ITEM
1. FINANCIAL STATEMENTS
Celexus,
Inc.
Condensed
Balance Sheets
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|
December 31, 2019
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|
March 31,
2019
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Assets
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|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash in bank
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|
$
|
5,873
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|
|
$
|
44,862
|
|
Total current assets
|
|
|
5,873
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|
|
|
44,862
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|
Total assets
|
|
$
|
5,873
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|
|
$
|
44,862
|
|
|
|
|
|
|
|
|
|
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Liabilities and Stockholders' Deficit
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|
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Current liabilities
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|
|
|
|
|
|
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Accounts payable and accrued expenses
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$
|
7,111
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|
|
$
|
3,557
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|
Related party advances payable
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|
|
79,169
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|
|
|
58,500
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|
Interest payable – related party
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|
|
8,087
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|
|
|
5,802
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|
Convertible revolving demand note - related party
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|
|
25,000
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|
|
|
25,000
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|
Total current liabilities
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|
|
119,367
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|
|
|
92,859
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|
Total liabilities
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|
|
119,367
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|
|
|
92,859
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|
|
|
|
|
|
|
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|
Commitments and contingencies
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|
|
—
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|
|
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—
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|
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|
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|
|
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Stockholders' Deficit
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|
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Common stock: $0.001 par value; 1,500,000,000 shares authorized; 6,288,457 shares issued and outstanding
|
|
|
6,288
|
|
|
|
6,288
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|
Additional paid-in capital
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|
|
8,878,425
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|
|
|
8,878,425
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|
Retained deficit
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|
|
(8,998,207
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)
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|
|
(8,932,710
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)
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Total stockholders' deficit
|
|
|
(113,494
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)
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|
|
(47,997
|
)
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Total liabilities and stockholders' deficit
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|
$
|
5,873
|
|
|
$
|
44,862
|
|
(The
accompanying notes are an integral part of these financial statements)
Celexus,
Inc.
Condensed Statements of Operations
(Unaudited)
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|
Three Months Ended
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Nine Months Ended
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December 31, 2019
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December 31, 2018
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|
December 31, 2019
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|
December 31, 2018
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Revenue
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|
$
|
—
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|
|
$
|
—
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|
|
$
|
—
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|
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$
|
—
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|
|
|
|
|
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Operating expenses
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General and administrative
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3,325
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|
|
|
2,570
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|
|
|
7,394
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|
|
|
3,770
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|
Professional fees
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|
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6,995
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|
|
|
—
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|
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55,820
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|
|
|
48
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|
Total operating expenses
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|
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10,320
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|
|
|
2,570
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|
|
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63,214
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3,818
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|
|
|
|
|
|
|
|
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Loss from operations
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|
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(10,320
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)
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|
|
(2,570
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)
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|
|
(63,214
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)
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|
|
(3,818
|
)
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|
|
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|
|
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Other income (expenses)
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Gain on forgiveness of liabilities
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|
—
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|
|
|
—
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|
|
|
2
|
|
|
|
—
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|
Interest expense
|
|
|
(784
|
)
|
|
|
(712
|
)
|
|
|
(2,285
|
)
|
|
|
(2,078
|
)
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Total other income (expenses)
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|
|
(784
|
)
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|
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(712
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)
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|
(2,283
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)
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|
|
(2,078
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)
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|
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Net loss
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|
$
|
(11,104
|
)
|
|
$
|
(3,282
|
)
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|
$
|
(65,497
|
)
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|
$
|
(5,896
|
)
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|
|
|
|
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Basic and diluted loss per common share
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|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
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Weighted average number of common shares outstanding - basic and diluted
|
|
|
6,288,457
|
|
|
|
6,288,457
|
|
|
|
6,288,457
|
|
|
|
6,288,457
|
|
(The
accompanying notes are an integral part of these financial statements)
Celexus,
Inc.
