Notes
to the Consolidated Financial Statements
November
30, 2021
(Unaudited)
NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
BorrowMoney.com,
Inc. (the “Company”), a Florida corporation formed in 2010, provides an internet-based platform that can match mortgage and
loan providers with prospective borrowers. The Company offers to borrowers “screened lenders” and ensures the lenders trustworthiness
and legitimacy. The Company provides institutional lenders with innovative digital solutions by offering fintech technologically advanced
gathered leads through an exclusive proprietary platform.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation -The accompanying financial statements have been prepared in accordance with United States generally accepted
accounting principles (“U.S. GAAP”).
The
interim unaudited consolidated financial statements as of November 30, 2021, and for the three months then ended, have been prepared
in accordance with accounting principles generally accepted in the United States for interim financial information on the same basis
as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments,
necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results
of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. They
do not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements
should be read in conjunction with the Company’s financial statements and notes filed with the SEC for the year ended August 31,
2021.
Going
Concern - The Company adopted Accounting Standards Update No. 2014-15, “Presentation of Financial Statements—Going
Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).
The accompanying unaudited interim consolidated financial statements have been prepared assuming the Company will continue as a going
concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has earned limited revenue since inception and lacks any significant operational history. These matters, among others, raise
substantial doubt about our ability to continue as a going concern.
The
Company is commencing operations to generate sufficient revenue, however the Company’s cash position may not be sufficient to support
the Company’s daily operations. Management intends to raise additional funds by way of a private or public offering. While the
Company believes in the viability of its strategy to commence operations and generate sufficient revenue and in its ability to raise
additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon
the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional
funds by way of private offerings. The financial statements do not include any adjustments related to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue
as a going concern.
Accounting
Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America, requires management to make estimates and assumptions that affect certain reported amounts and disclosures.
These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the
reported amounts of revenues and expenses. Accordingly, actual results could differ from those estimates.
Risks
and Uncertainties - The Company intends to operate in a highly competitive industry that is subject to intense competition, government
regulation and rapid technological change. The Company’s operations are subject to significant risk and uncertainties including
financial, operational, technological, regulatory and other risks associated with an emerging business, including the potential risk
of business failure.
Cash
and Cash Equivalents - For financial statement presentation purposes, the Company considers those short-term, highly liquid investments
with original maturities of three months or less to be cash or cash equivalents. There were no cash equivalents on November 30, 2021
and August 31, 2021.
Concentrations
of Credit Risk - Accounts which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents.
The Company considers all highly liquid instruments with an original purchased maturity of three months or less to be cash equivalents.
The Company maintains its cash and equivalents at insured financial institutions. The balances of which, at times may exceed the FDIC
insured limits. Management believes the risk of loss is minimal.
Fair
Value of Financial Instruments - The Company’s financial instruments consist of cash and notes payable. Management estimates
that the fair value of the notes payable does not differ materially from the aggregate carrying value of these financial instruments
recorded (at cost) in the accompanying balance sheets. We have financial assets and liabilities, not required to be measured at fair
value on a recurring basis, which primarily consist of cash, payables, and debt. The carrying value of cash and payables, approximate
their fair values due to their short-term nature. Considerable judgment is required in interpreting market data to develop the estimates
of fair value and, accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current
market exchange.
Fair
Value Measurements - The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes
the inputs to valuation techniques 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 measurements) and the lowest priority to unobservable inputs (level 3 measurements).
The
three levels of inputs which prioritize the inputs used in measuring fair value are:
Level
1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company
has the ability to access.
Level
2: Inputs to the valuation methodology include:
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Quoted
prices for similar assets or liabilities in active markets;
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Quoted
prices for identical or similar assets or liabilities in inactive markets;
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Inputs
other than quoted prices that are observable for the asset or liability; and
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Inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
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If
the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the
asset or liability.
Level
3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
assets or liabilities fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use
of unobservable inputs.
When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current
market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the
new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. There were no significant
transfers of financial assets or financial liabilities between the hierarchy levels.
Revenue
Recognition – The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) No. 2014-09,
“Revenue from Contracts with Customer”. The Company applies the following five steps in order to determine the appropriate
amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
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Identification
of the contract with a customer
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Identification
of the performance obligations in the contract
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Determination
of the transaction price
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Allocation
of the transaction price to the performance obligations in the contract
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Recognition
of revenue when, or as, the Company satisfies a performance obligation
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Costs
to Obtain Customer Contracts
Sales
commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized
and amortized on a straight-line basis over the anticipated period of benefit. We determined the period of benefit by taking into consideration
the length of our customer contracts, our technology lifecycle, and other factors. Amortization expense is recorded in sales and marketing
expense within our statement of operations. Historically we have not incurred incremental cost to acquire customer contracts.
Stock-Based
Awards - The Company measures the cost of employee services received in exchange for an award of equity instruments, including
stock options, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee
is required to provide service in exchange for the award, usually the vesting period. The Company estimates the fair value of share-based
payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected
to vest is recognized as expense over the requisite service periods in the Company’s statement of operations. The forfeitures are
estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. No
awards were granted for the three months ended November 30, 2021 and the year ended August 31, 2021.
Income
Taxes - The Company accounts for deferred income taxes on the asset and liability method whereby deferred tax assets are recognized
for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of enactment.
Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all
of the deferred tax assets will not be realized.
