ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Current Operations
Plan of Operations
The Company’s current plan of operations for
the twelve months ending April 30, 2017, involved the continued development of the business plan.
Our ability to implement the phases of our business
plan was dependent on us obtaining the significant financing for these projects, which we were unable to secure during the year ending
April 30, 2017.
Going Concern
We do not currently have any financing arranged and
we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund
further phases of our business plan. Even if we are successful in obtaining equity financing to fund our joint venture, there is no assurance
that we will obtain the funding necessary to pay our creditors and note holders on a timely basis. As a result, investors in our common
stock would most likely lose all of their investments.
Results from Operations – For the years ended April 30, 2017,
as compared to April 30, 2016.
Operating results for the years ended April 30, 2017, and 2016 are summarized
as follows:
| | |
Years Ended April 30, |
| | |
2017 | |
2016 |
| Revenue | |
$ | — | | |
$ | — | |
| Operating expenses | |
| 1,170,939 | | |
| 126,293 | |
| Other income (expense) | |
| — | | |
| — | |
| Net operating income (loss) | |
$ | 1,170,939 | | |
$ | (126,293 | ) |
Our net operating loss increased $1,044,646 for our
year ended April 30, 2017, from our year ended April 30, 2016. During the year ended April 30, 2017, our operating expenses increased
$1,044,646 from the year ended April 30, 2016. The increase in expenses was mainly comprised of increase in management fees from the hiring
of a new Chief Financial Officer and his receipt of 2,500,000 common shares valued at $1,050,000.
Liquidity and Capital Resources
As of April 30, 2017, we had cash of $0 and our working
capital deficit was $500,911. In 2017, we generated revenues of $0 and a net loss of $1,170,930 from operations as compared to 2016 revenues
of $0 and a net operating expense of $126,293.
The Company expects significant capital expenditures
during the next 12 months, contingent upon raising additional capital. We anticipate that we will need a minimum of $2,000,000 for operations
for the next 12 months.
The source of such capital is uncertain, and there
is no assurance that the Company will be successful in obtaining such capital on commercially reasonable terms, or at all. We have a working
capital deficit and will need cash infusions from investors and/or current shareholders to deploy our current business plan and joint
venture.
To implement our business plan, we will need to continue
to raise working capital in the form of equity in an amount up to $2,000,000 over the twelve-month period ending April 30, 2018, on terms
and conditions to be determined. If we were unable to raise any funds from the sale of equity, management may elect to seek subsequent
interim or “bridge” financing in the form of debt as may be necessary.
At this time, management is unable to determine the
specific amounts and terms of such future financings, or whether or not we will be successful in raising such funds on a basis acceptable
to us.
In order to finance the operations of the Company during the twelve months ending April 30, 2017, and 2016, the Company’s management
and/or shareholders entered a series of note transactions or accounts payable totaling $0 and 12,300, respectively.
Cash Flow
| | |
Years Ended April 30, |
| | |
2017 | |
2016 |
| Net cash provided (used) in operating activities | |
$ | (7 | ) | |
$ | (12,293 | ) |
| Net cash used in investing | |
| — | | |
| — | |
| Net cash provided (used) by financing activities | |
| — | | |
| 12,300 | |
| Net increase (decrease) in cash | |
$ | — | | |
$ | 7 | |
Cash used in operating activities for years ended
April 30, 2017, and 2016 was primarily for expenses related to general operations and for Company incurred administrative expenses.
Going Concern
Management believes that our current financial condition,
liquidity, and capital resources will not satisfy our cash requirements for the next twelve months to deploy our current business plan,
and as such we will need to either raise additional proceeds through financing facilities, sales of securities and our officers and directors
will need to make additional financial commitments to our Company, neither of which is guaranteed. We plan to satisfy our future cash
requirements, primarily the working capital required to execute on our current business and fund our necessary operating expenses, through
financial commitments from future debt facilities and equity sales, if and when possible.