Statement of Changes in Stockholders’
Deficit
For the Nine Months Ended December 31, 2019
(Unaudited)
|
Common Stock
|
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Additional Paid-in
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Retained
|
|
Total Stockholders'
|
|
Shares
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|
Amount
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|
Capital
|
|
Deficit
|
|
Deficit
|
Balance, March 31, 2019
|
6,288,457
|
|
$
|
6,288
|
|
$
|
8,878,425
|
|
$
|
(8,932,710)
|
|
$
|
(47,997)
|
Net loss for the period
|
-
|
|
|
-
|
|
|
-
|
|
|
(53,629)
|
|
|
(53,629)
|
Balance, June 30, 2019
|
6,288,457
|
|
|
6,288
|
|
|
8,878,425
|
|
|
(8,986,339)
|
|
|
(101,626)
|
Net loss for the period
|
-
|
|
|
-
|
|
|
-
|
|
|
(764)
|
|
|
(764)
|
Balance, September 30, 2019
|
6,288,457
|
|
|
6,288
|
|
|
8,878,425
|
|
|
(8,987,103)
|
|
|
(102,390)
|
Net loss for the period
|
-
|
|
|
-
|
|
|
-
|
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|
(11,104)
|
|
|
(11,104)
|
Balance, December 31, 2019
|
6,288,457
|
|
$
|
6,288
|
|
$
|
8,878,425
|
|
$
|
(8,998,207)
|
|
$
|
(113,494)
|
Celexus, Inc.
Statement of Changes in Stockholders’
Deficit
For the Nine Months Ended December 31, 2018
(Unaudited)
|
Common Stock
|
|
Additional Paid-in
|
|
Retained
|
|
Total Stockholders'
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Deficit
|
Balance, March 31, 2018
|
6,288,457
|
|
$
|
6,288
|
|
$
|
8,869,147
|
|
$
|
(8,911,476)
|
|
$
|
(36,041)
|
Net loss for the period
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,283)
|
|
|
(1,283)
|
Balance, June 30, 2018
|
6,288,457
|
|
|
6,288
|
|
|
8,869,147
|
|
|
(8,912,759)
|
|
|
(37,324)
|
Net loss for the period
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,331)
|
|
|
(1,331)
|
Balance, September 30, 2018
|
6,288,457
|
|
|
6,288
|
|
|
8,869,147
|
|
|
(8,914,090)
|
|
|
(38,655)
|
Related party gain on extinguishment of debt
|
-
|
|
|
-
|
|
|
9,278
|
|
|
-
|
|
|
9,278
|
Net loss for the period
|
-
|
|
|
-
|
|
|
-
|
|
|
(3,282)
|
|
|
(3,282)
|
Balance, December 31, 2018
|
6,288,457
|
|
$
|
6,288
|
|
$
|
8,878,425
|
|
$
|
(8,917,372)
|
|
$
|
(32,659)
|
(The
accompanying notes are an integral part of these financial statements)
Celexus,
Inc.
Condensed Statements of Cash Flows
(Unaudited)
|
|
Nine
Months Ended
|
|
|
December
31, 2019
|
|
December
31, 2018
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(65,497
|
)
|
|
$
|
(5,896
|
)
|
Adjustments
to reconcile net loss to net cash flows used in operating activities:
|
|
|
|
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
3,554
|
|
|
|
3,818
|
|
Increase
(decrease) in interest payable
|
|
|
2,285
|
|
|
|
2,078
|
|
Net
cash flows used in operating activities
|
|
|
(59,658
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Net
cash flows from investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from related party advances
|
|
|
20,669
|
|
|
|
—
|
|
Net
cash flows from financing activities
|
|
|
20,669
|
|
|
|
—
|
|
Change
in cash and cash equivalents
|
|
|
(38,989
|
)
|
|
|
—
|
|
Cash
and cash equivalents, beginning of period
|
|
|
44,862
|
|
|
|
—
|
|
Cash
and cash equivalents, end of period
|
|
$
|
5,873
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Interest
paid in cash
|
|
$
|
—
|
|
|
$
|
—
|
|
Income
taxes paid in cash
|
|
$
|
—
|
|
|
$
|
—
|
|
(The
accompanying notes are an integral part of these financial statements)
Celexus,
Inc.
Notes to Condensed Financial Statements
December 31, 2019
(Unaudited)
NOTE 1 –Organization and Going
Concern
Celexus, Inc. (the Company)(formerly Telupay
International, Inc.; formerly i-Level Media Group Incorporated; formerly Jackson Ventures, Inc.) was incorporated in the State
of Nevada on August 23, 2005 as Jackson Ventures Ltd. and its initial operations included the acquisition and exploration of mineral
resources. In March, 2007 the Company changed its name to i-Level Media Group Incorporated (“i-Level”) and changed
its business to that of developing and operating a digital media network service. This business ceased operations on December 1,
2008 and its business was wound-up.
