Item 1. Business.
Forward-Looking Statements
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Company Overview
We are an exploration stage mineral exploration company incorporated in Nevada on April 9, 2014. On May 8, 2014, we incorporated a wholly-owned subsidiary, NRC Exploration LLC in the state of Nevada, for the purposes of mineral exploration. On May 20, 2014, our consulting geologist introduced us to a mineral property and we acquired an option on that property whereupon we can acquire 100% legal and beneficial ownership interest in a mineral claim known as the “Donald Mineral Claim.” The Donald Mineral Claim is located in the Ominica Mining District located in the central part of the Province of British Columbia, Canada.
In May 2015, the underlying claims lapsed and the Company recorded an impairment of $1,150 during the year ended April 30, 2015, resulting in the property being recorded at $nil at April 30, 2017 and 2016. Management is currently searching for other opportunities in the mineral exploration.
Employees
We have no employees as of the date of this prospectus other than our president and CEO, Yang Liu. We conduct our business largely through agreements with consultants and other independent third party vendors.
Research and Development Expenditures
We have not incurred any research or development expenditures since our incorporation.
Subsidiaries
On May 8, 2014, we incorporated a wholly-owned subsidiary, NRC Exploration LLC in the State of Nevada for the purpose of conducting mineral exploration.
Patents and Trademarks
We do not own, either legally or beneficially, any patent or trademark.
Item 1A.
Item 1A. Risk Factors
As a “smaller reporting company”, as that term is defined in Item 10 of Regulation S-K, we are not required to include the information required by this item.
Item 1B.
Item 1B. Unresolved Staff Comments
None
Item 2.
Item 2. Properties.
Following our decision to cease exploration activities on the Donald Mineral Claim, we do not have any interests in any real property at this time.
Item 3.
Item 3. Legal Proceedings.
There are no claims, actions, suits, proceedings, or investigations that are currently pending or, to our knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of our officers, directors, or affiliates.
Item 4.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock is quoted under the symbol “NLRT” on the electronic marketplace operated by OTC Markets Group, Inc. (“OTC Markets”). Although our common stock is eligible for quotation on the marketplace operated by OTC Markets, no information on the high and low bid prices for our common stock was available during the last two fiscal years.
Quotations on the marketplace operated by OTC Markets reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.
Penny Stock
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.
Stockholders of Our Common Stock
The Company has approximately 18 stockholders of record of its common stock. As of July 31, 2017, we had 2,790,000 shares of our common stock issued and outstanding.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities
During the last two fiscal years, we did not sell any equity securities in transactions that were not registered under the Securities Act of 1933, as amended (the “Securities Act”).
Item 6.
Item 6. Selected Financial Data.
Not applicable to smaller reporting companies.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results of Operations for the fiscal years ended April 30, 2017 and 2016.
We have not earned any revenues since the inception of our current business operations. We incurred operating expenses in the amount of $73,900 for the year ended April 30, 2017 (2016 - $41,507). Our expenses during the year consisted of audit and accounting fees of $14,000 (2016 - $17,830), consulting fees of $12,000 (2016 - $nil) legal fees of $5,248 (2016 - $15,363), management fees of $6,500 (2016 - $nil) office expenses of $24,929 ( 2016 - 2,896) and transfer and filing fees of $11,223 (2016 - $5,410). We also incurred interest expense of $5,379 (2016 - $2,025).
Our losses are attributable to operating expenses together with a lack of any revenues.
Liquidity and Capital Resources
As of April 30, 2017, we had total current assets of $268, consisting of $268 cash. We had current liabilities of $66,174. Accordingly, we had negative working capital of $66,906 as of April 30, 2017.
On April 28, 2014 our former officer and director Mr. Misael Aguirre loaned the Company $23,000 which is evidenced by a Promissory Note in the amount of $23,000 with interest accruing on the principal amount of 6% per annum and due on December 31, 2018. In addition, we raised a total of $8,925 through our public offering closed December 18, 2014.