Management believes that we may generate some revenues
within the next 12 months of 2017, but that these revenues will not satisfy our cash requirements to implement our current business plan,
which is subject to change depending upon pending business opportunities and available financing.
We had no committed source for funds as of April 30,
2017, other than our convertible debt instruments. No representation is made that any funds will be available when needed. In the event
that funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve revenue, and could fail
to satisfy our future cash requirements as a result of these uncertainties.
It will be necessary to raise working capital funds
through equity and debt financing facilities, which are extremely difficult for a developmental stage company to secure and may not be
available to us or on a basis favorable to us. However, if such debt financing is available, we would likely have to pay additional costs
associated with high-risk loans and be subject to above market interest rates.
The Company and has accumulated a deficit of $46,575,912
at, April 30, 2017. We currently have only limited working capital with which continue our operating activities. The amount of capital
required to sustain operations is subject to future events and uncertainties, but the Company anticipates it will need to obtain
approximately $2,000,000 in additional working capital in the form of debt and/or equity in order to cover our current expenses over the
next 12 months in furtherance of our business plan. Whether such capital will be obtainable or obtainable on commercially reasonable terms
is at this date uncertain. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern.
Critical Accounting Policies
Our consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and judgments
that significantly affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities at the date of the consolidated financial statements. Note 3, “Summary of Significant Accounting
Policies” in the Notes to the Condensed Financial Statements for the year ended April 30, 2017, describes our significant
accounting policies which are reviewed by management on a regular basis.
Capital Expenditures
We have not incurred any material capital expenditures.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CROWN
BAUS CAPITAL CORP.
INDEX
TO FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting
Firm |
F-1 |
| |
|
| Balance Sheets |
F-2 |
| |
|
| Statements of Income |
F-3 |
| |
|
| Statements of Cash Flows |
F-4 |
| |
|
| Statements of Stockholders’ Equity |
F-5 |
| |
|
| Notes to Financial Statements |
F-6 |
Boyle
CPA, LLC
Certified
Public Accountants & Consultants
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and
Board of Directors of Crown Baus Capital Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of
Crown Baus Capital Corp. (the “Company”) as of April 30, 2017 and 2016, the related statements of operations, changes in stockholders’
equity (deficit), and cash flows for each of the years in the two-year period ended April 30, 2017, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of April 30, 2017 and 2016, and the results of its operations and its cash flows for each of
the two years in the period ended April 30, 2017, in conformity with accounting principles generally accepted in the United States of
America.
Substantial Doubt About the Company’s
Ability to Continue as a Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Notes 2 and 7 to the financial statements, the Company’s
continuing operating losses raise substantial doubt about its ability to continue as a going concern for a period of one year from the
issuance of these financial statements. Management’s plans are also described in Notes 2 and 7. The financial statements do not
include adjustments that might result from the outcome of this uncertainty.
Basis of Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with 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, whether due to fraud or error. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Boyle CPA, LLC
We
have served as the Company’s auditor since 2021
Red
Bank, NJ
March 21, 2022
331
Newman Springs Road P
(732) 784-1582
Building
1, 4th Floor, Suite 143 F
(732) 510-0665
Red
Bank, NJ 07701
Crown
Baus Capital Corp.
(Formerly
Cannabis Capital Corp.)
