NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JUNE 30,
2019
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.
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 June 30,
2019, the Company had an accumulated deficit of $8,986,339. 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 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
In July 2017, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11,
Earnings Per Share
(Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815).
The amendments in
Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features)
with down round features. When determining whether certain financial instruments should be classified as liabilities or equity
instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to
an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As
a result, a free-standing equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as
a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial
instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the
effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available
to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are
now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with
Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize
the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a
scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this
Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early
adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an
interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The
Company does not expect this accounting update to have a material effect on its Consolidated Financial Statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock
Compensation (Topic 718) Scope of Modification Accounting. The amendments in this Update provide guidance about which changes
to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The
amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning
after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities
for reporting periods for which financial statements have not yet been issued. The Company does not expect this accounting update
to have a material effect on its Consolidated Financial Statements.
In March 2016, the FASB issued ASU No. 2016-09,
“Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting (Topic 718)”, which is intended
to simplify several aspects of the accounting for share-based payment award transactions. The guidance is effective for our current
fiscal year. The adoption of ASU 2016-09 did not have a material impact on the Consolidated Financial Statements.
In February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842)”, which supersedes ASC Topic 840, Leases, and creates a new topic, ASC 842, Leases. The new guidance requires
the recognition of lease assets and liabilities for operating leases with terms of more than 12 months. Presentation of leases
within the consolidated statements of operations and consolidated statements of cash flows will be generally consistent with the
current lease accounting guidance. The ASU is effective for reporting periods beginning after December 15, 2018, with early adoption
permitted. The Company does not expect this accounting update to have a material effect on its Consolidated Financial Statements.
The Company reviews new accounting standards
as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal
year may be applicable, the Company has not identified any standards that the Company believes merit further discussion. The Company
believes that none of the new standards will have a significant impact on the financial statements.
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.
During the 3 Months ended June 30, 2019 and
Year Ended March 31, 2019, the Company recognized $737 and $2,538 of interest expense related to the Convertible Debenture.
A shareholder who is a related party has loaned
the corporation $58,500 as of March 31, 2019. The note bears no interest and is payable on demand.
Also see “Note
7” – Related Party Transactions.”
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.
At June 30, 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.
During the year ended March 31, 2017, On January
18, 2017, in connection with the custodianship, the Company issued 400,000,000 shares to Barton hollow, LLC to satisfy and caused
to be retired, the obligations of the Company. As a result the Company recognized stock compensation expense of $160,000 based
on the closing stock price on January 18, 2017 of $0.004 per share.
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.
NOTE 5 - Net Loss Per Share
During the years ended June
30, 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 years ended June 30, 2019 and 2018:
|
|
Three months Ended June 30, 2019
|
|
Three months Ended June 30, 2018
|
|
|
|
|
|
Basic and Diluted EPS Computation
|
|
|
|
|
Numerator:
|
|
|
|
|
Loss available to common stockholders'
|
|
$
|
(53,629
|
)
|
|
$
|
(1,283
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
6,287,384
|
|
|
|
6,287,384
|
|
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
|
|
|
6,539,005
|
|
|
|
3,011,097
|
|
NOTE 6 – Subsequent Events
Management has reviewed material events subsequent
of the period ended June 30, 2019 and through the date of filing of financial statements in accordance with FASB ASC 855 “Subsequent
Events”.
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.