Star Alliance International Corp. - Quarter Report: 2017 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2017

or

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

Commission File Number: 333-197692

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 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 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, 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.

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 CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 35,400,000 shares of $0.001 par value common stock outstanding as of August 14, 2018.

STAR ALLIANCE INTERNATIONAL CORP.

FORM 10-Q

Quarterly Period Ended December 31, 2017

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

STAR ALLIANCE INTERNATIONAL CORP.

BALANCE SHEETS

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

STAR ALLIANCE INTERNATIONAL CORP.

STATEMENTS OF OPERATIONS

(UNAUDITED)

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

STAR ALLIANCE INTERNATIONAL CORP.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

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

 Star Alliance International Corp.

Notes to Financial Statements

December 31, 2017

(Unaudited)

NOTE 1 - Nature of Business and Significant Accounting Policies

Nature of Business

Star Alliance International Corp. (“the Company”, “we”, “us”) was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada. Our initial business plan was to provide customers with unique and innovative solution for their decorative needs. The Company’s initial product was lattice panels designed for suspended ceiling. We had generated limited earnings under this plan.

On November 25, 2016, pursuant to a stock purchase agreement reached by and between Ilia Tomski, the Company's President and CEO at the time, and Kido Inter Co. Ltd. (“Kido”) which is wholly owned by Ms. Somporn Phatchan, Kido acquired 25,000,000 shares of common stock of the Company, representing 70.62% ownership, for a cash consideration of $246,000. On November 25, 2016, Ilia Tomski resigned his official position as President and CEO of the Company, and on the same day the shareholders of the Company voted Ms. Somporn Phatchan as Director and CEO of the Company, and Eng Wah Kung as Chief Financial Officer and Director.

On December 17, 2016, the Company acquired 100% equity interest in Astral Investments Limited (“Astral”), a British Virgin Islands (“BVI”) company incorporated and owned by Ms. Somporn Phatchan, with a consideration of $50,000. On the same day, Ms. Somporn Phatchan, on behalf of Astral, paid MOP25,000 (appropriately $3,205) to owners of Star Alliance Macau Ltd. (“SA Macau”) to take over its ownership. Also see Note 4.

On January 6, 2017, the Board of Directors of the Company adopted an amendment to its Articles changing the Company’s name to Star Alliance International Corp. from Asteriko Corp. On January 10, 2017, the Company additionally amended its Articles to effectuate a Forward Stock Split of 5:1 (the “Stock Split”). The Financial Industry Regulatory Authority (“FINRA”) gave final approval for the above changes on March 17, 2017. The share information for the three and six months ended December 31, 2016 has been retroactively stated to reflect the Stock Split in the accompanying statements of operations.

On February 2, 2017, Astral acquired 100% equity interest in Star Alliance Inter Co., Ltd. (“SA Thailand”), a Thailand company incorporated and owned by Ms. Somporn Phatchan, with a consideration of THB10,000,000 (approximately $285,489).

The Company originally intended to provide travel and adventure packages to MICE (Meeting, Incentive, Convention, Events) tourists primarily in the Asia region. Services and products provided by SA Thailand would initially include pre-arranged tours, customized packages according to clients’ specifications, travel consultation, and as time progresses making reservations for lodging amongst other related services. However, as the business plan did not bring any revenues, the management determined that this business plan did not work well, which led to the disposal transaction mentioned as below.

On June 30, 2017, pursuant to a stock purchase agreement entered into by and between Ms. Somporn Phatchan and the Company, all common shares of Astral were sold to Ms. Somporn Phatchan for a consideration of $1. Starting from the same day, Astral, SA Macau and SA Thailand are no longer wholly owned subsidiaries of the Company.

On July 31, 2017, Ms. Somporn Phatchan resigned from her positions as the CEO and Director of the Company. On the same day, the shareholders voted Dr. Kok Chee Lee, as CEO and Director of the Company, who resigned subsequently on January 17, 2018. On the same day, Sreyneang Jin was appointed as CEO and Director. On April 30, 2018, Sreyneang Jin announced her resignation as CEO and Director of the Company and Richard Carey was appointed as the new CEO and Chairman of the Board of Director.

NOTE 2 - Significant and Critical Accounting Policies and Practices

Basis of Presentation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's latest Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of operations for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year, as reported in the Form 10-K for the fiscal year ended June 30, 2017, have been omitted.