Balance
Sheets
April
30, 2017 and 2016
| | |
2017 | |
2016 |
| ASSETS | |
| | | |
| | |
| Current Assets: | |
| | | |
| | |
| Cash
and equivalents | |
$ | — | | |
$ | 7 | |
| Prepaid
expenses | |
| — | | |
| — | |
| Total
current assets | |
| — | | |
| 7 | |
| | |
| | | |
| | |
| Other Assets | |
| | | |
| | |
| Investment | |
| 6,300,000 | | |
| — | |
| | |
| | | |
| | |
| TOTAL
ASSETS | |
$ | 6,300,000 | | |
$ | 7 | |
| | |
| | | |
| | |
| LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
| | |
| | | |
| | |
| Liabilities | |
| | | |
| | |
| Accounts
payable and accrued expenses | |
$ | 450,167 | | |
$ | 330,167 | |
| Loans
payable – stockholders’ | |
| 50,745 | | |
| 49,813 | |
| Total
current liabilities | |
| 500,912 | | |
| 379,980 | |
| | |
| | | |
| | |
| Stockholders’
Equity (Deficit): | |
| | | |
| | |
| Common
stock, $0.001 par value; 200,000,000 shares authorized, 143,550,000 and 143,550,000 shares issued and outstanding, respectively | |
| 143,550 | | |
| 143,550 | |
| Stock
subscription | |
| 7,350,000 | | |
| — | |
| Additional
paid in capital | |
| 44,885,000 | | |
| 44,885,000 | |
| Cancellation
receivable | |
| (3,550 | ) | |
| (3,550 | ) |
| Accumulated
Deficit | |
| (46,575,912 | ) | |
| (45,404,973 | ) |
| Total
Stockholders' Equity (Deficit) | |
| 5,799,088 | | |
| (379,973 | ) |
| | |
| | | |
| | |
| TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
$ | 6,300,000 | | |
$ | — | |
See
accompanying notes to financial statements
Crown
Baus Capital Corp.
(Formerly
Cannabis Capital Corp.)
Statements
of Operations
For
the Years Ended April 30, 2017 and 2016
| |
|
|
|
|
|
|
|
|
| | |
2017 | |
2016 |
| | |
| | | |
| | |
| Revenue | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Expenses: | |
| | | |
| | |
| Officers’
compensation | |
| — | | |
| — | |
| Management
fees | |
| 1,170,000 | | |
| 120,000 | |
| Professional
fees | |
| — | | |
| 3,000 | |
| Other | |
| 939 | | |
| 3,293 | |
| Net operating loss | |
| (1,170,939 | ) | |
| (126,293 | ) |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Provision
for income taxes | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net
income (loss) | |
$ | (1,170,939 | ) | |
$ | (126,293 | ) |
| | |
| | | |
| | |
| Basic
and diluted loss per share | |
$ | 0.00 | | |
$ | (0.00 | ) |
| | |
| | | |
| | |
| Basic
and diluted weighted average Number of shares outstanding | |
| 140,679,999 | | |
| 143,550,000 | |
See
accompanying notes to financial statements
Crown
Baus Capital Corp.
Statement
of Stockholders' Deficit
For
the Years Ended April 30, 2017 and 2016
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | |
Common
Stock | |
| |
| |
| |
| |
|
| | |
Shares | |
Amount | |
Additional
Paid-in Capital | |
Common
Stock to be Returned | |
Stock
Subscription | |
Accumulated
Deficit | |
Total
Stockholders' Equity (Deficit) |
| Balance - April 30, 2015 | |
| 143,550,000 | | |
$ | 143,550 | | |
$ | 44,885,000 | | |
$ | (3,550 | ) | |
$ | — | | |
$ | (45,278,680 | ) | |
$(253,680) |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (126,293 | ) | |
(126,293) |
| Balance - April 30, 2016 | |
| 143,550,000 | | |
$ | 143,550 | | |
$ | 44,885,000 | | |
$ | (3,550 | ) | |
| — | | |
$ | (45,404,973 | ) | |
$(379,973) |
| Stock to be issued for services | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,050,000 | | |
| — | | |
1,050,000 |
| Stock to be issued for acquisition | |
| — | | |
| — | | |
| — | | |
| — | | |
| 6,300,000 | | |
| — | | |
6,300,000 |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,170,939 | ) | |
(1,170,939) |
| Balance - April 30, 2017 | |
| 143,550,000 | | |
$ | 143,550 | | |
$ | 44,885,000 | | |
$ | (3,550 | ) | |
$ | 7,350,000 | | |
$ | (46,575,912 | ) | |
$5,799,088 |
See accompanying notes to financial statements
Crown
Baus Capital Corp.
