NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION
Velt International Group Inc. (formerly
A & C United Agriculture Developing Inc., or “Velt” or the “Company”) is a Nevada corporation formed
on February 7, 2011. Our current principal executive office is located at 1313 N. Grand Ave. #16, Walnut, CA 91789. Tel: 626-262-7379.
The Company’s common stock are currently traded on the Over the Counter Bulletin Board (“OTCQB”) under the symbol
“VIGC”.
In addition to the U.S. operation, the
Company established a subsidiary, A & C Agriculture Developing (Europe) AB (“A&C Europe” or the “Subsidiary”)
in Stockholm, Sweden on October 24, 2013, which is located at Gamla Sodertaljevagen 134A, 141 70 Segeltorp, Sweden. On August 5,
2017, the Company sold all of its equity interest in the Subsidiary to the prior President of A&C Europe.
The Company has started to set up a completed
and mature mobile application system (the “mobile app”) which supports third party payment function, online booking
and other management functions. This mobile app allows users to get special discounts when the users purchase from merchants listed
in the app through its online payment systems and will rely on big data management to create a large consumer base that will mostly
connect with traditional retailers and some of the online stores.
The Board of the Directors approved the
reverse stock split (the “stock split”) of the Company’s issued and outstanding common stock whereby each twenty
shares of common stock will be converted into one share of common stock. The stock split became effective with the Financial Industry
Regulatory Authority (“FINRA”) on May 21, 2018. All share and per share amounts in the financial statements and notes
thereto have been restated for all periods presented to give retroactive effect to the stock split.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US
GAAP”) for interim financial information and the rules of the Securities and Exchange Commission, and should be read in conjunction
with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements
filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of financial position and the results of operations for the interim period presented have been reflected
herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full
year. Notes to the unaudited interim financial statements which would substantially duplicate the disclosures contained in the
audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.
Use of Estimates
The preparation of consolidated financial
statements in conformity with US GAAP requires management to make estimates, judgements and assumptions that affect certain amounts
reported in the financial statements and footnotes. Accordingly, actual results could differ from those estimates.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards
Board (FASB) issued a new accounting standard update on revenue recognition from contracts with customers (Topic 606). The new
guidance replaces all current GAAP guidance on this topic and requires entities to recognize revenue when control of the promised
goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled
to in exchange for those goods or services. The Company elected to early adopt the new accounting standard on October 1, 2017 using
the modified retrospective method, applied to those contracts which were not completed as of October 1, 2017. The adoption of Topic
606 did not have a material impact as of October 1, 2017 and therefore no cumulative adjustment was recorded.
Management believes that other than disclosed
above, none of the recently issued accounting pronouncements will have a material impact on the consolidated financial statements.
Concentration of Credit Risk
The Company maintains its cash in bank
accounts which, at times, may exceed the federally insured limits. The Company has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk on cash in bank.
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 September
30, 2017, the Company had cash and cash equivalents of $5,965 and $50,515, respectively.
Earnings Per Share
Basic earnings per share is computed by
dividing net income (loss) attribute to stockholders of common stock by the weighted-average number of common shares outstanding
for the period. Diluted net earnings per share is computed by dividing net income (loss) by the weighted average number of common
shares outstanding plus equivalent shares.
The Company only issued one type of shares,
i.e., common shares and does not have any potentially dilutive instrument as of June 30, 2018 and 2017.
Property and equipment
Property and equipment are carried at cost
and, less accumulated depreciation. Depreciation has been determined using a straight-line method over the estimated useful lives
of the related assets, which are 5 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements
are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and
any resulting gains or losses are included in income in the year of disposal. The Company examines the possibility of decreases
in the value of property and equipment when events or changes in circumstances reflect the fact that their recorded value may not
be recoverable.
As of June 30, 2018, the Company’s
property and equipment consists of computer equipment with a cost of $7,378 and accumulated depreciation of $705. During the nine
months ended June 30, 2018 and 2017, the depreciation expenses were $705 and $4,081, respectively.
Revenue Recognition
Revenue is recognized upon transfer of
control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to
in exchange for those products and services. We enter into contracts that include products and services, which are generally capable
of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and
any taxes collected from customers.
