NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
July
31, 2022
(Unaudited)
NOTE
1 - ORGANIZATION AND OPERATIONS
Bioquest
Corp.(the “Company”) was originally incorporated in the State of Nevada on May 17, 2011, as Renaissance Films Inc. On September
26, 2011, the Company changed its name to Sedition Films Inc. and on May 1, 2014, the Company changed its name to Select-TV Solutions,
Inc. The Company was organized for the purpose of producing documentary films. On October 10, 2019, there was a change in control of
the Company with the purchase of 270,000,000 of the Company’s Common stock and on that date the Company changed its name to Bioquest
Corp. On October 12, 2019, the Company elected a new Board of Directors and approved a 2,000 to 1 Reverse Stock Split resulting in the
reduction of the outstanding shares of the Company’s Common Stock from 454,254,585 shares to 237,233 shares of Common Stock. All
common shares and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account
for the effect of the reverse stock split for all periods presented. The total number of authorized common shares and the par value thereof
were not changed by the reverse stock split.
The
Company had previously intended to market, package, and distribute, Hemp-CBD based products. Our mission was to Create High End, Unique
Content and aggregate all relevant CBD content in the Nutraceutical and Pharmaceutical markets. In 2022, after the effects of Covid,
the Company decided to change direction and acquire companies in the green energy sector. The Company has executed a letter of intent
on June 23,2022 to acquire its first energy company. (See Subsequent Events Note 8).
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying condensed financial statements are unaudited. These financial statements and notes should be read in conjunction with the
audited financial statements and related notes for the years ended April 30, 2022, and 2021.
The
accompanying interim condensed financial statements are unaudited and have been prepared in accordance with accounting principles
generally accepted in the United States for interim periods. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been
condensed or omitted pursuant to such rules. In the opinion of management, the unaudited condensed financial statements and notes
have been prepared on the same basis as the audited financial statements for the year ended April 30, 2022 and include all
adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position
at July 31, 2022 and statements of operations for the three months ended July 31, 2022 and 2021 and cash flows for the three months
ended July 31, 2022 and 2021. These interim periods are not necessarily indicative of the results to be expected for any other
interim period or the full year. The accompanying condensed financial statements reflect the application of certain significant
accounting policies as described below and elsewhere in these notes to the condensed financial statements. As of July 31, 2022, the
Company’s significant accounting policies and estimates, which are detailed in the Company’s audited financial
statements for the year ended April 30, 2021, have not changed. The amounts shown herein for the years ended April 30,2022 were derived from our audited financial statements for
the years ended April 30,2022, which were filed on www.sec.gov on August 15, 2022.
Cash
and Cash Equivalents
Cash
equivalents consist of highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are
on deposit with financial institutions without any restrictions. As of July 31, 2022, cash equivalents amounted to $14,955.
Basic
Loss Per Share
FASB
ASC Subtopic 260, Earnings Per Share, provides for the calculation of “Basic” and “Diluted” earnings per share.
Basic earnings per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares
outstanding for the period. All potentially dilutive securities including stock options and stock payable have been excluded from the
computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the
future. The number of potentially dilutive shares were 330,225 shares as of July 31, 2022, and 217,166 shares on July 31, 2021.
BIOQUEST
CORP.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
July
31, 2022
(Unaudited)
Income
Taxes
The
Company follows FASB ASC Subtopic 740, Income Taxes, for recording the provision for income taxes. Deferred tax assets and liabilities
are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted
marginal tax rate applicable when the related asset or liability is expected to be realized or settled.
Deferred
income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it
is more likely than not that some portion or all the deferred tax assets will not be realized, a valuation allowance is required to reduce
the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included
in the provision for deferred income taxes in the period of change.
Stock-based
Compensation
The
Company follows FASB ASC Subtopic 718, Stock Compensation, for accounting for stock-based compensation. The guidance requires that new,
modified, and unvested share-based payment transactions, such as grants of stock options and restricted stock, be recognized in the consolidated
financial statements based on their fair value at the grant date and recognized as compensation expense over their vesting periods.
