REOS ReoStar Energy Corporation (PK)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 1-SA

 

SEMI-ANNUAL REPORT 

PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933

 

For the semiannual period ended JUNE 30, 2023

 

K-CHAIN GROUP, INC.

(Exact name of issuer as specified in its charter)

 

Delaware		85-2903928
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

155 N Lake Ave Suite 800

Pasadena CA 91101

(Full mailing address of principal executive offices)

 

(310) 595- 2768

(Issuer’s telephone number, including area code)

 

 

ITEM 1. Management Discussion and Analysis of Financial Condition and Results of Operations. 

 

Use of Terms

 

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to “we,” “us,” “our” or “our company” refer to K-CHAIN GROUP, INC. a Delaware incorporated company.

 

Special Note Regarding Forward Looking Statements 

 

We make statements in this Annual Report on Form 1-SA that are forward-looking statements within the meaning of the federal securities laws. The words "believe," "estimate," "could", "expect," "anticipate," "intend," "may", "plan," "seek," "may," and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Semi-Annual Report or in the information incorporated by reference into this Semi-Annual Report.

 

The forward-looking statements included in this Annual Report on Form 1-SA are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market condition and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, taking into account the information currently available to us, our actual performance, results and achievements or outcomes could differ materially from those set forth in the forward-looking statements. These factors include, among other things:

 

·Our lack of operating history on which to judge our business prospects and management;  

 

·Our ability to raise capital and the availability of future financing;  

 

·Our ability to compete in a highly competitive and evolving industry;  

 

·Our ability to protect our intellectual property;  

 

·Adverse federal, state, and local government regulation and taxation, rendering it difficult for us to monetize our products and services;  

 

·Our ability to protect against and avoid criminal prosecution and civil liability in the U.S., given the illegal status of cannabis under U.S. federal law;  

 

·Unpredictable events, such as the COVID-19 outbreak, and associated business disruptions could harm our financial condition, delay our operations, increase our costs and expenses, and impact our ability to raise capital.  

 

You are cautioned not to place undue reliance on any forward-looking statements included in this Semi-Annual Report. All forward-looking statements are made as of the date of this Annual Report on Form 1-K, and the risk that actual results will differ materially from the expectations expressed in this Annual Report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Semi-Annual Report, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Annual Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Annual Report will be achieved. 

 

Overview

 

The Company was originally incorporated in the State of Delaware on September 30, 2020.

 

The address of our web site is www.kchaingroup.com. The information at our web site is for general information and marketing purposes and is not part of this report for purposes of liability for disclosures under the federal securities laws.

 

Recent Developments

 

Revenue

 

The company generated $186,164 in revenue during the six months ended June 30, 2023.

 

Net loss

 

As a result of the foregoing, from inception through the period ending to June 30, 2023, we recorded a net loss of $348,171. The loss is mainly comprised of consulting, professional fees, and general and administrative expenses.

 

Liquidity and Capital Resources

 

As of June 30, 2023, the Company had cash on hand of $38,217. We may be required to raise additional funds, particularly if we are unable to generate positive cash flow as a result of our operations. We estimate that based on current plans and assumptions, that our cash will not be sufficient to satisfy our cash requirements under our present operating expectations, without further financing, for up to 12 months. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through borrowings and the sale of common stock. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of an equity financing.

 

Cash Flows

 

Operating Activities

 

From January 1, 2023 through June 30, 2023, the company had a net cash of $33,827 in operating activities.

 

Financing Activities

 

From January 1, 2023 through June 30, 2023, financing activities provided $3,788. We received these proceeds as a loan from a shareholder. 

 

Critical Accounting Policies and Estimates

 

Use of estimates

 

The preparation of the unaudited financial statements in conformity with generally accepted accounting principles 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 these estimates.

 

 

 

Recent Developments

 

On JANUARY 11, 2021 the company qualified with the SEC to raise $50,000,000 under Regulation A. To date, we have not raised any funds under this submission.

 

Going Concern

 

Our current financial condition raises substantial doubt regarding our ability to continue as a going concern. Our financial statements are prepared using U.S. generally accepted accounting principles, or GAAP, applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as shown in the accompanying financial statements, we have sustained substantial losses from operations since inception and do not have a predictable revenue stream. The lack of a proven profitable business strategy that would generate a predictable revenue stream raises substantial doubt for our company to continue as a going concern. It is management’s plan in this regard to obtain additional working capital through equity financings. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue in existence.

