UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FRONTERA GROUP INC.
(Exact name of Registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
8742
(Primary Standard Industrial Classification Code Number)
46-4429598
(I.R.S. Employer Identification Number)
8670 W. Cheyenne, Suite 120, Las Vegas, NV 89129 Phone:(702) 718-0140
(Address, including zip code, and telephone number, including are code, of registrants principal executive offices)
Michael Krichevcev, C.E.O.
8670 W. Cheyenne, Suite 120, Las Vegas, NV 89129 Phone:(702) 718-0140
(Name, address, including zip code, and telephone number, including area code, of agent for service)
As soon as practicable after the effective date of this registration statement
(Approximate date of commencement of the proposed sale to the public)
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [X]
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] |
Accelerated Filer [ ] |
Non-Accelerated Filer [ ] (Do not check if a smaller reporting company) |
Smaller Reporting Company [X] |
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Proposed |
|
|
Title of Each Class |
|
Maximum |
Proposed Maximum |
|
of Securities to be |
Amount to be |
Offering Price |
Aggregate Offering |
Amount of |
Registered |
Registered |
per Unit |
Price |
Registration Fee (1) |
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|
|
|
|
Common Stock |
32,500,000 |
$0.0125 |
$406,250 |
$52.32 |
[1] Estimated solely for purposes of calculating the registration fee under Rule 457.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
Subject to completion, dated _________, 2014
PROSPECTUS
FRONTERA GROUP INC.
SHARES OF COMMON STOCK
3,250,000 Minimum 32,500,000 Maximum
We are offering a minimum of 3,250,000 and a maximum of 32,500,000 shares of our common stock in a direct public offering, without any involvement of underwriters or broker-dealers on a best efforts basis. The offering price is $0.0125 per share. This registration statement constitutes the initial public offering of the companys common stock.
Funds from this offering will be placed in a separate bank account at Bank of America, NY. There is no escrow, trust or similar account in which your subscription will be deposited. The bank account is merely a separate interest bearing savings account under our control where we have segregated your funds. Our officers and directors will not use the subscription proceeds prior to satisfaction of the minimum and issuance of the shares for working capital, collateral for the company, or other purposes. You will not have the right to withdraw your funds during the offering. You will only receive your funds back if we do not raise the minimum amount of the offering within 270 days and no creditors attach the funds.
Investing in our common stock involves risks. See "Risk Factors" starting on page 8.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
The shares of our common stock to be sold by us will be sold on our behalf by our executive officers and directors. Such officers and directors will not receive any compensation or commission on the proceeds from the sale of our shares on our behalf, if any.
We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to sell these securities in any state where the offer or sale is not permitted.
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Offering Price |
Expenses |
Proceeds to Us |
||||||
|
|||||||||
Per Share - Minimum |
$ |
0.0125 |
|
$ |
0.0026 |
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$ |
0.0099 |
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Per Share - Maximum |
$ |
0.0125 |
|
$ |
0.00026 |
|
$ |
0.00122 |
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Minimum |
$ |
40,625 |
|
$ |
8,352 |
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$ |
32,273 |
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Maximum |
$ |
406,250 |
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$ |
8,352 |
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$ |
397,898 |
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Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the Prospectus. Any representation to the contrary is a criminal offense.
The date of this Prospectus is September 3, 2014.
TABLE OF CONTENTS
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Page |
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Prospectus Summary |
5 |
Risk Factors |
8 |
Use of Proceeds |
17 |
Determination of Offering Price |
17 |
Dilution of the Price per Share |
18 |
Plan of Distribution; Terms of the Offering |
19 |
Managements Discussion and Analysis or Plan of Operation |
22 |
Description of our Business and Properties |
25 |
Directors, Executive Officers and Control Persons |
31 |
Executive Compensation |
32 |
Security Ownership of Certain Beneficial Owners and Management |
33 |
Certain Relationships and Related Transactions |
34 |
Description of Securities |
35 |
Shares Eligible for Future Sale |
36 |
Anti-Takeover Provisions |
36 |
Legal Proceedings |
36 |
Disclosure of Commission Position of Indemnification for Securities Act Liabilities |
37 |
Interests of Named Experts and Counsel |
37 |
Additional Information |
37 |
Reports to Security Holders |
38 |
Financial Statements |
38 |
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|
4
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this Prospectus. This summary does not contain all the information that may be important to you. You should read the more detailed information contained in this Prospectus, including but not limited to, the risk factors beginning on page 8. In addition, certain statements are forward-looking statements, which involve risks and uncertainties. See Disclosure Regarding Forward-Looking Statements.
References in this Prospectus to Frontera Group, Company, we, our, or us refer to Frontera Group Inc. unless otherwise indicated or the context otherwise requires.
Forward-Looking Statements
This Prospectus contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the "Risk Factors" section and elsewhere in this Prospectus.
Our Company
We were formed on November 21, 2013. Frontera Group Inc. is an export management company providing business development and market consultancy services that facilitate new market penetration in Central and South America for small and medium-sized businesses. Our target clients are manufacturers of household goods and food products, who are looking for assistance in the areas of marketing, sales and logistics as they expand their sales territories.
We generate revenue by providing consulting services to small and medium businesses. We acquire customers through direct marketing, referrals and our primary website, www.fronteragroupinc.com .
We have commenced our operations during the period ended June 30, 2014. As of June 30, 2014 we have generated $10,700 in revenues and have incurred $23,379 in operating costs since our inception on November 21, 2013. To date we have relied upon revenues from our operations and sales of our securities in unregistered private placement transactions to fund our operations. We are a development stage company with a limited operating history. Accordingly, for the foreseeable future, we will continue to be dependent on revenues from operations and additional financing in order to maintain our operations and continue with our corporate activities.
This offering and any investment in our common stock involve a high degree of risk. If our future revenues will not be sufficient to cover our operating costs we may be obliged to cease business operations due to lack of funds. If we raise only the minimum amount of proceeds from this offering, we will have limited funds available to build and grow our business. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for us to fund our planned business activities. We may also rely on loans from our Directors; however, there are no assurances that our Directors will provide us with any additional funds. Currently, we do not have any arrangements for additional financing. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing shareholders.
We face many challenges to continue operations, including, but not limited to our limited operating history, competition, and general economic conditions. Please review the "Risk Factors" starting on page 8 of this offering.
Our Directors collectively own 100% of the 4,000,000 outstanding shares of our common stock as of the date of this Offering. If the minimum amount of the shares will be sold, our Directors will own 55.17% of our outstanding common stock. Accordingly, they will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets.
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The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Frontera Group's principal executive office is located at 8670 W. Cheyenne, Suite 120, Las Vegas, NV 89129 and our telephone number is (702) 718-0140. Our primary website address is www.fronteragroupinc.com . The information on, or that can be accessed through this website is not part of this prospectus.
We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act.
The Company shall continue to be deemed an emerging growth company until the earliest of:
(a) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;
(b) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title;
(c) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or
(d) the date on which such issuer is deemed to be a large accelerated filer, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto..
The Company intends to take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an emerging growth company. Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an emerging growth company, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an emerging growth company, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company.
Notwithstanding the above, we are also currently a smaller reporting company, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company, at such time are we cease being an emerging growth company, we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an emerging growth company or smaller reporting company may make it harder for investors to analyze the Companys results of operations and financial prospects.
The Company has irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act.
6
The Offering
Following is a brief summary of this Offering:
Securities being offered: |
3,250,000 shares of common stock minimum and 32,500,000 shares of common stock maximum, par value $0.001
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Offering price per share: |
$ 0.0125
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|
Offering period: |
The shares are being offered for a period not to exceed 180 days or 270 days, if extended. |
|
Net proceeds to us:
|
Approximately $32,273 assuming the minimum number of shares is sold. Approximately $397,898 assuming the maximum number of shares is sold.
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Use of proceeds: |
We will use the proceeds to pay for the implementation of our business plan, administrative expenses and general working capital. (i)
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|
Number of shares outstanding before the offering:
|
4,000,000 |
|
Number of shares outstanding after the offering: |
7,250,000 (if minimum number of shares are sold) 36,500,000 (if maximum number of shares are sold) |
(i) If the minimum amount of the shares is sold, we will use the proceeds to pay for offering expenses of $8,352. Of the $8,352, the amounts to be paid from the proceeds for expenses of the offering are: $5,000 for accounting fees; $1,500 for filing fees; $800 for legal fees; $52 for registration fee; and $1,000 for transfer agent fees.
We will use the rest of the funds (net of offering expenses) for paying off our current liabilities, hiring new personnel and implementation of our business plan.
Selected Financial Data
The following financial information summarizes the more complete historical financial information at the end of this Prospectus. The summary information below should be read in conjunction with Selected Historical Financial Data, Managements Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included elsewhere in this Prospectus .
Income Statement Data:
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|
|
For the Period from November 21, 2013 |
|
|
|
(Inception) through |
|
|
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June 30, 2014 |
|
|
|
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Revenue |
|
$ |
10,700 |
Cost of Revenue |
|
|
4,606 |
Operating Expenses |
|
$ |
(23,379) |
Net Income (Loss) |
|
$ |
(17,285) |
7
Balance Sheet Data:
|
|
As of |
|
|
June 30, 2014 |
|
|
|
Total Assets |
$ |
6,616 |
Total Liabilities |
$ |
(19,901) |
Shareholders' Deficit |
$ |
(13,285) |
As of June 30, 2014, we had a working capital deficiency of $13,285 and accumulated deficit of $17,285 since inception.
RISK FACTORS
You should carefully consider the risks described below and other information contained in this prospectus before making an investment decision. Any of the events discussed in the risk factors below may occur. If they do, our business, results of operations or financial condition could be materially adversely affected.
Frontera Group Inc. is a development stage company. The Company has elected to early adopt Accounting Standards Update No.2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to the development stage from its financial statements.
Frontera Group Inc. is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification . Although the Company has recognized nominal amounts of revenue, it is still devoting substantially all of its efforts on establishing the business. All losses accumulated since Inception (November 21, 2013) have been considered as part of the Companys development stage activities.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Frontera Group has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage.
Frontera Group Inc. is an emerging growth company under the Jumpstart Our Business Startups Act. We cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our shares of common stock less attractive to investors.
Frontera Group Inc. is and will remain an "emerging growth company" until the earliest to occur of (a) the last day of the fiscal year during which its total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (b) the last day of the fiscal year following the fifth anniversary of its initial public offering, (c) the date on which Frontera Group
8
has, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (d) the date on which Frontera Group is deemed a "large accelerated filer" (with at least $700 million in public float) under the Securities and Exchange Act of 1934 (the "EXCHANGE ACT").
For so long as Frontera Group remains an "emerging growth company" as defined in the JOBS Act, it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. Frontera Group cannot predict if investors will find its shares of common stock less attractive because Frontera Group will rely on some or all of these exemptions. If some investors find Frontera Group's shares of common stock less attractive as a result, there may be a less active trading market for its shares of common stock and its stock price may be more volatile.
If Frontera Group avails itself of certain exemptions from various reporting requirements, its reduced disclosure may make it more difficult for investors and securities analysts to evaluate Frontera Group and may result in less investor confidence.
The recently enacted JOBS Act is intended to reduce the regulatory burden on "emerging growth companies". Frontera Group meets the definition of an "emerging growth company" and so long as it qualifies as an "emerging growth company," it will not be required to:
· have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
· comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
· submit certain executive compensation matters to shareholder advisory votes, such as say-on-pay and say-on-frequency; and
· disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEOs compensation to median employee compensation.
In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, Frontera Group is choosing to "opt out" of such extended transition period, and as a result, Frontera Group will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that its decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Notwithstanding the above, we are also currently a smaller reporting company, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a smaller reporting company, at such time are we cease being an emerging growth company, we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.
Decreased disclosures in our SEC filings due to our status as an emerging growth company or smaller reporting company may make it harder for investors to analyze the Companys results of operations and financial prospects.
9
We lack an operating history. There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, our business will fail.
We were incorporated on November 21, 2013, and have realized $10,700 in revenues and incurred $23,379 in operating costs since inception. As of June 30, 2014, we had accumulated deficit of $17,285. We have a limited operating history upon which an evaluation of our future success or failure can be made. Based upon current plans, we expect to continue generating revenues. However our revenues may not be sufficient to cover our operating costs. We cannot guarantee that we will be successful in generating significant revenues in the future. Failure to achieve a sustainable sales level will cause us to go out of business.
Our auditors have issued a going concern opinion because there is substantial uncertainty that we will continue operations in which case you could lose your investment.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
We face intense competition in our industry. If we are unable to compete successfully, our business will be seriously harmed.
The market for consulting services is highly competitive and has low barriers to entry. Our competitors vary in size and in the variety of services they offer. Many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and an established client base. These competitors may be able to adapt more quickly to new or emerging social media marketing technologies and changes in customer requirements. They may also be able to devote greater resources to the promotion and sales of their services than we can, or may adopt more aggressive pricing policies. If we fail to compete successfully against our competitors, our revenue could decline and our business could be harmed.
Our business relies on our ability to attract new customers. If we are unable to attract new customers, our business will fail.
Our future growth is dependent on our ability to attract new customers and our ability to sell additional services to our existing customers. We rely on direct sales and referrals from existing customers and other business associates to attract new customers. We also rely on selling additional services to our existing clients, such as ongoing administrative support or continuing consulting engagements, for additional revenue. If we are unable to attract new customers or sell additional services to our existing customers, our revenue will likely decline and our business will fail.
We depend on key personnel.
Our future success will depend in part on the continued service of key personnel, particularly, Michael Krichevcev, our President and Director and Tatiana Varuha, our Secretary, Treasurer, Chief Financial Officer and Director. On February 1, 2014, we have entered into consulting management agreements with Michael Krichevcev, our President, and Tatiana Varuha, our Chief Financial Officer. Frontera Group can terminate these contracts with a sixty (60) day advance written notice. Our officers and directors can terminate these contracts with a thirty (30) day advance written notice. If any of our directors and officers choose to leave the company, we will face significant difficulties in attracting potential candidates for replacement of our key personnel due to our limited financial resources and operating history. In addition, the loss of any key employees or the inability to attract or retain qualified personnel could delay our plan of operations and harm our ability to provide services to our current customers and harm the markets perception of us.
10
U.S. investors may experience difficulties in attempting to effect a service of process and enforce judgments based upon U.S. Federal Securities Laws against the company and its non U.S. resident officers and directors.
While we are organized under the laws of State of Nevada, our officers and directors are both non-U.S. residents. Consequently, it may be difficult for investors to affect service of process on Mr. Michael Krichevcev and Ms. Tatiana Varuha in the United States and to enforce in the United States judgments obtained in United States courts against these individuals based on the civil liability provisions of the United States securities laws. As well, any judgment obtained in the United States against us may not be enforceable in the United States.
We do not have a majority of independent directors on our Board and the Company has not voluntarily implemented various corporate governance measures, in the absence of which stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.
Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or the NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors independence, audit committee oversight, and the adoption of a code of ethics. We have not yet adopted any of these other corporate governance measures and since our securities are not yet listed on a national securities exchange, we are not required to do so. Our Board of Directors is comprised of two individuals, both of whom are also our executive officers. As a result, we do not have independent directors on our Board of Directors.
We have not adopted corporate governance measures such as an audit or other independent committee of our board of directors, as we presently do not have independent directors on our board. If we expand our board membership in future periods to include additional independent directors, we may seek to establish an audit and other committee of our board of directors. It is possible that if our Board of Directors included independent directors and if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurance that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, at present in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages or employment contracts to our senior officers are made by a majority of directors who have an interest in the outcome of the matters being decided. However, as a general rule, the board of directors, in making its decisions, determines first that the terms of such transaction are no less favorable to us that those that would be available to us with respect to such a transaction from unaffiliated third parties. The company executes the transaction between executive officers and the company once it was approved by the Board of Directors.
Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.
You could be diluted from our future issuance of capital stock and derivative securities.
As of June 30, 2014, we had 4,000,000 shares of common stock outstanding and no shares of preferred stock outstanding. We are authorized to issue up to 75,000,000 shares of common stock and no shares of preferred stock. To the extent of such authorization, our Board of Directors will have the ability, without seeking stockholder approval, to issue additional shares of common stock or preferred stock in the future for such consideration as the Board of Directors may consider sufficient. The issuance of additional common stock or preferred stock in the future may reduce your proportionate ownership and voting power.
11
Because our Directors, who are also our sole promoters, will own 55.17% of our outstanding common stock, if the minimum amount of the offering will be sold, they could make and control corporate decisions that may be disadvantageous to other minority shareholders.
Our Directors own 100% of the outstanding shares of our common stock as of the date of this Offering. If the minimum amount of the shares will be sold, our Directors will own 55.17% of our outstanding common stock. Accordingly, they will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets. They will also have the power to prevent or cause a change in control. The interests of our directors may differ from the interests of the other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
None of the members of our Board of Directors are considered audit committee financial experts. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.
Our Board of Directors are inexperienced with U.S. GAAP and the related internal control procedures required of U.S. public companies. Management has determined that our internal audit function is also significantly deficient due to insufficient qualified resources to perform internal audit functions. Finally, we have not established an Audit Committee of our Board of Directors.
