Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
5
RESULTS OF OPERATIONS
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
FISCAL YEAR ENDED APRIL 30, 2013 COMPARED TO FISCAL YEAR ENDED APRIL 30, 2012.
Our net loss for the fiscal year ended April 30, 2013 was $34,457 compared to a net loss of $8,218 during the fiscal year ended APRIL 30, 2012. During fiscal year ended APRIL 30, 2013, the Company did not generate any revenue.
During the fiscal year ended APRIL 30, 2013, we incurred general and administrative expenses of $34,457 compared to $8,218 incurred during fiscal year ended APRIL 30, 2012. These expenses incurred during the fiscal year ended APRIL 30, 2013 consisted of: bank charges of $72 (2012: $431); professional fees of $8,750 (2012: $5,250) and miscellaneous charges of $25,635 (2012: $2,537).
Expenses incurred during fiscal year ended APRIL 30, 2013 compared to fiscal year ended APRIL 30, 2012 increased primarily due to the increased scale and scope of business operations. General and administrative expenses generally include corporate overhead, financial and administrative contracted services, marketing, and consulting costs.
The weighted average number of shares outstanding was 130,100,000 for the fiscal year ended APRIL 30, 2013 compared to 190,079,800 for the fiscal year ended APRIL 30, 2012.
LIQUIDITY AND CAPITAL RESOURCES
FISCAL YEAR ENDED APRIL 30, 2013
As of APRIL 30, 2013, we had no any assets and our total liabilities were $19,894. As of APRIL 30, 2013, total liabilities were comprised of $19,882 in advance from related parties and $12 in bank overdraft.
Stockholders’ deficit was $19,894 as of APRIL 30, 2013.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the fiscal year ended APRIL 30, 2013, net cash flows used in operating activities was $26,228 consisting of a net loss of $34,457, accounts payable of $933, decrease in prepaid expenses of $9,150 and $12 in bank overdraft. Net cash flows used in operating activities was $48,182 for the period from inception (March 21, 2011) to APRIL 30, 2013.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the fiscal year ended APRIL 30, 2013 net cash provided by financing activities was $16,263, received from contributed capital from related party. For the period from inception (March 21, 2011) to APRIL 30, 2013, net cash provided by financing activities was $48,182 received from proceeds from issuance of common stock and loan from Director.
6
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business.
Existing working capital, further advances and debt instruments, and anticipated cash flow are expected to be adequate to fund our operations over the next six months. 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) acquisition of inventory; (ii) developmental expenses associated with a start-up business; and (iii) 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 Annual 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 Annual 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 APRIL 30, 2013 and APRIL 30, 2012 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 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm
Balance Sheets as of APRIL 30, 2013 and APRIL 30, 2012
Statements of Operations for the year ended APRIL 30, 2013; and the periods from inception (March 21, 2011)
to April 30, 2013 and 2012.
Statement of Stockholders’ Equity from inception (March 21, 2011) to APRIL 30, 2013
Statements of Cash Flows for the year ended APRIL 30, 2013; and the periods from inception (March 21,
2011) to APRIL 30, 2013 and 2012
Notes to the Audited Financial Statements
8
RONALD R. CHADWICK, P.C.
Certified Public Accountant
2851 South Parker Road, Suite 720
Aurora, Colorado 80014
Telephone (303)306-1967
Fax (303)306-1944
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Umax Group Corp.
Carson City, Nevada
I have audited the accompanying balance sheets of Umax Group Corp. (a development stage company) as of April 30, 2013 and 2012, and the related statements of operations, stockholders' equity and cash flows for the years then ended, and for the period from March 21, 2011 (inception) through April 30, 2013. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Umax Group Corp. as of April 30, 2013 and 2012, and the results of its operations and its cash flows for the years then ended, and for the period from March 21, 2011 (inception) through April 30, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered a loss from operations and has limited working capital that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Aurora, Colorado
Ronald R. Chadwick, P.C.
June 7, 2013
RONALD R. CHADWICK, P.C.
