UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-K

 

[X]	Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the year ended April 30, 2018
[  ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to __________
	Commission File Number:  333-199013

 

Nogales Resources Corp.

(Exact name of registrant as specified in its charter)

 

Nevada	35-2510378
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

 

Unit 1908, Shanghai Mart Tower, 2299 West Yan'an Road, Changning District, Shanghai, China 200336

(Address of principal executive offices)

 

+86 (021) 2357-0055

(Registrant’s telephone number)

 

_________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  [  ] Yes   [X] No

 

Indicated by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [X] Yes   [ ] No

 

Indicated by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days  [ ] Yes   [X] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [  ] No [X]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

[ ] Large accelerated filer [ ] Non-accelerated filer

[ ] Accelerated filer [X] Smaller reporting company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes   [  ] No

 

The aggregate market value of the common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter is: $8,925 based on a price of $0.0075 per share, being the last price at which the registrant sold shares of its common stock.

 

As of July 26, 2018, there were 2,790,000 shares of common stock $0.001 par value, outstanding.

 

 

TABLE OF CONTENTS

 

	Page
PART I	3
Item 1 Business	3
Item 1A Risk Factors	4
Item 1B Unresolved Staff Comments	4
Item 2 Properties	4
Item 3 Legal Proceedings	4
Item 4 Mine Safety Disclosures	4
PART II	4
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4
Item 6 Selected Financial Data	5
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 7A Quantitative and Qualitative Disclosures about Market Risk	7
Item 8 Financial Statements and Supplementary Data	7
Item 9 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	8
Item 9A Controls and Procedures	8
Item 9B Other Information	8
PART III	9
Item 10 Directors, Executive Officers and Corporate Governance	9
Item 11 Executive Compensation	11
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	13
Item 13 Certain Relationships and Related Transactions, and Director Independence	13
Item 14 Principal Accounting Fees and Services	13
PART IV	14
Item 15 Exhibits, Financial Statement Schedules	14
Signatures	15

 

 

PART I 

 

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, 2018 and 2017.  Management is currently searching for other opportunities in 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. On May 4, 2018 NRC Exploration LLC was dissolved.

 

Patents and Trademarks

 

We do not own, either legally or beneficially, any patent or trademark.

 

  

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. Unresolved Staff Comments

 

None

 

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. 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. Mine Safety Disclosures.

 

Not applicable.

 

PART II

 

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.

 

Fiscal Year Ended April 30, 2018
Quarter Ended		High $		Low $
April 30, 2018		n/a		n/a
January 31, 2018		n/a		n/a
October 31, 2017		n/a		n/a
July 31, 2017		n/a		n/a

 

Fiscal Year Ended April 30, 2017
Quarter Ended		High $		Low $
April 30, 2017		n/a		n/a
January 31, 2017		n/a		n/a
October 31, 2016		n/a		n/a
July 31, 2016		n/a		n/a

 

 

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 XX, 2018, 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. Selected Financial Data.

 

Not applicable to smaller reporting companies.

 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Results of Operations for the fiscal years ended April 30, 2018 and 2017.

 

For the three months ended April 30, 2018 we did not earn any revenues. We incurred total operating expenses of $14,332 (2017 – $32,653) and incurred a net loss in the amount of $14,332 (2017 –$33,941).

 

Our expenses during the three months ended April 30, 2018 consisted of audit and accounting fees of $6,000 (2017 – $4,000), Office and miscellaneous expenses of $6,033 (2017 – $6,140), transfer and filing fees of $2,299 (2017 – $3,453) and interest expense of $nil (2017 – $1,288).

 

For the year ended April 30, 2018 we did not earn any revenues. On June 30, 2017 an unrelated third party forgave loans totaling $52,011 in principal and interest and a former CEO and director forgave loans totaling $44,859 in principal and interest. For the year ended April 30, 2018 we incurred total operating expenses of $72,370 (2017 – $73,900) and earned net income in the amount of $24,500 (2017 – net loss of $79,279).