We are a development stage company with limited resources. Therefore, we cannot assure investors that we will be able to maintain effective internal controls over financial reporting based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. For these reasons, we are considering the costs and benefits associated with improving and documenting our disclosure controls and procedures and internal controls and procedures, which includes (i) hiring additional personnel with sufficient U.S. GAAP experience and (ii) implementing ongoing training in U.S. GAAP requirements for our CFO and accounting and other finance personnel. If the result of these efforts are not successful, or if material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation.
The requirements of being a public company may strain our resources and distract our management.
Following the completion of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the Securities and Exchange Commission. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs to us and could have a negative effect on our business, results of operations and financial condition.
As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and requirements of the Sarbanes-Oxley Act of 2002, as amended, or SOX. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The SOX requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. These activities may divert managements attention from other business concerns, which could have a material adverse effect on our business and results of operations.
12
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of managements time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
The Company is subject to the 15(d) reporting requirements under the Securities Exchange Act of 1934 which does not require a company to file all the same reports and information as fully reporting company.
Until our common stock is registered under the Exchange Act, we will not be a fully reporting company, but only subject to the reporting obligations imposed by Section 15(d) of the Securities Exchange Act of 1934.
Pursuant to Section 15(d), we will be required to file periodic reports with the SEC, such as annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, once this registration statement is declared effective, including the annual report on Form 10-K for the fiscal year during which the registration statement is declared effective. That filing obligation will generally apply even if our reporting obligations have been suspended automatically under section 15(d) of the Exchange Act prior to the due date for the Form 10-K.
After that fiscal year and provided the Company has less than 300 shareholders, the Company is not required to file these reports. If the reports are not filed, the investors will have reduced visibility as to the Company and its financial condition. In addition, as a filer subject to Section 15(d) of the Exchange Act, the Company is not required to prepare proxy or information statements; our common stock will not be subject to the protection of the going private regulations; the company will be subject to only limited portions of the tender offer rules; our officers, directors, and more than ten (10%) percent shareholders are not required to file beneficial ownership reports about their holdings in our company; that these persons will not be subject to the short-swing profit recovery provisions of the Exchange Act; and that more than five percent (5%) holders of classes of your equity securities will not be required to report information about their ownership positions in the securities.
We will not be required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act until the end of the second fiscal year reported upon in our second annual report on form 10-K.
The Sarbanes-Oxley Act of 2002 and the new rules subsequently implemented by the Securities and Exchange Commissions, the Financial Industry Regulatory Authority (FINRA) and the Public Company Accounting Oversight Board have imposed various new requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. These costs could affect profitability and our results of operations.
We are in the process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404. We will not be required to conduct the evaluation of effectiveness of our internal controls until the end of the fiscal year reported upon in our second annual report on Form 10-K.
13
In addition, because we are a smaller reporting company, we are not required to obtain the auditor attestation of managements evaluation of internal controls over financial reporting. If we obtain and disclose such reports we could continue doing so at our discretion so long as we remain a smaller reporting company.
This process of internal control evaluation and attestation may divert internal resources and will take a significant amount of time, effort and expense to complete. If it is determined that we are not in compliance with Section 404, we may be required to implement new internal control procedures and re-evaluate our financial reporting. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results, which could adversely affect our ability to comply with our periodic reporting obligations under the Exchange Act.
The funds raised in this offering and held by us during pendency of the offering may be subject to creditors claims.
We are offering a minimum of 3,250,000 and a maximum of 32,500,000 shares of our common stock in a direct public offering, without any involvement of underwriters or broker-dealers. The offering price is $0.0125 per share. Funds from this offering will be placed in a separate bank account at Bank of America, NY. This account is not an escrow, trust or similar account. It is merely a separate interest bearing savings account under our control where we have segregated your funds. Your subscription will only be deposited in a separate bank account under our name. Only Michael Krichevcev, our Chief Executive Officer, and Tatiana Varuha, our Chief Financial Officer, will have the power to authorize a release of funds from this account upon completion of this offering. The funds will be maintained in the separate bank until we receive a minimum of $40,625 at which time we will remove those funds along with accrued interest and use the same as set forth in the Use of Proceeds section of this prospectus. The accrued interest will be retained by us as proceeds of this offering. As a result, if we are sued for any reason and a judgment is rendered against us, your subscription could be seized in a garnishment proceeding and you could lose your investment, even if we fail to raise the minimum amount in this offering. Further, if we file a voluntary bankruptcy petition or our creditors file an involuntary bankruptcy petition, our assets will be seized by the bankruptcy trustee, including your subscription, and used to pay our creditors. If that happens, you will lose your investment, even if we fail to raise the minimum amount in this offering. As a result, there is no assurance that your funds will be returned to you if the minimum offering is not reached. Any funds received by us thereafter will immediately used by us.
No shares will be issued prior to the minimum offering amount being met. Investors bear risk without enjoying any benefits of share ownership.
The funds received from investors will be maintained in a separate bank account until we receive a minimum of $40,625, at which time we will begin to issue shares pursuant to the subscription agreements. We will remove the funds from the separate account and use the same as set forth in the Use of Proceeds section of this prospectus. No shares will be issued if the minimum amount is not reached. As a result, investors bear the risk of investing without enjoying any benefits of share ownership. Our officers and directors will not use the subscription proceeds prior to satisfaction of the minimum and issuance of the shares for working capital, collateral for the company or other purposes.
We do not intend to pay dividends and there will be less ways in which you can make a gain on any investment in Frontera Group Inc.
We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may likely prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in Frontera Group Inc. will need to come through appreciation of the stocks price.
The offering price of the shares was arbitrarily determined and bears no relation to our assets, earnings, book value or other criteria of value. Therefore it should not be used as an indicator of the future market price of the securities.
The $0.0125 per share offering price of the common stock being sold under this prospectus has been arbitrarily set. The price does not bear any relationship to our assets, book value, earnings or net worth and it is not an indication of actual value. The offering price should not be regarded as an indicator of the future market price of the securities.
14
There is no public (trading) market for our common stock and there is no assurance that the common stock will ever trade on a recognized exchange or dealers network; therefore, our investors may not be able to sell their shares.
Our common stock is not listed on any exchange or quoted on any similar quotation service, and there is currently no public market for our common stock. We have not taken any steps to enable our common stock to be quoted on the OTC Bulletin Board or OTC Link, and can provide no assurance that our common stock will ever be quoted on any quotation service or that any market for our common stock will ever develop. As a result, stockholders may be unable to liquidate their investments, or may encounter considerable delay in selling shares of our common stock. Neither we nor our selling stockholders have engaged an underwriter for this Offering, and we cannot assure you that any brokerage firm will act as a market maker of our securities. A trading market may not develop in the future, and if one does develop, it may not be sustained. If an active trading market does develop, the market price of our common stock is likely to be highly volatile due to, among other things, the nature of our business and because we are a new public company with a limited operating history. Further, even if a public market develops, the volume of trading in our common stock will presumably be limited and likely be dominated by a few individual stockholders. The limited volume, if any, will make the price of our common stock subject to manipulation by one or more stockholders and will significantly limit the number of shares that one can purchase or sell in a short period of time. The market price of our common stock may also fluctuate significantly in response to the following factors, most of which are beyond our control:
- variations in our quarterly operating results;
- changes in general economic conditions;
- price competition or pricing changes by us or our competitors;
- new services offerings or other actions by our competitors;
- loss of a major customer, partner or joint venture participant; and
- the addition or loss of key managerial and collaborative personnel.
The equity markets have, on occasion, experienced significant price and volume fluctuations that have affected the market prices for many companies' securities and that have often been unrelated to the operating performance of these companies.
Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.
If our common stock is accepted for quotation on the OTC Bulletin Board or OTC Link, the application of the Penny Stock rules could adversely affect the market price of our common shares and increase your transaction costs to sell those shares. The Securities and Exchange Commission has adopted Rule 3A51-1, which establishes the definition of a Penny Stock, for the purposes relevant to us, as any equity security that has market price of less than $5.00 per share or within an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15G-9 require:
- that a broker or dealer approve a person's account for transactions in penny stocks; and
- the broker or dealer receive from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
- obtain financial information and investment experience objectives of the person; and
- make a reasonable determination that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
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- sets forth the basis on which the broker or dealer made the suitability determination; and
- that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
You may face significant restrictions on the resale of your shares due to state blue sky laws.
Each state has its own securities laws, often called blue sky laws, which (1) limit sales of securities to a states residents unless the securities are registered in that state or qualify for an exemption from registration, and (2) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or it must be exempt from registration. The applicable broker-dealer must also be registered in that state.
We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as market makers for our common stock. There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities. You should therefore consider the resale market for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of these words or other variations on these words or comparable terminology. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished.
Such forward-looking statements include statements regarding, among other things, (i) the potential markets for our services, our potential profitability and cash flows, (ii) our growth strategies, (iii) anticipated trends in the product marketing industry, (iv) our future financing plans and (v) our anticipated needs for working capital. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under Management's Plan of Operation" and "Description of Our Business and Properties," as well as in this Prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. In addition to the information expressly required to be included in this filing, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.
Although forward-looking statements in this Prospectus reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Prospectus. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Prospectus, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our Prospectus which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows.
16
If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.
USE OF PROCEEDS
Our Offering is being made on a self underwritten basis - with a minimum of $40,625 in gross proceeds. The table below sets forth the use of proceeds if $40,625 (i.e. gross proceeds of the minimum offering) or $406,250 (i.e. gross proceeds of the maximum offering) of our common stock is sold.
Our Offering is being conducted on a best-effort minimum 3,250,000/ maximum 32,500,000 basis. The offering scenarios presented below are for illustrative purposes only and the actual amount of proceeds, if any, may differ.
|
Minimum Offering Proceeds |
|
Maximum Offering Proceeds |
||||
|
|
|
|
||||
Gross proceeds |
$ |
40,625 |
|
|
$ |
406,250 |
|
Offering expenses |
|
8,352 |
|
|
|
8,352 |
|
Net proceeds |
$ |
32,273 |
|
|
$ |
397,898 |
|
The net proceeds will be used as follows:
|
|
Minimum Offering Proceeds (Net) |
|
|
Maximum Offering Proceeds (Net) |
|
|
|
|
|
|
Current liabilities |
$ |
7,901 |
|
$ |
19,901 |
Advertising |
|
5,000 |
|
|
25,000 |
Target market relationship network expansion |
|
15,000 |
|
|
80,000 |
Sales representatives, broker |
|
- |
|
|
180,000 |
Website expansion (clients area) |
|
- |
|
|
23,000 |
General and administrative |
|
4,372 |
|
|
69,997 |
TOTAL |
$ |
32,273 |
|
$ |
397,898 |
Total offering expenses are approximately $8,352. Of the $8,352, the amounts to be paid from the proceeds for expenses of the offering are: $5,000 for accounting fees; $1,500 for filing fees; $800 for legal fees; $52 for registration fee; and $1,000 for transfer agent fees. We will use the rest of the funds (net of offering expenses) for paying off our current liabilities, hiring new personnel and implementation of our business plan.
In the future, in addition to equity financing, we may rely on loans from our Directors and officers to continue our operations; however, there are no assurances that our Directors will provide us with any additional funds. Currently, we do not have any arrangements for additional financing. If we are not able to obtain needed financing and generate sufficient revenue from operations, we may have to cease operations.
DETERMINATION OF OFFERING PRICE
The offering price of $0.0125 of our common stock has been arbitrarily determined in order for us to raise up to a total of $406,250 in this Offering and bears no relationship to any objective criterion of value. The price does not bear any relationship to our assets, book value, historical earnings or net worth. In determining the offering price, management considered such factors as the prospects, if any, for similar companies, anticipated results of operations, present financial resources and the likelihood of acceptance of this offering. No valuation or appraisal has been prepared for our business. We cannot assure you that a public market for our securities will develop or continue or that the securities will ever trade at a price higher than the offering price.
17
DILUTION OF THE PRICE PER SHARE
Dilution represents the difference between the offering price and the net tangible book value per share immediately after completion of this Offering. Net tangible book value is the amount that results from subtracting total liabilities and intangible assets from total assets. As of June 30, 2014, the net tangible book value of our shares of common stock was $(13,285) or approximately $(0.0033) per share based upon 4,000,000 shares outstanding.
If the maximum number of shares is sold:
Upon completion of this Offering, in the event all of the shares are sold, the net tangible book value of the 36,500,000 shares to be outstanding will be $384,613, or approximately $0.0105 per share. The amount of dilution to the shareholders acquiring shares in this offering will be $0.002 per share. The net tangible book value of the shares held by our existing shareholder will be increased by $0.0138 per share without any additional investment on their part. The shareholders acquiring shares in this Offering will incur an immediate dilution from $0.0125 per share to $0.0105 per share.
After completion of this Offering, if 32,500,000 shares are sold, the shareholders acquiring shares in this Offering will own approximately 89.04% of the total number of shares then outstanding for which the shareholders acquiring shares will have made cash investment of $406,250, or $0.0125 per share. Our existing shareholders will own approximately 10.96% of the total number of shares then outstanding, for which they have made contributions of cash of $4,000, or $0.001 per share.
If the minimum number of shares is sold:
Upon completion of this Offering, in the event 3,250,000 shares are sold, the net tangible book value of the 7,250,000 shares to be outstanding will be $18,988 or approximately $ 0.0026 per share. The amount of dilution to the shareholders acquiring shares in this offering will be $ 0.0099 per share. The net tangible book value of the shares held by our existing stockholders will be increased by $0.0059 per share without any additional investment on their part. The shareholders acquiring shares in this offering will incur an immediate dilution from $0.0125 per share to $ 0.0026 per share.
After completion of this Offering, if 3,250,000 shares are sold, the shareholders acquiring shares in this Offering will own approximately 44.83% of the total number of shares then outstanding for which the shareholders acquiring shares have made cash investment of $40,625, or $0.0125 per share. Our existing shareholders will own approximately 55.17% of the total number of shares then outstanding, for which they have made contributions of cash, totaling $4,000, or $0.001 per share.
The following table compares the differences of investment in our shares to the shareholders acquiring shares in this Offering with investment in our shares of our existing stockholders.
Existing stockholders if all of the shares are sold:
Price per share |
$ |
0.001 |
Net tangible book value per share before offering |
$ |
(0.0033) |
Net tangible book value per share after offering |
$ |
0.0105 |
Increase to present stockholders in net tangible book value per share after offering |
$ |
0.0138 |
Capital contributions (cash) |
$ |
4,000 |
Number of shares outstanding before the offering |
|
4,000,000 |
Number of shares after offering held by existing stockholders |
|
4,000,000 |
Percentage of ownership after offering |
|
10.96% |
18
Purchasers of shares in this Offering if all shares sold:
Price per share |
$ |
0.0125 |
Dilution per share |
$ |
0.002 |
Capital contributions |
$ |
406,250 |
Number of shares after offering held by public investors |
|
32,500000 |
Percentage of ownership after offering |
|
89.04% |
Existing stockholders if the minimum number of shares sold:
Price per share |
$ |
0.001 |
Net tangible book value per share before offering |
$ |
(0.0033) |
Net tangible book value per share after offering |
$ |
0.0026 |
Increase to present stockholders in net tangible book value per share after offering |
$ |
0.0059 |
Capital contributions (cash) |
$ |
4,000 |
Number of shares outstanding before the offering |
|
4,000,000 |
Number of shares after offering held by existing stockholders |
|
4,000,000 |
Percentage of ownership after offering |
|
55.17% |
Purchasers of shares in this Offering if the minimum number of shares sold:
Price per share |
$ |
0.0125 |
Dilution per share |
$ |
0.0099 |
Capital contributions |
$ |
40,625 |
Number of shares after offering held by public investors |
|
3,250,000 |
Percentage of ownership after offering |
|
44.83% |
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
We are offering a minimum of 3,250,000 and a maximum of 32,500,000 shares of our common stock in a direct public offering, without any involvement of underwriters or broker-dealers. The offering price is $0.0125 per share. Funds from this offering will be placed in a separate bank account at Bank of America, NY. This account is not an escrow, trust or similar account. It is merely a separate interest bearing savings account under our control where we have segregated your funds. Your subscription will only be deposited in a separate bank account under our name. Only Michael Krichevcev, our Chief Executive Officer, and Tatiana Varuha, our Chief Financial Officer, will have the power to authorize a release of funds from this account upon completion of this offering. Our officers and directors will not use the subscription proceeds prior to satisfaction of the minimum and issuance of the shares for working capital, collateral for the company or other purposes. The funds will be maintained in the separate bank until we receive a minimum of $40,625 (cleared through the bank) at which time we will remove those funds along with accrued interest and use the same as set forth in the Use of Proceeds section of this prospectus. The accrued interest will be retained by us as proceeds of this offering. As a result, if we are sued for any reason and a judgment is rendered against us, your subscription could be seized in a garnishment proceeding and you could lose your investment, even if we fail to raise the minimum amount in this offering. Further, if we file a voluntary bankruptcy petition or our creditors file an involuntary bankruptcy petition, our assets will be seized by the bankruptcy trustee, including your subscription, and used to pay our creditors. If that happens, you will lose your investment, even if we fail to raise the minimum amount in this offering. As a result, there is no assurance that your funds will be returned to you if the minimum offering is not reached. Any funds received by us thereafter will immediately used by us.
