NOTES
TO FINANCIAL STATEMENTS
MAY
31, 2016
1.
|
Organization
and Nature of Operations
|
Blue
Spa Incorporated (“the Company”) was incorporated in the State of Nevada, USA on September 4, 2009. The Company is
in its early developmental stage since its formation and has not realized any revenues from its planned operations. The Company
is engaged in the development of an internet based retailer of a multi-channel concept combining a wholesale distribution with
a retail strategy. It plans to distribute quality personal care products, fitness apparel and related accessories.
The
Company has chosen a fiscal year end May 31.
These
interim financial statements have been prepared in conformity with generally accepted accounting principles in the United States,
which contemplate continuation of the Company as a going concern. However, the Company has limited operations and has sustained
operating losses resulting in a deficit. In view of these matters, realization of a major portion of the assets in the accompanying
balance sheet is dependent upon the continued operations of the Company, which in turn is dependent upon the Company’s ability
to meet its financing requirements, and the success of its future operations.
The
Company has accumulated a deficit of $229,097 since inception September 4, 2009, has yet to achieve profitable operations and
further losses are anticipated in the development of its business. The Company’s ability to continue as a going concern
is in substantial doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of
operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company believes that the cash on hand will be able to meet its on-going costs in the next 12 months. The Company may seek additional
equity as necessary and it expects to raise funds through private or public equity investment in order to support existing operations
and expand the range of its business. There is no assurance that such additional funds will be available for the Company on acceptable
terms, if at all.
3.
|
Summary
of principal accounting policies
|
Use
of estimates
The
preparation of financial statements in conformity with generally accepted accounting principles 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 revenue and expenses during the reporting period. Management
makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when
the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate,
which is typically in the period when new information becomes available to management. Actual results could differ from those
estimates.
Foreign
currency translations
The
Company is located and operating outside of the United States of America. The functional currency of the Company is the U.S. Dollar.
At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange
rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in
effect at that date. The resulting foreign exchange gains and losses are included in operations.
Cash
and cash equivalents
The
Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original
maturities of three months or less to be cash equivalents.
Comprehensive
income
The
Company has adopted ASU 220 “Reporting Comprehensive Income”, which establishes standards for reporting and display
of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement
of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions
to owners.
For
the year ended May 31, 2016 there are no reconciling items between the net loss presented in the statements of operations and
comprehensive loss as defined by ASU 220.
Loss
per share
The
Company reports basic loss per share in accordance with ASC Topic 260 Earnings Per Share (“EPS”). Basic loss per share
is based on the weighted average number of common shares outstanding and diluted EPS is based on the weighted average number of
common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net loss (numerator) applicable
to common stockholders by the weighted average number of common shares outstanding (denominator) for the period. All EPS presented
in the financial statements are basic EPS as defined by ASU 260, “
Earnings Per Share
”. There are no diluted
net income/ (loss) per share on the potential exercise of the equity-based financial instruments, hence a state of anti-dilution
has occurred. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value.
Income
Taxes
The
Company follows the guideline under ASC Topic 740 Income Taxes. “Accounting for Income Taxes” which requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Since
the Company is in the developmental stage and has losses, no deferred tax asset or income taxes have been recorded in the financial
statements.
Website
Development Costs
The
Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost”
that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”)
NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website
development costs the Company follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting
for Website Development Costs”. The website development costs are divided into three stages, planning, development and production.
The development stage can further be classified as application and infrastructure development, graphics development and content
development. In short, website development cost for internal use should be capitalized except content input and data conversion
costs in content development stage.
Costs
associated with the website consist primarily of website development costs paid to third party. These capitalized costs will be
amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related
to the development of website content will be charged to operations as incurred. Web-site development costs related to the customers
are charged to cost of sales.
Concentration
of credit risk
The
Company places its cash and cash equivalents with a high credit quality financial institution. The Company maintains United States
Dollars. The Company minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary
financial institution.
Recently
issued accounting pronouncements
The
Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued,
which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently
issued would, if adopted, have a material effect on the accompanying financial statements.
Accrued
expenses as of May 31, 2016 are summarized as follows:
|
|
May
31, 2016
|
|
|
May
31, 2015
|
|
|
|
|
|
|
|
|
Accrued audit fee
|
|
$
|
11,000
|
|
|
$
|
10,000
|
|
Accrued accounting fee
|
|
|
1,575
|
|
|
|
4,725
|
|
Accrued office
expenses
|
|
|
3,296
|
|
|
|
2,960
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
15,871
|
|
|
$
|
17,685
|
|
During
the year ended May 31, 2016, no shares of common stock were sold. There were a total of 7,000,000 common stocks issued and outstanding
as of May 31, 2016. There were no warrants or stock options outstanding as of May 31, 2016.
There
are seven (7) unsecured promissory notes bearing interest at 8% per annum which are due on demand.
Date
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
6, 2010
|
|
|
$
|
3,000
|
|
|
$
|
1,358
|
|
|
$
|
4,358
|
|
|
February
22, 2011
|
|
|
|
1,500
|
|
|
|
633
|
|
|
|
2,133
|
|
|
May
17, 2011
|
|
|
|
7,500
|
|
|
|
3,026
|
|
|
|
10,526
|
|
|
September
16, 2011
|
|
|
|
5,000
|
|
|
|
1,884
|
|
|
|
6,884
|
|
|
November
4, 2011
|
|
|
|
5,000
|
|
|
|
1,830
|
|
|
|
6,830
|
|
|
March
15, 2012
|
|
|
|
10,000
|
|
|
|
3,371
|
|
|
|
13,371
|
|
|
December
14,2012
|
|
|
|
13,000
|
|
|
|
3,433
|
|
|
|
16,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
45,000
|
|
|
$
|
15,535
|
|
|
$
|
60,535
|
|
There
are six (6) unsecured promissory notes bearing interest at 8% per annum which are due on demand, and convertible at a conversion
price of US$0.005 per share at the lender’s option. The convertible notes are at the same interest rate as promissory notes
that have no conversion feature.
Date
|
|
|
Principal
|
|
|
Interest
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
2, 2013
|
|
|
$
|
14,000
|
|
|
$
|
3,544
|
|
|
$
|
17,544
|
|
|
September
4, 2013
|
|
|
|
30,000
|
|
|
|
6,575
|
|
|
|
36,575
|
|
|
October
15, 2013
|
|
|
|
15,000
|
|
|
|
3,153
|
|
|
|
18,153
|
|
|
January
8, 2014
|
|
|
|
10,000
|
|
|
|
1,916
|
|
|
|
11,916
|
|
|
December
3, 2014
|
|
|
|
20,000
|
|
|
|
2,393
|
|
|
|
22,393
|
|
|
September
22, 2015
|
|
|
|
20,000
|
|
|
|
1,109
|
|
|
|
21,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
109,000
|
|
|
$
|
18,690
|
|
|
$
|
127,690
|
|