LUBOA GROUP, INC. - Quarter Report: 2016 May (Form 10-Q)

U.S. 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 May 31, 2016

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

For the transition period from ______ to _______

Commission File No. 333-199210

LUBOA GROUP, INC.

 (Exact name of registrant as specified in its charter)

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) Yes ☒ No ☐, and (2) has been subject to such filing requirements for the past 90 days. Yes ☐  No ☒

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every, Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.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 ☐  No ☐

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

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

As of June 24, 2016, the registrant had 11,600,000 shares of common stock outstanding.

Table of Contents

PART I. FINANCIAL INFORMATION

LUBOA GROUP, INC. (FKA SUNRISE TOURS, INC.)

BALANCE SHEETS

(UNAUDITED)

The accompanying notes are an integral part of these financial statements

LUBOA GROUP, INC. (FKA SUNRISE TOURS, INC.)

STATEMENTS OF OPERATIONS

(UNAUDITED)

The accompanying notes are an integral part of these financial statements

LUBOA GROUP, INC. (FKA SUNRISE TOURS, INC.)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

The accompanying notes are an integral part of these financial statements

LUBOA GROUP, INC. (FKA SUNRISE TOURS, INC.)

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS

MAY 31, 2016

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

Organization and Description of Business 

LUBOA GROUP, INC., formerly known as SUNRISE TOURS, INC. (the “Company”, “we” or “us”), was incorporated under the laws of the State of Nevada on March 19, 2013 (“Inception”), and has adopted August 31 fiscal year end.  On January 20, 2016, the Company filed a Certificate of Amendment with the Secretary of State of Nevada and changed its corporate name to “Luboa Group, Inc.” Concurrently with the change of corporate name, the Company also changed its principal business plan from developing and offering special services such as 3D virtual tours for companies which would like to promote their venues on the Internet and electronic media, to developing specialized agricultural products and a carbon emission trading platform in Asia. However, as of May 31, 2016, no definitive agreement had been entered into in connection with the business plan. The Company’s principal headquarters is located in Kaohsiung City, Taiwan. From Inception through May 31, 2016, the Company accumulated losses of approximately $72,249.

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (“ASC”), thereby removing the financial reporting distinction between development stage entities and other reporting entities from generally accepted accounting principles in the United States of America “U.S. GAAP”. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.

NOTE 2 – GOING CONCERN

The Company has incurred loss since Inception resulting in an accumulated deficit of $72,249 as of May 31, 2016, and further losses are anticipated in the development of its business plan.  Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.  

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and, or, obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans from related parties and/or private placement of the Company’s common stock.  

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in accordance with U.S. GAAP and are presented in US dollars. The Company’s fiscal year-end is August 31.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. At May 31, 2016, the Company had no bank account.

Basic and Diluted Income (Loss) Per Share

The Company computes income (loss) per share in accordance with FASB ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period.  Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

For the three month periods ended May 31, 2016 and 2015, there were no potentially dilutive debt or equity instruments issued or outstanding and any such shares would have been excluded from the computation because they would have been anti-dilutive as the Company incurred losses in these periods.

Fair Value of Financial Instruments

ASC 820, “Fair Value Measurements and Disclosures”, establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

These tiers include:

Level 1: defined as observable inputs such as quoted prices in active markets;

Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

Level 3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The carrying value of cash and the Company’s loan from a shareholder approximates its fair value due to their short-term maturity.

Income Taxes

The Company accounts for income taxes pursuant to FASB ASC 740 “Income Taxes”. Under ASC 740 deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At May 31, 2016, there were no unrecognized tax benefits.

Revenue Recognition

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

Advertising Costs

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during three month periods ended May 31, 2016 and 2015.

Recent accounting pronouncements

Management has reviewed all the recently issued, but not yet effective, accounting pronouncements, and does not believe any of these pronouncements will have a material impact on the Company.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Stock-Based Compensation

As of May 31, 2016, the Company had not issued any stock-based payments to its employees.

Stock-based compensation is accounted for at fair value in accordance with ASC 718, when applicable.  To date, the Company has not adopted a stock option plan and has not granted any stock options.

NOTE 4 – COMMON STOCK

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

On September 23, 2013, the Company issued 9,000,000 shares at $0.001 per share for total proceeds of $9,000.