Revenue
Recognition
The
Company will recognize revenue pursuant to Accounting Standards Codification 606, which requires revenue to be recognized at an
amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers. Revenue
is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company’s
customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all the benefits from,
the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer
acceptance.
Revenue
will be recognized for the Company’s wholesale customers sales when the Company ships the product from its inventory facility.
Revenue will be recognized by the Company for e-commerce sales at the time the merchandise is shipped from our inventory facility. Customers
typically receive goods within four days of shipment. Amounts related to shipping and handling that are billed to customers are reflected
in revenues, and the related costs are reflected in cost of revenues. Taxes collected from customers and remitted to governmental authorities
are presented in the consolidated statements of operations on a net basis. The nature of the Company’s business allows for customers
to return previously purchased goods for a return or exchange which may result in a reduction of the Company’s revenues. These
sales returns will not be significant to the Company’s revenues in the accompanying financial statements.
BIOQUEST
CORP.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
July
31, 2022
(Unaudited)
Fair
Value of Financial Instruments
Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC
820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant
assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists
of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level
1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level
2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities
in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates);
and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level
3 - Inputs that are both significant to the fair value measurement and unobservable. Our company estimates the fair value of financial
instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value.
Accordingly, the estimates of fair value may not be indicative of the amounts our company could realize in a current market exchange.
As of April 30, 2022, and July 31, 2022, the carrying value of accounts payable and loans that are required to be measured at fair value,
approximated fair value due to the short-term nature and maturity of these instruments.
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 as of July 31, 2022, of $10,788,321 and its
liabilities exceeded its assets by $536,419 These factors among others raise substantial doubt about the Company’s ability to continue
as a going concern.
The
Company has executed a letter of intent to acquire a green hydrogen energy company, but has limited resources, no source of operating
cash flow and no assurance that sufficient funding will be available. Management will be required to raise funds through a combination
of equity and/or debt financing for the further development of its hydrogen technology business. The success of these plans will depend
upon the ability of the Company to generate cash flows from equity and/or debt financing. These conditions indicate the existence of
material uncertainties which may cast significant doubt on the Company’s ability to continue as a going concern.
The
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
4 – RELATED PARTY TRANSACTIONS
As
of July 31, 2022, $23,100 was
due to Officers Shareholders for rent and other costs paid on behalf of the Company.
BIOQUEST
CORP.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
July
31, 20212
(Unaudited)
NOTE
5 – NOTES PAYABLE
The
Company issued multiple convertible notes payable in January and February 2020 in the amount of $40,000 due in two years from date of
issuance, with interest at 6% and convertible into common shares at $1.00 per share adjustable in certain circumstances, as defined in
the debt agreements. These notes were in technical default as of April 30, 2022. On July 14,2022 the Company extended the due dates of
these notes to September 30, 2022, in consideration for the issuance of 40,000 shares of unregistered shares of common stock.
These
notes contain contingent conversion features. The first feature triggers in the event that the Company has a qualified equity offering,
as defined, in agreement. If triggered, this allows the holder to convert the principal and any unpaid and accrued interest at a price
per share equal to the Discount Rate (as defined in the note agreement) multiplied by the price per share paid by the investors in the
qualified financing. The second feature triggers in the event that the Company has an equity financing that does not qualify as a qualified
financing. If triggered, this allows the holder to convert the principal and any unpaid and accrued interest into the equity financing
security at a rate at the lower of the Discount Rate (as defined in the note agreement) multiplied by the price per share paid by the
investors in the equity financing. The third feature triggers in the event that a Sale Event (as defined in the note agreements) occurs.
If triggered, this allows the note holders to covert their outstanding principal and any unpaid and accrued interest into common stock
of the Company at the Discount Rate (as defined in the note agreement) multiplied by proceeds per share payable in the Sales Event.
Upon
maturity, the holders of the notes may elect to convert their unpaid principal and accrued interest into that number of common shares
determined by multiplying the Discount Rate (as defined in the note agreement) by the 5-trading day average closing price of the Company’s
common stock.