We will return your funds to you in the form a cashiers check sent Federal Express on the 181 st day, or 271 st day in case of the extended period. During the 180 day period, or additional 90 days, no funds will be returned to you. You will only receive a refund of your subscription if we do not raise a minimum of $40,625 within the 180 day period, or additional 90 day period referred to above. There are no finders involved in our distribution.
19
You will only have the right to have your funds returned if we do not raise the minimum amount of the offering or there would be a change in the material terms of the offering.
The following are material changes that would entitle you to a refund of your money:
- a change in the offering price;
- a change in the minimum sales requirement;
- a change in the amount of proceeds necessary to release the funds held in the separate bank account;
- a change to allow sales to affiliates in order to meet the minimum sales requirement; and
- an extension of the offering period beyond 270 days.
We will sell the shares in this Offering through our Directors, Michael Krichevcev and Tatiana Varuha. They will receive no commission from the sale of any shares. They will not register as a broker-dealer under Section 15 of the Exchange Act in reliance upon Rule 3a4-1.
Rule 3a4-1 sets forth those conditions under which a person associated with an issuer may participate in the offering of the issuer's securities and not be deemed to be a broker-dealer. The conditions are that:
1. The person is not statutorily disqualified, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation; and,
2. The person is not compensated in connection with her participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities;
3. The person is not at the time of their participation, an associated person of a broker-dealer; and,
4. The person meets the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Securities Exchange Act 1934, as amended (the Exchange Act), in that she (A) primarily performs, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of the issuer otherwise than in connection with transactions in securities; and (B) is not a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months; and (C) does not participate in selling and offering of securities for any issuer more than once every 12 months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii).
Our Directors and officers are not statutorily disqualified, are not being compensated, and are not associated with a broker-dealer. They are and will continue to be our officers and Directors at the end of the Offering and have not been during the last 12 months and are currently not broker-dealers or associated with a broker-dealer. They have not during the last twelve months and will not in the next 12 months offer or sell securities for another corporation.
Only after our Prospectus is declared effective by the Securities and Exchange Commission (the Commission), we intend to distribute this Prospectus to potential investors at meetings and to our friends, business associates and relatives who are interested in us and a possible investment in the Offering. We will not utilize the Internet to advertise our Offering.
Section 15(g) of the Exchange Act
Our shares are covered by Section 15(g) of the Exchange Act, and Rules 15g-1 through 15g-6 promulgated thereunder. They impose additional sales practice requirements on broker-dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $160,000 or $300,000 jointly with their spouses).
Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.
Rule 15g-2 declares unlawful broker-dealer transactions in penny stocks unless the broker-dealer has first provided to the customer a standardized disclosure document.
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Rule 15g-3 provides that it is unlawful for a broker-dealer to engage in a penny stock transaction unless the broker-dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.
Rule 15g-4 prohibits broker-dealers from completing penny stock transactions for a customer unless the broker-dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.
Rule 15g-5 requires that a broker-dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the sales persons compensation.
Rule 15g-6 requires broker-dealers selling penny stocks to provide their customers with monthly account statements.
Rule 15g-9 requires broker-dealers to approved the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his rights and remedies in cases of fraud in penny stock transactions; and, the NASDs toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker-dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your shares.
Offering Period and Expiration Date
This Offering will start on the date of this Prospectus and continue for a period of up to 180 days. The offering will continue until all 32,500,000 shares of common stock are sold, the expiration of 180 days from the date of this prospectus, which period may be extended for up to an additional 90 days at our discretion, or until we elect to terminate the Offering, whichever event occurs first. If the 3,250,000 share minimum has been reached and all 32,500,000 shares are not sold within this period, the offering for the balance of the shares will terminate and no further shares will be sold.
Procedures for Subscribing
If you decide to subscribe for any shares in this Offering, you must: (i) execute and deliver a subscription agreement; and (ii) deliver a check, money order or certified funds to us for acceptance or rejection. The subscription agreement and subscription funds can be mailed, couriered or delivered in person. All checks, money orders or certified funds for subscriptions must be made payable to Frontera Group Inc. The funds from all accepted subscriptions will be deposited into the Bank of America account until we receive a minimum of $40,625 (cleared through the bank) at which time we will remove those funds along with accrued interest and use the same as set forth in the Use of Proceeds section of this prospectus. The accrued interest will be retained by us as proceeds of this offering. Only Michael Krichevcev, our Chief Executive Officer, and Tatiana Varuha, our Chief Financial Officer, will have the power to authorize a release of funds from this account upon completion of this offering.
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after we receive them.
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MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are a development stage company with limited operations and limited revenues from our business operations. In order to obtain funds needed to implement our business plan, we are attempting to raise money from this offering.
If we raise the minimum amount through this offering, we will be able to achieve the short-term goals of our business plan and to continue operations and remain in business for the next 12 months. If we are unable to generate revenues for any reason, or if we are unable to make a reasonable profit, we may have to cease operations. At the present time, we have not made any arrangements to raise additional cash, other than through this offering. If we need additional cash and cannot raise it, we will either have to suspend implementation of our business plan until we do raise the cash, or cease operations entirely if revenue from operations will not be sufficient to cover our operating costs.
If we raise the maximum amount, we believe we can implement our short term and long-term business plan and achieve profitable operations. However, we cannot guarantee that proceeds from this offering will be sufficient for us to continue as going concern for the next five years. If we raise less than the maximum amount and we require additional funds, it may be necessary for us to obtain additional funds through a second public offering, a private placement of securities, or loans. We have no other financing plans, other than described above.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us upon which to base an evaluation of our performance. We are in the development stage of operations and cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns, such as increases in advertising and marketing costs, administration expenditures associated with daily operations, accounting and audit fees, and legal fees related to filings and regulatory compliance.
We anticipate relying on equity sales of our common stock in order to continue to implement our business plan. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for to fund our planned business activities. We may also rely on loans from our Directors; however, there are no assurances that our Directors will provide us with any additional funds.
Currently, we do not have any arrangements for additional financing. We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop, or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Results of Operations
Frontera Group Inc. is a provider of business development and market consultancy services that facilitate new market penetration to Central and South American markets for small and medium-sized businesses.
Results of operations for the period from November 21, 2013 (Inception) through June 30, 2014
We were formed on November 21, 2013. Accordingly, the results of operations during the first fiscal period ended June 30, 2014 (7 full months) are not necessarily indicative of the results of the regular (12 months) full fiscal year. All revenues, cost of revenues and operating expenses during our fiscal 2014 were affected by the shorter reporting period compared to a full year of operations.
Revenue
Our gross revenue from market consultancy services for the period ended June 30, 2014 was $10,700. Our cost of revenues for this period was $4,606 resulting in a gross profit of $6,094. All of our revenues derived from consulting services related to market research and feasibility study.
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Costs and Expenses
The major components of our expenses for the period from inception to June 30, 2014 are outlined in the table below:
|
|
For the Period from November 21, 2013 (Inception) through June 30, 2014 |
|
|
|
Compensation - officers |
|
$ 3,250 |
Consulting fees |
|
8,000 |
Website development costs |
|
7,500 |
General and administrative |
|
4,629 |
|
|
$ 23,379 |
We commenced our operations in November of 2013 and incurred expenses related to implementation of our business plan. The shorter reporting period in our fiscal 2014 affected categories of operating costs and expenses charged on a monthly basis, such as officer compensation, consulting and rent expenses. General and administrative expenses of $4,629 represent incorporation costs of $225, filing fees of $450, office expenses of $324, rent of $274 and travel expenses of $3,356.
The President of the Company provides management consulting services to the Company. On February 1, 2014, we have entered into consulting agreements with Michael Krichevcev, our President, and Tatiana Varuha, our Chief Financial Officer. Frontera Group can terminate these contracts with a sixty (60) day advance written notice. Our officers and directors can terminate these contracts with a thirty (30) day advance written notice. During the period from February 1, 2014 to June 30, 2014, the Company incurred $2,500 in management consulting services with the President of the Company.
The Chief Financial Officer of the Company provides consulting services to the Company. During the period from inception to June 30, 2014, consulting services of $2,000 were charged to operations. A portion of consulting services directly related to sales provided by the President of the Company totaling $1,250 was reported as cost of sales as of June 30, 2014.
Since inception, we have sold 4,000,000 shares of common stock at $0.001 per share to our Directors for total proceeds of $4,000.
Liquidity and Capital Resources
|
|
|
|
|
|
|
As of |
|
|
|
June 30, 2014 |
|
|
|
|
Total assets |
|
$ |
6,616 |
Total liabilities |
|
$ |
(19,901) |
Working capital deficiency |
|
$ |
(13,285) |
Liquidity
Our internal liquidity is provided by our operations. Our total current liabilities exceed our current assets resulting in working capital deficiency of $13,285 as of June 30, 2014.
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From time to time, Michael Krichevcev, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. As of June 30, 2014, the advance balance was $7,500.
Management believes that in the fiscal year 2014 the Company will show an increase in revenue however, there is no guarantee that revenues will increase. Management does believe that revenues are increasing and operations should be sustainable in the long-term of at least twelve (12) months due to the increase in cash flow generated by revenues from consulting services. In addition, we intend to use the proceeds from this offering to finance our ongoing operations and implementation of our short-term (12 months) business plan.
If we are not successful in expanding our clientele base, maintaining profitability and positive cash flow, additional capital may be required to maintain ongoing operations. We have explored and are continuing to explore options to provide additional financing to fund future operations as well as other possible courses of action. Such actions include, but are not limited to, securing lines of credit, sales of debt or equity securities (which may result in dilution to existing shareholders), loans and cash advances from our directors or other third parties, and other similar actions. There can be no assurance that we will be able to obtain additional funding (if needed), on acceptable terms or at all, through a sale of our common stock, loans from financial institutions, our directors, or other third parties, or any of the actions discussed above. If we cannot sustain profitable operations, and additional capital is unavailable, lack of liquidity could have a material adverse effect on our business viability, financial position, results of operations and cash flows.
Cash Flows
The table below, for the period indicated, provides selected cash flow information:
|
|
For the Period from November 21, 2013 (Inception) through June 30, 2014 |
|
|
|
Net cash used in operating activities |
$ |
(4,884) |
Cash used in investing activities |
|
- |
Cash provided by financing activities |
|
11,500 |
Net increase in cash |
$ |
6,616 |
We have generated revenues of $10,700 during the period from inception to June 30, 2014. In addition to cash received from consulting services, during the period ended June 30, 2014 we received proceeds of $4,000 from sale of our common stock to our officers and directors at $0.001 per share and cash advance from our President of $7,500. We had no other sources of cash inflow during the reporting periods.
Cash Flows from Operating Activities
Our cash used in operating activities of $4,884 is a net result of cash generated from sales of our consulting services and changes in our current assets and liabilities. This portion of our cash flow represents the most significant source of funding for our operations. The major uses of our operating cash include funding general operating expenses (legal and professional expenses, consulting, travel, office expenses and office rent) and cost of revenues.
Cash flows resulting from changes in assets and liabilities include an increase in accounts payable and accrued liabilities and the increase in the officers accrued compensation. The increase in accounts payable and accrued expenses reflected the increase in our general operating expenses incurred during the period ended June 30, 2014 that remained unpaid at the end of the reporting period. The increase in the officers accrued compensation is due to the consulting fees incurred by the Company during the period ended June 30, 2014 that remained unpaid as at the end of this period.
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Cash Flows from Investing Activities
We did not generate any cash from investing activities during the period from November 21, 2013 (Inception) through June 30, 2014.
Cash Flows from Financing Activities
During the period from November 21, 2014 (Inception) through June 30, 2014 the Company sold 4,000,000 shares of common stock at par to the Company Directors for $4,000 in cash. In addition, the Company received a $7,500 cash advance from the Companys President. This advance is unsecured, non-interest bearing and due on demand.
We believe that we need approximately an additional $40,000 (gross) to implement our short-term business plan and meet our working capital requirements over the next 12 months. Our intention is to obtain this money through this offering. We intend to use the proceeds from this offering to finance our ongoing operations and implementation of our short-term (12 months) business plan (see Plan of Operations, page 26). As of the date of this Registration Statement we do not have any other arrangements of sources of financing beside anticipated proceeds from this offering and proceeds from future sales.
We anticipate future capital requirements for financing of our ongoing operations to be approximately $80,000 per year. In addition we will require approximately $105,000 over the five-year period for expansion of our relationship network and our sales force.
Management expects to keep operating costs to a minimum until cash is available through financing or operating activities. Management plans to continue to seek, in addition to equity financing, other sources of financing (e.g. bank loan, line of credit, shareholder loan) on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. If we are unable to generate profits sufficient to cover our operating costs or to obtain additional funds for our working capital needs, we may need to cease or curtail operations. Furthermore, there is no assurance the net proceeds from any successful financing arrangement will be sufficient to cover cash requirements during the initial stages of the Companys operations.
DESCRIPTION OF OUR BUSINESS AND PROPERTIES
You should rely only on the information contained in this Prospectus or any supplement hereto. We have not authorized anyone to provide you with different information. If anyone provides you with different information, you should not rely on it. We are not making an offer to sell the shares in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this Prospectus is accurate as of any date other than the date on the front cover of this Prospectus regardless of the date of delivery of this Prospectus or any supplement hereto, or the sale of the shares. Our business, financial condition, results of operations and prospects may have changed since that date.
Industry Background
The grocery and home goods retail industry is a rapidly evolving industry in Central and South America. Urbanization has driven the new retail trend of large chain grocery stores and neighborhood convenience stores replacing traditional markets. Consumers have begun to look for one-stop-shop options to meet their needs for convenience and time efficiency. Larger retail spaces have allowed for a wider selection of grocery and home goods to be offered to consumers. Central and South America has also experienced improving economic conditions over the past decade, resulting in consumers looking for new and high end products.
North American and European companies are exporting their products to Central and South America to meet the demands of consumers for imported products. Consumers tend to perceive imported products from Europe and North America as higher quality and safer than locally manufactured foods and products. North American and European products also have strong name recognition amongst consumers looking for more variety and new products.
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Retail Industries in Select Central and South American Countries
Costa Rica
The Costa Rican economy is currently growing at a good pace, with steady rates of growth expected in the foreseeable future. The main economic drivers are tourism and financial services. Costa Rican consumers are leading increasingly hectic lifestyles, as many people are shifting towards longer working hours and more women enter the workplace. Due to the change in lifestyle, Costa Ricans have begun demand a greater variety of processed foods from the food sector and convenient one-stop-shops for their grocery and home goods needs. This progressing trend also means that households have increased disposable income to spend on imported goods. The growing urban population, the increase of the number of women in the workforce, and greater exposure to foreign products have contributed to increasing and influencing import demands.
Supermarkets are the main source of imported goods for Costa Rican consumers. Over the past decade, supermarkets have been gaining prominence. While urban areas contain the majority of supermarkets, they are gaining ground in rural settings as well. There are five major grocery retailers in Costa Rica that target middle and high-income consumers looking for convenience and brand name goods: Wal-Mart, Gessa, AutoMercado, Price Smart, and Megasuper. As retail supermarkets expand their reach and consumer base, they present an excellent opportunity for increased exports of grocery and home goods products.
Guatemala
Guatemala has one of the Central Americas largest economy, accounting for almost one-third of the regions Gross Domestic Product. Agriculture is the principal contributor to the production of goods and the economy relies on the incomes generated by the tourism sector and international trade, especially exports of goods to the United States. Guatamelas expanding supermarket industry has led forecasters to expect strong prospects for sales of imported goods in the future. The increase is due to strong growth in outlets, changing purchasing habits among consumers, and increased brand awareness. Guatemalan consumers have becomes accustomed to North American products and tend to perceive them as higher quality than locally manufactured goods. The retail sector in Guatemala is dominated by three supermarket chains: PriceSmart, Wal-Mart and Unisuper. It is estimated that only 40% of food sales are made through the supermarkets and the rest are divided between corner stores and open-air markets.
Panama
Panama has one of the fastest-growing economies in the Central and South America. Expansion of the Panama Canal and the government's investment program are expected to drive the economy in the next several years. Grocery and home good consumer trends have been favorable to imported goods, as consumers look to North American and European brands for diversification of locally manufactured goods. Retail preferences continue to grow towards supermarkets and away from traditional markets, as supermarkets are able to offer reduced consumer prices relative to traditional retail. Competition in Panamanian retail industry is fierce, inventory stock is overly diversified, and markups and profit margins are low. Modern food retailers have been growing at the expense of more traditional outlets (grocery stores and wet market kiosks). The largest supermarket chains in panama are Super 99, Supermercado Rey, Super Xtra, Riba Smith and Machetazo.
El Salvador
El Salvador has the third largest economy in Central America. The Government of El Salvador is committed to an open-market economy and has recently led economic diversification initiatives in new sectors such as non-traditional agricultural products (tuna, bakery, snacks, beverages, and dairy products, among others), processed food, distribution, telecom services, and tourism. Currently, the forecasts for grocery and home goods retail industry are positive due to positive employment rate trends and financial stability and expansion of consumer credit.