For the year ended August 31, 2015, the Company issued 2,600,000 shares at $0.01 per share for total proceeds of $26,000.

As at May 31, 2016, 11,600,000 shares of common stock were issued and outstanding. See Note 8 (Change of Control) regarding the January 8, 2016 transaction resulting in the ownership change as to approximately 77.59% of these common shares.

NOTE 5 – INCOME TAXES

As of May 31, 2016 the Company had net operating loss carry forwards of approximately $72,249 that may be available to reduce future years’ taxable income through 2036. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

NOTE 6 – PREPAID EXPENSES

On October 19, 2015, the Company prepaid $10,000 to OTC Market Group Inc. for its annual fee from October 1, 2015 to September 30, 2016.  As of May 31, 2016, Company had prepaid expenses of $3,333, the remaining prepaid balance to OTC Markets Group Inc.

NOTE 7 – LOAN FROM SHAREHOLDER

The Company relies on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.  

From Inception through May 31, 2016, the Company’s then sole shareholder and director Alexander Karpetskiy loaned the Company $15,066 to pay for incorporation costs and operating expenses.  The loan is non-interest bearing, due upon demand and unsecured. As of January 8, 2016, the amount outstanding was $14,429. As a result of the ownership change described in Note 8, the entire unpaid balance of the loan was discharged by Mr. Karpetskiy.

Since January 8, 2016, the Company’s major shareholder Hsin-Nan Lin has loaned $10,000 to the Company to pay for legal and other regulatory costs. The loan is non-interest bearing, due upon demand and unsecured. As of May 31, 2016, the amount outstanding was $25,810.

NOTE 8 – CHANGE OF CONTROL

On January 8, 2016 (the “Closing Date”), Mr. Karpetskiy entered into a Securities Purchase Agreement (the “SPA”) with Mr. Lin, pursuant to which Mr. Lin acquired from Mr. Karpetskiy all 9 million shares of the Company’s common stock owned by him. Pursuant to the SPA, all of the Company’s outstanding liabilities as of the Closing Date, including the outstanding balance of Mr. Karpetskiy’s loan, were fully paid by utilizing cash on hand (or discharged in the case of Mr. Karpetskiy’s loan). As a result, the Company was relieved of unpaid shareholder loan in the amount of $14,428, which is recorded by the Company as additional paid-in capital as of May 31, 2016.

NOTE 9 – SUBSEQUENT EVENTS

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to May 31, 2016 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements.

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

General

We were incorporated in the State of Nevada on March 19, 2013 under the name “Sunrise Tours, Inc.” On January 20, 2016, we amended our Articles of Incorporation and changed our name to “Luboa Group, Inc.” in connection with our new business plan as described below. Our business office is located at 3 F, No. 102, Bo'ai 2nd Road, Zuoying District, Kaohsiung City, 813. Taiwan. Our telephone number is 886- 75570551.

Business Plan

Prior to our corporate name change on January 20, 2016, we planned to offer special service such as 3D virtual tours for companies which would like to promote their venues on the Internet, optical disks and hard and flash drives. Concurrently with our name change, we have changed our business plan to developing specialized agricultural products and a carbon emission trading platform in Asia. However, as of May 31, 2016, we have not entered into any definitive agreement in connection with our new business plan.

Results of Operations

As of May 31, 2016, we had total assets of $3,333 and total liabilities of $26,153.  We anticipate that we will continue to incur substantial losses in the next 12 months. Our financial statements have been prepared assuming that we will continue as a going concern.  We expect we will require additional capital to meet our long term operating requirements. We may raise additional capital through, among other things, sale of equity or debt securities.

Three-Month Period Ended May 31, 2016 compared to the Three-Month Period Ended May 31, 2015

Revenue

We did not generate any revenue during the three months ended May 31, 2016, but recognized $1,000 of revenue during the same period ended May 31, 2015.

Operating Expenses

During the three-month period ended May 31, 2016, we incurred general and administrative expenses of $20,660 as compared to $7,250 during the three-month period ended May 31, 2015. General and administrative expenses generally relate to corporate overhead, and financial and administrative contracted services, such as legal, accounting and regulatory expenses related to the matters resulting from the change in control occurred in January 2016.

Net Income (Loss)

Our net loss for the three-month period ended May 31, 2016 was $20,660, as compared to a net loss of $6,250 during the three-month period ended May 31, 2015.