 

Related Party Transaction

 

As of June 30, 2023, the Company does not have any related party transactions to report.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2023, we did not have any off-balance sheet arrangements.

 

ITEM 2. Other Information 

 

We have no information to disclose that was required to be in a report on Form 1-U during the semiannual period covered by this Form 1-SA but was not reported. 

 

ITEM 3. Financial Statements 

 

K-CHAIN GROUP, INC.

INDEX TO UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2022

 

 

	Page
Balance Sheets as of JUNE 30, 2022	F-1
Statements of Operations for the Six Months ending JUNE 30, 2022	F-2
Statements of Stockholders’ Deficit for the Six Months ending JUNE 30, 2022	F-3
Statements of Cash Flows for the Six Months ending JUNE 30, 2022	F-4
Notes to Financial Statements	F-5

 

 

Balance Sheet  

K-Chain Group Inc.  

Semi-annual report period ending June 30, 2023

 

Assets		$
Total Cash and Bank			38,217
Total Other Current Assets			—
Total Long-term Assets			—
Total Assets			38,217
Liabilities
Shareholder Loan			6,238
Total Liabilities			6,238
Commitment and Contingencies
Equity
Common Stock			1,589
Additional paid in capital			378,561
Shares to be issued
Total Retained Deficit			(348,171	)
Total Equity			31,979
Total Liabilities and Equity			38,217

 

The accompanying notes are an integral part of these financial statements.

 

Income Statement

K-Chain Group Inc.

Semi-annual report period ending June 30, 2022

   

 

Total Income		$	186,164
Total Cost of Goods Sold			—
Gross Profit			186,164
Operating Expenses
Professional Fees			139,073
Payroll - Salary & Wages
Travel Expense			8,442
Advertising & Promotion			1,650
Office Supplies & Expenses			2,694
Bank Service Charges			278
Miscellaneous Expense			200
Total Operating Expenses			152,336
Income Before Taxes			33,827
Provision For Taxes			7,104
Net Income			26,724
Average Shares Outstanding			15,388,100
Net Loss Per Common Share			0

 

The accompanying notes are an integral part of these financial statements.

 

Statement of Stockholders' Equity

K-Chain Group Inc.

Semi-annual report between Jan. 1st, 2022 to June 30, 2022

 

			Common Stock
			Shares				Amount				Additional Paid-in-capital				Common stock to be issued				Retained Earnings				Total Stockholders' Equity
			—				—				—								—				—
Issuance of shares			15,388,100				1,539				129,861				248,750				—				380,150
Net Income			—				—				—								(348,171	)			(348,171	)
Stockholders' Equity Sep. 30, 2020			15,388,100				1,539				129,861				248,750				(348,171	)			31,979

The Accompanying Notes Are an Integral Part of these Financial Statements.

    Cash Flow Statement

K-Chain Group Inc.

Semi-annual report period ending June 30, 2023

   

 

Operating Activities		$
Revenue			186,164
Expenses			(152,336	)
Net Loss from Operating Activities			33,827
Financing Activities		$
Shareholder Loan			3,788
Other			—
Net Cash from Financing Activities			3,788
Net Cash			37,615
Net Cash Beginning			601
Net Cash Ending			38,217

 

    

                            The Accompanying Notes Are an Integral Part of these Financial Statements.

 

 

K-Chain Group Inc.

NOTES TO FINANCIAL STATEMENTS

For Period Ending June 30, 2023

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

K-Chain Group Inc. (the “Company”) was incorporated in the State of Delaware on September 4, 2020. The Company is in the development stage whose purpose is to provide an international online e-commerce platform specializing in unique exclusive products from the Asian market sector.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Development Stage Company

 

The Company is considered to be in the development stage as defined in ASC 915 “Development Stage Entities.” The Company is devoting substantially all of its efforts to the development of its business plans. The Company has elected to adopt early application of Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements; and does not present or disclose inception-to-date information and other remaining disclosure requirements of Topic 915.

 

Use of estimates

 

The preparation of financial statements in conformity with GAAP 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 amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Start-Up Costs

 

In accordance with ASC 720, “Start-up Costs”, the Company expenses all costs incurred in connection with the start-up and organization of the Company.

 

Cash

 

Cash includes cash in bank and cash on hand.