The
Company issued a convertible note payable in September 2020 due in one year in the amount of $27,500 including interest at 10% per annum.
The note is convertible at a 40% discount to the 20-day volume weighted average trading price of the Company’s common stock, after
90 days from issuance. In the event of default, the conversion discount increases to 50% of the 20-day volume weighted average trading
price. In November 2020 the Company issued an additional note payable to the same investor due in one year in the amount of $30,800 with
interest at 10% per annum. The note is convertible at a 60% discount to the 20-day volume weighted average trading price of the Company’s
common stock. The Company extended the due date to February2,2022, and issued 10,000 shares (postponement shares) for this extension
in the year ended April 30, 2021. In the year ended April 30, 2022, the Company recorded a penalty payable at non-payment upon maturity
for the two notes above $58,300 in the amount of $45,000 which is included in accounts payable and accrued expense as of April 30, 2022,
and July 31,2022. As of April 30, 2022, and July 31, 2022, these notes were in default.
In
March 2022, the Company received gross proceeds of $85,000 and issued a convertible promissory note in the amount of $85,000, which matures
12 months from issuance. The convertible note bears interest at the rate of 8% per annum. The conversion rate of the note is $0.50 with
standard antidilution provisions. The Company may prepay the convertible note at any time without penalty. At issuance, the Company determined
that the beneficial conversion feature was immaterial
During
the year ended April 30, 2022, convertible notes, the Company has determined that the conversion features require bifurcation as derivatives.
The Company has calculated the value of the derivative, a level 3 liability as follows:
The
expected volatility rate was estimated based on comparison to the volatility of a peer group of companies in similar industries. The
term for the conversion of the notes is based upon the remaining term of the notes. The risk-free interest rate for periods within the
contractual life is based on the yield derived from auctions of comparable periods of constant maturity U.S. Treasury securities. Circumstances
may change, and additional data may become available over time, which could result in changes to these assumptions and methodologies,
and thereby materially impact our fair value determination.
The
following table for the derivative liability summarizes the inputs used for the Black-Scholes pricing model on the three months ended
July 31,2022.
SUMMARY OF DERIVATIVE LIABILITY USED FOR BLACK-SCHOLES PRICING MODEL
| | |
Notes | |
| Exercise price | |
$ | 0.36 - $0.54, | |
| Risk free interest rate | |
| 2.2 | % |
| Volatility | |
| 1,000 | % |
| Expected term months | |
| 3 | |
| Dividend yield | |
| None | |
BIOQUEST
CORP.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
July
31, 2022
(Unaudited)
NOTE
6 – STOCKHOLDERS’ DEFICIT
Capital
Stock Issued
During
the quarter ended July 31, 2021, the Company issued 65,000 shares of common stock for $65,000 cash.
During
the quarter ended July 31,2022 the Company issued 40,000 shares
of common stock for extension of the due date of notes payable of $40,000
and 135,000
shares of common stock issued in satisfaction of the stock payable.
Authorized
Capital Stock Common Stock
The
Company is authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share. As of July 31, 2022, and April
30, 2022, there were 11,485,230 and 11,310,230 shares issued and outstanding.
NOTE
7 – SUBSEQUENT EVENTS
On
June 23, 2022, the Company executed a non-binding Letter of Intent with the shareholders of Progressus Clean Technologies, Inc. (“Progressus”),
whereby the Company shall acquire all the issued and outstanding shares of Progressus, a private company incorporated in Delaware in
exchange for the Company issuing 90,000,000 shares of its common stock to the shareholders of Progressus. Should the acquisition become
effective, the shareholders of Progressus will control the Company.
Progressus
is a venture stage green technology company focused on the development of novel hydrogen generation and separation technologies. Progressus
owns the exclusive rights and intellectual property pertaining to the Advanced Electrolyzer System for the production of hydrogen from
dilute syngas.
In
addition, we did not identify any additional material events or transactions occurring during subsequent event reporting period that
required further recognition or disclosure in these financial statements.