9
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
|
|
|
|
|
APRIL 30, 2013
|
APRIL 30, 2012
|
|
ASSETS
|
|
|
|
Current Assets
|
|
|
|
Cash and cash equivalents
|
$ -
|
$ 9,965
|
|
Prepaid expenses
|
-
|
9,150
|
|
|
|
|
|
Total Assets
|
$ -
|
$ 19,115
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
Liabilities
|
|
|
|
Current Liabilities
|
|
|
|
Accounts Payable
|
$ -
|
$ 933
|
|
Bank overdraft
|
12
|
|
|
Indebtedness to related party
|
19,882
|
3,619
|
|
Total Liabilities
|
19,894
|
4,552
|
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
Common stock, par value $0.001; 200,000,000 shares authorized, 97,600,000 shares issued and outstanding (227,600,000 shares issued and outstanding as at April 30, 2012)
|
97,600
|
227,600
|
|
Additional paid-in-capital
|
(69,300)
|
(199,300)
|
|
Deficit accumulated during the development stage
|
(48,194)
|
(13,737)
|
|
Total Stockholders’ Equity
|
(19,894)
|
14,563
|
|
|
|
|
|
Total Liabilities and Stockholders’ Equity
|
$ -
|
$ 19,115
|
See accompanying notes to financial statements.
10
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
YEAR ENDED APRIL 30, 2013
|
YEAR ENDED APRIL 30, 2012
|
FOR THE PERIOD FROM MARCH 21, 2011 (INCEPTION) TO APRIL 30, 2013
|
|
REVENUES
|
|
|
$ 0
|
$ 0
|
$ 0
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
General and Administrative Expenses
|
|
|
34,457
|
8,218
|
48,194
|
|
TOTAL OPERATING EXPENSES
|
|
|
34,457
|
8,218
|
48,194
|
|
NET LOSS FROM OPERATIONS
|
|
|
(34,457)
|
(8,218)
|
(48,194)
|
|
PROVISION FOR INCOME TAXES
|
|
|
0
|
0
|
0
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
(34,457)
|
(8,218)
|
$ (48,194)
|
|
|
|
|
|
|
|
|
NET LOSS PER SHARE: BASIC AND DILUTED
|
|
|
$ (0.00)
|
$ (0.00)
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED
|
|
|
130,100,000
|
190,079,800
|
|
See accompanying notes to financial statements.
11
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE PERIOD FROM MARCH 21, 2011 (INCEPTION) TO APRIL 30, 2013
|
|
|
|
|
|
|
|
Common Stock (1)
|
Additional paid-in-capital
|
Deficit Accumulated during the Development
|
Total Stockholders’
|
|
|
Shares
|
Par Value
|
|
Stage
|
Equity (Deficit)
|
|
|
|
|
|
|
|
|
Inception, March 21, 2011
|
-
|
$ -
|
$ -
|
$ -
|
$ -
|
|
April 1, 2011
|
|
|
|
|
|
|
Shares sold to director at $0.000025 per share
|
60,000,000
|
60,000
|
(58,500)
|
|
1,500
|
|
April 7, 2011
|
|
|
|
|
|
|
Shares sold to director at $0.000025 per share
|
120,000,000
|
120,000
|
(117,000)
|
-
|
3,000
|
|
Net loss for the period ended April 30, 2011
|
-
|
-
|
|
(5,519)
|
(5,519)
|
|
Balance, April 30, 2011
|
180,000,000
|
180,000
|
(175,500)
|
(5,519)
|
(1,019)
|
|
Shares issued at $0.0005
|
47,600,000
|
47,600
|
(23,800)
|
|
23,800
|
|
Net loss for the period ended April 30, 2012
|
|
|
|
(8,218)
|
(8,218)
|
|
Balance, April 30, 2012
|
227,600,000
|
227,600
|
(199,300)
|
(13,737)
|
14,563
|
|
Shares cancelled on August 30, 2012
|
(130,000,000)
|
(130,000)
|
130,000
|
|
-
|
|
Net loss for the period ended April 30, 2013
|
|
|
|
(34,457)
|
(34,457)
|
|
Balance, April 30, 2013
|
97,600,000
|
$ 97,600
|
$ (69,300)
|
$ (48,194)
|
(19,894)
|
(1) As restated for a forty (40) for one (1) forward stock split effective July 30, 2012
See accompanying notes to financial statements.