Principles of Consolidation

The accompanying statements of operations for the three and six months ended December 31, 2016 and the statements of cash flows for the six months ended December 31, 2016 include the accounts of the Company and its subsidiaries, Astral, SA Macau and SA Thailand, of which were under common control. These financial statements herein contain the operations of the wholly-owned subsidiaries. See Note 1 for details on the subsidiaries. All significant inter-company transactions have been eliminated in the preparation of these financial statements. On June 30, 2017, the Company disposed of Astral, SA Macau and SA Thailand. The accompanying balance sheets present the financial position of Star Alliance International Corp. only. The statements of operations for the three and six months ended December 31, 2017 and the statements of cash flows for the six months ended December 31, 2017 contain the results of operations and cash flows of Star Alliance International Corp. only.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of liabilities, and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting periods. Management makes these estimates using the best information available at the time, however, actual results could differ materially from those estimates.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.

Fair Value of Financial Instruments

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants would use when pricing the asset or liability.

Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:

Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

The Company's financial instruments are consisted principally of accrued expenses. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to substantiate this.

Related Parties

A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.

NOTE 3 - Going Concern

The accompanying financial statements have been prepared assuming that the Company continues as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As shown in the accompanying financial statements, the Company has accumulated deficit of $586,518 and negative working capital of $72,779 as of December 31, 2017, and net loss of $46,882 and no cash flows in operating activities for the six months ended December 31, 2017. Due to these conditions, it raises substantial doubt about its ability to continue as a going concern.

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

The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.

NOTE 4 - Related Party Transactions

On December 17, 2016, the Company acquired 100% equity interest in Astral with a consideration of $50,000. The Company and Astral are under common control of Ms. Somporn Phatchan and the acquisition was accounted for as a transaction between entities under common control. On the same day, Ms. Somporn Phatchan, on behalf of Astral, paid MOP25,000 (appropriately $3,205) to owners of SA Macau to take over its ownership.

During the six months ended December 31, 2016, the Company borrowed $7,000 of cash by issuing notes payable to Ilia Tomski, former President of the Company. The cash repayment to Ilia Tomski totaled $1,169. In connection with the change of major shareholder on November 25, 2016, cash of $3,266 and property and equipment in the amount of $2,040 was distributed to Ilia Tomski.

On June 8, 2017, Stal Business Services Sdn Bhd (“SBSSB”), a wholly owned company by Kok Chee Lee, CEO and Director of the Company at the time, entered into an office lease agreement with ADA Shared Services Sdn Bhd. The office is offered to be used by the Company for free during the six months ended December 31, 2017. During the six months ended December 31, 2016, the Company was provided office space by its former President and CEO, Ilia Tomski, at no cost.

As of December 31, 2017, amount due to related party was $42,651 as operating expenses of $42,651 were paid by Kok Chee Lee, CEO and Director of the Company at the time, on behalf of the Company during the six months ended December 31, 2017. The borrowing is unsecured, non-interest-bearing and due on demand. As of June 30, 2017, there was no amount due to related party. During the six months ended December 31, 2016, operating expenses in the total amount of $111,345 were paid by Ms. Somporn Patchan, former CEO and Director of the Company, on behalf of the Company.

NOTE 5 – Common Stock

In January 2017, the Board of Directors of the Company approved a 5-for-1 forward stock split, whereby every one (1) share of the common stock was automatically reclassified and changed into five (5) shares (the “Stock Split”). The authorized number of shares and par value per share were not be affected by the Stock Split. All shares throughout these financial statements have been retroactively restated to reflect the Stock Split. 

NOTE 6 – Subsequent Events

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date the financial statements were issued, and has determined that no material subsequent events exist other than the following.

On May 14, 2018, pursuant to an agreement by and between Richard Carey, the Company’s new President and Chairman of the Board, and Kido, Mr. Richard Carey acquired 22,000,000 shares of common stock of the Company owned by Kido, for $264,000, representing 62.15% ownership of the Company which constitutes control. Mr. Richard Carey accepted the positions of President and Chairman of the Board on the same day.

On May 16, 2018, Eng Wah Kung and David E. Price resigned from their positions as CFO and Director, and Secretary of the Board, respectively. On May 17, 2018, Mr. Richard Carey, the Company’s sole Director, appointed Alexei Tchernov as CEO and Director, Franz Allmayer as Vice President and Director, John C. Baird as CFO and Director and Themis Glatman as Secretary and Director.

On August 14, 2018, the Company entered into an Exclusive Option Agreement (the “Agreement”) with Starving Lion, Inc. (“Lion”). Under the Agreement, the Company has been granted the exclusive option, for a period of six (6) months, to acquire the following assets from Lion (collectively, the “Lion Assets”) (refer to Item 2 for additional detail).