On June 29, 2015, Mr. Aguirre loaned an additional $7,000 to the Company under a Promissory Note due December 31, 2018, with interest accruing on the principal amount at an annual rate of 6%.
On August 26, 2015, Mr. Aguirre loaned an additional $3,600 to the Company under a Promissory Note due December 31, 2018, with interest accruing on the principal amount at an annual rate of 6%.
On October 26, 2015, Mr. Aguirre loaned an additional $4,000 to the Company under a Promissory Note due December 31, 2018, with interest accruing on the principal amount at an annual rate of 6%.
On February 9, 2016, Mr. Aguirre loaned an additional $1,500 to the Company under a Promissory Note due December 31, 2018, with interest accruing on the principal amount at an annual rate of 6%.
As of April 30, 2017, the total principal amount owed to Mr. Aguirre was $39,100. On June 30, 2017 Mr. Aguirre forgave these loans and the accrued interest.
On April 6, 2016, an unrelated 3rd party loaned $23,978 to the Company under a Promissory Note due on demand, with interest accruing on the principal amount at an annual rate of 6%. On June 30, 2017 this loan and the accrued interest was forgiven by the lender.
On April 30, 2017, an unrelated 3rd party loaned an additional $25,000 to the Company under a Promissory Note due on demand, with interest accruing on the principal amount at an annual rate of 6%. On June 30, 2017 this loan and the accrued interest was forgiven by the lender.
During the year ended April 30, 2017 the Company accrued interest expense of $5,379 (year ended April 30, 2016 - $2,025) pursuant to these notes payable. Total accrued interest on these notes as of April 30, 2017 was $8,792.
Off Balance Sheet Arrangements
As of April 30, 2017, there were no off balance sheet arrangements.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Currently, we do not believe that any accounting policies fit this definition.
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting pronouncements to have an impact on our results of operations or financial position.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 8.
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Nogales Resources Corp.
We have audited the accompanying consolidated balance sheet of Nogales Resources Corp. as of April 30, 2017 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also 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. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Nogales Resources Corp. as of April 30, 2017 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated revenues since inception, has incurred losses in developing its business, and further losses are anticipated. The Company requires additional funds to meet its obligations and the costs of its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Dale Matheson Carr-Hilton Labonte llp
CHARTERED PROFESSIONAL ACCOUNTANTS
/s/ DMCL
Vancouver, Canada
July 31, 2017
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders’
Nogales Resources Corp.
Hong Kong
We have audited the accompanying consolidated balance sheet of Nogales Resources Corp. and its subsidiary (collectively, the "Company") as of April 30, 2016 and the consolidated related statements of operations, changes in stockholders’ deficit and cash flow for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nogales Resources Corp. and its subsidiary as of April 30, 2016 and the results of their operations and their cash flow for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
July 27, 2016
NOGALES RESOURCES CORP.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN US DOLLARS)
SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
NOGALES RESOURCES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN US DOLLARS)
SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
NOGALES RESOURCES CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
For the years ended April 30, 2017 and 2016
SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
NOGALES RESOURCES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN US DOLLARS)
SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
NOGALES RESOURCES CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2017 and 2016
Note 1	Nature of Operations and Ability to Continue as a Going Concern
The Company was incorporated in the state of Nevada, USA on April 9, 2014. The Company was formed for the purpose of acquiring and developing mineral properties.
Basis of presentation
These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has yet to achieve profitable operations, has accumulated losses of $166,292 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available or on acceptable terms, if at all. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Note 2	Summary of Significant Accounting Policies
Use of Estimates
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which may have been made using careful judgment. Actual results may vary from these estimates.
Principles of Consolidation
These consolidated financial statements include the accounts of the Company and NRC Exploration LLC., a wholly owned subsidiary incorporated in Nevada, USA on May 8, 2014. All inter-company transactions and balances have been eliminated.