 

Our expenses during the year ended April 30, 2018 consisted of audit and accounting fees of $19,500 (2017 – $14,000), Office and miscellaneous expenses of $24,033 (2017 – $24,929), legal fees of $12,065 (2017 – $5,248), transfer and filing fees of $16,772 (2017 – $11,223) and interest expense of $nil (2017 – $5,379). These were offset by a gain on forgiveness of debt of $96,870 (2017 – $nil).

 

Our operating losses are attributable to operating expenses together with a lack of any revenues. The net income for the year is attributable to the forgiveness of debt from a former CEO & director and an unrelated third party.

 

Liquidity and Capital Resources

 

As of April 30, 2018, we had total current assets of $143 (April 30, 2017 – $268), consisting entirely of cash. We had current liabilities of $121,010 (April 30, 2017 – $66,174).  Accordingly, we had a working capital deficit of $120,867 as of April 30, 2018 (April 30, 2017 – $139,608).

 

To date, we have funded our operations primarily through loans from related parties and from unrelated third parties. As of April 30, 2018, we owed our current CEO $105,190 for advances. Amounts loaned by our former CEO and an unrelated third party totaling $96,870 in principal and interest were forgiven on June 30, 2017.

 

We do not currently have sufficient funds to repay our existing debts. If we are unable to secure additional financing, we could fail and investors may lose some or all of their investment. In addition, we are no longer pursuing exploration or development of the Donald Property and our option for that property has expired. We are currently searching for other opportunities in the mineral exploration field. As such, we are unable to provide an accurate estimate of our financial requirements for the next twelve months. If we do identify a suitable business opportunity that we wish to pursue, we will likely need substantial financing. If we fail to obtain sufficient financing, our ability to pursue alternative business opportunities may be limited. We do not currently have any financing arrangements in place, and there is no assurance that sufficient financing will be available to us when needed.

 

Off Balance Sheet Arrangements

 

As of April 30, 2018, 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. 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. Financial Statements and Supplementary Data.

 

Audited Financial Statements:
F-1	Reports of Independent Registered Public Accounting Firm
F-3	Consolidated Balance Sheets as of April 30, 2018 and 2017
F-4	Consolidated Statements of Operations for years ended April 30, 2018 and 2017
F-5	Consolidated Statement of Stockholders’ (Deficit) Equity for years ended  April 30, 2018 and 2017
F-6	Consolidated Statements of Cash Flows for the years ended April 30, 2018 and  2017
F-7	Notes to Consolidated Financial Statements

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the shareholders and the board of directors of Nogales Resources Corp.

 

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Nogales Resources Crop. (the "Company") as of April 30, 2018 and 2017, the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

The accompanying 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, expects to incur further losses from operations, and requires additional funds to meet its obligations and repay its liabilities arising from normal business 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

 

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("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 audit to obtain reasonable assurance about whether the 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 in accordance with the standards of the PCAOB. 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 in accordance with the standards of the PCAOB.

 

Our audits included performing procedures to assess the risks of material misstatement of the 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ DMCL 

DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED PROFESSIONAL ACCOUNTANTS

 

We have served as the Company’s auditor since 2017

Vancouver, Canada

July 26, 2018

NOGALES RESOURCES CORP.

CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN US DOLLARS)

 

	April 30, 2018				April 30, 2017
ASSETS
Current
Cash	$	143			$	268
Total assets	$	143			$	268
LIABILITIES
Current
Accounts payable and accrued liabilities	$	15,820			$	14,163
Notes payable		—				48,978
Accrued interest on notes payable		—				3,033
Due to related party		105,190				—
Total current liabilities		121,010				66,174
Long term
Due to related party		—				73,702
Accrued interest – related party		—				5,759
Total long term liabilities		—				79,461
Total liabilities		121,010				145,635
STOCKHOLDERS’ DEFICIT
Preferred stock, $0.001 par value 10,000,000 shares authorized, none  issued and outstanding		—				—
Common stock, $0.001 par value 90,000,000 shares authorized 2,790,000 shares issued and outstanding		2,790				2,790
Additional paid in capital		18,135				18,135
Accumulated deficit		(141,792	)			(166,292	)
Total stockholders’ deficit		(120,867	)			(145,367	)
Total liabilities and stockholders’ deficit	$	143			$	268

 

SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS 

NOGALES RESOURCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(EXPRESSED IN US DOLLARS)

 