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

FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer. You should, however, consult further disclosures we make in future filings of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

OVERVIEW AND OUTLOOK

Star Alliance International Corp. was originally incorporated with the name Asteriko Corp. in the State of Nevada on April 17, 2014 under the laws of the state of Nevada. Our initial business plan was to provide customers with unique and innovative solution for their decorative needs. The Company’s initial product was lattice panels designed for suspended ceiling. We had generated limited earnings under this plan.

On November 25, 2016, pursuant to a stock purchase agreement reached by and between Ilia Tomski, the Company's controlling shareholder, President and CEO at the time, and Kido Inter Co. Limited (“Kido”) which is wholly owned by Ms. Somporn Phatchan, Kido acquired 25,000,000 shares of common stock of the Company, representing 70.62% of ownership, for a cash consideration of $246,000. On November 25, 2016, Ilia Tomski resigned his official position as President and CEO of the Company, and on the same day the shareholders of the Company voted Ms. Somporn Phatchan as Director and CEO of the Company, Eng Wah Kung as Chief Financial Officer and Director.

On December 17, 2016, the Company acquired 100% equity interest in Astral Investments Limited (“Astral”), a British Virgin Islands (“BVI”) company incorporated and owned by Ms. Somporn Phatchan, with a consideration of $50,000.

On December 17, 2016, Ms. Somporn Phatchan, on behalf of Astral, paid MOP25,000 (appropriately $3,205) to owners of Star Alliance Macau Ltd. (“SA Macau”) to take over its ownership.

On January 6, 2017, the Board of Directors of the Company adopted an amendment to its Articles changing the Company’s name to Star Alliance International Corp. from Asteriko Corp. On January 10, 2017, the Company additionally amended its Articles to effectuate a Forward Stock Split of 5:1 (the “Stock Split”). The Financial Industry Regulatory Authority (“FINRA”) gave final approval for the above changes on March 17, 2017. The share information for the three and six months ended December 31, 2016 has been retroactively stated to reflect the Stock Split in the accompanying statements of operations.

On February 2, 2017, Astral acquired 100% equity interest in Star Alliance Inter Co., Limited (“SA Thailand”), a Thailand company incorporated and owned by Ms. Somporn Phatchan, with a consideration of THB10,000,000 (appropriately $285,489).

The Company intended to provide travel and adventure packages to MICE (Meeting, Incentive, Convention, Events) tourists primarily in the Asia region. Services and products provided by SA Thailand would initially include pre-arranged tours, customized packages according to clients’ specifications, travel consultation, and as time progresses making reservations for lodging amongst other related services. However, as the business did not bring any revenue and the management determined that this business plan did not work well, which led to the disposal transaction mentioned as below.

On June 30, 2017, pursuant to a stock purchase agreement entered into by and between Ms. Somporn Phatchan and the Company, all common shares of Astral were sold to Ms. Somporn Phatchan for a consideration of $1. Starting from the same day, Astral, SA Macau and SA Thailand are no longer wholly owned subsidiaries of the Company.

On July 31, 2017, Ms. Somporn Phatchan resigned from her positions as the CEO and Director of the Company. On the same day, the shareholders voted Dr. Kok Chee Lee, as CEO and Director of the Company, who resigned subsequently on January 17, 2018. On the same day, Sreyneang Jin was appointed as CEO and Director. On April 30, 2018, Sreyneang Jin announced her resignation as CEO and Director of the Company and Richard Carey was appointed as the new CEO and Chairman of the Board of Director.

On May 14, 2018, pursuant to an agreement by and between Richard Carey, the Company’s new President and Chairman of the Board, and Kido, Mr. Carey acquired 22,000,000 shares of common stock of the Company owned by Kido, representing 62.15% ownership of the Company which constitutes control. Mr. Carey accepted the positions of President and Chairman of the Board on the same day.

On May 16, 2018, Mr. Eng Wah Kung and Mr. David E. Price resigned from their positions as CFO and Director, and Secretary of the Board, respectively. On May 17, 2018, Mr. Carey, the Company’s sole Director, appointed Alexei Tchernov as CEO and Director, Franz Allmayer as Vice President and Director, John C. Baird as CFO and Director and Themis Glatman as Secretary and Director.

On June 4, 2018 the Company entered into a Binding Letter of Intent with Starving Lion, Inc., a British Virgin Islands corporation, to acquire two mines located in Guatemala; one is a magnesium mine in El Progresso, and the other is a gold mine in Livingston.

In addition to the two mines, the Company is acquiring intellectual property which is a gold extraction process following the conventional principles of heap leaching for the extraction of gold in oxidized minerals accelerating the rate of dissolution of gold to nearly an immediate rate, reducing the standard time of extraction.