Cash
Cash consists of all highly liquid investments that are readily convertible to cash within 90 days when purchased.
Related party
The Company follows ASC 850, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Note 2	Summary of Significant Accounting Policies - (cont’d)
Mineral Property
The Company is primarily engaged in the acquisition, exploration and development of mineral properties.
Mineral property acquisition costs are capitalized in accordance with FASB ASC 930, “Extractive Activities-Mining,” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met.
In the event that mineral property acquisition costs are paid with Company shares, those shares are recorded at the estimated fair value at the time the shares are due in accordance with the terms of the property agreements.
Mineral property exploration costs are expensed as incurred.
When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre-feasibility, the costs incurred to develop such property are capitalized.
Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards.
Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.
To date the Company has not established any proven or probable reserves on its mineral properties.
Asset Retirement Obligations
Asset retirement obligations (“ARO”) associated with the retirement of a tangible long-lived asset, are recognized as liabilities in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated assets. The cost of tangible long-lived assets, including the initially recognized ARO, is amortized, such that the cost of the ARO is recognized over the useful life of the assets.
The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted fair value is accreted to the expected settlement value.
The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate. As of April 30, 2017 the Company has determined no provision for ARO’s is required.
Note 2	Summary of Significant Accounting Policies - (cont’d)
Impairment of Long- Lived Assets
The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-0 through 15-5, Impairment or Disposal of Long- Lived Assets.
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar.
Assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Accumulated Other Comprehensive Income account in stockholder’s deficit, if applicable. Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. Any exchange gains and losses are included in the Statement of Operations.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards 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.
The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
Loss per share
In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Note 3	Financial Instruments
The carrying value of the Company’s financial assets and liabilities which consist of cash, notes payable, accounts payable and accrued liabilities, and due to related parties in management’s opinion approximate their fair value due to the short maturity of such instruments.
Note 4	Mineral Property
On May 20, 2014, the Company’s wholly owned subsidiary, NRC Exploration Ltd (“NRC”) entered into a property option agreement whereby NRC was granted an option to earn up to an 100% interest in the Donald mineral claim #1028301”. The Donald claim is located in the Omineca mining district of the Province of British Columbia Canada, and comprises 517 hectares.
Consideration for the option consists of cash payments totalling $11,150, of which $1,150 is payable upon the execution of the agreement (paid) and $ 10,000 is due on or before April 30, 2017.
In May 2015, the underlying claims lapsed and the Company recorded an impairment of $1,150 during the year ended April 30, 2015, resulting in the property being recorded at $nil at April 30, 2017 and 2016.
Note 5	Related Party Transactions
An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein.
On April 28, 2014, the Company’s former president loaned $23,000 to the Company and the Company issued a promissory note in the amount of $23,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On June 29, 2015, the Company’s former president loaned $7,000 to the Company and the Company issued a promissory note in the amount of $7,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On August 26, 2015, the Company’s former president loaned $3,600 to the Company and the Company issued a promissory note in the amount of $3,600. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On October 26, 2015, the Company’s former president loaned $4,000 to the Company and the Company issued a promissory note in the amount of $4,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
On February 9, 2016, the Company’s former president loaned $1,500 to the Company and the Company issued a promissory note in the amount of $1,500. The promissory note is unsecured, bears interest at 6% per annum, and matures on December 31, 2018.
No payments have been made on the above notes, and the total principal due on these notes at April 30, 2017 and 2016 is $39,100. (Note 9)
During the year ended April 30, 2017, the Company accrued interest expense of $2,346 (year ended April 30, 2016 - $2,025) pursuant to these notes payable. Total accrued interest on these note as of April 30, 2017 and 2016 was $5,759 and $3,413, respectively. (Note 9)
During the year ended April 30, 2017 the Company’s President advanced the Company $34,602. The advance is unsecured, bears no interest, and has no set repayment date.