On September 24, 2013, the Company effected
the acquisition of Telupay, PLC by way of a reverse merger. As a result of the Merger, the Company changed its name to Telupay
International Inc., effectuated a 1.5-for-1 forward stock split and Telupay became a wholly-owned subsidiary. Telupay was engaged
in the mobile banking and payment processing business primarily in the Philippines, Peru, Indonesia, Myanmar and the United Kingdom.
Telupay PLC was the primary operating subsidiary of the Company accounting for most of our assets and liabilities. Telupay PLC
never reached profitability and was spun out of the Company shortly after December 31, 2014 to the former directors and officers
of the Company whereby the business, including the assets and liabilities of Telupay PLC were transferred for no consideration.
As a result, the Company had no operations.
On January 18, 2017, Barton Hollow, LLC, a
limited liability company, was appointed custodian for the Company by the District Court of Clark County, Nevada. The Company was
reinstated by the Nevada Secretary of State on November 9, 2017 and on September 9, 2018 changed its name to Celexus, Inc. The
Company currently is looking to acquire an operating business or develop a business.
On March 27, 2019 the Board of Directors
elected David Soto as COO of the corporation. As of May 20, 2019, Lisa Averbuch has resigned as President of Celexus, Inc. (the
“Company”). Ms. Averbuch will continue to serve as a Director of the Company and maintains the authority to vote the
shares of the Company’s majority shareholder, Global Services Unlimited Group, Inc.
Mr. Soto also to serve as Chief Executive
Officer of HempWave, a hemp industry company with which the Company has entered into an agreement by which HempWave will be acquired
following the completion of an appraisal
On May 13, 2019,
Celexus has entered into a definitive agreement by
which it will acquire a related entity, HempWave f/k/a Bio Distributions, upon the completion of an appraisal satisfactory to management
of both companies. On July 31, 2019 the Exchange Agreement between Celexus and Hempwave was Amended until January 3, 2020 subject
to the conditions of the agreement. During December 2019 the date of the merger completion was subsequently changed to May 31,
2020 or sooner.
On
that same date, Michael R Cashion, was hired as Chief Sales Strategist
for the corporation. Michael is a Start up Sales strategist that is focused on driving revenue. His approach in creating teams
and implementing strategic plans has created strong growth in different markets. With a executive level presence, he is able work
with customers, Board of Directors, and internal stake holders to drive sales and profits.
On
July 31, 2019, Celexus, Inc. (the “Company”) and its affiliate, Bio Distribution, Inc. (d/b/a “HempWave”)
entered into an amendment to the acquisition agreement entered in February 2019, by which the Company would acquire HempWave by
issuing stock in exchange for the shares of
HempWave (the “Exchange Agreement”). The amendment includes changes to four provisions of the Exchange Agreement, and
are summarized below:
|
1.
|
Section A of the Exchange Agreement is amended to provide that instead of the acquisition for $13,000,000 in Company stock, the value of the stock to be issued will be calculated by an independent appraisal;
|
|
2.
|
Section V.02(e) of the Exchange Agreement is amended to clarify that the due diligence investigation conducted by the Company shall include an appraisal of HempWave;
|
|
3.
|
Section V.03(f) of the Exchange Agreement is amended to include a corresponding change to that made in Section V.02(e) of the Exchange Agreement; and
|
|
4.
|
Section VI.01(c) of the Exchange Agreement is amended to extend the period for the completion of due diligence and to effect the acquisition from July 31, 2019 to January 3, 2020.
|
Celexus, Inc.’s business plan is to be
an acquisition, management and holding company for early stage, high growth businesses and technologies in the hemp industry. The
Company has developed specific criteria and standards that must be met by each acquisition candidate. Once identified, the Company
will engage its team of industry professionals to perform thorough due diligence on the potential acquisition partner. Following
successful due diligence, Celexus will send in its M & A team to structure and present an attractive win win proposal to the
selling entity.
Going Concern
The Company’s financial statements are
prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established
an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. As of December
31, 2019, the Company had an accumulated deficit of $8,998,207. The ability of the Company to continue as a going concern is dependent
on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain
adequate capital, it could be forced to cease operations.