Statements
of Cash Flows
For
the Years Ended April 30, 2017, and 2016
| |
|
|
|
|
|
|
|
|
| | |
2017 | |
2016 |
| Cash flows from operating activities: | |
| | | |
| | |
| Net income (loss) | |
$ | (1,170,939 | ) | |
$ | (126,293 | ) |
| Adjustments to reconcile net income (loss) to net cash used by operating activities: | |
| | | |
| | |
| Stock based compensation | |
| 1,050,000 | | |
| — | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts payable and accrued expenses | |
| 120,000 | | |
| 114,000 | |
| Net cash used by operating activities | |
| (939 | ) | |
| (12,293 | ) |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from issuance of common stock | |
| — | | |
| — | |
| Proceeds from Stockholders’ loans | |
| 932 | | |
| 12,300 | |
| Net cash provided by (used in) financing activities | |
| 932 | | |
| 12,300 | |
| Net increase (decrease) in cash | |
| (7 | ) | |
| 7 | |
| Cash at beginning of period | |
| 7 | | |
| — | |
| Cash at end of period | |
$ | — | | |
$ | 7 | |
| Supplemental cash flow information: | |
| | | |
| | |
| Cash paid during the period for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | — | |
| Income taxes | |
$ | — | | |
$ | — | |
Non-cash transactions
For the year ended April 30, 2015, the
company issued 200,000
shares of the Company’s common stock for
the acquisition of certain assets valued at 3,104,000.
The Company also issued 1,150,000
common shares for services with a total value
of $14,375,000.
These shares were subsequently cancelled but have not been returned and are in include in the adjustment column on the Stockholders Deficit
page of this report
For the year ended April 30, 2017, the Company hired a new Chief Financial
Officer. As of this Report the 2,500,000 common shares valued at $1,050,000 for this contract had not been issued but were to be issued
and are acknowledged in the Stock Subscription column.
See
accompanying notes to financial statements
CROWN
BAUS CAPITAL CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. DESCRIPTION OF BUSINESS
Crown
Baus Capital Corp. (“We” or the “Company”) was incorporated pursuant to the laws of the State of Nevada on August
8, 2011, as Flow Tech Solutions, Inc. We changed our name to World Stevia Corp. on August 15, 2013, then to Cannabis Capital Corp. on
March 3, 2014, and finally to Crown Baus Capital Corp. on May 27, 2014.
Overview of Business and Operations
The Company’s mission is to work together with
our shareholders’, investors, and communities to create long-term value.
Our strategy is to identify companies in industries
that compliments the expertise of our management team, Board of Directors, and partners. Our management’s track record provides
a highly attractive opportunity for prospective targets looking for proven value, liquidity, and capital procurement.
The Company is focused on becoming a global acquisitions-based company
targeting high tech industries, and financial services.
The Company has negotiated with several targets, but none have accomplished
the desired goals and were either abandoned or canceled after signing management or acquisition agreements These agreements were announced
and their cancellations disclosed in various Form 8-K filed with the Securities and Exchange Commission from February 17, 2014, through
October 24, 2014 (incorporated herein by reference).
NOTE 2. BASIS OF PRESENTATION
The accompanying financial
statements of the Company are presented in accordance with accounting principles generally accepted in the United States of America and
with the requirements for Form 10-K and Regulation S-X.
Going Concern
Since inception, the Company has an accumulated deficit
of $46,575,912. The Company currently has only limited working capital with which to continue its operating activities. The amount of
capital required to sustain operations is subject to future events and uncertainties. The Company must secure additional working capital
through loans, sale of equity securities, or a combination, in order to implement its current business plans. There can be no assurance
that such funding will be available in the future, or available on commercially reasonable terms favorable to the Company. These conditions
raise substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements have been presented
on the basis of the continuation of the Company as a going concern and do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company
be unable to continue as a going concern. Management continued to manage its costs for the year ended April 30, 2017, to ensure appropriate
funding is on hand for its limited operations.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The financial statements include the accounts of the
Company. The Company did not have operations for the year ended April 15, 2017, or 2016.