Note 6	Capital Stock
The authorized common stock of the Company consists of 90,000,000 shares of common stock with par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001.
Note 7	Notes Payable
On April 6, 2016, $23,978 was loaned to the Company by an unrelated party. The loan has an interest rate of 6 % per annum, is unsecured and is due on demand. (Note 9)
On April 30, 2016, $25,000 was loaned to the Company by an unrelated party. The loan has an interest rate of 6 % per annum, is unsecured and is due on demand. (Note 9)
No payments have been made on the above notes, and the total interest due on these notes at April 30, 2017 and 2016 is $3,033 and $nil, respectively. (Note 9)
Note 8	Income Taxes
A reconciliation of the income tax provision computed at statutory rates to the reported tax provision is as follows:
Significant components of the Company’s deferred tax assets and liabilities are as follows:
At April 30, 2017, the Company has incurred accumulated net operating losses in the United States of America totalling approximately $166,292 which are available to reduce taxable income in future taxation years.
These losses expire as follows:
Note 8	Subsequent events
Subsequent to year end the Company’s former president forgave a series of loans totalling $44,859 in principal and interest. Also subsequent the year end an unrelated third party forgave a pair of loans totalling $52,011 in principal and interest. (Notes 5 & 7)
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statements disclosure.
On May 15, 2015 we dismissed Malone Bailey LLP (the “Former Accountant”) as our independent auditor and we appointed Dale Matheson Carr-Hilton Labonte LLP as our new independent auditor. During the last two fiscal years, there was a “reportable event” (as defined in Item 304(a)(v) of Regulation S-K) in that the Company’s internal controls over financial reporting for those periods were not effective. We do not believe that these reportable events have been disclosed in a manner different than what the Former Accountant would have concluded was required.
Item 9A.
Item 9A. Controls and Procedures.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, April 30, 2017. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of April 30, 2017 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of April 30, 2017, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are typical of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending April 30, 2017: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to Item 308(b) of Regulation S-K.
Item 9B.
Item 9B. Other Information.
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
Our executive officer and director and her age as of the date of this 10-K is as follows:
Set forth below is a brief description of the background and business experience of our current executive officer and director.
Yang Liu, Ms. Liu, age 34, has served as our sole executive officer and sole director since April 28, 2017. Mr. Liu has served as director, board chairwoman and legal representative for Qingdao Weichuang Private Capital Management Co. since November 2015. Weichuang Private Capital Management Co., registered capital of ¥100 million yuan, operates equity investment, debt investment, capital investment consulting, short-term financial investment and entrusted asset management business. Ms Liu was responsible for decision-making and co-ordinating financial and budget activities for maximum operational efficiency. From August 2008 to November 2015, Ms. Liu served as General Manager of Qingdao Harbor Impression Hotel Management Co. Ltd. Qingdao Harbor Impression Hotel Management Co. Ltd. has more than 100 hotels nationwide. Ms Liu was in charge of Planning, directing and co-ordinating the operations of business. She also worked at Yantai Huiyun Investment Co., Ltd. in the Investment Department as Customer Service Manager from November 2005 to July 2008. Yantai Huiyun Investment Co., Ltd. is a privately owned and operated company that makes long-term investments in China. And Ms Liu was responsible for information management, planning and organizing. Ms. Liu has over ten years work experience in investment and hotel management. She obtained her Bachelor’s Degree with a major in international trade from Yantai University in 2005. Ms. Liu does not have any prior experience as a chief executive or as the head of a public company.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until they resign or are removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Family Relationships
Ms. Liu is our sole executive officer and sole director. As such, there are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended, vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated; and (5) being otherwise involved in any legal proceeding described in Item 401(f) of Regulation S-K.
Committees of the Board
Ms. Liu is our sole director. As such, we do not have a separately constituted Audit Committee, Compensation Committee, or Nominating Committee.