In view of these conditions, the ability of
the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations and on the
ability of the Company to obtain necessary financing to fund ongoing operations. Historically, the Company has relied upon internally
generated funds and funds from the sale of shares of stock, issuance of promissory notes and loans from its shareholders and private
investors to finance its operations and growth. Management is planning to raise necessary additional funds for working capital
through loans and/or additional sales of its common stock. However, there is no assurance that the Company will be successful in
raising additional capital or that such additional funds will be available on acceptable terms, if at all. Should the Company be
unable to raise this amount of capital its operating plans will be limited to the amount of capital that it can access. These financial
statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern
and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at
amounts different from those reflected in the accompanying financial statements.
NOTE 2 – Summary of Significant
Accounting Policies
Use of Estimates
The preparation of the Company’s consolidated
financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities
and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going
basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions.
Cash
Cash includes amounts held in bank accounts.
The Company has no amounts deposited with financial institutions in excess of federally insured limits.
Fair Value Measurements
The Company measures fair value as the price
that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market
participants at the reporting date. The Company utilizes a three-tier hierarchy which prioritizes the inputs used in the valuation
methodologies in measuring fair value:
Level 1. Valuations based on quoted
prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets
or liabilities measured and recorded on a recurring or nonrecurring basis with Level 1 inputs.
Level 2. Valuations based on quoted
prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or
other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
The Company has no assets or liabilities measured and recorded on a recurring or nonrecurring basis with Level 2 inputs.
Level 3. Valuations based on inputs
that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The
Company has no assets or liabilities measured and recorded on a recurring or nonrecurring basis with Level 3 inputs.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents,
accounts payable and interest payable approximate their fair value because of the short-term nature of these instruments and their
liquidity. It is not practical to determine the fair value of the Company’s debentures payable due to the complex terms.
Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial
instruments.
Stock Based Compensation
When applicable, the Company will account for
stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based
payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated
statement of operations based on their fair values at the date of grant.
The Company accounts for stock-based payments
to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments
to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated
statement of operations based on the value of the vested portion of the award over the requisite service period as measured at
its then-current fair value as of each financial reporting date.
The Company calculates the fair value of option
grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized
during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires
forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised,
if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures”
is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered
stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense
for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well
as employee termination patterns. The resulting stock-based compensation expense for both employee and non-employee
awards is generally recognized on a straight-line basis over the period in which the Company expects to receive the benefit, which
is generally the vesting period.
Loss per Share
The computation of basic earnings per share
(“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares
of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of
basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially
dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume
conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore,
when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the
EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method
only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants
(they are in the money). See “NOTE 5 - Net Loss Per Share” for further discussion.
Income Taxes
The Company accounts for income taxes using
the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the
future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and tax credits and loss carry-forwards. 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 and carry-forwards are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax
assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain
income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded
as a component of interest expense or other expense, respectively.
Business segments
ASC 280, “Segment Reporting”
requires use of the “management approach” model for segment reporting. The management approach model is based
on the way a company’s management organizes segments within the company for making operating decisions and assessing performance.
The Company determined it has one operating segment.
Recent Accounting Pronouncements
From time to time, new accounting
pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management
believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s
financial statements upon adoption.
NOTE 3 – Debt – Related
Party
On January 18, 2017, the Company entered into
a Revolving Demand Note (the “Revolving Demand Note”) with Securities Compliance Group, Ltd. (the “Creditor”).
Pursuant the Revolving Demand Note, the Company borrowed $25,000 at an annual interest rate of 9.5% with a default rate of 22%.
The Revolving Demand Note may be converted into common stock at an exercise price of par, or $0.001 per share at the discretion
of the Creditor. The Revolving Demand Note does not have a maturity date. The debt discount attributable to the fair value of the
beneficial conversion feature amounted to $17,500 and was accreted on the date of issuance due to no maturity date of the Revolving
Demand Note.
Prior to the Company filing the Form 10 General
Form for Registration of Securities on February 5, 2019, this revolving demand note was acquired by European Trade Partners, LLC
as part of the change in majority ownership. European Trade Partners, LLC is a related party under the control of Lisa Averbuch,
the Company’s major shareholder, member of the board of directors and president.