 

Revenue Recognition

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and Accounting Standards Codification (“ASC”) Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”), (collectively, “Topic 606”). On September 30, 2020, the Company adopted Topic 606. ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. The Company implemented ASU 2014-09 for the semi-annual reporting period presented.

 

 

Earnings Per Share

 

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” Basic earnings (loss) per share (“EPS”) is computed by dividing net profit/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. The number of common shares that are exercisable or converted into common stock is not material to effect diluted EPS results.
Further, since the Company showed a loss for the period presented, basic and diluted loss per share are the same for the period.

 

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of June 30th, 2023, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

 

ASC 820 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. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 — quoted prices in active markets for identical assets or liabilities

 

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable.

 

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

The Company has no assets or liabilities valued at fair value on a recurring basis.

 

Year End

 

The Company adopted a December 31^st year end for accounting purposes through Board Resolution dated December 13^th, 2021.

 

 

NOTE 3 - GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has begun generating revenue through its franchise fee, however, still has an accumulated net loss of $(348,171) for the period from inception to December 31st, 2022. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period.  The Company’s continuation as a going concern is dependent upon, among other things, its ability to generate revenues and its ability to obtain capital from third parties. No assurance can be given that the Company will be successful in these efforts.

 

Management plans to raise significant capital through investors to capitalize its business plan.

 

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 4 – REVENUE

 

The Company continues to implement its Franchisee Model which generated $186,164 through the semi-annual period ending June 30, 2023. The Company is aggressively ramping up this Franchisee program for 2023 and expects to see significant results.

 

NOTE 5 - INCOME TAXES

 

The reconciliation of income tax benefit at the U.S. statutory rate of 21% for the period ended June 30, 2023, to the Company’s effective tax rate is as follows:

 

Income tax expense at statutory rate		$	7,104
Change in valuation allowance			0
Income tax expense per books		$	7,104

 

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets for the period ended June 30, 2023, are as follows:

Net Operating Loss		$	(348,171	)
Valuation Allowance			348,171
Net deferred tax asset		$	0

 

 

The Company has approximately $(348,171) of net operating losses (“NOL”) carried forward to offset taxable income, if any, in future years which expire commencing in fiscal 2037. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.

 

NOTE 6 – COMMITMENT AND CONTINGENCIES

 

The Company entered into a monthly lease agreement with US-KT Investment Consultant Group Inc. for office space in Pasadena, California executed on 10/01/2020 at a rate of $150.00/month. The rent was paid for by a third party for the benefit of K-Chain Group.

 

The Company terminated its Transfer Agent agreement with Pacific Stock Transfer on April 10, 2023, and has engaged Securitize LLC as its Transfer Agent. Securitize will be tokenizing the shares of the Company and they will be entered into the Ethereum block chain, making for easier transfers for the shareholders.

 

 

NOTE 7 – STOCKHOLDERS’ EQUITY

 

Authorized Stock

 

The Company has authorized 100,000,000 common shares with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

The Company has no authorized preferred shares at this time but may deem it advisable to authorize one or more class(es) of Preferred Stock

 

The Company ownership contributed $31,600 for operating purposes in exchange for 13,000,000 common shares. These shares were authorized by the Board on September 25^th, 2020.

 

During December 31, 2021, the Year End period, Koch Partners International was issued 500,000 common shares of stock bearing a restrictive legend. Also, 1,000,000 shares were issued to Jiwang Wei and Xue Lan in exchange for marketing services rendered to the company.

 

The Company sold, as of August 22^nd, 2022, 497,500 shares total under its Reg A+ Offering for total capital into the company of $248,750 and added 253 new shareholders. These shares have been authorized but have not been issued by the Transfer Agent. The total outstanding shares are now 15,885,600.

 

 

NOTE 8 – CONSULTING SERVICES

 

On January 1, 2023, the company entered into a new service agreement with Koch Partners to handle all business-related matters. Koch Partners will receive $6,000 monthly for the services rendered.

 

NOTE 9 – SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events through the date these financials were made available for issuance and concluded that no other subsequent events have occurred that would require recognition in the Financial Statements or disclosure in the Notes to the Financial Statements.

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A+, the issuer has duly caused this Annual Report on Form 1-K to be signed on its behalf by the undersigned, thereunto duly authorized, in Pasadena, California on October 19, 2023.

 

K-Chain Group Inc.
By:	/s/ Yuxia Zhang
Name:	Yuxia Zhang
Title:	President, CEO, Director

 

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