Audit Committee
We do not have a separately designated standing audit committee. Our sole director performs the functions of an audit committee, but no written charter governs the actions of our sole director when performing the functions of what would generally be performed by an audit committee. Currently our sole director approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, our sole director reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. Ms. Liu, our sole director, does not qualify as an “audit committee financial expert” within the definition of Item 407(d)(5)(ii) of Regulation S-K. We believe that, at our current size and stage of development, the addition of a special audit committee financial expert to the Board is not necessary.
Nomination Committee
We do not have a separately designated nominating committee. As a result, no written charter governs the director nomination process. Because of our size and the fact that Ms. Liu is our sole director at this time, we believe that a separate nominating committee is not necessary at this time.
When evaluating director nominees, our sole director considers the following factors:
- The appropriate size of our Board of Directors;
- Our needs with respect to the particular talents and experience of our directors;
- The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
- Experience in political affairs;
- Experience with accounting rules and practices; and
- The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members.
Our goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experience. In doing so, our sole director will also consider candidates with appropriate non-business backgrounds.
Other than the foregoing, there are no stated minimum criteria for director nominees, although our sole director may also consider such other factors as it may deem are in our best interests as well as our stockholders. Our sole director may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary.
Code of Ethics
We currently have not adopted a code of ethics for the Board or our executive officers. As Ms. Liu is our sole executive officer and sole director, we do not believe that the adoption of a Code of Ethics is warranted at this time.
Compliance with Section 16(a) of the Exchange Act
We do not have a class of securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”). As such, our directors, executive officers and beneficial owners of greater than 10% of our equity securities are not required to comply with the provisions of Section 16(a) of the Exchange Act.
Item 11.
Item 11. Executive Compensation.
Compensation Discussion and Analysis
We presently do not have employment agreements with our sole executive officer and we have not established a system of executive compensation or any fixed policies regarding compensation of executive officers. Due to financial constraints typical of those faced by a development stage business, we have not paid any cash and/or stock compensation to our sole named executive officer.
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to each named executive officer for our last two completed fiscal years for all services rendered to us.
Narrative Disclosure to the Summary Compensation Table
Our named executive officer does not currently receive any compensation from the Company for her service as an officer of the Company.
Outstanding Equity Awards At Fiscal Year-end Table
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer outstanding as of the end of our last completed fiscal year.
Compensation of Directors Table
The table below summarizes all compensation paid to our director for our last completed fiscal year.
Narrative Disclosure to the Director Compensation Table
Our directors do not currently receive any compensation from the Company for their service as members of the Board of Directors of the Company.
Securities Authorized for Issuance Under Equity Compensation Plans
To date, we have not adopted a stock option plan or other equity compensation plan and have not issued any stock, options, or other securities as compensation.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth, as of July 31, 2017, the beneficial ownership of our common stock by each executive officer and director, by each person known by us to beneficially own more than 5% of the our common stock and by the executive officers and directors as a group. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 2,790,000 shares of common stock issued and outstanding.
As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.
The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Except as set forth below, since the beginning of our last fiscal year, none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since our incorporation or in any presently proposed transaction which, in either case, has or will materially affect us.
As of the year ended April 30, 2017, we were indebted to our former President, CEO, CFO and sole director, Misael Aguirre, in the aggregate principal amount of $39,100. On June 30, 2017 Mr. Aguirre forgave these loans and the accrued interest.
Item 14.
Item 14. Principal Accounting Fees and Services
Below is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years.
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules.
(1) Incorporated by reference to Registration Statement on Form S-1 filed on September 29, 2014.
* Filed herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Nogales Resources Corp.
Date: July 31, 2017
By: /s/ Yang Liu
Yang Liu
Title: Chief Executive Officer, Chief Financial Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Nogales Resources Corp.
Date: July 31, 2017
By: /s/ Yang Liu
Yang Liu
Title: Chief Executive Officer, Chief Financial Officer and Director