	Year Ended April 30,
	2018				2017
Operating expenses
Audit and accounting fees	$	19,500			$	14,000
Consulting fees		—				12,000
Legal fees		12,065				5,248
Management fees		—				6,500
Office expenses		24,033				24,929
Transfer and filing fees		16,772				11,223
Loss from operations		(72,370	)			(73,900	)
Interest expense		—				(5,379	)
Gain on forgiveness of loans		96,870				—
Net and Comprehensive Income (Loss)	$	24,500			$	(79,279	)
Net income (loss) per common share – basic and diluted	$	0.01			$	(0.03	)
Weighted average number of common shares outstanding – basic and diluted		2,790,000				2,790,000

  

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, 2018 and 2017 

 

	Preferred Shares								Common Shares								Additional Paid In				Accumulated
	Number				Amount				Number				Amount				Capital				Deficit				Total
Balance, April 30, 2016		—				—				2,790,000				2,790			$	18,135				(87,013	)			(66,088	)
Net loss		—				—				—				—				—				(79,279	)			(79,279	)
Balance, April 30, 2017		—				—				2,790,000				2,790				18,135				(166,292	)			(145,367	)
Net income		—				—				—				—				—				24,500				24,500
Balance, April 30, 2018		—			$	—				2,790,000			$	2,790			$	18,135			$	(141,792	)		$	(120,867	)

 

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) 

 

	Year Ended April 30,
	2018				2017
Operating activities
Net income (loss)	$	24,500			$	(79,279	)
Non-cash items:
Accrued interest – related party		—				2,346
Accrued interest – notes payable		—				3,033
Gain on forgiveness of debt		(96,870	)			-—
Changes in operating assets and liabilities:
Prepaid expenses		—				5,000
Accounts payable and accrued liabilities		(1,657	)			14,163
Net cash used in operating activities		(70,713	)			(54,737	)
Financing activities
Proceeds from short term loan payable		—				—
Proceeds from related party notes payable		70,588				34,602
Net cash provided by financing activities		70,588				34,602
Change in cash during the period		(125	)			(20,135	)
Cash, beginning of the period		268				20,403
Cash, end of the period	$	143			$	268
Supplemental information
Interest and taxes paid in cash	$	—			$	—

  

SEE ACCOMPANYING NOTES THAT ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS 

NOGALES RESOURCES CORP.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2018 and 2017 

 

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 $141,792 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. Subsequent to the year end, on May 15, 2018, NRC Exploration LLC was dissolved.

 

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)

 

Reclassifications

 

Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any period presented.

 

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.

 

 

Note 2 Summary of Significant Accounting Policies – (cont’d)

 

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 Related Party Transactions

 

On June 30, 2017 the Company’s former president forgave loans and interest totaling $44,859.

 

During the year ended April 30, 2018 the Company’s president advanced the Company $70,588 (2017 - $34,602), for a total amount advanced of $91,274. The advances are unsecured, bear no interest and have no terms of repayment.

 

Note 5 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 6 Notes Payable

 

On April 6, 2016, an amount totaling $23,978 and on April 30, 2016, an amount totaling $25,000 were loaned to the Company. These loans had an interest rate of 6 % per annum.

 

On June 30, 2017 these loans, totaling $52,011, in principal and interest were forgiven. 

 

Note 7 Income Taxes

 

A reconciliation of the income tax provision computed at statutory rates to the reported tax provision is as follows:

 

	Year Ended				Year Ended
	April 30, 2018				April 30, 2017
Basic statutory and state income tax rate		35	%			35	%
Income (loss) before income taxes	$	24,500			$	(79,279	)
Expected approximate tax recovery on net loss, before income tax		5,145				(27,748	)
Change in tax rate		23,282				27,748
Changes in valuation allowance		(28,427	)
Deferred income tax recovery	$	—			$	—

  

 

 Note 8 Income Taxes (cont’d)

 

Significant components of the Company’s deferred tax assets and liabilities are as follows:

 

	Year Ended				Year Ended
	April 30, 2018				April 30, 2017
Deferred income tax assets
Non-capital losses carried forward	$	29,776			$	58,203
Less: valuation allowance		(29,776	)			(58,203	)
Deferred income tax assets	$	—			$	—

 

At April 30, 2018, the Company has incurred accumulated net operating losses in the United States of America totaling approximately $141,792 which are available to reduce taxable income in future taxation years. These losses may be carried forward indefinitely.