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Supermarkets and convenience stores coexist with the traditional corner grocery stores and open-air markets to provide consumers with their grocery and home goods needs. There are three dominant supermarket chains in El Salvador: Supermercado Selectos, Wal-Mart El Salvador and Europa.
Chile
Chile is becoming increasingly urbanized, not only in the capital, but also in other more provincial and second-tier cities. Urbanization has created a demand for convenience stores and smaller supermarkets, as well as larger supermarkets that offer consumers a one-stop-shop experience. Large shopping centers are also increasingly being built in emerging suburban areas. Unfortunately, the pace of growth of the retailing industry is set to slow down over the next few years as consumers are expected to become more conservative in terms of the acquisition of new debts. Despite the forecasted slowdown in growth, opportunities for food and home goods manufacturers to break into Chilean market still exist as existing and newly built shopping centers and grocery retail chains continuously look for new products to offer their consumers. The main supermarket chains in Chile are Jumbo, Lider, Santa Isabel and Tottus.
Brazil
Despite the onset of an economic slowdown in 2013, consumer spending remained high, especially among the new middle class, whose purchasing power was stimulated by higher disposable incomes. Consumers in urbanized city centers tend to purchase food and home goods in convenience stores and small grocery stores in their neighborhoods. Thus, the share of grocery sales in large stores like hypermarkets slowed while the share of non-grocery products increased. Supermarkets in Brazil offer a varied mix of non-grocery products, from consumer electronics and appliances, to home and garden products as a way to offset the pressure on food sales. Imported brand names from North America and Europe have also helped offset the pressure on local food sales, as consumers looking for new products visited superstores to purchase brands not available in their neighborhood markets. Retailing is expected to receive a boost from the countrys hosting of the Olympic Games in 2016 and the continued expansion of a new middle class. The main grocery chains in Brazil are Walmart, Carrefour, Extra and Bretas.
Services required for Product launch in new markets
For North American and European manufacturers looking to expand into Central and South America, launching a product in their new target market can be a complicated and time consuming procedure. A variety of services are needed to successfully launch a product in a foreign market.
Importation and Regulatory Compliance Services
Importation of products into foreign markets requires the use of customs brokerage houses to fill out required paperwork for customs and duties upon importation. In many cases, for a good to be imported into a country, new regulatory requirements must be met by the manufacturer. Specialty consultants are often used to guide a company through the steps needed to meet regulatory compliance in the new market.
Brokerage Services
Companies wishing to sell consumer products in new markets generally use an international broker for their particular industry that specializes in distributing and selling imported products. A broker assists in getting a product listed with local distributors and sells the product to local stores. Once a product has been listed with a store, brokers ensure that proper inventory is maintained through store visits and constant contact with a stores supply manager.
27
Translation Services
In order to ensure regulatory compliance, packaging must be altered to change the text to the official language of the foreign target market. Manufacturers must engage a provider of translation services that will translate the original packaging and edit the copy of the packaging, as well as any promotional material and website copy to ensure that the new copy achieves the business's intended message and brand positioning and is culturally sensitive to the foreign market.
Advertising
Finally, advertising and marketing a newly imported product requires a local advertising agency to create an advertising campaign that is tailored to the culture and needs of the local market. Trade and consumer shows are also useful for getting products into stores and for consumers to become familiar with the new brand. A booth design, trade show logistics and staffing is needed to participate in local trade and consumer shows. While marketing companies can help with design and staffing of a trade show, often, local independent contractors are also hired to staff and organize a trade or consumer show appearance.
Competition
The growing demand for imported North American and European products has resulted in a growing number of export management companies that offer business expansion services to clients looking to enter Central and South American markets. J.D. Honigber International (www.jdhintl.com) is an international sales and export management firm based in Illinois. They focus on providing marketing, sales and consulting services to Canadian and U.S. manufacturers looking to export their products globally. Frederick Export (www.frederickexport.com) is a Colorado based export management firm that provides sales, marketing and trade show services to consumer based products looking to export to Europe, Asia, Central and South America and Australia. Business Growth Hub (www.businessgrowthhub.com is a U.K. based company that offers Overseas Market Introduction Services that help manufacturers and service-based businesses break into new markets in Central and South America, as well as Asia and North America. They focus primarily of U.K. based businesses looking to expand, and work closely with the U.K. Trade and Investment Agency to get funding and important government contacts for their clients. Global Development Partners (gdp-inc.com) work with start-ups, small to medium sized businesses and non-profit organizations, providing services to facilitate expansion to South America. They have offices in the, U.S., Mexico and Brazil and offer services such as market research, growth strategy formulation and marketing strategy development.
Food and home goods distributors in Central and South America also offer in-house marketing brand consulting services for North American and European manufacturers looking to expand. Their in-house branding and marketing experts provide services, such as brokerage, marketing and sales. For example, Aurora (www.aurora.com.br) is a distributor of imported food and spirits in Brazil. Their clients include Haribo, Campbells Soups and Celestial Seasonings. They offer sales, marketing and promotional services for companies looking to begin exporting their products to Brazil. Mayca, the leading food distributor in Costa Rica, also offers services such as sales, marketing and brokerage for their international manufacturing clients. A number of smaller distributors provide sales services and offer to set up potential clients with brokerage firms and marketing firms to help facilitate their expansion into Central or South America.
Marketing agencies also offer product launch services that can help manufacturers enter new markets. Many marketing and advertising firms offer market research services as well as marketing strategy services and implementation. For example, WPP Brazil (wpp.br.com) is a full service advertising firm in Brazil that provides services such as consumer and market research services, branding strategy services, marketing and advertising strategy and implementation, public relations and trade marketing services. There are numerous advertising and marketing firms in Central and South America that vary in size and offer similar services.
Our competitors vary in size and in the variety of services they offer. Many of our current and potential competitors have longer operating histories and significantly greater financial, technical, marketing and other resources and an established client base. These competitors may be able to adapt more quickly to new or emerging food and home goods market changes and changes in customer requirements. They may also be able to devote greater resources to the promotion and sales of their services than we can, or may adopt more aggressive pricing policies. If we fail to compete successfully against our competitors, our revenue could decline and our business could be harmed.
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Our Business
Description of Business
Frontera Group Inc. (the Company) was incorporated under the laws of the State of Nevada on November 21, 2013. The Company is an export management company providing business development and market consultancy services that facilitate new market penetration in Central and South America for small and medium-sized businesses. Frontera Groups services include identification, assessment and contacting of potential distributors, partners and sales contacts, strategic consulting, market and competitor research, translation services, competitive pricing and marketing strategy analysis, trade show and other commercial event management, marketing plan development and training and administration services.
Our current services include:
Market and Competitor Research
Breaking into new markets is inherently risky due to the unfamiliarity of the competition and consumer demand. Our comprehensive market and competitor research allows our customers to have insight into their new target market. Our customers are better able to price their products and services competitively and position their brand effectively. Market research services include market, economic and political overview, logistics and cost environment, partnership identification, competitor research including availability of distribution channels, competitor promotional strategies and identification of specific differentiation opportunities. Market and competitor research is the first step for a client's launch into a new market. These services are billed on a project basis, with the scope determined in collaboration with the client. Research can be done as a one-off service prior to a new launch, or as an on-going project with a smaller scope to monitor competition in a particular market.
Marketing Strategy Development
Essential to the success of entering a new market is an appropriate and effective marketing strategy. After establishing a budget and target market, we develop a marketing plan that can help our clients reach their potential customers. A core part of our marketing services is the design and deployment of specialized reports that capture, measure and analyze target market data to provide insights into market opportunities, value proposition, positioning and messaging development. The result is a custom Business Development plan that addresses overall marketing strategy for a launch to a new market.
Translation Services
Launching a product in a new market often requires adaptation of packaging, corporate identity documents, and marketing materials to a new language. Our translation services ensure complete compatibility with local culture and market conditions for any corporate communication materials.
Trade show and commercial event management
An important part of a product or service launch is effective presentation at industry and consumer trade shows. We ensure an effective presentation at trade shows by developing target market appropriate booth design and sales material, as well as helping to manage staffing and logistics. We also consult and manage other commercial events, such as marketing events, product demos, and public relations events.
Administration and On-Going Business services
We provide services offering ongoing assistance with marketing, sales, and distribution after initial product launch. The scope of services depends on customer requirements. We can provide one-off consultations regarding marketing or distribution strategies, resulting in short-term engagements. For customers who require extra support, we can act as broker of record for a line of products in a specific geographic area. We customarily charge the client a flat monthly fee, with an additional commission depending on a portion of sales made in the target market.
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Plan of Operations
We expect to complete our offering within two to six months from the effective date of our registration statement.
To date, we have focused on providing individualized services to clients on a contract basis. The average length of our contracts is from two to four months. We do not have any contracts in place that have long-term ongoing commitments from clients. Our plan over the next twelve months is to expand our relationship network in our target markets, including building relationships with brokers, distributors and marketing companies who specialize in servicing household consumer goods and food companies. In addition, we plan to hire either part-time or full-time consultants and devote financial resources to customer acquisition.
Our plan over the next twelve months, if we raise the minimum amount, is to expand our client base, and improve our network in three Central and South American markets, namely Brazil, Costa Rica and Panama, by identifying and connecting with potential sub-contractors and consultants who are able to assist us in providing a more comprehensive range of consulting services.
Network Development
Over the next twelve months, our goal is to expand our contractor and sub-contractor base in Brazil, Costa Rica and Panama. We plan on contacting and negotiating with food and grocery brokerage firms and individual sales associates to develop our sales force. Broker firms and individuals sell products to grocery stores and supermarket chains, as well as ensure proper placement of product on store shelves and that stores have enough inventory. We will also be seeking and negotiating with food and home goods distributors to ensure our clients will have proper distribution channels in their target markets. We also plan on seeking our translation contractors who can assist our clients in translating their packaging and sales material into Spanish and Portuguese. If we raise the minimum amount in this offering we plan to spend $15,000 on network development and complete this stage in six to twelve months from the effective date of our registration statement. If we raise the maximum amount, we plan to spend $80,000 on network development with the completion of this stage within twelve-month period from the effective date of this prospectus. We will continue expansion of our network, subject to financing, during the next five years. The Companys President will oversee our relationship network expansion during this development stage.
Expanding Client Base
We are focused on targeting small to medium sized businesses looking to expand into South America. Namely, we are actively searching for clients who manufacture grocery products, such as packaged food, beverage and confectionary items. We also service clients that sell home goods, such as cleaning products, small cooking electronics and other items that are sold in supermarkets. We plan to develop a marketing strategy to attract new clients, such as development of an introductory brochure to our services, information packages for potential clients looking to expand to Brazil, Costa Rica or Panama, with detailed description of our services in that region as well as an overview of the grocery retail market. We also plan to seek out potential clients by researching grocery trade show databases for small and medium sized companies with potential for success in Central and South American markets. If we raise the maximum amount, we plan on sending representatives to a variety of trade shows in North America and Europe to seek out new clients, including the Fancy Food Show in New York, the Expo West Show in California and the Specialty & Fine Food Fair in London, UK. We plan to spend $5,000 (minimum shares sold) and $25,000 (maximum shares sold) on the marketing campaign and trade shows attendance over the next twelve months. The companys officers will be responsible for the development of this segment of our operations.
Hiring Personnel
Currently we rely on contractors to provide our clients with sales, marketing and brokerage services. If we raise the maximum amount, we plan to hire a full-time sales and marketing experts. To date we rely on our directors who are focused on signing new clients, maintaining and attempting to increase our business with existing clients. If we raise the maximum amount we plan to hire salespeople to attract new clients and to sell our existing client products to grocery and retail chains in South America. Salespeople will be compensated using a commission structure. Commissions will vary on the amount of revenue generated and will be paid after operating expenses are deducted. Our President will oversee the new hiring process.
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We expect these hires to cost approximately $140,000 per year. All future hiring will be subject to financing and sufficient cash flow from operations. If we raise the minimum amount of proceeds from this offering, we may not be able to hire additional employees.
Website development
In addition to hiring new staff, we plan to expand our website to include content in Spanish and Portuguese. We also plan on developing a client area on our website, where clients will be able to monitor sales of their products and access our invoices. A client area on our website will allow us to better coordinate with our clients and communicate regarding the progress of marketing and sales efforts, as well as help us collect invoice payments easier. We expect to spend approximately $23,000 on this project and launch it within 2 years of completion of the offering, if we raise the maximum amount. Our President will oversee this stage of our website development.
Long-term Plan of Operations
Our long-term, five-year plan is to expand our client base, expand into other countries in Central and South America subject to financing and sufficient cash flow from operations, and continue marketing our services to potential clients. There is no assurance we will be successful in completing our short-term plan of operations or achieving profitable operations necessary to implement our long-term plan.
Financing
We intend to raise a minimum of $40,625 and up to a maximum of $406,250 of gross proceeds from this Offering. Management believes that if we raise the minimum amount we will have sufficient cash flow to implement our short-term business plan and to meet our capital requirements for at least the next 12 months. Management expects to keep operating costs to a minimum until cash is available through financing or operating activities. If we are unable to generate profits or to obtain additional funds for our working capital needs, we may need to cease or curtail operations.
Description of Property
Our principal executive offices are located at 8670 W. Cheyenne, Suite 120, Las Vegas, Nevada and our telephone number is (702) 718-0140. Our primary website address is www.fronteragroupinc.com. We do not hold ownership or leasehold interest in any property and pay our office rent on a monthly basis.
DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
Our executive officers and Directors and their respective ages as of the date of this Prospectus are as follows:
Name |
Age |
Position |
|
|
|
Michael Krichevcev |
49 |
President, Chief Executive Officer, Director |
Tatiana Varuha |
43 |
Treasurer, Chief Financial Officer, Director |
The Directors will serve as Directors until our next annual shareholder meeting or until a successor is elected who accepts the position. Directors are elected for one-year terms. Officers hold their positions at the will of the Board of Directors, absent any employment agreement. There are no arrangements, agreements, or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of Frontera Group affairs.
Michael Krichevcev. Mr. Krichevcev has served as the President and Chief Executive Officer of Frontera Group Inc. since January 2014. Michael Krichevcev studied International Trade and Marketing. Throughout his career, Mr. Krichevcev worked as sales and marketing manager for various distribution companies. He was responsible for creation, development and implementation of new sales and marketing opportunities for various consumer products. Mr. Krichevcev worked on strategies for new market penetration, including exportation of North America consumer products to new markets in South America and Europe.
31
He was involved in sales strategy management, promotions, and other aspects of sales initiatives, as well as research and feasibility studies of international sales for consumer products looking to sell overseas. He was accountable for various sales channels, including but limited to health stores, food and drug stores, club stores, and specialty markets. For the past six years, Mr. Krichevcev worked as a sales manager for Unistream Distributors Inc. that specializes in selling North American exports to European markets.
Tatiana Varuha. Mrs. Tatiana Varuha holds a degree in Business Administration and was working for various companies throughout her career as an accountant. She has also worked at Raiffeizen Bank as a loan officer. For the past five years Mrs. Varuha is employed by Fast Truck International Logistics Inc. as an office manager.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to compensation paid by us to our officers from inception on November 21, 2013 through June 30, 2014, our fiscal year end.
Summary Compensation Table
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
Value & |
|
|
|
|
|
|
|
|
|
Nonquali- |
|
|
|
|
|
|
|
|
Non-Equity |
fied |
|
|
|
|
|
|
|
|
Incentive |
Deferred |
All |
|
|
|
|
|
|
|
Plan |
Compen- |
Other |
|
|
|
|
|
Stock |
Option |
Compen- |
sation |
Compen- |
|
Name and Principal |
|
Salary |
Bonus |
Awards |
Awards |
sation |
Earnings |
sation |
Totals |
Position [1] |
Year |
($)** |
($) |
($) |
($) |
(S) |
($) |
($)* |
($) |
Michael Krichevcev |
2014 |
0 |
0 |
0 |
0 |
0 |
0 |
2,500 |
2,500 |
President, CEO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tatiana Varuha, CFO, |
2014 |
0 |
0 |
0 |
0 |
0 |
0 |
2,000 |
2,000 |
Treasurer |
|
|
|
|
|
|
|
|
|
* - The company's president and chief financial officer provided consulting services to the company as per consulting agreements with the company at $500 and $400 per month respectively during the period from November 21, 2013 to June 30, 2014. These services included: overseeing daily operations; identifying new customers, corresponding with customers, vendors, business partners, professional firms and regulatory authorities; monitoring the companys reporting and compliance activities and project management. A portion of consulting services directly related to sales provided by the President totaling $1,250 was reported as cost of sales as of June 30, 2014.
The following table sets forth information with respect to compensation paid by us to our officers during the period from November 21, 2013 (Inception) through June 30, 2014 as reported on our statement of operations:
|
For the Period from November 21, 2013 (Inception) through June 30, 2014 |
|
|
Michael Krichevcev, President |
|
- Cost of Revenue |
$ 1,250 |
- Officer compensation |
1,250 |
|
$ 2,500 |
Tatiana Varuha, CFO |
|
- Officer compensation |
$ 2,000 |
32
We have entered into Consulting Agreements with Michael Krichevcev, our President, and Tatiana Varuha, our Chief Financial Officer, on February 1, 2014 (Exhibits 10.1 and 10.2).
