Frontera Group Inc. (the “Company”) as of June 30 2018 and 2017, and the related statements of operations, changes in stockholders’ deficit, and cash flows for each of the years in the two-year period ended June 30 2018, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30 2018, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements as of and for the year ended June 30, 2018 have been prepared assuming the Company will continue as a going concern.  As more fully described in Note 3 to the financial statements, the Company has no viable operations or significant assets and is dependent upon its major stockholder to provide sufficient working capital to maintain the integrity of the corporate entity.  These conditions and the Company’s lack of equity and viable operations, raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans regarding these matters are also described in Note 3.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.  Our opinion is not modified with respect to this matter.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2017.

Wei, Wei & Co., LLP

Flushing, New York

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November 21, 2018

FRONTERA GROUP INC.
BALANCE SHEETS
			June 30, 2018			June 30, 2017
Current Assets:
Cash			$                         216			$                     7,825
Total current assets			216			7,825
Total Assets			$                         216			$                     7,825
Current Liabilities:
Accounts payable			$                    15,573			$                   12,200
Advance from officer			10,713			10,713
Total current liabilities			26,286			22,913
Total liabilities			26,286			22,913
Commitments and Contingencies			-			-
Stockholders' (Deficit):
Common stock par value $0.00001 per share: 1,000,000,000 shares authorized; 307,280,150 and 307,280,000 shares issued and outstanding at June 30, 2018 and June 30, 2017, respectively			3,073			3,073
Additional paid-in capital			125,300			115,975
Deficit			(154,443)			(134,136)
Total stockholders' (deficit)			(26,070)			(15,088)
Total Liabilities and Stockholders' (Deficit)			$                        216			$                       7,825

See report of independent registered public accounting firm and accompanying notes to the financial statements.

 

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FRONTERA GROUP INC.
STATEMENTS OF OPERATIONS
				For the Year		For the Year
				Ended		Ended
				June 30, 2018		June 30, 2017
Revenue				$                            -		$                            -
Operating Expenses:
Professional Fees				17,050		21,300
General and administrative expenses				3,257		2,490
	Total Operating Expenses			20,307		23,790
Loss Before Income Tax Provision				(20,307)		(23,790)
Income Tax Provision				-		-
Net Loss				$                 (20,307)		$                 (23,790)
Net Loss  Per Common Shares - Basic and Diluted				$                     (0.00)		$                    (0.00)
Weighted Average Common Shares Outstanding - Basic and        Diluted				307,280,092		307,280,000

See report of independent registered public accounting firm and accompanying notes to the financial statements.

 

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See report of independent registered public accounting firm and accompanying notes to the financial statements.

 

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FRONTERA GROUP INC.
CONDENSED STATEMENTS OF CASH FLOWS
									The Year			The Year
							Ended					Ended
									June 30, 2018			June 30, 2017
Operating Activities:
	Net (loss)									$         (20,307)		$           (23,790)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Shares Issued for Consulting Services								50		-
		Changes in Operating Assets and Liabilities:
		Accounts Payable								3,373		12,615
Net Cash (Used In) Operating Activities										(16,884)		(11,175)
Financing Activities:
Contributions from CEO										9,275		10,000
Net Cash Provided by Financing Activities										9,275		10,000
Net Change in Cash										(7,609)		(1,175)
Cash - Beginning of Period										7,825		9,000
Cash - End of Period										$                216		$               7,825
Supplemental Disclosure of Cash Flow Information:
		Interest paid								$                     -		$                       -
		Income tax paid								$                     -		$                       -
Non-cash investing and financing activities:
		Accounts payable and accrued expenses transferred to Advance from officer								$                     -		$               6,015
See report of independent registered public accounting firm and accompanying notes to the financial statements.

 

16

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FRONTERA GROUP INC.

For the Year Ended June 30, 2018 and 2017

Notes to the Condensed Financial Statements

Note 1 – Organization and Operations

 

Frontera Group Inc. (the “Company”) was incorporated under the laws of the State of Nevada on November 21, 2013, Frontera Group Inc. was an export management company providing business development and market consultancy services that assist small and medium-sized businesses in entering new markets in Central and South America. The Company currently has no operations and is a shell company.

 

Note 2 – Summary of Significant Accounting Policies

 

Basis of Accounting and Presentation

The accompanying financial statements have been prepared using the accrual basis in accordance with accounting principles generally accepted in the United States of America.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.  As of June 30, 2018 and June 30, 2017, the Company does not have any cash equivalents.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with 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 periods.  Actual results could differ from those estimates.

 

Earnings (loss) per Share

 

Earnings (loss) Per Share is the amount of earnings (loss) attributable to each share of common stock. Earnings (loss) per share ("EPS") is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification.  Pursuant to Accounting Standards Codification (“ASC”)  Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS is computed by dividing net income (loss) available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. 

 

The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangements, stock options or warrants. When the Company has a loss, dilutive shares are not included as they would be antidilutive.