Use of Estimates
The preparation of financial statements in conformity
with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related
to intangible assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts,
historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s
estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will
be affected.
Impairment of Long-Lived Intangible Assets
We review our long-lived assets, including intangible
assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Impairment, if any, is measured as the excess of the carrying amount over the fair value based on market value
(when available) or discounted expected cash flows of those assets and is recorded in the period in which the determination is made. Intangible
assets not subject to amortization are tested annually for impairment and more frequently if events or changes in circumstances indicate
that it is more likely than not that the asset is impaired.
Cash
Cash includes all highly liquid instruments with
an original maturity of three months or less at the date of purchase. The Company maintains its cash in cash deposit accounts, which
are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per legal ownership. At times, the Company’s accounts
may exceed federally insured limits. To date, the Company has not experienced any losses in such accounts. At, April 30, 2017 and 2016,
the Company had $0 and $7
in cash and no other cash equivalents, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist
of cash, accounts payable, accrued liabilities, line of credit payable, loans from a related party, contingent consideration payable,
and convertible note payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity
or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Derivative
Financial Instruments
The
Company reviews the terms of convertible debt, equity instruments and other financing arrangements to determine whether there
are embedded derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately
as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding
options or warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.
The Company may also issue options or warrants to non-employees in connection with consulting or other services.
Derivative financial instruments are initially measured
at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially
recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits
to income. For warrant-based derivative financial instruments, the Company used the Black-Scholes option pricing model to value the derivative
instruments. The Binomial Lattice Model may be used to provide a model that the Company believes provides a more representative model
of future expenses, conversion periods and length of time to conversion than the Black Scholes based upon only the remaining short time
to note maturities all existing notes have embedded conversion features that cause all of the following accounting treatments to be utilized.
To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument liabilities exceed the total proceeds
received, an immediate charge to income is recognized, in order to initially record the derivative instrument liabilities at their fair
value.
The discount from the face value of the convertible
debt or equity instruments resulting from allocating some or all of the proceeds to the derivative instruments, together with the stated
interest on the instrument, is amortized over the life of the instrument through periodic charges to income, usually using the effective
interest method.
The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.
If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous
charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities
are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument
could be required within twelve months of the balance sheet date.
Revenue
Recognition
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and Accounting Standards Codification
(“ASC”) Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”), (collectively,
“Topic 606”). On January 1, 2019, the Company adopted Topic 606. ASU 2014-09 requires entities to recognize revenue through
the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination
of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity
satisfies the performance obligations. The Company implemented ASU 2014-09 for the interim and annual reporting periods of 2015 thru
2017, which resulted in no changes to our financial statements as there is no revenue reported in the years presented.
Business
Combinations
Each
investment in a business is being measured and determined whether the investment should be accounted for as a cost-basis investment,
an equity investment, a business combination, or a common control transaction. An investment in which the Company do not have a controlling
interest and which the Company is not the primary beneficiary but where the Company has the ability to exert significant influence is
accounted for under the equity method of accounting. For those investments that we account for in accordance ASC 805, Business Combinations,
the Company records the assets acquired and liabilities assumed at the management’s estimate of their fair values on the date of
the business combination. The assessment of the estimated fair value of each of these can have a material effect on the reported results
as intangible assets are amortized over various lives. Furthermore, according to ASC 805-50-30-5, when accounting for a transfer of assets
or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests shall initially
measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the
date of transfer.
Net
Income (Loss) Per Common Share
Basic
loss per common share (“EPS”) is calculated by dividing the net loss available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common stock. The number of common shares that are exercisable
from warrants or converted from debt into common stock is material to affect diluted EPS results.