The following table sets forth information with respect to compensation paid by us to our directors during the period from November 21, 2013 (inception) through June 30, 2014.
Director Compensation Table
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
Pension |
|
|
|
Fees |
|
|
|
Value and |
|
|
|
Earned |
|
|
Non-Equity |
Nonqualified |
All |
|
|
or |
|
|
Incentive |
Deferred |
Other |
|
|
Paid in |
Stock |
Option |
Plan |
Compensation |
Compen- |
|
|
Cash |
Awards |
Awards |
Compensation |
Earnings |
sation |
Total |
Name |
($) |
($) |
($) |
($) |
($) |
($) |
($) |
|
|
|
|
|
|
|
|
Michael Krichevcev |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Tatiana Varuha |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
All compensation received by our officers and directors has been disclosed. There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.
Compensation of Directors
Our directors do not receive any compensation for serving as a member of the board of directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership, as of June 30, 2014, and September 3, 2014 of our common stock by each of our Directors, and by all executive officers and Directors as a group, and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of June 30, 2014, and August 28, 2014, there were 4,000,000 common shares issued and outstanding. All persons named have sole voting and investment power with respect to the shares, except as otherwise noted.
Title of Class |
Name of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class Before Offering |
Percent of Class After Offering with Minimum Number of Shares Sold |
Percent of Class After Offering with Maximum Number of Shares Sold |
|
|
(1) |
(%) |
(%) |
(%) |
|
|
|
|
|
|
Common |
Michael Krichevcev, President C.E.O. and Director |
2,000,000 |
50.00 |
27.585 |
5.48 |
|
|
|
|
|
|
Common |
Tatiana Varuha ,C.F.O., Treasurer and Director |
2,000,000 |
50.00 |
27.585 |
5.48 |
|
|
|
|
|
|
|
All Officers and Directors as a Group that consists of two persons |
4,000,000 |
100.00 |
55.17 |
10.96 |
(1) - Includes shares that could be obtained by the named individuals within the next 60 days.
33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have not entered into transactions with our officers, Directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock or family members of these persons wherein the amount involved exceeds the lesser of $120,000 or one percent company's total assets at year end for the last completed fiscal year.
On February 1, 2014 the Company entered into a Management Consulting Agreement with Mr. Krichevcev on the following terms:
I. The Consultant agrees to act as President and Chief Executive Officer of the Company and to perform the following services and undertake the following responsibilities and duties to the Company as consulting services (the "Consulting Services"):
|
(a) |
fulfilling all senior officer duties as required by the Company, including but not limited to, exercising general direction and supervision over the business affairs of the Company, sourcing and implementing new business opportunities, raising financing reasonably required from time to time by the Company; |
|
|
|
|
(b) |
providing overall direction to the management of the Company; |
|
|
|
|
(c) |
reporting directly to board of directors of Company; |
|
|
|
|
(d) |
performing such other duties and observing such instructions as may be reasonably assigned from time to time by or on behalf of the board of directors of the Company in the Consultants capacity as President and C.E.O., provided such duties are within the scope of the Companys business and implementation of the Companys business plan. |
II. In consideration of the provisions of the Consulting Services, the Company shall pay to the Consultant the sum of US$500 per month for the duration of the Agreement.
III. The Company may terminate this Agreement: (i) at any time on two months notice; or (ii) without notice upon the occurrence of any of the following events of default (each an Event of Default):
|
(a) |
the Consultants commission of an act of fraud, theft or embezzlement or other similar willful misconduct; |
|
|
|
|
(b) |
the neglect or breach by the Consultant of his material obligations or agreements under this Agreement; or |
|
|
|
|
(c) |
the Consultants refusal to follow lawful directives of the Board, |
provided that notice of the Event of Default has been delivered to the Consultant and provided the Consultant has failed to remedy the default within thirty days of the date of delivery of notice of the Event of Default. The Consultant may terminate this Agreement at any time upon thirty days notice.
During the period from November 21, 2013 (Inception) to June 30, 2014, management consulting services of $2,500 were charged to operations.
On February 1, 2014 the Company entered into a Management Consulting Agreement with Mrs. Varuha on the following terms:
I. The Consultant agrees to act as Secretary, Treasurer and Chief Financial Officer of the Company and to perform the following services and undertake the following responsibilities and duties to the Company as consulting services (the "Consulting Services"):
|
(a) |
fulfilling all senior officer duties as required by the Company, including but not limited to, accounting, coordination of annual audits and quarterly reviews of the Companys financial statements; coordination of regulatory filings; |
|
|
|
|
(b) |
reporting directly to the Companys President and Board of Directors of the Company; |
|
|
|
|
( c ) |
performing such other duties and observing such instructions as may be reasonably assigned from time to time by or on behalf of the Board of Directors of the Company in the Consultants capacity as Secretary, Treasurer and C.F.O., provided such duties are within the scope of the Companys business and implementation of the Companys business plan. |
34
II. In consideration of the provisions of the Consulting Services, the Company shall pay to the Consultant the sum of US$400 per month for the duration of the Agreement.
III. The Company may terminate this Agreement: (i) at any time on two months notice; or (ii) without notice upon the occurrence of any of the following events of default (each an Event of Default):
|
(a) |
the Consultants commission of an act of fraud, theft or embezzlement or other similar willful misconduct; |
|
|
|
|
(b) |
the neglect or breach by the Consultant of his material obligations or agreements under this Agreement; or |
|
|
|
|
(c) |
the Consultants refusal to follow lawful directives of the Board, |
provided that notice of the Event of Default has been delivered to the Consultant and provided the Consultant has failed to remedy the default within thirty days of the date of delivery of notice of the Event of Default. The Consultant may terminate this Agreement at any time upon thirty days notice.
During the period from November 21, 2013 (Inception) to June 30, 2014, management consulting services of $2,000 were charged to operations.
In addition during the period from November 21, 2013 (Inception) to June 30, 2014 , the Company issued 4,000,000 shares of common stock at $0.001 per share to its Directors and officers for total proceeds of $4,000. During the same period ended June 30, 2014 the Company received a $7,500 cash advance from the Companys President. This advance is unsecured, non-interest bearing and due on demand.
We did not have any promoters besides our directors at any time during the past five fiscal years.
DESCRIPTION OF SECURITIES
Common Stock
The authorized capital stock of Frontera Group Inc. consists of 75,000,000 common shares, $0.001 par value. Holders of common stock have no preemptive rights to purchase additional shares of common stock or other subscription rights. The common stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions. All shares of common stock are entitled to share equally in dividends from sources legally available, therefore, when, as and if declared by the Board of Directors, and upon liquidation or dissolution of Frontera Group, whether voluntary or involuntary, to share equally in the assets of Frontera Group available for distribution to stockholders.
The Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by Frontera Group' Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.
Voting Rights
Each holder of common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote. Since the shares of common stock do not have cumulative voting rights, the holders of more than 50% of the shares voting for the election of Directors can elect all the Directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to the Board of Directors.
35
Dividend Policy
Holders of Frontera Group common stock are entitled to dividends if declared by the Board of Directors out of funds legally available. Frontera Group does not anticipate the declaration or payment of any dividends in the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy will be subject to the discretion of the Board of Directors and will be contingent upon future earnings, if any, Frontera Group financial condition, capital requirements, general business conditions, and other factors. Therefore, there can be no assurance that any dividends of any kind will ever be paid.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
SHARES ELIGIBLE FOR FUTURE SALE
The re-sales of 32,500,000 shares of common stock registered in this Offering must either be registered or rely upon an exemption from registration.
No shares held by our "affiliates" (officers, directors or 10% shareholders) are being registered hereunder. Our 4,000,000 issued and outstanding shares have been held since January and March, 2014, and are subject to the sale limitations imposed by Rule 144. Under Rule 144, since our Directors an affiliate as defined in that rule, the shares can be publicly sold, subject to volume restrictions and restrictions on the manner of sale, commencing one year after their acquisition.
The eventual availability for sale of substantial amounts of common stock under Rule 144 could adversely affect prevailing market prices for our securities.
ANTI-TAKEOVER PROVISIONS
There are no Nevada anti-takeover provisions that may have the effect of delaying or preventing a change in control.
LEGAL PROCEEDINGS
No officer, Director, or persons nominated for these positions, and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management. We are not aware of any pending or threatened legal proceedings which involve Frontera Group Inc.
36
During the past ten years, Mr. Krichevcev and Mrs. Varuha have not been the subject of the following events:
1. Any bankruptcy petition filed by or against any business of which Mr. Krichevcev or Mrs. Varuha were 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.
3. An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Krichevcevs, or Mrs. Varuhas involvement in any type of business, securities or banking activities.
4. Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Directors and officers are indemnified as provided by the Nevada Revised Statutes and our Bylaws. We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our Directors, officers or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to court of appropriate jurisdiction. We will then be governed by the court's decision.
INTEREST OF NAMED EXPERTS AND COUNSEL
Our financial statements included in this Prospectus and the Registration Statement have been audited by Li and Company, PC, our independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere in this document and in the registration statement filed with the SEC, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
Harrison Law, P.A., our legal counsel, has provided an opinion on the validity of our common stock. We retained the counsel solely for the purpose of providing this opinion and have not received any other legal services from this firm.
ADDITIONAL INFORMATION
We have filed with the Commission a Registration Statement on Form S-1 under the 1933 Act with respect to the securities offered by this Prospectus. This Prospectus, which forms a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, as permitted by the rules and regulations of the Commission. For further information with respect to us and the securities offered by this Prospectus, reference is made to the Registration Statement. The Registration Statement and other information may be read and copied at the Commissions Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.
37
REPORTS TO SECURITY HOLDERS
We have filed with the Commission a registration statement on Form S-1 under the 1933 Act with respect to the securities offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all the information set forth in the registration statement, as permitted by the rules and regulations of the Commission. For further information with respect to us and the securities offered by this prospectus, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document that we have filed as an exhibit to the registration statement are qualified in their entirety by reference to the to the exhibits for a complete statement of their terms and conditions. The registration statement and other information may be read and copied at the Commissions Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.
Reports to Security Holders
After we complete this offering, we will not be required to furnish you with an annual report. Further, we will not voluntarily send you an annual report. We will be required to file reports with the SEC under section 15(d) of the Securities Act. The reports will be filed electronically. The reports we will be required to file are Forms 10-K, 10-Q, and 8-K. You may read copies of any materials we file with the SEC at the SECs Public Reference Room or visiting the SECs Internet website at http://www.sec.gov.
FINANCIAL STATEMENTS
FRONTERA GROUP INC.
June 30, 2014
Index to the Financial Statements
Contents |
Page |
|
|
Report of Independent Registered Public Accounting Firm |
F-1 |
|
|
Balance Sheet at June 30, 2014 |
F-2 |
|
|
Statement of Operations for the Period from November 21, 2013 (Inception) through June 30, 2014 |
F-3 |
|
|
Statement of Stockholders Deficit for the Period from November 21, 2013 (Inception) through June 30, 2014 |
F-4 |
|
|
Statement of Cash Flows for the Period from November 21, 2013 (Inception) through June 30, 2014 |
F-5 |
|
|
Notes to the Financial Statements |
F-6 |
38
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Frontera Group Inc.
We have audited the accompanying balance sheet of Frontera Group Inc. (the Company) as of June 30, 2014 and the related statements of operations, stockholders deficit and cash flows for the period from November 21, 2013 (Inception) through June 30, 2014. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2014 and the results of its operations and its cash flows for the period from November 21, 2013 (Inception) through June 30, 2014 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had an accumulated deficit at June 30, 2014, a net loss and net cash used in operating activities for the period from November 21, 2013 (Inception) through June 30, 2014. These factors raise substantial doubt about the Companys ability to continue as a going concern. Managements plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/Li and Company, PC
Li and Company, PC
Skillman, New Jersey
September 3, 2014
F-1
F-2
F-3
F-4
F-5
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
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. is a full service product launch and marketing agency.
Note 2 Summary of Significant Accounting Policies
Basis of Presentation
The Companys financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).
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 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.
Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Companys critical accounting estimates and assumptions affecting the financial statements were:
(i) Valuation allowance for deferred tax assets: Management assumes that the realization of the Companys net deferred tax assets resulting from its net operating loss (NOL) carryforwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors;
This significant accounting estimate or assumption bears the risk of change due to the fact that there are uncertainties attached to this estimate or assumption, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its
F-6
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (Paragraph 820-10-35-37) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.
To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 |
|
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
Level 2 |
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3 |
|
Pricing inputs that are generally observable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amount of the Companys financial assets and liabilities, such as cash, accounts payable and accrued expenses, approximate their fair value because of the short maturity of those instruments.
Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less to be cash and cash equivalents.
Related Parties
The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include: a. affiliates of the Company; b. entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 8251015, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
F-7
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements.
The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and Contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Companys financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Companys financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Companys business, financial position, and results of operations or cash flows.
Revenue Recognition
The Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
The Company derives its revenues from sales contracts with its customer with revenues being generated upon rendering of services. Persuasive evidence of an arrangement is demonstrated via invoice; service is considered provided when the service is delivered to the customers; and the sales price to the customer is fixed upon acceptance of the purchase order and there is no separate sales rebate, discount, or volume incentive.
Income Tax Provision
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires 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 tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
F-8
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. 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 on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted the provisions of paragraph 740-10-25-13 of the FASB Accounting Standards Codification . Paragraph 740-10-25-13 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under paragraph 740-10-25-13 , the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Paragraph 740-10-25-13 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In managements opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Uncertain Tax Positions
The Company did not take any uncertain tax positions and had no unrecognized tax liabilities or benefits in accordance with the provisions of Section 740-10-25 at June 30, 2014.
Earnings per Share
Earnings Per Share is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. Earnings per share ("EPS") is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. 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 dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260105523). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at
F-9
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.
There were no common stock equivalents issued and outstanding at any time during the period from Inception (November 21, 2013) through June 30, 2014 .
Cash Flows Reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (Indirect method) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by
adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification .
Subsequent Events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued . Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an 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
In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606) (ASU 2014-09)
This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To achieve that core principle, an entity should apply the following steps:
The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:
F-10
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.
In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.
The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entitys governing documents and contractual arrangements allow additional equity investments.
The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage.
The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.
The company has limited operations and is considered to be in the development stage. The Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the company to remove the inception to date information and all references to development stage.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
F-11
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
Note 3 Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business .
As reflected in the accompanying financial statements, the Company had an accumulated deficit at June 30, 2014, a net loss and net cash used in operating activities for the period from November 21, 2013 (Inception) through June 30, 2014 . These factors raise substantial doubt about the Companys ability to continue as a going concern.
The Company is attempting to commence operations and generate sufficient revenue; however, the Companys cash position may not be sufficient to support the Companys daily operations. 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 Companys 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 financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
Note 4 Related Party Transactions
Consulting services from Officer
Consulting services provided by the officer for the period from November 21, 2013 (Inception) to June 30, 2014 were as follows:
|
|
For the Period From November 21, 2013 (Inception) to June 30, 2014 |
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|
|
|
|
President, Chief Executive Officer |
$ |
2,500 |
* |
Chief Financial Officer, Secretary and Treasurer |
|
2,000 |
|
|
$ |
4,500 |
|
*During the period ended June 30, 2014, $1,250 of these consulting services was recognized in cost of revenues and $3,250 in compensation-officers within operating expenses.
Advances from President and CEO
From time to time, the President, CEO and significant stockholder of the Company advances funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand. As of June 30, 2014, the advance balance was $7,500.
Note 5 Commitments and Contingencies
On February 1, 2014 the Company entered into a Management Consulting Agreement with Mr. Krichevcev (Consultant) on the following terms:
- The Consultant agrees to act as President and Chief Executive Officer of the Company for the period from February 1, 2014 to January 31, 2015.
- In consideration of the provisions of the Consulting Services, the Company shall pay to the Consultant the sum of US$500 per month for the duration of the Agreement.
- The Company may terminate this Agreement at any time on two months notice. The Consultant may terminate this Agreement at any time upon thirty days notice.
F-12
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
During the period from November 21, 2013 (Inception) to June 30, 2014, management consulting services of $2,500 were charged to operations.
On February 1, 2014 the Company entered into a Management Consulting Agreement with Mrs. Varuha (Consultant) on the following terms:
- The Consultant agrees to act as Secretary, Treasurer and Chief Financial Officer of the Company for the period from February 1, 2014 to January 31, 2015.
- In consideration of the provisions of the Consulting Services, the Company shall pay to the Consultant the sum of US$400 per month for the duration of the Agreement.
- The Company may terminate this Agreement at any time on two months notice. The Consultant may terminate this Agreement at any time upon thirty days notice.
During the period from November 21, 2013 (Inception) to June 30, 2014, management consulting services of $2,000 were charged to operations.
Note 6 Stockholders Deficit
Shares authorized
Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is seventy-five million (75,000,000) shares of common stock, par value $0.001 per share.
Common stock
In January and March of 2014, the Company sold 4,000,000 shares of its common stock at par to its directors for $4,000 in cash.