European Trade Partners, LLC has advanced the
corporation an additional amount of $58,500 as of March 31, 2019 and an additional $20,669 through December 2019. The advances
bear no interest and are payable on demand.
NOTE 4 – Common Stock
On December 10, 2018, it was resolved by the
board of director of the corporation that the name change of the corporation be changed to Celexus and that the outstanding shares
of stock of the corporation be reverse split on a 1 for 90 basis without change to authorized shares. The name change and 1-90
reverse took place open of business April 9, 2019. The 1-90 reverse split has been retroactively accounted for, accordingly.
At December 31, 2019, the Company had 1,500,000,000
authorized shares of common stock with a par value of $0.001 per share and 6,287,384 shares of common stock outstanding.
NOTE 5 - Net Loss Per Share
During the nine months ended December 31, 2019
and 2018, the Company recorded a net loss. Basic net loss per share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period. The Company has not included the effects of convertible debt on net loss
per share because to do so would be antidilutive.
Following is the computation of basic
and diluted net loss per share for the nine months ended December 31, 2019 and 2018:
|
|
Nine months Ended December 31, 2019
|
|
Nine months Ended December 31, 2018
|
Basic and Diluted EPS Computation
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Loss available to common stockholders'
|
|
$
|
(65,497
|
)
|
|
$
|
(5,896
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
6,288,457
|
|
|
|
6,288,457
|
|
Basic and diluted EPS
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
The shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:
|
|
|
|
|
|
|
|
|
Convertible debt
|
|
|
33,087,462
|
|
|
|
30,802,000
|
|
NOTE 6 – Subsequent Events
On February 12, 2020, the Securities and
Exchange Commission (the “SEC”) issued an order suspending trading in the common stock of Celexus, Inc. (the “Company”
or “CXUS”) on the OTC Bulletin Board and OTC Link for a period of 14 days ending on February 27, 2020. In its
order, the SEC alleged that there were “questions that have been raised about the accuracy and adequacy of publicly disseminated
information concerning, among other things, the company’s business combinations, related parties, relationship with its auditors,
control persons, and business prospects.” Neither the Company nor Lisa Averbuch, its officer and director is aware of any
untrue statements of material fact or any omission to state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading, in any of the Company’s filings or press releases.
The Company has discussed the issues with
the Securities and Exchange Commission and plans to address and resolve these concerns.
There has been no change to the Company’s
business plan. The Company will be seeking to have a broker or dealer publish quotations for the Company’s common stock
on the OTC Bulletin Board or another interdealer quotation system, although there can be no assurance that this will be achieved.
Management has reviewed material events subsequent
of the period ended December 31, 2019 and through the date of filing of financial statements in accordance with FASB ASC 855 “Subsequent
Events”.
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains
forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact
may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective
products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest
rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives
of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly
those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” and similar expressions or the negative of these similar terms. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies
to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking
and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ
materially from those projected in the information.
These forward-looking statements are not guarantees
of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking
statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general
economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether
we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to
successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources”.
We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities
laws. Unless stated otherwise, terms such as the “Company,” “Celexus,” “we,” “us,”
“our,” and similar terms shall refer to Celexus, Inc., a Nevada corporation.
Overview
We intend to become a key supplier of
high grade CBD hemp seeds and clones to international farmers entering the market. The quality, durability, performance and certification
on hemp seeds and clones will determine their value. Our seeds will ultimately be bio-engineered to grow large, robust crops, durable
to a wide range of weather and altitude and contain some of the highest percentages of CBD on the market. Our genetic improvement
strategy includes the following objectives:
|
·
|
Minimal male contamination
|
|
·
|
Reliable low levels of THC content
|
|
·
|
Continual development of new improvements to our strains of hemp seeds and clones
|
We are committed to breeding strains of
hemp that can maximize the profitability of the industrial hemp industry.
We expect the proposed HempWave acquisition
to be a key part of establishing the company as a leader in the hemp industry. The acquisition agreement that was executed in February
2019 is expected to be fully consummated by May 31, 2020 or sooner, providing all due diligence and market analysis confirms that
moving forward will be beneficial to the company and its shareholders. As noted in the Exchange Agreement filed in February 2019
with the SEC, the deal consists of the company acquiring 100% of the outstanding shares of HempWave (formerly Bio Distribution,
Inc) in exchange for common stock of the Company based on a fair market appraisal valuation.