Nine-Month Period Ended May 31, 2016 compared to the Nine-Month Period Ended May 31, 2015

Revenue

We did not generate any revenue during the nine months ended May 31, 2016, but recognized $2,500 of revenue during the same period ended May 31, 2015. 

Operating Expenses

During the nine-month period ended May 31, 2016, we incurred general and administrative expenses of $41,085, as compared to $16,868 during the nine-month period ended May 31, 2015.

Net Loss

Our net loss for the nine-month period ended May 31, 2016 was $41,085, as compared to a net loss of $14,368 during the nine-month period ended May 31, 2015.

Liquidity and Capital Resources

As of May 31, 2016

As at May 31, 2016, our current assets were $3,333 as compared to $18,902 at August 31, 2015. As at May 31, 2016, our current liabilities were $26,153 as compared to $15,066 at August 31, 2015.

Stockholders’ deficit was $22,820 as of May 31, 2016, compared to stockholders’ equity of $3,836 as of August 31, 2015.   

As of May 31, 2015

As at May 31, 2015 our current assets were $20,844 as compared to $9,054 at August 31, 2014. As at May 31, 2015, our current liabilities were $3,566 as compared to $1,066 at August 31, 2014.

Stockholders’ equity increased from $7,988 as of August 31, 2014 to $18,820 as of May 31, 2015.

Cash Flows from Operating Activities

We did not generate positive cash flows from operating activities.

For the three months ended May 31, 2016, net cash flows used in operating activities was $15,810, consisting of net loss of $20,660, increased by changes in prepaid expense of $5,133 and accounts payable of $343, and decreased by a change in accrued expense of $625.

For the three-month period ended May 31, 2015, net cash flows used in operating activities was $7,097, consisting of  net loss of $6,250, adjusted for non-cash amortization expense of $153, and decreased by change in prepaid revenue of $1,000.

For the nine-month period ended May 31, 2016, net cash flows used in operating activities was $43,720, consisting of  net loss of $41,085, adjusted for non-cash amortization expense of $205, and increased by changes in accounts payable for $343 and decreased by change in prepaid expenses of $3,183.

For the nine month period ended May 31, 2015, net cash flows used in operating activities was $14,210 consisting of  net loss of 14,368, amortization of $308, and decreased by change in prepaid expenses of $150.

Cash Flows from Investing Activities

Net cash used in investing activities during the three-month period ended May 31, 2016 was $0, compared to $0 during the three months ended May 31, 2015.

Net cash used in investing activities during the nine-month period ended May 31, 2016 was $0, compared to cash expenditure for the purchase of office equipment of $1,850 during the nine-month period ended May 31, 2015.

Cash Flows from Financing Activities

We have financed our operations primarily from either loans from related parties or the issuance of equity and debt instruments.

For the three-month periods ended May 31, 2016 and May 31, 2015, net cash provided by financing activities was $15,810 (cash proceeds of loans from shareholder) and $11,900 (proceeds from issuance of common stock), respectively.

For the nine-month period ended May 31, 2016, net cash flows provided by financing activities was $26,356, which included proceeds from shareholder loans of $28,410 and cash repayment of a shareholder loan for $2,054. For the nine-month period ended May 31, 2015, net cash flows provided by financing activities was $27,700, which included proceeds from issuance of common stock for $25,200 and proceeds from loan from shareholder for $2,500.

Plan of Operations and Funding

We expect that working capital requirements will continue to be funded through a combination of related party loans and further issuances of securities. Our working capital requirements are expected to increase if and when we are able to execute on our current business plan. As of May 31, 2016, we have a working capital deficit in the amount of $22,820.

We expect to fund our operations over the next three months with further loans from related parties. We have no lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt instruments. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) developmental expenses associated with a start-up business and (ii) marketing expenses. We intend to finance these expenses with further issuances of securities, and debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

Material Commitments

As of the date of this report, we do not have any material commitments.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment during the next twelve months.

Off-balance Sheet Arrangements

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Going Concern

The independent auditors' report accompanying our August 31, 2015 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2016. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended May 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information under this item.

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

No unregistered shares were sold during the three-month period ended May 31, 2016.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

The disclosures required by Item 4 are not applicable to us as we have no mining operations.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibits:

*    Filed herewith.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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