Note 7 Income Tax Provision
Deferred Tax Assets
At June 30, 2014, the Company had net operating loss (NOL) carryforwards for Federal income tax purposes of $17,285 that may be offset against future taxable income through 2034. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Companys net deferred tax assets of approximately $2,593, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a full valuation allowance.
Components of deferred tax assets are as follows:
|
|
|
|
|
|
|
June 30, 2014 |
Net deferred tax assets non-current: |
|
|
|
Expected income tax benefit from NOL carry-forwards |
|
$ |
2,593 |
Less valuation allowance |
|
|
(2,593) |
Deferred tax assets, net of valuation allowance |
|
$ |
- |
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. The valuation allowance increased approximately $2,593 during the period from November 21, 2013 (Inception) to June 30, 2014 .
F-13
FRONTERA GROUP INC.
June 30, 2014
Notes to the Financial Statements
Income Tax Provision in the Statements of Operations
A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:
|
|
For the Period From November 21, 2013 (Inception) to June 30, 2014 |
|
|
|
Federal statutory income tax rate |
|
15.0 % |
Change in valuation allowance on net operating loss carry-forwards |
|
(15.0)% |
Effective income tax rate |
|
0.00 % |
Note 8 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. The Management of the Company determined that there were no reportable subsequent events to be disclosed .
F-14
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses to be paid in connection with the common stock being registered, all of which will be paid by Frontera Group Inc. (on behalf of itself and the selling stockholders) in connection with this Offering. All amounts are estimates:
Accounting and audit fees |
$ |
5,000 |
Filing fees |
|
1,500 |
Legal fees and expenses |
|
800 |
Securities and Exchange Commission registration fee |
|
52 |
Transfer Agent Fees |
|
1,000 |
Total: |
$ |
8,352 |
IDEMNIFICATION OF DIRECTORS AND OFFICERS
Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or Director who is made a party to any proceeding, including a lawsuit, because of his/her position, if he/she acted in good faith and in a manner he/she reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or Director is successful on the merits in a proceeding as to which he/she is to be indemnified, we must indemnify him/her against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or Director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to Directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
RECENT SALES OF UNREGISTERED SECURITIES
We completed an offering of 4,000,000 shares of our common stock at a price of $0.001 per share to our Directors Michael Krichevcev (2,000,000) and Tatiana Varuha (2,000,000) in January and March, 2014. The total amount received from this Offering was $4,000. We completed this offering pursuant to Regulation S of the Securities Act. All of our directors and all of our executive officers reside outside the United States.
The offer and sale of all shares of our common stock listed above were affected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Regulation S promulgated under the Securities Act.
The investor acknowledged the following: subscriber is not a United States Person, nor is the subscriber acquiring the shares directly or indirectly for the account or benefit of a United States Person. None of the funds used by the subscriber to purchase the units have been obtained from United States Persons. For purposes of the Subscription Agreement, United States Person within the meaning of U.S. tax laws, means a citizen or resident of the United States, any former U.S. citizen subject to Section 877 of the Internal Revenue Code, any corporation, or partnership organized or existing under the laws of the United States of America or any state, jurisdiction,
II-1
territory or possession thereof and any estate or trust the income of which is subject to U.S. federal income tax irrespective of its source, and within the meaning of U.S. securities laws, as defined in Rule 902(o) of Regulation S, means: (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. person; (iv) any trust of which any trustee is a U.S. person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (viii) any partnership or corporation if organized under the laws of any foreign jurisdiction, and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
EXHIBITS
The exhibits listed under here below are filed as part of this Form S-1:
3.1 |
Articles of Incorporation |
3.2 |
Bylaws |
4.2 |
Subscription Agreement |
5.1 |
Legal Opinion |
10.1 |
Consulting Management Agreement , President |
10.2 |
Consulting Management Agreement, C.F.O. |
23.1 |
Consent of Li and Company, PC |
UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a post- effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(b) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in this registration statement; and notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may be
II-2
reflected in the form of prospectus filed with the commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration Statement; and
(c) include any additional or changed material information on the plan of distribution.
2. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering.
4. That, for determining our liability under the Securities Act to any purchaser in the initial distribution of the securities, we undertake that in a primary offering of our securities pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, we will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus or prospectus that we file relating to the offering required to be filed pursuant to Rule 424 (Section 230.424 of this chapter);
(ii) any free writing prospectus relating to the offering prepared by or on our behalf or used or referred to by us;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about us or our securities provided by or on behalf of us; and
(iv) any other communication that is an offer in the offering made by us to the purchaser.
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
II-3
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the Las Vegas, Nevada, on September 3, 2014.
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Frontera Group Inc. |
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By: |
/s/ Michael Krichevcev |
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Michael Krichevcev |
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President, Chief Executive Officer (Principal Executive Officer) and Director |
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Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURES |
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TITLE |
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DATE |
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/s/ Michael Krichevcev |
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President, CEO and Director |
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September 3, 2014 |
Michael Krichevcev |
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/s/ Tatiana Varuha |
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Treasurer, CFO, Principal Accounting Officer, Principal Financial Officer and Director |
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September 3, 2014 |
Tatiana Varuha |
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II-4
BYLAWS
of
FRONTERA GROUP INC.
(the "Corporation")
ARTICLE I: MEETINGS OF SHAREHOLDERS
Section 1 - Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held at the time fixed, from time to time, by the Board of Directors.
Section 2 - Special Meetings
Special meetings of the shareholders may be called by the Board of Directors or such person or persons authorized by the Board of Directors.
Section 3 - Place of Meetings
Meetings of shareholders shall be held at the registered office of the Corporation, or at such other places, within or without the State of Nevada as the Board of Directors may from time to time fix.
Section 4 - Notice of Meetings
A notice convening an annual or special meeting which specifies the place, day, and hour of the meeting, and the general nature of the business of the meeting, must be faxed, personally delivered or mailed postage prepaid to each shareholder of the Corporation entitled to vote at the meeting at the address of the shareholder as it appears on the stock transfer ledger of the Corporation, at least ten (10) days prior to the meeting. Accidental omission to give notice of a meeting to, or the non-receipt of notice of a meeting by, a shareholder will not invalidate the proceedings at that meeting.
Section 5 - Action Without a Meeting
Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting, without prior notice and without a vote if written consents are signed by shareholders representing a majority of the shares entitled to vote at such a meeting, except however, if a different proportion of voting power is required by law, the Articles of Incorporation or these Bylaws, than that proportion of written consents is required. Such written consents must be filed with the minutes of the proceedings of the shareholders of the Corporation.
Section 6 - Quorum
a) No business, other than the election of the chairman or the adjournment of the meeting, will be transacted at an annual or special meeting unless a quorum of shareholders, entitled to attend and vote, is present at the commencement of the meeting, but the quorum need not be present throughout the meeting.
b) Except as otherwise provided in these Bylaws, a quorum is two persons present and being, or representing by proxy, shareholders of the Corporation.
c) If within half an hour from the time appointed for an annual or special meeting a quorum is not present, the meeting shall stand adjourned to a day, time and place as determined by the chairman of the meeting.
Section 7 - Voting
Subject to a special voting rights or restrictions attached to a class of shares, each shareholder shall be entitled to one vote for each share of stock in his or her own name on the books of the corporation, whether represented in person or by proxy.
Section 8 - Motions
No motion proposed at an annual or special meeting need be seconded.
Section 9 - Equality of Votes
In the case of an equality of votes, the chairman of the meeting at which the vote takes place is not entitled to have a casting vote in addition to the vote or votes to which he may be entitled as a shareholder of proxyholder.
Section 10 - Dispute as to Entitlement to Vote
In a dispute as to the admission or rejection of a vote at an annual or special meeting, the decision of the chairman made in good faith is conclusive.
Section 11 - Proxy
a) Each shareholder entitled to vote at an annual or special meeting may do so either in person or by proxy. A form of proxy must be in writing under the hand of the appointor or of his or her attorney duly authorized in writing, or, if the appointor is a corporation, either under the seal of the corporation or under the hand of a duly authorized officer or attorney. A proxyholder need not be a shareholder of the Corporation.
b) A form of proxy and the power of attorney or other authority, if any, under which it is signed or a facsimiled copy thereof must be deposited at the registered office of the Corporation or at such other place as is specified for that purpose in the notice convening the meeting. In addition to any other method of depositing proxies provided for in these Bylaws, the Directors may from time to time by resolution make regulations relating to the depositing of proxies at a place or places and fixing the time or times for depositing the proxies not exceeding 48 hours (excluding Saturdays, Sundays and holidays) preceding the meeting or adjourned meeting specified in the notice calling a meeting of shareholders.
ARTICLE II: BOARD OF DIRECTORS
Section 1 - Number, Term, Election and Qualifications
a) The first Board of Directors of the Corporation, and all subsequent Boards of the Corporation, shall consist of not less than one (1) and not more than nine (9) directors. The number of Directors may be fixed and changed from time to time by ordinary resolution of the shareholders of the Corporation.
b) The first Board of Directors shall hold office until the first annual meeting of shareholders and until their successors have been duly elected and qualified or until there is a decrease in the number of directors. Thereinafter, Directors will be elected at the annual meeting of shareholders and shall hold office until the annual meeting of the shareholders next succeeding his or her election, or until his or her prior death, resignation or removal. Any Director may resign at any time upon written notice of such resignation to the Corporation.
c) A casual vacancy occurring in the Board may be filled by the remaining Directors.
d) Between successive annual meetings, the Directors have the power to appoint one or more additional Directors but not more than 1/2 of the number of Directors fixed at the last shareholder meeting at which Directors were elected. A Director so appointed holds office only until the next following annual meeting of the Corporation, but is eligible for election at that meeting. So long as he or she is an additional Director, the number of Directors will be increased accordingly.
e) A Director is not required to hold a share in the capital of the Corporation as qualification for his or her office.
Section 2 - Duties, Powers and Remuneration
a) The Board of Directors shall be responsible for the control and management of the business and affairs, property and interests of the Corporation, and may exercise all powers of the Corporation, except for those powers conferred upon or reserved for the shareholders or any other persons as required under Nevada state law, the Corporation's Articles of Incorporation or by these Bylaws.
b) The remuneration of the Directors may from time to time be determined by the Directors or, if the Directors decide, by the shareholders.
Section 3 - Meetings of Directors
a) The President of the Corporation shall preside as chairman at every meeting of the Directors, or if the President is not present or is willing to act as chairman, the Directors present shall choose one of their number to be chairman of the meeting.
b) The Directors may meet together for the dispatch of business, and adjourn and otherwise regulate their meetings as they think fit. Questions arising at a meeting must be decided by a majority of votes. In case of an equality of votes the chairman does not have a second or casting vote. Meetings of the Board held at regular intervals may be held at the place and time upon the notice (if any) as the Board may by resolution from time to time determine.
c) A Director may participate in a meeting of the Board or of a committee of the Directors using conference telephones or other communications facilities by which all Directors participating in the meeting can hear each other and provided that all such Directors agree to such participation. A Director participating in a meeting in accordance with this Bylaw is deemed to be present at the meeting and to have so agreed. Such Director will be counted in the quorum and entitled to speak and vote at the meeting.
d) A Director may, and the Secretary on request of a Director shall, call a meeting of the Board. Reasonable notice of the meeting specifying the place, day and hour of the meeting must be given by mail, postage prepaid, addressed to each of the Directors and alternate Directors at his or her address as it appears on the books of the Corporation or by leaving it at his or her usual business or residential address or by telephone, facsimile or other method of transmitting legibly recorded messages. It is not necessary to give notice of a meeting of Directors to a Director immediately following a shareholder meeting at which the Director has been elected, or is the meeting of Directors at which the Director is appointed.
e) A Director of the Corporation may file with the Secretary a document executed by him waiving notice of a past, present or future meeting or meetings of the Directors being, or required to have been, sent to him and may at any time withdraw the waiver with respect to meetings held thereafter. After filing such waiver with respect to future meetings and until the waiver is withdrawn no notice of a meeting of Directors need be given to the Director. All meetings of the Directors so held will be deemed not to be improperly called or constituted by reason of notice not having been given to the Director.
f) The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and if not so fixed is a majority of the Directors or, if the number of Directors is fixed at one, is one Director.
g) The continuing Directors may act notwithstanding a vacancy in their body but, if and so long as their number is reduced below the number fixed pursuant to these Bylaws as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number of Directors to that number, or of summoning a shareholder meeting of the Corporation, but for no other purpose.
h) All acts done by a meeting of the Directors, a committee of Directors, or a person acting as a Director, will, notwithstanding that it be afterwards discovered that there was some defect in the qualification, election or appointment of the Directors, shareholders of the committee or person acting as a Director, or that any of them were disqualified, be as valid as if the person had been duly elected or appointed and was qualified to be a Director.
i) A resolution consented to in writing, whether by facsimile or other method of transmitting legibly recorded messages, by all of the Directors is as valid as if it had been passed at a meeting of the Directors duly called and held. A resolution may be in two or more counterparts which together are deemed to constitute one resolution in writing. A resolution must be filed with the minutes of the proceedings of the directors and is effective on the date stated on it or on the latest date stated on a counterpart.
j) All Directors of the Corporation shall have equal voting power.
Section 4 - Removal
One or more or all the Directors of the Corporation may be removed with or without cause at any time by a vote of two-thirds of the shareholders entitled to vote thereon, at a special meeting of the shareholders called for that purpose.
Section 5 - Committees
a) The Directors may from time to time by resolution designate from among its members one or more committees, and alternate members thereof, as they deem desirable, each consisting of one or more members, with such powers and authority (to the extent permitted by law and these Bylaws) as may be provided in such resolution. Each such committee shall serve at the pleasure of the Board of Directors and unless otherwise stated by law, the Certificate of Incorporation of the Corporation or these Bylaws, shall be governed by the rules and regulations stated herein regarding the Board of Directors.
b) Each Committee shall keep regular minutes of its transactions, shall cause them to be recorded in the books kept for that purpose, and shall report them to the Board at such times as the Board may from time to time require. The Board has the power at any time to revoke or override the authority given to or acts done by any Committee.
ARTICLE III: OFFICERS
Section 1 - Number, Qualification, Election and Term of Office
a) The Corporations officers shall have such titles and duties as shall be stated in these Bylaws or in a resolution of the Board of Directors which is not inconsistent with these Bylaws. The officers of the Corporation shall consist of a president, secretary, treasurer, and also may have one or more vice presidents, assistant secretaries and assistant treasurers and such other officers as the Board of Directors may from time to time deem advisable. Any officer may hold two or more offices in the Corporation, and may or may not also act as a Director.
b) The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders.
c) Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his or her election, and until his or her successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation or removal.
Section 2 - Resignation
Any officer may resign at any time by giving written notice of such resignation to the Corporation.
Section 3 - Removal
Any officer appointed by the Board of Directors may be removed by a majority vote of the Board, either with or without cause, and a successor appointed by the Board at any time, and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer.
Section 4 - Remuneration
The remuneration of the Officers of the Corporation may from time to time be determined by the Directors or, if the Directors decide, by the shareholders.
Section 5 - Conflict of Interest
Each officer of the Corporation who holds another office or possesses property whereby, whether directly or indirectly, duties or interests might be created in conflict with his or her duties or interests as an officer of the Corporation shall, in writing, disclose to the President the fact and the nature, character and extent of the conflict and abstain from voting with respect to any resolution in which the officer has a personal interest.
ARTICLE IV: SHARES OF STOCK
Section 1 - Certificate of Stock
a) The shares of the Corporation shall be represented by certificates or shall be uncertificated shares.
b) Certificated shares of the Corporation shall be signed, either manually or by facsimile, by officers or agents designated by the Corporation for such purposes, and shall certify the number of shares owned by the shareholder in the Corporation. Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers or agents, the transfer agent or transfer clerk or the registrar of the Corporation may be printed or lithographed upon the certificate in lieu of the actual signatures. If the Corporation uses facsimile signatures of its officers and agents on its stock certificates, it cannot act as registrar of its own stock, but its transfer agent and registrar may be identical if the institution acting in those dual capacities countersigns or otherwise authenticates any stock certificates in both capacities. If any officer who has signed or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.
c) If the Corporation issued uncertificated shares as provided for in these Bylaws, within a reasonable time after the issuance or transfer of such uncertificated shares, and at least annually thereafter, the Corporation shall send the shareholder a written statement certifying the number of shares owned by such shareholder in the Corporation.
d) Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.
e) if a share certificate:
(i) is worn out or defaced, the Directors shall, upon production to them of the certificate and upon such other terms, if any, as they may think fit, order the certificate to be cancelled and issue a new certificate;
(ii) is lost, stolen or destroyed, then upon proof being given to the satisfaction of the Directors and upon and indemnity, if any being given, as the Directors think adequate, the Directors shall issue a new certificate; or
(iii) represents more than one share and the registered owner surrenders it to the Corporation with a written request that the Corporation issue in his or her name two or more certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the certificate so surrendered, the Corporation shall cancel the certificate so surrendered and issue new certificates in accordance with such request.