When
tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that
meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely
of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken
that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated
interest and penalties that would be payable to the taxing authorities upon examination. As of November 30, 2021 the Company had no unrecognized
tax benefits, and the Company had no positions which, in the opinion of management, would be reversed if challenged by a taxing authority.
The
Company’s evaluation of tax positions was performed for those tax years which remain open to audit. The Company may, from time
to time, be assessed interest or penalties by the taxing authorities, although any such assessments historically have been minimal and
immaterial to the Company’s financial results. In the event the Company is assessed interest and/or penalties, such amounts will
be classified as income tax expense in the financial statements.
Loss
Per Common Share - The basic earnings (loss) per common share is computed by dividing net income (loss) available to common stockholders
by the weighted average number of common shares outstanding. Diluted loss per share is computed similarly to basic loss per share except
that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive. As of November 30, 2021 and August 31, 2021, there were
50,000 warrants and no potentially dilutive securities outstanding, respectively, all of which were excluded from loss per share calculation
due to their anti-dilutive effect.
Related
Party Transactions - The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification
of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20 the related parties include (a) affiliates
of the Company (“Affiliate” means, with respect to any specified Person, any other Person that, directly or indirectly through
one or more intermediaries, controls, is controlled by or is under common control with such Person, as such terms are used in and construed
under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the
election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the
equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed
by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with
which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to
an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties
that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in
one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might
be prevented from fully pursuing its own separate interests. The financial statements shall include disclosures of material related party
transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However,
disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in
those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions,
including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are
presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements;
(c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change
in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of
the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Recently
issued accounting pronouncements – The Company does not believe that any recently issued effective pronouncements, or pronouncements
issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.
NOTE
3 - RELATED PARTY TRANSACTIONS
Note
payable related party consists of the following as of November 30, 2021 and August 31, 2021, respectively:
SCHEDULE OF RELATED PARTY DEBT
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November 30, 2021
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August 31, 2021
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Note payable to related party bearing interest at 8%. Balance at beginning of period
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$
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453,461
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$
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491,747
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Note payable to related party bearing interest at 8%. Balance at beginning of period
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$
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453,461
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$
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491,747
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Advances received
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2,500
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-
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Payments to related party loans
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-
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38,286
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Balance at end of period
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455,961
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453,461
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Less current portion
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(455,961
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)
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(453,461
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Due after one year
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$
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-
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$
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In
connection with the note, the Company has an accrued interest obligation as of November 30, 2021, and August 31, 2021 of $133,110 and
$123,940, respectively. The note was due on September 1, 2021 and was not paid off due to limited capital. As such, the parties agreed
to continue the note at 8% until sufficient funds are available to pay off the loan.
The
Company utilizes approximately 1,500 square feet of office space in 512 Bayshore Dr, Fort Lauderdale Florida. The space is owned by the
President and is provided without charge to the Company.
The
Company obtained a Line of Credit from a Delaware Corporation (owned by the outgoing CFO) on November 30, 2020. Total advanced under
this line of credit is $11,482 for the period ending November 30, 2021 and $11,254 for the year ending August 31, 2021. The line matured
on November 25, 2021 and carries an interest rate of 8%, however, it also carries a default interest rate of 17%.
NOTE
4 - EQUITY
Common
Stock Warrants
In
July 2019, the Company granted common stock warrants to purchase 50,000 shares of common stock to a service provider. The warrants have
a 4.4 year term and an exercise price of $0.10 per share. The warrants are fully earned upon issuance and become exercisable on January
1, 2020. As of November 30, 2021, the warrants have not been exercised.
The
Company valued the warrants using the Black-Scholes model with the following key assumptions ranging from: Stock price, $0.38, Exercise
price, $0.10, Term Remaining 2.1 years, Volatility 43.6%, Annual risk-free interest rate, 0.07%. At November 30, 2021 there was $14,100,
in intrinsic value of outstanding stock warrants.
The
Company has not declared or paid any dividends or returned any capital to common stock shareholders as of November 30, 2021 and November
30, 2020.
NOTE
5 – INCOME TAXES
The
Company has approximately $986,308, as of November 30, 2021, in available net operating loss (NOL) carryovers available to reduce future
income taxes. These carryovers expire at various dates through the year 2040.
Future
utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation
due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual
limitation may result in the expiration of NOL and tax credit carryforwards before full utilization.
The
Company determines whether it is more likely than not that a tax position will be sustained upon examination based upon the technical
merits of the position. If the more likely than not threshold is met, the Company measures the tax position to determine the amount to
recognize in the financial statements. The Company performed a review of its material tax positions in accordance with these recognition
and measurement standards. The Company has concluded that there are no significant uncertain tax positions requiring disclosure and there
are not material amounts of unrecognized tax benefits.
We
use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to reverse.
NOTE
6 – COMMITMENTS AND CONTINGENCIES
During
the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates
the merits of the case in accordance with FASB ASC 450-20-50, “Contingencies”. The Company evaluates its exposure
to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an
unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of November 30, 2021, the
Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.
NOTE
7 – SUBSEQUENT EVENTS
In
accordance with ASC 855-10, the Company has analyzed its operations subsequent to November 30, 2021, through the date when financial
statements were issued. On December 28, 2021, the Company accepted Andrew Trumbach’s resignation as a member of the board of directors
and as its chief financial officer.