Stock-Based
Compensation
On
August 8, 2011, the Company adopted the fair value recognition provisions codified in ASC 718, Compensation-Stock Compensation. The Company
adopted those provisions using the modified-prospective-transition method. Under this method, compensation cost recognized for all periods
prior to April 30, 2012, includes a) compensation cost for all share-based payments granted prior to, but not yet vested as of November
30, 2005, based on the grant-date fair value and b) compensation cost for all share-based payments granted subsequent to November 30,
2005, based on the grant-date fair value. In addition, deferred stock compensation related to non-vested options is required to be eliminated
against additional paid-in capital. The results for periods prior to April 30, 2012, were not restated.
The
Company accounts for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in
accordance with ASC 505, Equity. Costs are measured at the estimated fair market value of the consideration received or the estimated
fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration
other than employee services is determined on the earliest of a performance commitment or completion of performance by the counterparty.
There are no stock based compensation commitments in existence at, April 30, 2017.
Income
Taxes
Potential
benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted the
accounting standards codified in ASC 740, Income Taxes as of its inception. Pursuant to those standards, the Company is required to compute
tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses has not been recognized in these
financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried
forward in future years.
ASC
740-10-25 prescribes recognition thresholds that must be met before a tax position is recognized in the financial statements and provides
guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. An entity
may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. Based on its evaluation,
the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements.
The
Company does not have any unrecognized tax benefits as of April 30, 2017, and 2016 that, if recognized, would affect the Company’s
effective income tax rate. The Company’s policy is to recognize interest and penalties related to income tax issues as components
of income tax expense. The Company did not recognize or have any accrual for interest and penalties relating to income taxes as of April
30, 2017, and 2016 .
Common
Share Non-Monetary Consideration
In
situations where common shares are issued and the fair value of the goods or services received is not readily determinable, the fair
value of the common shares is used to measure and record the transaction. The fair value of the common shares issued in exchange for
the receipt of goods and services is based on the stock price as of the earliest of the date at which:
| |
i. |
The
counterparty’s performance is complete; |
| |
ii. |
commitment
for performance by the counterparty to earn the common shares is reached; or |
| |
iii. |
the
common shares are issued if they are fully vested and non-forfeitable at that date. |
Share
Purchase Warrants
The
Company accounts for common share purchase warrants at fair value in accordance with ASC 815, “Derivatives and Hedging”.
The Black-Scholes option pricing valuation method is used to determine fair value of these warrants. Use of this method requires that
the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates.
Convertible
Instruments
The
Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives
and Hedging Activities”. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account
for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which
(a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic
characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the
host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c)
a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Each reporting
period, the Company evaluates whether convertible debt to acquire stock of the Company contain provisions that protect holders from declines
in the stock price or otherwise could result in modification of the exercise price under the respective convertible debt agreements.
The
Company accounts for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from
their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion
options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized
over the term of the related debt to their stated date of redemption. The Company uses a Binomial Lattice Model to judge the fair value
of all of its currently outstanding derivative liabilities and to amortize any debt discounts that may have a remaining balance.
Risks
and Uncertainties
The
Company is not able to predict the ultimate impact political and health concerns will have on its business; however, if the current economic
conditions continue, the Company will be forced to significantly scale back its business operations and its growth plans and
could ultimately have a significant negative impact on the Company.
Recently and
Issued Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.
NOTE
4. RELATED PARTY TRANSACTIONS
During
the year ended April 30, 2017, a stockholder of the Company loaned the Company $932 to pay for certain expenses. Total loans payable
to stockholders, on April 30, 2017 and 2016 totaled $50,745 and $49,813, respectively. The loans bear no interest and are payable
on demand.
Management
Agreements
On
February 18, 2014, the Company signed five-year management agreements with Chad S. Johnson, CEO, Robert Kane, CFO, and Raymond Dabney,
Managing Consultant. Pursuant to the agreements, the executives and managing consulting were each issued 5,000,000 shares of Rule
144 restricted common stock each with a fair market value of $15,000,000, or $3 per share, in addition to being paid $5,000 each per
month for management fees.