Section 2 - Transfers of Shares
a) Transfers or registration of transfers of shares of the Corporation shall be made on the stock transfer books of the Corporation by the registered holder thereof, or by his or her attorney duly authorized by a written power of attorney; and in the case of shares represented by certificates, only after the surrender to the Corporation of the certificates representing such shares with such shares properly endorsed, with such evidence of the authenticity of such endorsement, transfer, authorization and other matters as the Corporation may reasonably require, and the payment of all stock transfer taxes due thereon.
b) The Corporation shall be entitled to treat the holder of record of any share or shares as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.
Section 3 - Record Date
a) The Directors may fix in advance a date, which must not be more than 60 days permitted by the preceding the date of a meeting of shareholders or a class of shareholders, or of the payment of a dividend or of the proposed taking of any other proper action requiring the determination of shareholders as the record date for the determination of the shareholders entitled to notice of, or to attend and vote at, a meeting and an adjournment of the meeting, or entitled to receive payment of a dividend or for any other proper purpose and, in such case, notwithstanding anything in these Bylaws, only shareholders of records on the date so fixed will be deemed to be the shareholders for the purposes of this Bylaw.
b) Where no record date is so fixed for the determination of shareholders as provided in the preceding Bylaw, the date on which the notice is mailed or on which the resolution declaring the dividend is adopted, as the case may be, is the record date for such determination.
Section 4 - Fractional Shares
Notwithstanding anything else in these Bylaws, the Corporation, if the Directors so resolve, will not be required to issue fractional shares in connection with an amalgamation, consolidation, exchange or conversion. At the discretion of the Directors, fractional interests in shares may be rounded to the nearest whole number, with fractions of 1/2 being rounded to the next highest whole number, or may be purchased for cancellation by the Corporation for such consideration as the Directors determine. The Directors may determine the manner in which fractional interests in shares are to be transferred and delivered to the Corporation in exchange for consideration and a determination so made is binding upon all shareholders of the Corporation. In case shareholders having fractional interests in shares fail to deliver them to the Corporation in accordance with a determination made by the Directors, the Corporation may deposit with the Corporation's Registrar and Transfer Agent a sum sufficient to pay the consideration payable by the Corporation for the fractional interests in shares, such deposit to be set aside in trust for such shareholders. Such setting aside is deemed to be payment to such shareholders for the fractional interests in shares not so delivered which will thereupon not be considered as outstanding and such shareholders will not be considered to be shareholders of the Corporation with respect thereto and will have no right except to receive payment of the money so set aside and deposited upon delivery of the certificates for the shares held prior to the amalgamation, consolidation, exchange or conversion which result in fractional interests in shares.
ARTICLE V: DIVIDENDS
a) Dividends may be declared and paid out of any funds available therefore, as often, in such amounts, and at such time or times as the Board of Directors may determine and shares may be issued pro rata and without consideration to the Corporation's shareholders or to the shareholders of one or more classes or series.
b) Shares of one class or series may not be issued as a share dividend to shareholders of another class or series unless such issuance is in accordance with the Articles of Incorporation and:
(i) a majority of the current shareholders of the class or series to be issued approve the issue; or
(ii) there are no outstanding shares of the class or series of shares that are authorized to be issued as a dividend.
ARTICLE VI: BORROWING POWERS
a) The Directors may from time to time on behalf of the Corporation:
(i) borrow money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit,
(ii) issue bonds, debentures and other debt obligations either outright or as security for liability or obligation of the Corporation or another person, and
(iii) mortgage, charge, whether by way of specific or floating charge, and give other security on the undertaking, or on the whole or a part of the property and assets of the Corporation (both present and future).
b) A bond, debenture or other debt obligation of the Corporation may be issued at a discount, premium or otherwise, and with a special privilege as to redemption, surrender, drawing, allotment of or conversion into or exchange for shares or other securities, attending and voting at shareholder meetings of the Corporation, appointment of Directors or otherwise, and may by its terms be assignable free from equities between the Corporation and the person to whom it was issued or a subsequent holder thereof, all as the Directors may determine.
ARTICLE VII: FISCAL YEAR
The fiscal year end of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII: CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be prescribed and altered, from time to time, by the Board of Directors. The use of a seal or stamp by the Corporation on corporate documents is not necessary and the lack thereof shall not in any way affect the legality of a corporate document.
ARTICLE IX: AMENDMENTS
Section 1 - By Shareholders
All Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws may be made by a majority vote of the shareholders at any annual meeting or special meeting called for that purpose.
Section 2 - By Directors
The Board of Directors shall have the power to make, adopt, alter, amend and repeal, from time to time, Bylaws of the Corporation.
ARTICLE X: DISCLOSURE OF INTEREST OF DIRECTORS
a) A Director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Corporation or who holds an office or possesses property whereby, directly or indirectly, a duty or interest might be created to conflict with his or her duty or interest as a Director, shall declare the nature and extent of his or her interest in such contract or transaction or of the conflict with his or her duty and interest as a Director, as the case may be.
b) A Director shall not vote in respect of a contract or transaction with the Corporation in which he is interested and if he does so his or her vote will not be counted, but he will be counted in the quorum present at the meeting at which the vote is taken. The foregoing prohibitions do not apply to:
(i) a contract or transaction relating to a loan to the Corporation, which a Director or a specified corporation or a specified firm in which he has an interest has guaranteed or joined in guaranteeing the repayment of the loan or part of the loan;
(ii) a contract or transaction made or to be made with or for the benefit of a holding corporation or a subsidiary corporation of which a Director is a director or officer;
(iii) a contract by a Director to subscribe for or underwrite shares or debentures to be issued by the Corporation or a subsidiary of the Corporation, or a contract, arrangement or transaction in which a Director is directly or indirectly interested if all the other Directors are also directly or indirectly interested in the contract, arrangement or transaction;
(iv) determining the remuneration of the Directors;
(v) purchasing and maintaining insurance to cover Directors against liability incurred by them as Directors; or
(vi) the indemnification of a Director by the Corporation.
c) A Director may hold an office or place of profit with the Corporation (other than the office of Auditor of the Corporation) in conjunction with his or her office of Director for the period and on the terms (as to remuneration or otherwise) as the Directors may determine. No Director or intended Director will be disqualified by his or her office from contracting with the Corporation either with regard to the tenure of any such other office or place of profit, or as vendor, purchaser or otherwise, and, no contract or transaction entered into by or on behalf of the Corporation in which a Director is interested is liable to be voided by reason thereof.
d) A Director or his or her firm may act in a professional capacity for the Corporation (except as Auditor of the Corporation), and he or his or her firm is entitled to remuneration for professional services as if he were not a Director.
e) A Director may be or become a director or other officer or employee of, or otherwise interested in, a corporation or firm in which the Corporation may be interested as a shareholder or otherwise, and the Director is not accountable to the Corporation for remuneration or other benefits received by him as director, officer or employee of, or from his or her interest in, the other corporation or firm, unless the shareholders otherwise direct.
ARTICLE XI: ANNUAL LIST OF OFFICERS, DIRECTORS AND REGISTERED AGENT
The Corporation shall, within sixty days after the filing of its Articles of Incorporation with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of incorporation occurs each year, file with the Secretary of State a list of its president, secretary and treasurer and all of its Directors, along with the post office box or street address, either residence or business, and a designation of its resident agent in the state of Nevada. Such list shall be certified by an officer of the Corporation.
ARTICLE XII: INDEMNITY OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
a) The Directors shall cause the Corporation to indemnify a Director or former Director of the Corporation and the Directors may cause the Corporation to indemnify a director or former director of a corporation of which the Corporation is or was a shareholder and the heirs and personal representatives of any such person against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him or them including an amount paid to settle an action or satisfy a judgment inactive criminal or administrative action or proceeding to which he is or they are made a party by reason of his or her being or having been a Director of the Corporation or a director of such corporation, including an action brought by the Corporation or corporation. Each Director of the Corporation on being elected or appointed is deemed to have contracted with the Corporation on the terms of the foregoing indemnity.
b) The Directors may cause the Corporation to indemnify an officer, employee or agent of the Corporation or of a corporation of which the Corporation is or was a shareholder (notwithstanding that he is also a Director), and his or her heirs and personal representatives against all costs, charges and expenses incurred by him or them and resulting from his or her acting as an officer, employee or agent of the Corporation or corporation. In addition the Corporation shall indemnify the Secretary or an Assistance Secretary of the Corporation (if he is not a full time employee of the Corporation and notwithstanding that he is also a Director), and his or her respective heirs and legal representatives against all costs, charges and expenses incurred by him or them and arising out of the functions assigned to the Secretary by the Corporation Act or these Articles and each such Secretary and Assistant Secretary, on being appointed is deemed to have contracted with the Corporation on the terms of the foregoing indemnity.
c) The Directors may cause the Corporation to purchase and maintain insurance for the benefit of a person who is or was serving as a Director, officer, employee or agent of the Corporation or as a director, officer, employee or agent of a corporation of which the Corporation is or was a shareholder and his or her heirs or personal representatives against a liability incurred by him as a Director, officer, employee or agent.
CERTIFIED TO BE THE BYLAWS OF:
FRONTERA GROUP INC.
per:
/s/ Michael Krichevcev
_________________________
Michael Krichevcev , President
SUBSCRIPTION AGREEMENT
FRONTERA GROUP INC.
The undersigned (the "Purchaser") hereby irrevocably subscribes for and agrees to purchase the number of shares of common stock in the capital of Frontera Group Inc. (the Company), a Nevada company, disclosed on page 4 of this Agreement at a price of US$0.0125 per share for the aggregate price disclosed on page 4 of this Agreement (U.S. dollars) (the "Funds"). Together with this Subscription Agreement, the Purchaser is delivering to the Company the full amount of the purchase price for the Shares in respect of which it is subscribing.
1. Terms. The Company is offering a minimum of 3,250,000 and up to a maximum of 32,500,000 shares of common stock (the Offering). Funds from this Offering will be placed in a separate, non-interest bearing bank account. This account is not an escrow, trust or similar account. The Company will hold the Funds in this account until the Company receives a minimum of $40,625, at which time the Funds will be appropriated by transferring to the Companys current bank account. Any Funds received by the Company thereafter will be immediately available for the Company use.
If the Company does not receive the minimum amount of $40,625 within 180 days of the effectiveness date of this prospectus, or an additional 90 days in case of extended period, all Funds will be promptly returned to the Purchasers acquiring shares in this Offering without a deduction of any kind. During the 180 day period, or an additional 90 days, no funds will be returned to the Purchasers acquiring shares in this Offering. The Purchasers acquiring shares in this Offering will only receive a refund of the Funds if the Company does not raise a minimum of $40,625 within the 180 day period, or an additional 90 days, referred to above.
Officers, Directors, affiliates or anyone involved in marketing of the Company shares will not be allowed to purchase shares in the Offering. The Purchaser will not have the right to withdraw the subscription funds advanced to the Company during the Offering period of up to 450 days. The Purchaser will only have the right to have the funds returned if the Company does not raise the minimum amount of the Offering, or if there is a material change in the terms of the Offering. The following are material changes that would entitle the Purchaser to a refund of the Funds:
- a change in the offering price;
- a change in the minimum sales requirement;
- a change in the amount of proceeds necessary to release the funds held in the separate bank account;
- a change to allow sales to affiliates in order to meet the minimum sales requirement; and
- an extension of the offering period beyond 270 days.
If any of the above material changes occur, a new offering may be made by means of a post-effective amendment.
2. Purchasers Representation and Warranties. In order to induce the Company to accept this subscription, the Purchaser hereby represents and warrants to, and covenants with, the Company as follows:
A. The Purchaser is a non-resident of the United States of America;
B. The Purchaser has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and this Agreement is a legally binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms;
C. The Purchaser agrees not to engage in hedging transactions with regard to the Shares unless in compliance with the Act;
3. Company Representations. The Company represents and warrants to the Purchaser that:
A. The Company is duly incorporated under the laws of the State of Nevada and is in good standing in accordance with all applicable federal and state laws;
B. The execution, delivery and performance of this Agreement by the Company and the performance of its obligations hereunder do not and will not constitute a breach or violation of any of the terms and provisions of, or constitute a default under or conflict with or violate any provisions of (i) the Companys Articles of Incorporation or By-laws, (ii) any indenture, mortgage, deed of trust, agreement or any instrument to which the Company is a party or by which it or any of its property is bound, (iii) any applicable statute or regulation, or (iv) any judgment, decree or order of any court or government body having jurisdiction over the Company or any of its property;
C. The execution, delivery and performance of this Agreement and the consummation of the issuance of the Shares and the transactions contemplated by this Agreement are within the Companys corporate powers and have been duly authorized by all necessary corporate and stockholder action on behalf of the Company;
D. There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties, which might result in any material adverse change in the condition (financial or otherwise) or in the earnings, business affairs or business prospects of the Company, or which might materially and adversely affect the properties or assets thereof;
E. The Company is not in default in the performance or observance of any material obligation agreement, covenant or condition contained in any material indenture, mortgage, deed of trust or other material instrument or agreement to which it is a party or by which it or its property may be bound; and neither the execution, nor the delivery by the Company, nor the performance by the Company of its obligations under this Agreement will conflict with or result in the breach or violation of any of the terms or provisions of, or constitute a default or result in the creation or imposition of a lien or charge on any assets or properties of the Company under any material deed of trust or other material agreement or instrument to which the Company is party or by which it is bound or any statute or the Articles of Incorporation or By-laws of the Company, or any decree, judgment, order, ruling or regulation of any court or government agency or body having jurisdiction over the Company or its properties;
F. There is no fact known to the Company (other than general economic conditions known to the public generally) that has not been disclosed in writing to the Purchaser that (i) could reasonably be expected to have a material adverse effect on the condition (financial or otherwise) or on the earnings, business affairs, business prospects, properties or assets of the Company, or (ii) could reasonably be expected to materially and adversely affect the ability of the Company to perform its obligations pursuant to this Agreement.
4. Non-Binding Until Accepted. The Purchaser understands that this subscription is not binding upon the Company until the Company accepts it, which acceptance is at the sole discretion of the Company and is to be evidenced by the Companys execution of this Agreement where indicated. The funds advanced by the Purchaser cannot be used by the Company until the Company has accepted the subscription, executed this Agreement and the minimum amount of $40,625 will be raised from all purchasers collectively within 180 days, or an additional 90 days, of the effective date of the Companys Prospectus.
5. Non-Assignability. Neither this Agreement nor any of the rights of the Purchaser hereunder may be transferred or assigned by the Purchaser.
6. Modification/Entire Agreement.
This Agreement:
a) May only be modified by a written instruction executed by the Purchaser and the Company;
b) Sets forth the entire agreement of the Purchaser and the Company with respect to the subject matter hereof; and
c) Shall enure to the heirs, legal representatives, successors and permitted assigns.
7. Governing Law. This Agreement will be construed and enforced in accordance with and governed by the laws of the State of Nevada.
8. Notices. All Notices or other communication hereunder shall be in writing and shall be deemed to have been duly given if delivered personally (including courier service) or mailed by certified or registered mail, return receipt requested, postage prepaid.
IN WITNESS WHEREOF the Purchaser has executed this Securities Subscription Agreement on the date set forth below.
The Subscriber hereby offers to subscribe for ___________ Shares on the terms and conditions of this Agreement and agrees to pay the Funds and delivers herewith a certified check, money order or bank draft in the sum of $ ____________(U.S.) made payable to the Company.
DATED: _________________________
(sign below if Subscriber is an individual)
SIGNED, SEALED AND DELIVERED by the Subscriber in the presence of:
|
) ) ) ) ) ) ) ) ) |
Signature of the Subscriber
Printed Name of Subscriber
Residential Address of Subscriber
|
(sign below if Subscriber is a corporation)
EXECUTED by ___________________________ in the presence of:
Witness |
) ) ) ) ) ) ) |
___________________________ per:
Authorized Signatory |
Acceptance by the Company
This Agreement is accepted by the Company as of the ____ day of _________, 2014.
|
FRONTERA GROUP INC.
per:
Authorized Signatory |
September 2, 2014
VIA EDGAR
Board of Directors
Frontera Group Inc.
311 West Third Street
Carson City, NV 89703
Re: Registration Statement on Form S-1 of Frontera Group Inc.
Dear Directors:
You have requested our opinion as counsel for Frontera Group Inc. , a Nevada corporation (the Company), in connection with the filing of the Companys Registration Statement on Form S-1 filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the Act), on or about the date hereof, as to the legality of 32,500,000 shares of common stock, par value $0.001 per share, offered by the Company in a direct primary offering (the Shares).
We have made such legal examination and inquiries as we have deemed advisable or necessary for the purpose of rendering this opinion and have examined originals or copies of the Registration Statement; the Articles of Incorporation and any amendments thereto; the Bylaws and any amendments thereto; the Companys resolutions of the Board of Directors authorizing the issuance of shares and the registration described above; and such other corporate documents and matters as we have deemed necessary to render our opinion. In our examinations, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, photostatic, or conformed copies and the authenticity of the originals of all such latter documents. In addition, we have relied upon certificates and advice from various state authorities and public officials, and we have assumed the accuracy of the factual matters contained therein.
The opinions set forth herein are limited to matters governed by the laws of the State of Nevada, including applicable statutory provisions, applicable provisions of the Nevada constitution, and reported judicial decisions interpreting those laws. Our opinion is based on these laws as in effect on the date hereof and as of the effective date of the Registration Statement, and we assume no obligation to revise or supplement this opinion after the effective date of the Registration Statement should the law be changed by legislative action, judicial decision, or otherwise.
