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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our condensed unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly 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. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to shares of our common stock.

As used in this quarterly report, the terms "we", "us", "our" and "our company" mean Magicstem Group Corp., unless otherwise indicated.

Company History

Our company was incorporated in the State of Nevada on October 25, 2012 under the name Cold Cam, Inc.  and originally intended to develop a camera system to be placed on the inside of refrigerator doors.

On January 31, 2015, Yonekatsu Kato, formerly our company's sole officer and director, entered into a stock purchase agreement, pursuant to which he sold all of his 10,000,000 shares of our company's common stock (98% of our company's total outstanding common shares) to Magicstem Development Limited, a Seychelles corporation ("Magicstem Development") ultimately owned by Chi Man Ng, in a private transaction, for an aggregate purchase price of $50,000. The funds used for this share purchase were Magicstem Development's funds. Magicstem Development now owns 98% of our company's issued and outstanding shares of common stock. The closing of the share purchase agreement created a change of control of our company. As a result of the change of control, and the change in our management as noted herein, our company now intends to investigate additional opportunities in an effort to enhance shareholder value. Those efforts are initially anticipated to focus on the development of stem cell cryo-preserved banking in Asia, with the expectation that primary customers would come from China.

 

On January 31, 2015, our board of directors accepted the resignation of Yonekatsu Kato as our president, chief executive officer, chief financial officer, treasurer, secretary and director.

The resignation of Yonekatsu Kato was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.

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On January 31, 2015, we appointed Chi Man Ng as president, chief executive officer and director; Ka Sing Edmund Yeung as chief financial officer, treasurer, secretary and director; and Guosheng Hu as chief technology officer and director of our company.

On April 1, 2015, our company's board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary Magicstem Group Corp., a Nevada corporation, to effect a name change from Cold Cam, Inc. to Magicstem Group Corp.  Our company remained as the surviving company.  Magicstem Group Corp. was formed on October 25, 2012.

The name change was approved by the Financial Industry Regulatory Authority (FINRA) for filing with an effective date of May 4, 2015 and became effective with the OTC Markets at the opening of trading on May 4, 2015 under the symbol "MGGI".

At this time, we have not developed our product or contacted any possible client or developer. Our company has not yet implemented its business model and to date, has generated no revenues.

Results of Operations for the Three Months Ended July 31, 2015 Compared to the Three Months Ended July 31, 2014

Our operating results for the three month periods ended July 31, 2015 and 2014 are summarized as follows:

		Three months ended
		July 31,
		2015					2,014
REVENUE		$	-			$	-
OPERATING EXPENSES
Office and general			(8,333	)			-
Professional fees			15,611				3,800
Total operating expenses			7,278				3,800
LOSS  BEFORE TAXES			(7,278	)			(3,800	)
Provision for taxes			-				-
NET LOSS		$	(7,278	)		$	(3,800	)

 

Revenue

 

We recognized no revenues for the three month periods ended July 31, 2015 and July 31, 2014 as we have not yet commenced operations.

Operating Expenses

 

Net Losses 

 

During the three months ended July 31, 2015, we incurred operating losses of $7,278 compared to $3,800 expenses incurred in the three months ended July 31, 2014, an increase of $3,478 due to the factors discussed above.

		Nine months ended
		July 31,
		2015				2014
REVENUE		$	-			$	-
OPERATING EXPENSES
Office and general			6,047				1,125
Professional fees			33,285				9,300
Total Operating Expenses			39,332				10,425
LOSS BEFORE TAXES			(39,332	)			(10,425	)
Provision for taxes			-				-
NET LOSS		$	(39,332	)		$	(10,425	)

 

Revenue

 

We recognized no revenues in the nine months periods ended July 31, 2015 and July 31, 2014 as we have not yet commenced operations.

 

Operating Expenses

 

During the nine months ended July 31, 2015, we incurred operating expenses of $39,332 compared to $10,425 in the nine months ended July 31, 2014, an increase of $28,907.  The increase in professional fees was related to name change and ongoing regulatory costs and the increase in office, general & administrative expenses was related to the OTCQB application and annual fee as well as the various costs associated with the name change.

 

Net Losses 

 

Liquidity and Capital Resources

 

Working Capital

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		Nine Months Ended July 31, 2015				Nine Months Ended July 31, 2014
Net cash used in operating activities		$	(51,250	)		$	(18,381	)
Net cash provided by (used in) investing activities			-				-
Net cash provided by financing activities			70,393				17,540
Net increase (decrease) in cash		$	19,143			$	(841	)

 

 

During the nine months ended July 31, 2015, we used $51,250 in our operating activities compared to $18,381 used in operating activities during the nine months ended July 31, 2014. During the nine months ended July 31, 2015 we incurred losses of $39,332 and we increased our balance of prepaid expense by $8,333 and reduced accounts payable and accrued expenses by $3,585. By comparison, during the nine months ended July 31, 2014 we only incurred losses of $10,425 and reduced our balance of accounts payable and accrued expenses by $7,956.

Cash Flow from Investing Activities

We neither generated funds nor used funds in investing activities during the nine month periods ended July 31, 2015 and 2014, respectively.

