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, 2018, 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, 2018.
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, 2018.
Operating results for the years ended April 30, 2017, and 2018 are summarized
as follows:
| | |
Years Ended April 30, |
| | |
2017 | |
2018 |
| Revenue | |
$ | — | | |
$ | — | |
| Operating expenses | |
| 1,170,939 | | |
| 120,000 | |
| Other income (expense) | |
| — | | |
| — | |
| Net operating income (loss) | |
$ | 1,170,939 | | |
$ | (120,000 | ) |
Our net operating loss decreased $1,050,000 for our
year ended April 30, 2018, from our year ended April 30, 2017. During the year ended April 30, 2018, our operating expenses increased
$1,050,000 from the year ended April 30, 2017. The decrease in expenses was mainly comprised of decrease 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, 2018, we had cash of $0 and our working
capital deficit was $620,911. In 2018, we generated revenues of $0 and a net loss of $120,000 from operations as compared to 2017 revenues
of $0 and a net operating expense of $1,170,930.
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 2018, the Company’s management and/or shareholders entered a series of note transactions or accounts
payable totaling $0 and $0, respectively.
Cash
Flow
| | |
Years
Ended April
30, |
| | |
2017 | |
2018 |
| Net
cash provided (used) in operating activities | |
$ | (7 | ) | |
$ | — | |
| Net cash
used in investing | |
| — | | |
| — | |
| Net
cash provided (used) by financing activities | |
| — | | |
| — | |
| Net
increase (decrease) in cash | |
$ | (7 | ) | |
$ | — | |
Cash
used in operating activities for years ended April 30, 2017, and 2018 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 2018, 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, 2018, 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 $46,575,911 at, April 30, 2018. 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, 2018, 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, 2018 and 2017, 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, 2018, 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, 2018 and 2017,
and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2018, 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, 2018 and 2017
| |
|
|
|
|
|
|
|
|
| | |
2018 | |
2017 |
| ASSETS | |
| | | |
| | |
| Current Assets: | |
| | | |
| | |
| Cash and equivalents | |
$ | — | | |
$ | — | |
| Prepaid expenses | |
| — | | |
| — | |
| Total current assets | |
| — | | |
| — | |
| | |
| | | |
| | |
| Other Assets | |
| | | |
| | |
| Investment | |
| — | | |
| 6,300,000 | |
| | |
| | | |
| | |
| TOTAL ASSETS | |
$ | — | | |
$ | 6,300,000 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
| | |
| | | |
| | |
| Liabilities | |
| | | |
| | |
| Accounts payable and accrued expenses | |
$ | 570,167 | | |
$ | 450,167 | |
| Loans payable – stockholders’ | |
| 50,745 | | |
| 50,745 | |
| Total current liabilities | |
| 620,912 | | |
| 500,912 | |
| | |
| | | |
| | |
| Stockholders’ Equity (Deficit): | |
| | | |
| | |
| Common stock, $0.001 par value; 200,000,000 shares authorized, 161,050,000
and 143,550,000 shares issued and outstanding, respectively | |
| 161,050 | | |
| 143,550 | |
| Stock subscription | |
| — | | |
| 7,350,000 | |
| Additional paid in capital | |
| 45,932,500 | | |
| 44,885,000 | |
| Cancellation receivable | |
| (18,550 | ) | |
| (3,550 | ) |
| Accumulated deficit | |
| (46,695,912 | ) | |
| (46,575,912 | ) |
| Total Stockholders' Equity (Deficit) | |
| (620,912 | ) | |
| 5,799,088 | |
| | |
| | | |
| | |
| 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, 2018 and 2017
| |
|
|
|
|
|
|
|
|
| | |
2018 | |
2017 |
| | |
| | | |
| | |
| Revenue | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| Expenses: | |
| | | |
| | |
| Officers’
compensation | |
| — | | |
| — | |
| Management
fees | |
| 120,000 | | |
| 1,170,000 | |
| Professional
fees | |
| — | | |
| — | |
| Other | |
| — | | |
| 939 | |
| Net operating loss | |
| (120,000 | ) | |
| (1,170,939 | ) |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Provision
for income taxes | |
| — | | |
| — | |
| | |
| | | |
| | |
| Net
income (loss) | |
$ | (120,000 | ) | |
$ | (1,170,939 | ) |
| | |
| | | |
| | |
| Basic
and diluted loss per share | |
$ | 0.00 | | |
$ | (0.01 | ) |
| |
| | | |
| | |
| Basic
and diluted weighted average number of shares outstanding | |
| 143,550,000 | | |
| 140,679,999 | |
See
accompanying notes to financial statements
Crown
Baus Capital Corp.