For
the years ended April 30, 2017, the following executive compensation was recorded:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Related
Party | |
Position | |
Stock-based
Compensation | |
Management
Fees |
| Benjamin
Tam | |
| CFO | | |
$ | 1,050,000 | | |
| — | |
| Robert
Kane | |
| CFO,
Director | | |
| — | | |
| 60,000 | |
| Raymond
Dabney | |
| Managing
Consultant | | |
| — | | |
| 60,000 | |
| | |
| | | |
$ | 1,050,000 | | |
$ | 120,000 | |
NOTE
5. STOCKHOLDERS' EQUITY
Authorized
The
Company is authorized to issue 200,000,000 shares of common stock, having a par value of $0.001 per share.
Issued
and Outstanding
Common
Stock
In
February 2012, the Company issued 25,000,000 shares of common stock at par value of $0.001.
On
August 15, 2013, the Company did a 5:1 forward split of its common stock bringing the issued and outstanding common stock to 125,000,000.
During
February 2014, the Company issued 15,000,000 shares of its common stock with a fair market value of $45,000,000, as bonuses pursuant
to the terms of three management agreements with officer's and stockholders for management services rendered to the Company.
For
the year ended April 30, 2014, the Company issued 2,200,000 shares of the Company's common stock with a fair market value of $40,788,000
to certain consultants, pursuant to the terms of their consulting agreements, for services to be provided in future periods. For
the year ended April 30, 2014, $322,037 had been expensed. This contract was cancelled in 2015 and the consulting charge reversed.
On
June 24, 2014, the Company entered into a Property Purchase Agreement to acquire properties in Washington State and California for business
operations. A total of $200,000 in deposits were paid towards to acquisition of the properties in addition to issued 100,000 Rule
144 restricted shares of common stock with a fair market value of $1,250,000. The agreement was cancelled on October 24, 2014. No charges
were taken except that the common shares were issued and as of the date of this filing have not been recovered.
On
June 24, 2014, the Company entered into a five year Consulting Agreement with a consultant to perform services related to acquiring
properties in Washington, Nevada, Colorado, and California in addition to managing them for the Company in exchange for 1,150,000
Rule 144 restricted shares of common stock with a fair market value of $14,375,000.
This project was cancelled in 2015. No charges were taken except that the common shares were issued and as of the date of this
filing have not been recovered.
On
May 1, 2014, the Company closed the acquisition of WebCongress, Inc., a Nevada corporation and Miami based technology, education, and
consulting company. Pursuant to the April 15, 2014, Share Purchase Agreement, the Company issued 100,000 Rule 144 Restricted shares
of common stock with a fair market value of $1,854,000 or $18.54 per share to the principals, to acquire WebCongress. The Company
also committed to funding a total of $3,000,000 to cover operating costs over three years. This contract was cancelled in 2015 and the
stock has been returned but not cancelled.
On
September 14, 2016, the Company hired Ben Tam as CFO and agreed to issue 2,500,000 shares of common stock for services. The shares were
not issued and valued at the price on the employment date of $0.42, or $1,050,000. The shares were issued on January 11, 2018. The Company
recognized $1,050,000 in stock based compensation during the year ended April 30, 2017. The Company terminated the agreement in January
2020 for non-performance. The shares have not been recovered.
On
September 28, 2016, the Company agreed to acquire Aeonik, Inc. for 15,000,000 shares of common stock. The shares were not issued and
valued at the market price of $0.42, or $6,300,000. The shares were issued on January 11, 2018. The acquisition was terminated on January
15, 2018. The shares have not been recovered.
The
Company has not issued any warrants or stock options.
NOTE
6. INCOME TAXES
Potential
benefits of income tax losses and other tax assets are not recognized in the accounts until realization is more likely than not. As of
April 30, 2017, the Company has operating loss carry forwards of approximately $46,575,912 for tax purposes in various jurisdictions
subject to expiration as described below. Pursuant to ASC 740, Income Taxes, the Company is required to compute tax asset benefits
for net operating losses carried forward and other items giving rise to deferred tax assets. Future tax benefits which may arise as a
result of these losses and other items have not been recognized in these financial statements, as their realization is determined not
likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these items.