12
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
YEAR ENDED APRIL 30, 2013
|
YEAR ENDED APRIL 30, 2012
|
FOR THE PERIOD FROM MARCH 21, 2011 (INCEPTION) TO APRIL 30, 2013
|
|
OPERATING ACTIVITIES
|
|
|
|
|
Net loss for the period
|
$ (34,457)
|
$ (8,218)
|
$ (48,194)
|
|
Prepaid expenses
|
9,150
|
(9,150)
|
-
|
|
Accounts payable
|
(933)
|
(1,567)
|
-
|
|
Bank overdraft
|
12
|
|
12
|
|
CASH FLOWS USED IN OPERATING ACTIVITIES
|
(26,228)
|
(18,935)
|
(48,182)
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from sale of common stock
|
-
|
23,800
|
28,300
|
|
Indebtedness to related party
|
16,263
|
425
|
19,882
|
|
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
|
16,263
|
24,225
|
48,182
|
|
|
|
|
|
|
NET INCREASE IN CASH
|
(9,965)
|
5,290
|
0
|
|
Cash, beginning of period
|
9,965
|
4,675
|
0
|
|
Cash, end of period
|
$ 0
|
$ 9,965
|
$ 0
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
Interest paid
|
$ 0
|
$ 0
|
$ 0
|
|
Income taxes paid
|
$ 0
|
$ 0
|
$ 0
|
See accompanying notes to financial statements.
13
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 2013
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Umax Group Corp. (the "Company") was incorporated under the laws of the State of Nevada, U.S. on March 21, 2011. We are a development stage company and our business is distribution of arcade machines. The Company is in the development stage as defined under Statement on Financial Accounting Standards Accounting Standards Codification FASB ASC 915-205 "Development-Stage Entities.” Since inception through April 30, 2013 the Company has not generated any revenue and has accumulated losses of $48,194.
NOTE 2 – GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $48,194 as of April 30, 2013 and further losses are anticipated in the development of its business raising 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 to obtain 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 existing cash on hand and loans from directors and/or private placement of common stock.
NOTE 3– SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES
Development Stage Company
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to development stage companies. A development-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a April 30 fiscal year end.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.
14
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 2013
NOTE 3– SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents and amounts due to shareholder. The carrying amounts of cash and current liabilities approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.
Income Taxes
We account for income taxes as required by the Income Tax Topic of the FASB ASC, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of April 30, 2013.
15
UMAX GROUP CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 2013
NOTE 3 – SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
NOTE 4 –INDEBTEDNESS TO RELATED PARTY
The director loaned $19,882 to the Company to pay for incorporation and organization fees. The amount is due on demand, non-interest bearing and unsecured. The balance due to director was $19,882 as of April 30, 2013.
NOTE 5 – COMMON STOCK
On July 30, 2012 the Company completed a forward stock split whereby every pre-split share of common stock is exchangeable for 40 shares of post-split common stock. Accordingly, all share and per share information has been restated to retroactively show the effect of the stock split.
On April 1, 2011, the Company issued 60,000,000 shares of common stock for cash proceeds of $1,500 at $0.000025 per share to its director. On April 7, 2011, the Company issued 120,000,000 shares of common stock for cash proceeds of $3,000 at $0.000025 per share to its director. For the period from April 30, 2012 to March 7, 2012 the Company issued 47,600,000 shares of common stock for cash proceeds of $23,800 at $0.0005 per share.
On July 30, 2012, two controlling shareholders cancelled an aggregate of 130,000,000 shares of Common Stock which were returned to the status of authorized but unissued shares.
As of and April 30, 2013, the Company had
97,600,000 shares of common stock issued and outstanding.
NOTE 6– INCOME TAXES
As of April 30, 2013, the Company had net operating loss carry forwards of $48,194 that may be available to reduce future years’ taxable income in varying amounts through 2033. 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 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from April 30, 2013 through the date whereupon the financial statements were issued and has determined that there are no items to disclose.
16
Item 9A(T). Controls and Procedures
Management’s Report on Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial
Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of APRIL 30, 2013 using the criteria established in “ Internal Control - Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of APRIL 30, 2013, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
1)
We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee, and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities.
2)
We did not maintain appropriate cash controls – As of APRIL 30, 2013, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts.
3)
We did not implement appropriate information technology controls – As at APRIL 30, 2013, the Company retains copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors.
Accordingly, the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of APRIL 30, 2013 based on criteria established in Internal Control—Integrated Framework issued by COSO.
17
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with our evaluation we conducted of the effectiveness of our internal control over financial reporting as of APRIL 30, 2013, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