 

There were no potentially dilutive debt or equity instruments issued and outstanding at any time during the year ended June 30, 2018 and 2017.

 

Income Taxes

 

The Company accounts for income taxes in accordance with the FASB ASC Section 740, “Income Taxes” (“ASC 740”), which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes.  Deferred tax assets and liabilities represent the future tax consequences for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.  Deferred tax assets are also recognized for operating losses that are available to offset future taxable income.  A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

The Company accounts for uncertain tax positions in accordance with ASC Section 740-10, which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also prescribes direction on de-recognition, classification, and accounting for interest and payables in the financial statements. The Company classifies interest expense and any related penalties related to income tax uncertainties as a component of income tax expense. No interest or penalties have been recognized as of June 30, 2018 and 2017. The Company does not expect any significant changes in unrecognized tax benefits within twelve months of the reporting date.

Fair Value of Financial Instruments

 

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The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

 

ASC 820 defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value as follows:

 

●

Level 1 - quoted prices in active markets for identical assets or liabilities

 

●

Level 2 - inputs other than quoted prices in level 1 that are observable either directly or indirectly.

 

●

Level 3 - inputs based on prices or valuation techniques that are both unobservable and significant to the

                              fair value markets.

 

The Company did not identify any assets or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial instruments, including cash, accounts payable and advances from officers, approximated their fair value due to the short maturity of these financial instruments. There were no changes in methods or assumptions during the periods presented.

Recently Issued Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, will have a material effect on the accompanying financial statements.

 

Note 3 – Going Concern

  

As reflected in the accompanying financial statements, the Company has a deficit of $154,443 at June 30, 2018, a net loss of $20,307 for the year ended June 30, 2018 and net cash used in operating activities of $16,884 for the year ended June 30, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position is not sufficient to support the Company’s daily operations.  Management intends to raise additional funds by way of a private or public offering.  While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of asset or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.

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Note 4 – Related Party Transactions

Advances from officer

 

From time to time, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand. As June 30, 2018 and June 30, 2017, the advance balance was $10,713.

Note 5 – Stockholders’ (Deficit)

Shares authorized

Upon formation, the total number of shares of all classes of stock which the Company was authorized to issue seventy-five million (75,000,000) shares of common stock, par value $0.001 per share. On February 23, 2016, the Company increased its authorized common shares to one billion (1,000,000,000), and decreased the par value to $0.00001 per share.

Common stock

On March 12, 2016, the Company sold 300,000,000 common shares at $0.00003 per share for total proceeds of $9,000. The 300,000,000 shares of common stock were issued to Nanjing Dayu Xianneng Foods, Co, Ltd. The control person that Nanjing Dayu Xianneng Foods Co. Ltd is Mr. Daobing Xia.

Note 6 – Income Tax Provision

Deferred Tax Assets

 

As of June 30, 2018 and 2017, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $154,443 and $134,136, respectively that may be offset against future taxable income which begin to expire in 2037.  No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a full valuation allowance. In addition, due to the change in control of the Company on January 12, 2016 and March 12, 2016, the carry-forward losses generated through these dates will be significantly limited in their use.

The provision (benefit) for income taxes consisted of the following for the years ended June 30, 2018 and 2017:

				2018		2017
Adjustment due to enacted tax rate change			$	17,438	$		-
Deferred				(4,265)			(8,089)
Change in valuation allowance				(13,173)			8,089
Income tax provision (benefit)			$	-	$		-

Deferred tax assets (liabilities) are comprised of the following:

 

				June 30, 2018		June 30, 2017
Net operating loss carryforwards			$	32,433	$		45,606
Valuation allowance				(32,433)			(45,606)
Net deferred tax assets			$	-	$		-

The following table reconciles the effective income tax rates with the statutory rates for the years ended June 30:

				2018		2017
U.S. federal statutory rate				21.0%			34.0%
Change in valuation allowance				(21.0)%			(34.0)%
Effective income tax rate				-%			-%

On December 22, 2017, the U.S. Tax Cuts and Jobs Act was enacted.  The tax reform introduced many changes, including lowering the U.S. corporate tax rate from variable rates depending on corporate income subject to tax to a flat rate of 21%.

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards.  The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. 

 

We follow ASC 740 Accounting for Uncertainty in Income Taxes. Under ASC 740, tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. We had no liabilities for unrecognized tax benefits at June 30, 2018 and 2017.

 

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Our policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended June 30, 2018 and 2017, we did not recognize any interest or penalties in our statement of operations, nor did we have any interest or penalties accrued in our balance sheet at June 30, 2018 and 2017 relating to unrecognized tax benefits.

 

The tax years 2016 to 2018 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject.

Note 7 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date through November 21, 2018 when the financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were no reportable subsequent events to be adjusted for and / or disclosed.