The
actual income tax provisions differ from the expected amounts calculated by applying the combined income tax statutory rates applicable
in each jurisdiction to the Company’s loss before income taxes and non-controlling interest. The calculated tax deferred benefit
on April 30, 2017, and 2016 is based on the current Federal statutory income tax rate of 35% applied to the loss
before provision for income taxes.
The
following table accounts for the differences between the actual income tax benefit and amounts computed for the years ended April 30,
2017, and 2016:
| |
|
|
|
|
|
|
|
|
| | |
Years Ended April 30, |
| | |
2017 | |
2016 |
Tax
benefit at the federal statutory rate | |
$ | 46,575,912 | | |
$ | 45,404,973 | |
| | |
| | | |
| | |
| Non-deductible costs | |
| — | | |
| — | |
| Decrease in valuation allowance | |
| (46,575,912 | ) | |
| (45,404,973 | ) |
| Income tax expense | |
$ | — | | |
$ | — | |
The
components of the deferred tax asset and deferred tax liability on April 30, 2017, and 2016 are as follows:
| |
|
|
|
|
|
|
|
|
| | |
April 30, |
| | |
2017 | |
2016 |
| Deferred tax assets | |
$ | 9,780,942 | | |
| 15,891,741 | |
| | |
| | | |
| | |
| Valuation allowance | |
| (9,780,942 | ) | |
| (15,891,741 | ) |
| | |
$ | — | | |
| — | |
A
valuation allowance has been provided to reduce the net deferred tax asset, as management determined that it is more likely than not
that the deferred tax assets will not be realized.
On
April 30, 2017, the Company has approximately a net operating loss carry forward for United States income tax purposes approximating
$46,576,000. These losses expire in varying amounts between April 30, 2033, and 2037.
NOTE
7. BASIS OF REPORTING
The
Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business.
The
Company has experienced a loss from operations during its development stage as a result of its investment necessary to achieve its operating
plan, which is long-range in nature. For the period from inception (August 8, 2011) to April 30, 2017, the Company incurred a net
loss of approximately $46,575,912. In addition, the Company has no significant assets or revenue generating operations at, April
30, 2017.
The
Company currently does not have sufficient cash to sustain itself for the next 12 months and will require additional funding in order
to execute its plan of operations and to continue as a going concern. To meet its cash needs, management expects to raise capital
through a private placement offering. In the event that this funding does not materialize, certain stockholders have agreed, orally,
to loan, on a non-interest-bearing demand basis, sufficient funds to maintain the Company's operations for the next 12 months.
The
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going
concern.
NOTE
8. FAIR VALUE MEASUREMENT
The
Company values its derivative instruments under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value,
and expands disclosures about fair value measurements.
Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the
asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can
be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability
of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the
lowest priority to unobservable inputs (level 3 measurement).
The
three levels of the fair value hierarchy are as follows:
Level
1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets
are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on
an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and
listed equities.
Level
2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly
observable as of the reported date.
Level
3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used
with internally developed methodologies that result in management’s best estimate of fair value.
The
Company’s financial instruments consisted of cash, prepaid expense, deposit, accounts payable and accrued liabilities, line of
credit, loan from stockholders and convertible debt. The estimated fair value of cash, prepaid expense, deposit, accounts payable and
accrued liabilities, line of credit, loan from stockholders approximates its carrying amount due to the short maturity of these instruments.
The recognition of the derivative values of convertible debt are based on the weighted-average Black-Scholes option pricing model, which
the Company’s classifies as a level three of the fair value measurement hierarchy.
The
derivative liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical quoted
market prices for the Company’s common stock and are classified within Level 3 of the valuation hierarchy.
NOTE
9. SUBSEQUENT EVENTS
During
the year ended April 30, 2020, the Company received an advance of $200,000 from a consultant, which was utilized to pay professional,
administrative and consulting fees. The advance in non-interest bearing and payable upon demand.