Cash Flow from Financing Activities

During the nine months ended July 31, 2015, we received a $10,666 loan from our former sole officer and a $59,727 loan from our current sole officer, compared to a $17,540 loan received from our former sole officer during the nine months ended July 31, 2014.  The increase in cash flow from financing activities in 2015 reflected our need to fund the increased cash flow used in operating activities in 2015 as compared to 2014 as described above.

Going Concern

Our financial statements for the nine month period ended July 31, 2015 have been prepared on a going concern basis which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

We not generated revenues, have achieved losses since our inception, and rely upon the sale of our common stock and proceeds from shareholder loans to fund our operations. If we are unable to raise equity or secure alternative financing, we may not be able to continue our operations and our business plan may fail.

If our operations and cash flow improve, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or an improvement in our liquidity situation. The threat of our ability to continue as a going concern will cease to exist only when our revenues have reached a level able to sustain our business operations.

Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Future Financings

If our company is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, our company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in our company having to seek capital from other sources such as debt financing, which may be available. However, if such financing were available, because we have no operations to date, we would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If our company cannot raise additional proceeds via a private placement of its common stock or secure debt financing we would be required to cease business operations. As a result, investors in our company's common stock would lose all of their investment.

As of the date of this Report, the current funds available to our company will not be sufficient to continue operations. The cost to establish our company and begin operations is estimated to be approximately $100,000 over the next twelve months and the cost of maintaining our reporting status is estimated to be $8,000 over this same period, not taking into account any additional funds that may be required for the acquisition or commencement of a stem cell banking business. Our officers and directors have undertaken to provide our company with operating capital to sustain our business over the next twelve month period as the expenses are incurred in the form of a non-secured loan. However, there is no contract in place or written agreement securing this agreement.  Management believes that if our company cannot raise sufficient revenues or maintain its reporting status with the Securities and Exchange Commission ("SEC") we will have to cease all efforts directed towards our company.  As such, any investment previously made would be lost in its entirety.    

Plan of Operation

As a result of the change of control, and the change in our management as noted herein, our company now intends to investigate additional opportunities in an effort to enhance shareholder value.  Those efforts are initially anticipated to focus on the development of stem cell banking cryopreserved in Asia, with the expectation that primary customers would come from China.

In order to pursue this initiative, we anticipate that our cash requirements for the next twelve months shall consist of:

 

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Off Balance Sheet Arrangement

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

Basis of Presentation

The accompanying financial statements include the accounts of our company and have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") and the instructions to Form 10-K and Regulation S-X and are presented in US dollars. Our company has adopted an October 31 fiscal year end.

Unaudited Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q.  Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading.  The results of operations for such interim periods are not necessarily indicative of operations for a full year.

While management of our company believes that the disclosures presented herein are adequate and not misleading, these condensed interim financial statements should be read in conjunction with the audited combined financial statements and the footnotes thereto for the year ended October 31, 2014 filed on Form 10-K on December 19, 2014.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Our company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

Fair Value of Financial Instruments

FASB ASC 820-10 "Fair Value Measurements and Disclosures" defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This ASC also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described below:

 

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2	Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable data by correlation or other means.
Level 3	Inputs that are both significant to the fair value measurement and unobservable.

Our company's financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities and amounts due to related party. The fair value of our company's financial instruments approximates their carrying value because of the short maturity of these instruments.

Property

Our company does not own or rent any property.  Our office space is provided by our president at no charge.

Revenue Recognition

Our company will recognize revenue in accordance with Accounting Standards Codification No. 605, “Revenue Recognition” ("ASC-605"), ASC-605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. Our company will defer any revenue for which the product has not been delivered or is subject to refund until such time that our company and the customer jointly determine that the product has been delivered or no refund will be required.

Advertising

Advertising costs will be expensed as incurred. No advertising costs were incurred during the three and nine months ended July 31, 2015 or 2014.

Income Taxes

Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized.

Our company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “Accounting for Income Taxes”.  It prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  As a result, our company has applied a more-likely-than-not recognition threshold for all tax uncertainties.  The guidance only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the various taxing authorities. Our company is subject to taxation in the United States.   All of our company’s tax years are subject to examination by Federal and state jurisdictions.

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Our company classifies penalties and interest related to income taxes as income tax expense in the Statements of Operations.

Basic and Diluted Net Loss per Share

Our company computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Our company had no potentially dilutive debt or equity instruments issued and outstanding during the three and nine months ended July 31, 2015 or 2014 and accordingly basic loss and diluted loss per share are the same.

Recent Accounting Pronouncements

Our company reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on our company.

As a "smaller reporting company", we are not required to provide the information required by this Item.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

Changes in Internal Controls over Financial Reporting

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PART II – OTHER INFORMATION

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

As a “smaller reporting company”, we are not required to provide the information required by this Item.

No sales of unregistered equity securities were completed during the three and nine month periods ended July 31, 2015 and July 31, 2014.

No senior debt was issued or outstanding during the three and nine month periods ended July 31, 2015 and 2014.

Not applicable to our company

On July 21, 2015, we appointed Chun-han (Peter) Lin as a director and Chun-heng (Kevin) Lin as Group Senior Manager of our company.

 

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.