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Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND  FINANCIAL DISCLOSURE

None

Item 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls

 

We evaluated the effectiveness of our disclosure controls and procedures as of the end of the 2018 fiscal year.  This evaluation was conducted with the participation of our chief executive officer and our principal accounting officer.

 

Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to be disclosed in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported. 

 

Limitations on the Effective of Controls

Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met.  Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs.  These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control.  A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

 

Conclusions

 

Based upon their evaluation of our controls, the chief executive officer and principal accounting officer have concluded that, subject to the limitations noted above, the disclosure controls are not effective providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared.  There were no changes in our internal controls that occurred during the year covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls.

 

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PART III

 

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The following table presents information with respect to our officers, directors and significant employees as of the date of this Report:

 

Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors.

 

Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present time, members of the board of directors are not compensated for their services to the board.

 

Biographical Information Regarding Officers and Directors

 

Gan Ren, age 31, graduated from Nanchang Aero University Business Administration major with a bachelor degree in 2010. He received a MBA degree from University of Laverne in 2016.

Item 11:  EXECUTIVE COMPENSATION

 

Compensation of Officers

 

The following summary compensation table sets forth information concerning compensation for services rendered in all capacities during 2016 awarded to, earned by or paid to our executive officers.

 

Summary Compensation Table

 

(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
							Change in
							Pension
							Value &
							Non-quali-
						Non-Equity	fied
						Incentive	Deferred	All
						Plan	Compen-	Other
				Stock	Option	Compen-	sation	Compen-
Name and Principal		Salary	Bonus	Awards	Awards	sation	Earnings	sation	Totals
Position [1]	Year	($)*	($)	($)	($)	(S)	($)	($)	($)
Gan Ren	2017	0	0	0	0	0	0	0	0
President, CEO, CFO, Treasurer, Secretary	2016	0	0	0	0	0	0	0	0

Retirement, Resignation or Termination Plans

 

We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.

 

Directors’ Compensation

 

The persons who served as members of our board of directors, including executive officers, did not receive any compensation for services as directors for 2018 and 2017.

 

Option Exercises and Stock Vested

 

None

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Pension Benefits and Nonqualified Deferred Compensation

 

The Company does not maintain any qualified retirement plans or non-nonqualified deferred compensation plans for its employees or directors.

 

Executive Officer Outstanding Equity Awards at Fiscal Year-End

 

None

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND   RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding beneficial ownership of our common stock as of June 30, 2018: (i) by each of our directors, (ii) by each of the Named Executive Officers, (iii) by all of our executive officers and directors as a group, and (iv) by each person or entity known by us to beneficially own more than five percent (5%) of any class of our outstanding shares. As of June 30, 2018 there were 307,280,150 shares of our common stock outstanding:

 

 

 (1)  Applicable percentage of ownership is based on 307,280,150 shares of common stock outstanding on November 8, 2018. Percentage ownership is determined based on shares owned together with securities exercisable or convertible into shares of common stock within 60 days of November 8, 2018, for each stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Shares of common stock subject to securities exercisable or convertible into shares of common stock that are currently exercisable or exercisable within 60 days of November 8, 2018, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.  Our common stock is our only issued and outstanding class of securities eligible to vote.

 

As of November 8, 2018, there were 307,280,150 shares of common stock outstanding owned by our officers and directors.

 

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Consulting services from President, Chief Executive Officer, Secretary and Treasurer and Chief Financial Officer

Consulting services provided by the former President, Chief Executive Officer, Secretary and the former Treasurer and Chief Financial Officer for the year ended June 30, 2018 and 2017 were as follows:

			For the Year Ended June 30, 2018		For the Year Ended June 30, 2017
President, Chief Executive Officer			$                   -		$           -
Chief Financial Officer, Secretary and Treasurer			-		-
			$                   -		$           -

Advances from President and CEO

From time to time, the President, CEO and significant stockholder of the Company advances funds for working capital purposes. Those advances are unsecured, non-interest bearing and due on demand. As of June 30,2018, and June 30, 2017, the advance balance was $10,713 and $10,713, respectively.

 

Director Independence

 

Under NASDAQ rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation.

 

Our director, Gan Ren, is also our chief executive officer and chief financial officer. As a result, we do not have independent directors on our Board of Directors.

 

Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

 

 

 

 

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PART IV

Item 15.  EXHIBITS

 

EXHIBIT

NUMBER      DESCRIPTION

 

3.1		Articles of Incorporation. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 3, 2014.
3.2		Bylaws. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 3, 2014.
4.2		Subscription Agreement. Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 3, 2014.
10.1		Consulting Agreement (President). Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 3, 2014.
10.2		Consulting Agreement (C.F.O.). Incorporated by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 3, 2014.
31.1		Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2		Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2		Certification of the Chief Financial Officer pursuant to 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 **

 

   *  Filed herewith.                                                                     

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Frontera Group Inc

/s/ Gan Ren

Gan Ren

CEO, CFO

November 21, 2018

26