The Company’s contracts with customers
may include multiple performance obligations. Revenue relating to agreements that provide more than one performance obligation
is recognized based upon the relative fair value to the customer of each performance obligation as each obligation is earned. The
Company derives its revenues the follows:
Mobile Apps:
Revenue from the mobile apps is recognized
when control has transferred to the customer which typically occurs when the mobile apps either upon delivery of the key code to
the customer or upon the deployment of the mobile app to the App Store.
Maintenance Services:
The Company offers maintenance and function
improvements services related to the mobile apps for customers. Maintenance service is considered distinct and is recognized ratably
over the maintenance term.
During the nine months ended June 30, 2018, the Company recognized
revenue from the mobile apps and maintenance services in the amount of $15,084 and $2,000, respectively.
Going Concern Assessment
Pursuant to ASC 205-40-50, The Company’s
financial statements are prepared using US GAAP applicable to a going concern that contemplates the realization of assets and liquidation
of liabilities in the normal course of business. The Company demonstrates adverse conditions that raise substantial doubt about
the Company’s ability to continue as a going concern. These adverse conditions are negative financial trends, specifically
negative working capital, recurring operating losses, accumulated deficit and other adverse key financial ratios.
The Company did not generate sufficient
revenues to cover its operating expense during the nine months ended June 30, 2018. The Company plans to loan from Mr. Chin Kha
Foo who is the majority shareholder and the President of the Company to support the Company’s normal business operating.
There is no assurance, however, that the Company will be successful in raising the needed capital and, if funding is available,
that it will be available on terms acceptable to the Company.
The financial statements do not include
any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities
that might be necessary in the event that the Company cannot continue as a going concern.
NOTE 3 - RELATED PARTY TRANSACTIONS
Loans from shareholders
On May 24, 2018, the Company issued a promissory
note of $249,975, bearing interest rate at 6% and due in twelve months, to Mr. Chin Kha Foo in exchange for cash. During the nine
months ended June 30, 2018, the interest expense was $1,520.
The Company also borrowed loans with no
interest and due on demand from the shareholders to support its operation. The outstanding balance, including promissory note,
as of June 30, 2018 and September 30, 2017 were $410,930 and $86,158, respectively.
NOTE 4 - INCOME TAXES
The Company recorded no income tax expense
or benefit during the nine months ended June 30, 2018 and 2017 since the Company incurred net operating losses and recorded a full
valuation allowance against net deferred tax assets for all periods presented. As of June 30, 2018 and September 30, 2017, the
aggregate balances of our gross unrecognized tax benefits were $198 thousand and $248 thousand, respectively, of which a valuation
allowance recognized against the unrecognized tax benefits.
In December 2017, the Tax Reform Act was
signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax
rate decrease from 35% to 21 % effective for tax years beginning after December 31, 2017, the transition of U.S. international
taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation
of cumulative foreign earnings as of December 31, 2017. The management does not believe that there will be any material impact
on its consolidated financial statements as a result of the Tax Reform Act.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company has no commitment or contingency
as of June 30, 2018.
NOTE 6 - COMMON STOCK
The Board of the Directors approved the
stock split of the Company’s issued and outstanding common stock whereby each twenty shares of common stock will be converted
into one share of common stock. The stock split became effective FINRA on May 21, 2018. Pursuant to the stock split, each issued
and outstanding share of the common stock was exchanged for one-twentieth of a share.
As a result,
each stockholder now owns a reduced number of shares of the Company’s common stock. The number of the Company’s authorized
shares of common stock was not affected by the stock split and t
he shares of common stock retain a par value of $0.001 per
share.
NOTE 7 –
escrow
deposit
The Company borrowed a promissory note
of $249,975 from Chin Kha Foo, the majority shareholder and the President of the Company, and then deposited a total amount of
$250,000 in an escrow account for the purpose of purchasing a piece of land, valued at $1,750,000, from Anchor Alliance Development
Inc., a California Corporation (“Anchor”). On June 20, 2018, the Company and Anchor agreed to cancel the transaction.
The amount of $214,000 was recorded as escrow deposit, net of the loss on the cancellation of the escrow contract of $36,000, in
the balance sheet as of June 30, 2018.
NOTE 8 - SUBSEQUENT EVENTS
On July 20, 2018, the escrow deposit of
$214,000 was returned to the Company due to the cancellation of the escrow contract.
The Company has evaluated all other subsequent
events through the date the financial statements were issued and determined that there were no other subsequent events or transactions
that require recognition or disclosures in the financial statements.