Notes
to the Financial Statements
(Unaudited)
Note
1 – Organization and Operations
Frontera
Group Inc. (the “Company”) was incorporated under the laws of the State of Nevada on November 21, 2013, Frontera Group Inc.
was created to be an export management company providing business development and market consultancy services that assist small and medium-sized
businesses in entering new markets in Central and South America. The Company purchased intellectual property in March 2022.
Note
2 – Summary of Significant Accounting Policies
Basis
of Presentation – Unaudited Interim Financial Information
The
accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations
of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim
financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management,
necessary for a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative
of the results for the full fiscal year. These unaudited interim financial statements should be read in conjunction with the financial
statements of the Company for the year ended June 30, 2022 and notes thereto contained in the information as part of the Company’s
Annual Report on Form 10-K, which was filed with the SEC on October 5, 2022.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
As of September 30, 2022, the Company had $5,134 of cash and no cash equivalents.
Use
of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. 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(s). Actual results
could differ from those estimates.
Earnings
(loss) per Share
Earnings
(loss) per share is the amount of earnings (loss) attributable to each share of common stock. Earnings (loss) per share (“EPS”)
is computed pursuant to section 260-10-45 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”). Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS is computed by dividing the net income
(loss) available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator)
during the period.
The
computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number
of additional common shares that would have been outstanding if the potential dilutive common shares had been issued during the
period to reflect the potential dilution that could occur from common shares issuable through contingent share issuance arrangements,
stock options or warrants. When the Company has a loss, potential dilutive shares are not included as they would be anti-dilutive.
There
were no potentially dilutive debt or equity instruments issued and outstanding at any time during the three months ended September
30, 2022 and 2021.
Income
Taxes
The
Company accounts for income taxes in accordance with the FASB ASC Section 740, “Income Taxes” (“ASC 740”), which
requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement
and income tax purposes. Deferred tax assets and liabilities represent the future tax consequences for those differences, which will
either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are also recognized for
operating losses that are available to offset future taxable income. A valuation allowance is established when necessary to reduce deferred
tax assets to the amount expected to be realized.
The
Company accounts for uncertain tax positions in accordance with ASC Section 740-10, which prescribes a recognition threshold and measurement
process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance
also prescribes direction on de-recognition, classification, and accounting for interest and payables in the financial statements. The
Company classifies interest expense and any related penalties related to income tax uncertainties as a component of income tax expense.
No interest or penalties have been recognized as of September 30, 2022 and 2021. The Company does not expect any significant changes
in unrecognized tax benefits within twelve months of the reporting date.
Subsequent
Events
The
Company follows the guidance in Section 855-10-50 of the FASB ASC for the disclosure of subsequent events. The Company evaluates subsequent
events through the date when the financial statements are issued. Pursuant to Accounting Standards Update (“ASU”)
2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements, of the FASB ASC, the Company
as a Securities and Exchange Commission (“SEC”) filer considers its financial statements issued when they are widely distributed
to users, such as through filing them on EDGAR.
Recently
Issued Accounting Pronouncements
Management
has evaluated Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Topic
606 – Revenue from Contracts with Customers and FASB ASI 2016-02, Topic 842 – Leases, and determined that at the present
time these new standards do not affect the Company, but may in the future if operations are resumed. Management does not believe that
any recently issued, but not yet effective accounting pronouncements, if adopted, will have a material effect on the accompanying financial
statements.
Note
3 – Going Concern
As
reflected in the accompanying financial statements, the Company had an accumulated deficit as of September 30, 2022, and a net loss for
the three months ended September 30, 2022 and has no operating cash to pay its liabilities. Management has determined that these factors
raise substantial doubt about the Company’s ability to continue as a going concern.
The
Company is attempting to commence operations and generate sufficient revenue; however, the Company’s cash position is not sufficient
to support the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While
the Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise
additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent
upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional
funds by way of a public or private offering.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
Note
4 – Income Tax Provision
Deferred
Tax Assets
As
of September 31, 2022, and June 30, 2022, the Company had net operating loss (“NOL”) carry–forwards for Federal income
tax purposes of $1,805,397 and $1,452,327, respectively, that may be offset against future taxable income which begin to expire in 2038.
No tax benefit has been reported with respect to these NOL carry-forwards in the accompanying financial statements because the Company
believes that the realization of the Company’s net deferred tax assets was not considered more likely than not and accordingly,
the potential tax benefits of the NOL carry-forwards are fully offset by a full valuation allowance.
Deferred
tax assets (liabilities) are comprised of the following:
Schedule
of Deferred Tax Assets (Liabilities)
Deferred
tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred
tax assets because of the uncertainty regarding its realizability.
We
follow ASC 740 Accounting for Uncertainty in Income Taxes. Under ASC 740, tax benefits are recognized only for tax positions that
are more likely than not to be sustained upon examination by the tax authorities. The amount recognized is measured as the largest amount
of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits
claimed in our tax returns that do not meet these recognition and measurement standards. We had no liabilities for unrecognized tax benefits
at September 30, 2022 and June 30, 2022.
Our
policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the
three months ended September 30, 2022 and 2021, we did not recognize any interest or penalties in our statement of operations, nor did
we have any interest or penalties accrued in our balance sheet as of September 30, 2022 and June 30, 2022 relating to unrecognized tax
benefits.
The
tax years ended June 30, 2015, 2016 and 2017 remain open to examination for federal income tax purposes and by the other major taxing
jurisdictions to which we are subject.
Note
5 – Related Party Transactions
As
of September 30, 2022, there were 73,796,815 shares of our common stock outstanding. Our chairman of the board
of directors owns 18,750,000 shares, approximately 25.4% of our outstanding shares.
Note
6 – Subsequent Events
The
Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued
to determine if they must be reported.