REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and shareholders of Velt International
Group Inc.
Opinions on the Financial Statements
and Internal Control over Financial Reporting
We have audited the accompanying consolidated
balance sheets of Velt International Group Inc. and subsidiary (the “Company”) as of September 30, 2018 and 2017, and
the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity (deficit) and cash
flows for each of the two years in the period ended September 30, 2018, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of September 30, 2018 and 2017, and the results of its operations and its cash
flows for each of the two years in the period ended September 30, 2018, in conformity with accounting principles generally accepted
in the United States of America.
Going Concern Uncertainty
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial
statements, the Company has suffered recurring losses from operations, accumulated deficit and other adverse key financial ratios
which raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also
are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinions
These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As
part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly,
we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe
that our audits provide a reasonable basis for our opinion.
/s/ Simon & Edward, LLP
Los Angeles, California
December 11, 2018
We have served as the Company's auditor since 2017.
NOTES
TO 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 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
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”). The consolidated financial statements include the financial statements of the Company
and its subsidiary. All significant inter-company balances and transactions have been eliminated on consolidation.
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 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.
The
Company had total revenue of $23,048 and $657,839 for the years ended September 30, 2018 and 2017, respectively. For the year
ended September 30, 2018, all revenue was to one customer. For the year ended September 30, 2017, the Company’s largest
two customers provided with approximately 77% of sales.
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 September 30, 2018 and 2017, the Company had cash in bank of $127 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 September
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 September 30, 2018, the Company’s property and equipment consists of computer equipment with a cost of $7,378 and accumulated
depreciation of $1,074. As of September 30, 2017, the Company has property, plant, and equipment at a cost of nil and accumulated
depreciation of nil. During the years ended September 30, 2018 and 2017, the depreciation expenses were $1,074 and $5,441, 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 year ended September 30, 2018, the Company recognized revenue from the mobile apps and maintenance services in the amount
of $23,048. The Company had total revenue of $657,839 in sales of seeds for the year ended September 30, 2017.
Going
Concern Assessment
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 year ended September 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 a shareholder
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 (“Mr. Foo”) in exchange for cash. On July 17, 2018 and July 25, 2018, the Company made repayments of $100,000
and $90,000 to Mr. Foo, respectively. As of September 30, 2018, the outstanding balance for the promissory note was $59,975. For
the year ended September 30, 2018, the interest expense was $3,110.
The
Company borrowed from Mr. Foo to support its operation and the amount bears no interest and due on demand. The outstanding balance
of the borrowings as of September 30, 2018 and 2017 were $160,955 and $86,158, respectively.
NOTE
4 – STOCKHOLDER’S EQUITY
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 the shares of common stock retain a par value of $0.001
per share.
Preferred stock
On April 23, 2018, the Company authorized
20,000,000 shares of preferred stock with $0.001 par value. As of September 30, 2018, nil share was issued and outstanding.
NOTE
5 - INCOME TAXES
The
Company provides for income taxes under ASC 740 “Income Taxes”, ASC 740 requires the use of an asset and liability
approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the
financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to
reverse. It also requires the reduction of deferred tax assets by a valuation allowance if based on the weight of available evidence,
it is more likely than not that some or all of the deferred tax assets will not be realized.
The
Company is subject to taxation in the United States. The Company has not recognized an income tax benefit for its operating losses
generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the
period presented is offset by a valuation allowance. For the year ended September 30, 2018, the Company has incurred a net loss
of approximately $187,000. Net Operating Loss (“NOL”) carry forwards of approximately $846,000 will expire, if not
utilized, through 2038. The deferred tax asset has been off-set by an equal valuation allowance.
|
|
For
the year ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
Deferred tax asset, generated from net operating loss
at statutory rates
|
|
$
|
206,551
|
|
|
$
|
159,948
|
|
Valuation allowance
|
|
|
(206,551
|
)
|
|
|
(159,948
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
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
6 - COMMITMENTS AND CONTINGENCIES
The
Company has no commitment or contingency as of September 30, 2018.
NOTE
7 - SUBSEQUENT EVENTS
The
Company has evaluated subsequent events through the date these consolidated financial statements were issued and determined that
there were no subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.