 

   

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.

 

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, 2018. 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, 2018 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, 2018, 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, 2018: (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. Other Information.

 

None.

 

 

PART III

 

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:

 

Name			Age			Position(s) and Office(s) Held
Yang Liu			35			President, Chief Executive Officer, Chief Financial Officer, and Director

 

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 35, 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. 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.

 

SUMMARY COMPENSATION TABLE
Name and principal position			Year				Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Yang Liu, President, CEO, CFO, and director			2017 2018				0 0				0 0				0 0				0 0				0 0				0 0				0 0				0 0
Philip Kwan, Former President, CEO, CFO, and director			2017				0				0				0				0				0				0				6,500				0
Lei Yang, Former President, CEO, CFO, and director			2017				0				0				0				0				0				0				0				0

  

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.

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS																						STOCK AWARDS
Name			Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date			Number of Shares or Shares of Stock That Have Not Vested (#)			Market Value of Shares or Shares of Stock That Have Not Vested ($)				Equity Incentive Plan Awards: Number of Unearned Shares, Shares or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Shares or Other Rights That Have Not Vested (#)
Yang Liu			0				0				0				0				0			0			0				0				0
Philip Kwan			0				0				0				0				0			0			0				0				0
Lei Yang			0				0				0				0				0			0			0				0				0
Misael Aguirre			0				0				0				0				0			0			0				0				0

 

Compensation of Directors Table

 

The table below summarizes all compensation paid to our director for our last completed fiscal year.

 

DIRECTOR COMPENSATION
Name			Fees Earned or Paid in Cash ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Non-Qualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Yang Liu			0				0				0				0				0				0				0

 

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. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table sets forth, as of July 26, 2018, 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.

 

	Title of class			Name and address of beneficial owner			Amount of beneficial ownership		Percent of class
	Common			Yang Liu: President, Chief Executive Officer, Chief Financial Officer and Director 15 Hai’er Road, Laoshan District Qingdao City, Shandong, China			1,600,000		57.35%
	Common			Total all executive officers and directors			1,600,000		57.35%
	Common			Other 5% Shareholders
				None

 

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. 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. 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.

 

	2018				2017
Audit and review fees	$	12,000			$	19,500
Audit related fees	$	—			$	—
Tax fees	$	—			$	—
All other fees	$	—			$	—
Total	$	12,000			$	19,500

 

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. Exhibits, Financial Statement Schedules.

 

Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation (1)
3.2	By-laws (1)
10.1	Promissory Note in the amount of $23,000 due December 31, 2018 (1)
10.2	Geological Consultant Engagement Letter (1)
10.3	Consulting Geologist Agreement (1)
10.4	Property Option Agreement (1)
10.5	Corporate Administrative Services Agreement with Melville Business Services Inc. (1)
10.6	Promissory Note in the amount of $7,000 due December 31, 2018 (2)
10.7	Promissory Note in the amount of $3,600 due December 31, 2018 (3)
10.8	Promissory Note in the amount of $4,000 due December 31, 2018 (4)
10.9	Promissory Note in the amount of $1,500 due December 31, 2018 (5)
10.10	Promissory Note in the amount of $23,977.50 due on demand (6)
10.11	Promissory Note in the amount of $25,000 due on demand (6)
31.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2017 formatted in Extensible Business Reporting Language (XBRL).

 

(1) Incorporated by reference to Registration Statement on Form S-1 filed on September 29, 2014.

(2) Incorporated by reference to Form 10-K filed on July 9, 2015.

(3) Incorporated by reference to Form 10-Q filed on September 14, 2015.

(4) Incorporated by reference to Form 10-Q filed on December 14, 2015.

(5) Incorporated by reference to Form 10-Q filed on March 9, 2016.

(6) Incorporated by reference to Form 10-K filed on July 27, 2016.

 

 

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 30, 2018
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 30, 2018
By:	/s/ Yang Liu Yang Liu
Title:	Chief Executive Officer, Chief Financial Officer and Director