We expect to generate operating losses
and experience negative cash flows for the immediate future and it is uncertain if we will achieve future profitability. We may
not have enough funds to sustain the business until it becomes profitable. The company needs $500,000 for additional capital in
order to fund operations through, at a minimum, the next 12 months.
Results of Operations
Working Capital
|
|
December 31, 2019
|
|
March 31, 2019
|
Current assets
|
|
$
|
5,873
|
|
|
$
|
44,862
|
|
Current liabilities
|
|
$
|
119,367
|
|
|
$
|
92,859
|
|
Working capital deficit
|
|
$
|
(113,494
|
)
|
|
$
|
(47,997
|
)
|
Cash Flows
|
|
December 31, 2019
|
|
December 31, 2018
|
Cash flows used in operating activities
|
|
|
(59,658
|
)
|
|
|
—
|
|
Cash flows provided by financing activities
|
|
|
—
|
|
|
|
—
|
|
Cash flows used in investing activities
|
|
|
20,669
|
|
|
|
—
|
|
Net change in cash during period
|
|
|
(38,989
|
)
|
|
|
—
|
|
Results for the Three Months Ended December
31, 2019 Compared to the Three Months Ended December 31, 2018
Operating Revenues
The Company had no revenue for the three months
ended December 31, 2019 or for the same period in 2018.
Cost of Revenues
The Company had no cost of revenues for the
three months ended December 31, 2019 or for the same period in 2018.
General and Administrative Expenses
General and administrative expenses and professional
fees, consisted primarily of consulting fees, professional fees, in preparation of a Registration Statement on Form S-1, SEC Reporting
obligations and accounting expenses. For the three months ended December 31, 2019 and December 31, 2018, general and administrative
expenses increased to $10,320 from $2,570 for the same period in 2018 representing an increase of $7,750 or 301%. The $7,750 increase
is primarily attributable to an increase in professional fees due to the filing of the Registration Statement on Form S-1.
Other Income (Expense)
Other income (expense) consisted of interest
income from third-party notes. For the three months ended December 31, 2019, there was a $784 loss from interest on the third-party
notes. There was a $712 loss on interest for the same period in 2018.
Net Income (loss)
Our net loss for the three months ended December
31, 2019, was $11,104 compared with net loss of $3,282 for the three months ended December 31, 2018, an increase of $7,822 or 238%.
The net loss is influenced by the matters discussed above.
Results for the Nine Months Ended December
31, 2019 Compared to the Nine Months Ended December 31, 2018
Operating Revenues
The Company had no revenue for the nine months
ended December 31, 2019 or for the same period in 2018.
Cost of Revenues
The Company had no cost of revenues for the
nine months ended December 31, 2019 or for the same period in 2018.
Operating Expenses
General and administrative expenses and professional
fees consisted primarily of consulting fees, professional fees, in preparation of a Registration Statement on Form S-1, SEC Reporting
obligations and accounting expenses. For the nine months ended December 31, 2019 and December 31, 2018, general and administrative
expenses increased to $63,214 from $3,818 for the same period in 2018 representing an increase of $59,396 or 1,556%. The $59,396
increase is primarily attributable to an increase in professional fees in relation to the Company filing its Registration Statement
on Form S-1.
Other Income (Expense)
Other income (expense) consisted of interest
income from third-party notes. For the nine months ended December 31, 2019, there was a $2,285 loss from interest on that third-party
notes. There was a $2,078 loss on interest for the same period in 2018.
Net Income (loss)
Our net loss for the nine months ended December
31, 2019, was $65,497 compared with net loss of $5,896 for the nine months ended December 31, 2018, an increase of $59,601 or 1,011%.
The net loss is influenced by the matters discussed above.
Liquidity and Capital Resources
The ability of the Company to continue as a
going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its
inception, the Company has been funded by related parties and third parties, through capital investment and borrowing of funds.
At December 31, 2019, the Company had total
current assets of $5,873 compared to $44,862 at December 31, 2018. Current assets consisted primarily of cash. The decrease in
current assets $38,989 was primarily attributed to an increase in corporate expenses.
At December 31, 2019, the Company had total
current liabilities of $119,367 compared to $92,859 at December 31, 2018. Current liabilities consisted primarily of the accrued
expenses to a related party and notes payable to third parties. The increase in our current liabilities was attributed to the increase
in the amounts owed to a related party of $79,169 and the increase in accounts payable and accrued expenses of $7,111.