Statement
of Stockholders' Deficit
For
the Years Ended April 30, 2018 and 2017
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | |
Common
Stock | |
| |
| |
| |
| |
|
| | |
Shares | |
Amount | |
Additional
Paid- in Capital | |
Common
stock to be Returned | |
Stock
Subscription | |
Accumulated
Deficit | |
Total
Stockholders’ Equity (Deficit) |
| Balance - April
30, 2016 | |
| 143,550,000 | | |
$ | 143,550 | | |
$ | 44,885,000 | | |
$ | (3,550 | ) | |
$ | 1,050,000 | | |
$ | (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 | |
| Issuance
of common shares for acquisition | |
| 15,000,000 | | |
| 15,000 | | |
| — | | |
| (15,000 | ) | |
| (6,300,000 | ) | |
| — | | |
| (6,300,000 | ) |
| Shares issued
for accrued salaries | |
| 2,500,000 | | |
| 2,500 | | |
| 1,047,500 | | |
| — | | |
| (1,050,000 | ) | |
| — | | |
| — | |
| Net
loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (120,000 | ) | |
| (120,000 | ) |
Balance,
April 30, 2018 | |
| 161,050,000 | | |
$ | 161,050 | | |
$ | 45,932,500 | | |
$ | (18,550 | ) | |
| — | | |
$ | (46,695,912 | ) | |
$ | (620,912 | ) |
See
accompanying notes to financial statements
Crown
Baus Capital Corp.
Statements
of Cash Flows
For
the Years Ended April 30, 2018 and 2017
| |
|
|
|
|
|
|
|
|
| | |
2018 | |
2017 |
| Cash flows from operating
activities: | |
| | | |
| | |
| Net
income (loss) | |
$ | (120,000 | ) | |
$ | (1,170,939 | ) |
| Adjustments
to reconcile net income (loss) to net cash used by operating activities: | |
| | | |
| | |
| Shares
issued for services | |
| — | | |
| 1,050,000 | |
| Changes
in operating assets and liabilities: | |
| | | |
| | |
| Accounts
payable and accrued expenses | |
| 120,000 | | |
| 120,000 | |
| Net cash
used by operating activities | |
| — | | |
| (939 | ) |
| | |
| | | |
| | |
| Cash flows from financing
activities: | |
| | | |
| | |
| Proceeds
from issuance of common stock | |
| — | | |
| — | |
| Proceeds
from Stockholders’ loans | |
| — | | |
| 932 | |
| Net cash
provided by (used in) financing activities | |
| — | | |
| 932 | |
| Net increase (decrease) in
cash | |
| — | | |
| (7 | ) |
| Cash at beginning of period | |
| — | | |
| 7 | |
| Cash at end of period | |
$ | — | | |
$ | — | |
| Supplemental cash flow information: | |
| | | |
| | |
| Cash
paid during the period for: | |
| | | |
| | |
| Interest | |
$ | — | | |
$ | — | |
| Income
taxes | |
$ | — | | |
$ | — | |
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 $46,695,912. 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, 2018, 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 2018.
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 2018, the Company had $0 and $0 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
2018, 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, 2018.
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 2018 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 2018 .
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, 2018, a stockholder of the Company loaned the Company $0 to pay for certain expenses. Total loans payable
to stockholders, on April 30, 2018 and 2017 totaled $50,745. The loans bear no interest and are payable on demand.
Management
Agreements
On
February 18, 2014, the Company signed five-year management agreements with Robert Kane, Director, 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, 2018, the following executive compensation was recorded:
| | |
| |
| |
|
| Related
Party | |
Position | |
Stock-based
Compensation | |
Management
Fees |
| Benjamin
Tam | |
| CFO | | |
$ | — | | |
$ | — | |
| Robert
Kane | |
|
Director | | |
| — | | |
| 60,000 | |
| Raymond
Dabney | |
| Managing
Consultant | | |
| — | | |
| 60,000 | |
| | |
| | | |
$ | — | | |
$ | 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
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. The shares have not been recovered.
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, 2018, the Company has operating loss carry forwards of approximately $46,695,912 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, 2018, and 2017 is based on the current Federal statutory income tax rate of 21% and 35%, respectively,
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,
2018, and 2017:
| |
|
|
|
|
|
|
|
|
| | |
Years Ended April
30, |
| | |
2018 | |
2017 |
| Tax
benefit at the federal statutory rate | |
$ | 46,695,912 | | |
$ | 46,575,912 | |
| | |
| | | |
| | |
| Non-deductible
costs | |
| — | | |
| — | |
| Decrease
in valuation allowance | |
| (46,695,912 | ) | |
| (46,575,912 | ) |
| Income
tax expense | |
$ | — | | |
$ | — | |
The
components of the deferred tax asset and deferred tax liability on April 30, 2018 and 2017 are as follows:
| |
|
|
|
|
|
|
|
|
| | |
April
30, |
| | |
2018 | |
2017 |
| Deferred
tax assets | |
$ | 9,806,142 | | |
| 9,780,842 | |
| | |
| | | |
| | |
| Valuation
allowance | |
| (9,806,142 | ) | |
| (9,780,842 | ) |
| | |
$ | — | | |
| — | |
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, 2018, the Company has approximately a net operating loss carry forward for United States income tax purposes approximating
$46,696,000. These losses expire in varying amounts between April 30, 2033, and 2038.
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, 2018, the Company incurred a net
loss of approximately $46,695,912. In addition, the Company has no significant assets or revenue generating operations at, April
30, 2018.
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.