On August 14, 2018, the Company entered into an Exclusive Option Agreement (the “Agreement”) with Starving Lion, Inc. (“Lion”). Under the Agreement, the Company has been granted the exclusive option, for a period of six (6) months, to acquire the following assets from Lion (collectively, the “Lion Assets”):

A. Bridge Mine Mining Rights. The Bridge Mine is located 41.5 km from Guatemala City on the Atlantic Highway CA-9 in the department of El Progreso, having proven gold reserves amounting to 189,580 ounces. Additionally, the deposit at Bridge Mine contains inferred reserves of a minimum of 150,000 ounces to be assessed fully upon further exploration. Bridge is an extension deposit of the “El Sastre” Mining Complex, and the “La Puya” mine.

B. El Chocon Mine Mining Rights. El Chocon is located 307 km from Guatemala City on the Atlantic Highway CA-9 in the department of Livingston, with proven Magnesite ore reserves amounting to 10,000,000 tons. Additionally, the deposit contains a minimum of 4,000,000 tons of inferred reserves to be fully assessed upon further exploration.

C. Genesis Process. A gold extraction process following the conventional principles of heap leaching for the extraction of gold in oxidized minerals, accelerating the rate of dissolution of gold to nearly an immediate rate, reducing the standard time of extraction from about 40-120 days to a mere 24 – 76 hours, and providing immediate technical solutions to difficulties caused by fine materials, resolving the need to agglomerate, speeding the extraction of gold to 400 times faster than conventional heap leaching.

The required purchase price for the Lion Assets will be $1,000,000 cash, together with the issuance to Lion of new common and/or preferred stock to represent fifty-eight percent (58%) of the Company’s issued and outstanding common stock on a fully-diluted, post-closing basis.

In the event that the Company is able to acquire the Lion Assets, its business focus will shift to the pursuit of mining and mining technology businesses currently conducted by Lion as described above. The Company’s ability to successfully acquire the Lion Assets is contingent upon obtaining additional financing sufficient to pay the cash portion of the purchase price. As of the current date no assets have been transferred.

Results of Operations for the Six and Three Months Ended December 31, 2017

General and administrative expenses

General and administrative expenses were $6,382 for the six months ended December 31, 2017, compared to $11,478 for the six months ended December 31, 2016, a decrease of $5,096.

General and administrative expenses were $3,211 for the three months ended December 31, 2017, compared to $11,132 for the three months ended December 31, 2016, a decrease of $7,921.

Professional fees were $40,500 for the six months ended December 31, 2017, compared to $103,943 for the six months ended December 31, 2016, a decrease of $63,443.

Professional fees were $33,500 for the three months ended December 31, 2017, compared to $100,214 for the three months ended December 31, 2016, a decrease of $66,714.

Net loss for the six months ended December 31, 2017 was $46,882. For the six months ended December 31, 2016, the Company recorded net loss of $115,841.

Net loss for the three months ended December 31, 2017 was $36,711. For the three months ended December 31, 2016, the Company recorded net loss of $111,346.

LIQUIDITY AND CAPITAL RESOURCES

We believe that our existing sources of liquidity will not be sufficient to fund our operations, anticipated capital expenditures, working capital and other financing requirements for the next twelve months. We currently rely on borrowings from related party to stay in operations.

The following table summarizes total assets, accumulated deficit, stockholders' deficit and working capital at December 31, 2017 and June 30, 2017.

Net cash from operating activities was $0 during the six months ended December 31, 2017. The net cash used in operating activities was $3,932 during the six months ended December 31, 2016. 

Satisfaction of Our Cash Obligations for the Next Twelve Months

The management is still exploring new business plan which may generate enough revenue to cover operating expenses. However, we have not established any stable business plan, and for the next twelve months, we expect to rely on borrowings from related parties to sustain our needs in operating cash flows.

Off-Balance Sheet Arrangements

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 is material to investors.

Critical Accounting Policies

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout management's Discussion and Analysis or Plan of Operation where such policies affect our reported and expected financial results. Note that our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

This item is not applicable as we are currently considered a smaller reporting company.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (SEC) rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Disclosure Controls

In designing and evaluating the Company's disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, Company management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions

Evaluation of Disclosure Controls and Procedures

Our CEO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on the evaluation, he concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures were not effective as of December 31, 2017 due to the material weaknesses as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC on November 27, 2017.

Changes in Internal Control over Financial Reporting

Such officer also confirmed that there was no change in our internal control over financial reporting during the six months ended December 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of their property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.

Item 1A. Risk Factors.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

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.