We had negative working capital of $113,494
as of December 31, 2019 compared to $47,997 as of December 31, 2018, an increase of $65,497 or 134%.
Our
operations will not fully commence until we complete our acquisition of HempWave by fulfilling the Exchange Agreement with HempWave
prior to the end of July 2019. Pursuant to the Exchange Agreement, we will issue Common Stock in the amount to be determined during
the due diligence process to HempWave as compensation. Over the course of the current fiscal year ending March 31, 2020, we intend
to explore various fundraising methods available to us to replenish the company’s cash reserves and to expand its operations.
The company needs $500,000 for additional capital in order to fund operations through, at a minimum, the next 12 months.
Cash Flow from Operating Activities
During the nine months ended December 31, 2019,
cash used in operating activities was $65,497 compared to $5,896 for the nine months ended December 31, 2018. The increase in the
amounts of cash used for operating activities was primarily due to the increase in general and administrative expenses in relation
to preparing and filing of the Registration Statement on Form S-1.
Cash Flow from Investing Activities
There were no investing activities for the
nine months ended December 31, 2019 or for the nine months ended December 31, 2018.
Cash Flow from Financing Activities
During the nine months ended December 31, 2019,
cash provided by financing activity was $20,669 compared to $nil provided during the nine months ended December 31, 2018.
Quarterly Developments
None.
Subsequent Developments
On February 12, 2020, the Securities and
Exchange Commission (the “SEC”) issued an order suspending trading in the common stock of Celexus, Inc. (the “Company”
or “CXUS”) on the OTC Bulletin Board and OTC Link for a period of 14 days ending on February 27, 2020. In its
order, the SEC alleged that there were “questions that have been raised about the accuracy and adequacy of publicly disseminated
information concerning, among other things, the company’s business combinations, related parties, relationship with its auditors,
control persons, and business prospects.” Neither the Company nor Lisa Averbuch, its officer and director is aware of any
untrue statements of material fact or any omission to state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading, in any of the Company’s filings or press releases.
Going Concern
We have not attained profitable operations
and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors
stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as
a going concern without further financing.
The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs for the next fiscal year and allow it to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. As of the nine months ended December 31, 2019, the Company has a net loss of $65,497, an accumulated
deficit of $8,998,207 and if the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern during
the next fiscal year, the Company if it does not raise enough funds the Company will need, among other things, additional capital
resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant
shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot
provide any assurances that the Company will be successful in accomplishing any of its plans. We may not have enough funds to sustain
the business until it becomes profitable. The company needs $500,000 for additional capital in order to fund operations through,
at a minimum, the next 12 months.
Future Financings.
We will continue to rely on equity sales of
the Company’s common shares in order to continue to fund business operations. Issuances of additional shares will result
in dilution to existing shareholders. There is no assurance that the Company will achieve any additional sales of the equity securities
or arrange for debt or other financing to fund our business plan of entering the hemp, production and sales industry.
Since inception, we have financed our cash
flow requirements through issuance of common stock and loans to third parties. As we expand our activities, we may, and most likely
will, continue to experience net negative cash flows from operations, pending receipt of revenues. Additionally, we anticipate
obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional
financing to the extent necessary to augment our working capital. In the future we will need to generate sufficient revenues from
sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we
will be successful in raising the necessary funds to execute our business plan.
We anticipate that we will incur operating
losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain.
Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not
limited to, an evolving and unpredictable business model and the management of growth.
To address these risks, we must, among other
things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and
upgrade our business model and website, respond to competitive developments, and attract, retain and motivate qualified personnel.
There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse
effect on our business prospects, financial condition and results of operations.
Critical Accounting Policies.
Our financial statements and accompanying notes
have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Management regularly evaluates the accounting
policies and estimates that are used to prepare the financial statements. A complete summary of these policies is included in Note
1 of the Company’s audited financial statements. In general, management's estimates are based on historical experience, on
information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts
and circumstances. Actual results could differ from those estimates made by management.
Off-Balance Sheet Arrangements
We have no significant 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 that are material to stockholders.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might
have a material impact on its financial position or results of operations.
Contractual Obligations
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.