Based upon and subject to the foregoing, it is our opinion that the 32,500,000 shares of common stock being offered by the Company and which are being registered in the Registration Statement have been duly authorized, and when distributed and sold in the manner referred to in the Registration Statement will be legally issued, fully paid, and non-assessable.
We hereby consent to t he discussion in the Registration Statement of this opinion, to t he filing of this opinion as an exhibit to the Registration Statement, to the references to our firm under the caption Interest of Named Experts and Counsel, and to all references made to us in the Registration Statement and in the Prospectus forming a part thereof.
Sincerely,
HARRISON LAW, P.A.
/s/Diane J. Harrison
Diane J. Harrison
MANAGEMENT CONSULTANT AGREEMENT
This Management Consultant Agreement (the "Agreement") is made and entered into effective as of the 1 st day of February, 2014 (the "Effective Date"), between FRONTERA GROUP INC. , a Nevada corporation, (the "Company") and Michael Krichevcev (the Consultant).
WHEREAS:
A. Frontera Group Inc. is an export management company.
B. The Company desires to retain the Consultant to act as President and Chief Executive Officer of the Company and to provide consultant services to the Company on the terms and subject to the conditions of this Agreement.
C. The Consultant has agreed to act as President and Chief Executive Officer of the Company and to provide consultant services to the Company on the terms and subject to the conditions of this Agreement.
THIS AGREEMENT WITNESSES THAT in consideration of the premises and mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:
1. DEFINITIONS
1.1 The following terms used in this Agreement shall have the meaning specified below unless the context clearly indicates the contrary:
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"Consultant Fee" shall mean the consultant fee payable to the Consultant at the rate set forth in Section 5.1; |
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(b) |
"Board" shall mean the Board of Directors of the Company; |
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"Term" shall mean the term of this Agreement beginning on the Effective Date and ending on the close of business on the date of the termination of this Agreement. |
2. ENGAGEMENT AS A CONSULTANT
2.1 The Company hereby engages the Consultant as a consultant to provide the services of the Consultant in accordance with the terms and conditions of this Agreement and the Consultant hereby accepts such engagement.
3. TERM OF THIS AGREEMENT
3.1 The term of this Agreement shall become effective and begin as of the Effective Date, and shall continue until the close of business on January 31, 2015, unless this Agreement is earlier terminated in accordance with the terms of this Agreement or extended by the Board of Directors of the Company.
4. CONSULTANT SERVICES
4.1 The Consultant agrees to act as President and Chief Executive Officer of the Company and to perform the following services and undertake the following responsibilities and duties to the Company as consulting services (the "Consulting Services"):
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fulfilling all senior officer duties as required by the Company, including but not limited to, exercising general direction and supervision over the business affairs of the Company, sourcing and implementing new business opportunities, raising financing reasonably required from time to time by the Company; |
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providing overall direction to the management of the Company; |
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reporting directly to board of directors of Company; |
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performing such other duties and observing such instructions as may be reasonably assigned from time to time by or on behalf of the board of directors of the Company in the Consultants capacity as President and C.E.O., provided such duties are within the scope of the Companys business and implementation of the Companys business plan. |
4.2 The Consultant shall devote such attention and energies to the business affairs of the Company as may be reasonably necessary for the discharge of his duties as President and C.E.O., provided, however, the Consultant may engage in reasonable investment and other personal activities that do not interfere with the Consultant's obligations hereunder.
4.3 The Consultant will at all times be an independent contractor and the Consultant will not be deemed to be an employee of the Company.
5. CONSULTANT FEE
5.1 During the term of this Agreement, the Company shall pay the Consultant a consultant fee in consideration of the provision of the Consulting Services equal $500 US per month (the "Consultant Fee").
6. STOCK OPTIONS
6.1 The Consultant may be granted, subject to the approval of the Companys board of directors, incentive stock options to purchase shares of the Companys common stock in such amounts and at such times as the Board of Directors of the Company, in their absolute discretion, may from time to time determine.
7. REIMBURSEMENT OF EXPENSES
7.1 The Company will pay to the Consultant, in addition to the Consultant Fee, the reasonable travel and promotional expenses and other specific expenses incurred by the Consultant on behalf of the Company, or in provision of the Consulting Services, provided the Consultant has obtained the prior approval of the Company.
8. TERMINATION
8.1 The Company may terminate this Agreement: (i) at any time on two months notice; or (ii) without notice upon the occurrence of any of the following events of default (each an Event of Default):
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the Consultants commission of an act of fraud, theft or embezzlement or other similar willful misconduct; |
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the neglect or breach by the Consultant of his material obligations or agreements under this Agreement; or |
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the Consultants refusal to follow lawful directives of the Board, |
provided that notice of the Event of Default has been delivered to the Consultant and provided the Consultant has failed to remedy the default within thirty days of the date of delivery of notice of the Event of Default.
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8.2 The Consultant may terminate this Agreement at any time upon thirty days notice.
8.3 On termination of this Agreement for any reason, all rights and obligations of each party that are expressly stated to survive termination or continue after termination will survive termination and continue in full force and effect as contemplated in this Agreement.
9. PROPRIETARY INFORMATION AND DEVELOPMENTS
9.1 The Consultant will not at any time, whether during or after the termination of this Agreement for any reason, reveal to any person or entity any of the trade secrets or confidential information concerning the organization, business or finances of the Company or of any third party which the Company is under an obligation to keep confidential, except as may be required in the ordinary course of performing the Consultant Services to the Company, and the Consultant shall keep secret such trade secrets and confidential information and shall not use or attempt to use any such secrets or information in any manner which is designed to injure or cause loss to the Company. Trade secrets or confidential information shall include, but not be limited to, the Company's financial statements and projections, expansion proposals, property acquisition opportunities and business relationships with banks, lenders and other parties not otherwise publicly available.
10. RELIEF
10.1 The Consultant hereby expressly acknowledges that any breach or threatened breach by the Consultant of any of the terms set forth in Section 9 of this Agreement may result in significant and continuing injury to the Company, the monetary value of which would be impossible to establish, and any such breach or threatened breach will provide the Company with any and all rights and remedies to which it may be entitled under the law, including but not limited to injunctive relief or other equitable remedies.
11. PARTIES BENEFITED; ASSIGNMENTS
11.1 This Agreement shall be binding upon, and inure to the benefit of, the Consultant, his heirs and his personal representative or representatives, and upon the Company and its successors and assigns. Neither this Agreement nor any rights or obligations hereunder may be assigned by the Consultant.
12. NOTICES
12.1 Any notice required or permitted by this Agreement shall be in writing, sent by registered or certified mail, return receipt requested, or by overnight courier, addressed to the Board and the Company at its then principal office, or to the Consultant at the address set forth in the preamble, as the case may be, or to such other address or addresses as any party hereto may from time to time specify in writing for the purpose in a notice given to the other parties in compliance with this Section 12. Notices shall be deemed given when delivered.
13. GOVERNING LAW
13.1 This Agreement shall be governed by and construed in accordance with the laws of the Sate of Nevada and each party hereto adjourns to the jurisdiction of the courts of the State of Nevada.
14. REPRESENTATIONS AND WARRANTIES
14.1 The Consultant represents and warrants to the Company that (a) the Consultant is under no contractual or other restriction which is inconsistent with the execution of this Agreement, the performance of his duties hereunder or other rights of Company hereunder, and (b) the Consultant is under no physical or mental disability that would hinder the performance of his duties under this Agreement.
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15. MISCELLANEOUS
15.1 This Agreement contains the entire agreement of the parties relating to the subject matter hereof.
15.2 This Agreement supersedes any prior written or oral agreements or understandings between the parties relating to the subject matter hereof.
15.3 No modification or amendment of this Agreement shall be valid unless in writing and signed by or on behalf of the parties hereto.
15.4 A waiver of the breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any subsequent breach of the same or any other term or condition.
15.5 This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Agreement, or the application thereof to any person or circumstance, shall, for any reason and to any extent, be held invalid or unenforceable, such invalidity and unenforceability shall not affect the remaining provisions hereof and the application of such provisions to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law.
15.6 The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.
15.7 This Agreement may be executed in one or more counter-parts, each of which so executed shall constitute an original and all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date first written above.
FRONTERA GROUP INC.
by its authorized signatory:
/s/ Tatiana Varuha |
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TATIANA VARUHA, DIRECTOR |
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SIGNED, SEALED AND DELIVERED |
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BY MICHAEL KRICHEVCEV |
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in the presence of: |
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/s/ Michael Krichevcev |
Signature |
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MICHAEL KRICHEVCEV |
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MANAGEMENT CONSULTANT AGREEMENT
This Management Consultant Agreement (the "Agreement") is made and entered into effective as of the 1 st day of February, 2014 (the "Effective Date"), between FRONTERA GROUP INC. , a Nevada corporation, (the "Company") and Tatiana Varuha (the Consultant).
WHEREAS:
A. Frontera Group Inc. is an export management company.
B. The Company desires to retain the Consultant to act as Secretary, Treasurer and Chief Financial Officer of the Company and to provide consultant services to the Company on the terms and subject to the conditions of this Agreement.
C. The Consultant has agreed to act as Secretary, Treasurer and Chief Financial Officer of the Company and to provide consultant services to the Company on the terms and subject to the conditions of this Agreement.
THIS AGREEMENT WITNESSES THAT in consideration of the premises and mutual covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:
1. DEFINITIONS
1.1 The following terms used in this Agreement shall have the meaning specified below unless the context clearly indicates the contrary:
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(a) |
"Consultant Fee" shall mean the consultant fee payable to the Consultant at the rate set forth in Section 5.1; |
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(b) |
"Board" shall mean the Board of Directors of the Company; |
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"Term" shall mean the term of this Agreement beginning on the Effective Date and ending on the close of business on the date of the termination of this Agreement. |
2. ENGAGEMENT AS A CONSULTANT
2.1 The Company hereby engages the Consultant as a consultant to provide the services of the Consultant in accordance with the terms and conditions of this Agreement and the Consultant hereby accepts such engagement.
3. TERM OF THIS AGREEMENT
3.1 The term of this Agreement shall become effective and begin as of the Effective Date, and shall continue until the close of business on January 31, 2015, unless this Agreement is earlier terminated in accordance with the terms of this Agreement or extended by the Board of Directors of the Company.
4. CONSULTANT SERVICES
4.1 The Consultant agrees to act as Secretary, Treasurer and Chief Financial Officer of the Company and to perform the following services and undertake the following responsibilities and duties to the Company as consulting services (the "Consulting Services"):
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fulfilling all senior officer duties as required by the Company, including but not limited to, accounting, coordination of annual audits and quarterly reviews of the Companys financial statements; coordination of regulatory filings; |
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reporting directly to the Companys President and Board of Directors of the Company; |
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performing such other duties and observing such instructions as may be reasonably assigned from time to time by or on behalf of the Board of Directors of the Company in the Consultants capacity as Secretary, Treasurer and C.F.O., provided such duties are within the scope of the Companys business and implementation of the Companys business plan. |
4.2 The Consultant shall devote such attention and energies to the business affairs of the Company as may be reasonably necessary for the discharge of his duties as Secretary, Treasurer and Chief Financial Officer provided, however, the Consultant may engage in reasonable investment and other personal activities that do not interfere with the Consultant's obligations hereunder.
4.3 The Consultant will at all times be an independent contractor and the Consultant will not be deemed to be an employee of the Company.
5. CONSULTANT FEE
5.1 During the term of this Agreement, the Company shall pay the Consultant a consultant fee in consideration of the provision of the Consulting Services equal $400 US per month (the "Consultant Fee").
6. STOCK OPTIONS
6.1 The Consultant may be granted, subject to the approval of the Companys board of directors, incentive stock options to purchase shares of the Companys common stock in such amounts and at such times as the Board of Directors of the Company, in their absolute discretion, may from time to time determine.
7. REIMBURSEMENT OF EXPENSES
7.1 The Company will pay to the Consultant, in addition to the Consultant Fee, the reasonable travel and promotional expenses and other specific expenses incurred by the Consultant on behalf of the Company, or in provision of the Consulting Services, provided the Consultant has obtained the prior approval of the Company.
8. TERMINATION
8.1 The Company may terminate this Agreement: (i) at any time on two months notice; or (ii) without notice upon the occurrence of any of the following events of default (each an Event of Default):
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the Consultants commission of an act of fraud, theft or embezzlement or other similar willful misconduct; |
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the neglect or breach by the Consultant of his material obligations or agreements under this Agreement; or |
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the Consultants refusal to follow lawful directives of the Board, |
provided that notice of the Event of Default has been delivered to the Consultant and provided the Consultant has failed to remedy the default within thirty days of the date of delivery of notice of the Event of Default.
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8.2 The Consultant may terminate this Agreement at any time upon thirty days notice.
8.3 On termination of this Agreement for any reason, all rights and obligations of each party that are expressly stated to survive termination or continue after termination will survive termination and continue in full force and effect as contemplated in this Agreement.
9. PROPRIETARY INFORMATION AND DEVELOPMENTS
9.1 The Consultant will not at any time, whether during or after the termination of this Agreement for any reason, reveal to any person or entity any of the trade secrets or confidential information concerning the organization, business or finances of the Company or of any third party which the Company is under an obligation to keep confidential, except as may be required in the ordinary course of performing the Consultant Services to the Company, and the Consultant shall keep secret such trade secrets and confidential information and shall not use or attempt to use any such secrets or information in any manner which is designed to injure or cause loss to the Company. Trade secrets or confidential information shall include, but not be limited to, the Company's financial statements and projections, expansion proposals, property acquisition opportunities and business relationships with banks, lenders and other parties not otherwise publicly available.
10. RELIEF
10.1 The Consultant hereby expressly acknowledges that any breach or threatened breach by the Consultant of any of the terms set forth in Section 9 of this Agreement may result in significant and continuing injury to the Company, the monetary value of which would be impossible to establish, and any such breach or threatened breach will provide the Company with any and all rights and remedies to which it may be entitled under the law, including but not limited to injunctive relief or other equitable remedies.
11. PARTIES BENEFITED; ASSIGNMENTS
11.1 This Agreement shall be binding upon, and inure to the benefit of, the Consultant, his heirs and his personal representative or representatives, and upon the Company and its successors and assigns. Neither this Agreement nor any rights or obligations hereunder may be assigned by the Consultant.
12. NOTICES
12.1 Any notice required or permitted by this Agreement shall be in writing, sent by registered or certified mail, return receipt requested, or by overnight courier, addressed to the Board and the Company at its then principal office, or to the Consultant at the address set forth in the preamble, as the case may be, or to such other address or addresses as any party hereto may from time to time specify in writing for the purpose in a notice given to the other parties in compliance with this Section 12. Notices shall be deemed given when delivered.
13. GOVERNING LAW
13.1 This Agreement shall be governed by and construed in accordance with the laws of the Sate of Nevada and each party hereto adjourns to the jurisdiction of the courts of the State of Nevada.
14. REPRESENTATIONS AND WARRANTIES
14.1 The Consultant represents and warrants to the Company that (a) the Consultant is under no contractual or other restriction which is inconsistent with the execution of this Agreement, the performance of his duties hereunder or other rights of Company hereunder, and (b) the Consultant is under no physical or mental disability that would hinder the performance of his duties under this Agreement.
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15. MISCELLANEOUS
15.1 This Agreement contains the entire agreement of the parties relating to the subject matter hereof.
15.2 This Agreement supersedes any prior written or oral agreements or understandings between the parties relating to the subject matter hereof.
15.3 No modification or amendment of this Agreement shall be valid unless in writing and signed by or on behalf of the parties hereto.
15.4 A waiver of the breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any subsequent breach of the same or any other term or condition.
15.5 This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Agreement, or the application thereof to any person or circumstance, shall, for any reason and to any extent, be held invalid or unenforceable, such invalidity and unenforceability shall not affect the remaining provisions hereof and the application of such provisions to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law.
15.6 The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.
15.7 This Agreement may be executed in one or more counter-parts, each of which so executed shall constitute an original and all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the date first written above.
FRONTERA GROUP INC.
by its authorized signatory:
/s/ Michael Krichevcev |
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MICHAEL KRICHEVCEV, DIRECTOR |
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SIGNED, SEALED AND DELIVERED |
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BY MICHAEL KRICHEVCEV |
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in the presence of: |
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/s/ Tatiana Varuha |
Signature |
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TATIANA VARUHA |
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Frontera Group Inc.
Las Vegas, Nevada
We hereby consent to the use in this Registration Statement on Form S-1 (the Registration Statement) of our report dated September 3, 2014, relating to the balance sheet of Frontera Group Inc., (the Company) as of June 30, 2014 and the related statements of operations, stockholders equity and cash flows for the period from November 21, 2013 (Inception) through June 30, 2014 , which report includes an explanatory paragraph as to an uncertainty with respect to the Companys ability to continue as a going concern, appearing in such Registration Statement. We also consent to the reference to our firm under the Caption Experts in such Registration Statement.
/s/ Li and Company, PC
Li and Company, PC
Skillman, New Jersey
September 3, 2014