Neutra Corp 10-K, filed Jun 24, 2020
Neutra Corp. (NTRR)
About this 10-K
Neutra Corp filed this 10-K on June 24, 2020, covering the fiscal year ended January 31, 2020.
UNITED STATES
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 2020
or
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-55077
NEUTRA CORP.
(Exact name of registrant as specified in its charter)
Wyoming |
| 27-4505461 |
(State or other jurisdiction of Incorporation or organization) |
| (I.R.S. Employer Identification Number) |
|
|
|
54 Sugar Creek Center Blvd., Suite 200 Sugar Land, Texas |
| 77478 |
(Address of principal executive offices) |
| (Zip code) |
Registrant’s telephone number, including area code: 702-793-4121
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class |
| Name of Each Exchange on which Registered |
Common stock $0.001 par value |
| OTC Markets QB |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [_] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [_] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [_]
Indicate by check mark if disclosures of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Yes [X] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [_] | Accelerated filer | [_] |
| Non-accelerated filer | [_] | Smaller reporting company | [X] |
| (Do not check is smaller reporting company) | Emerging growth company | [_] | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [_] No [X]
The Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, July 31, 2019 was $458,713.
There were 1,383,565,422 shares of the Registrant’s common stock outstanding as of June 24, 2020.
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NEUTRA CORP.
TABLE OF CONTENTS
Part I | 5 |
Item 1. Business | 5 |
Item 1A. Risk Factors | 5 |
Item 1B. Unresolved Staff Comments | 5 |
Item 2. Properties | 5 |
Item 3. Legal Proceedings | 6 |
Item 4. Mine Safety Disclosures | 6 |
Part II | 6 |
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 6 |
Item 6. Selected Financial Data | 7 |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of operations | 8 |
Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 10 |
Item 8. Financial Statements and Supplementary Data | 11 |
Report of Independent Registered Public Accounting Firm | 12 |
Consolidated Balance Sheets | 13 |
Consolidated Statements of Operations | 14 |
Consolidated Statement of Changes in Shareholders’ Equity (Deficit) | 15 |
Consolidated Statements of Cash Flows | 16 |
Notes to the Consolidated Financial Statements | 17 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 28 |
Item 9A. Controls and Procedures | 28 |
Item 9B. Other Information | 29 |
Part III | 29 |
Item 10. Directors, Executive Officers and Corporate Governance | 29 |
Item 11. Executive Compensation | 31 |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 32 |
Item 13. Certain Relationships and Related Transactions, and Director Independence | 32 |
Item 14. Principal Accounting Fees and Services | 32 |
Part IV | 33 |
Item 15. Exhibits, Financial Statement Schedules | 33 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
OTHER PERTINENT INFORMATION
When used in this report, the terms, “we,” the “Company,” “NTRR,” “our,” and “us” refers to Neutra Corp., a Wyoming corporation.
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PART I
ITEM 1. BUSINESS
Overview
Neutra Corp. was incorporated in Nevada on January 11, 2011 to market and participate in the nutraceutical space by bringing products derived from all natural and organic origins. On August 16, 2019, Neutra Corp. reincorporated in Wyoming.
Along with participating in the actual nutraceutical products, we plan to research and bring new technology to the nutraceutical space. Nutraceutical natural medicine is an alternative system that focuses on natural remedies and the body’s vital ability to heal and maintain itself. One of the nutraceutical sub-markets is the new thriving medical cannabis market, in which we intend to participate. We intend to entrust the manufacturing to a nutraceutical contractor to private label all of our products and to sell them under our unique brand. We have established a fiscal year end of January 31.
As the global cannabis market grows exponentially, it is constantly in need of better technologies and products to be more efficient in how it grows, what it grows and how it consumes cannabis and its related products. From lighting to dosage devices, from pesticide replacements to plant enhancers, Neutra Corp. is constantly combing the industry for the latest and greatest to test, prove and bring to market.
On January 23, 2018, we entered into an agreement with Artillery Labs to sell and market natural nutraceuticals online. The objective of this agreement is for the Company to have its own line of all natural and legal CBD products for sale through Artillery Labs’ online sales infrastructure. Under the terms of the agreement, Artillery Labs will be paid $25,000 upon the successful marketing launch of a product.
On August 30, 2019, we purchased all of the outstanding stock of Vivis Corporation, a Wyoming corporation, (“Vivis”) from Sydney Jim, our CEO. The purchase price for Vivis is $35,000 cash and a royalty of 40 percent of gross revenue until $100,000 is paid declining to 25 percent until an additional $100,000 has been paid. There will be a 10 percent royalty in perpetuity.
We have generated limited revenues to date and our activities have been primarily limited to developing our business plan and research and development of products. We will not have the necessary capital to fully develop or execute our business plan until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise additional funds in order to implement our business plan. Our current cash on hand is insufficient to commercialize our products or fully develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations.
Employees and Employment Agreements
Our CEO is our sole employee.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 2. PROPERTIES
We maintain our corporate offices at 54 Sugar Creek Center Blvd., Suite 200 Sugar Land, Texas 77478. Our telephone number is 702-793-4121.
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ITEM 3. LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “NTRR” in October 2011.
Holders
As of the date of this filing, there were 11 holders of record of our common stock.
Dividends
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
Common Stock
We are authorized to issue unlimited shares of common stock, with a par value of $0.001. The closing price of our common stock on June 16, 2020, as quoted by OTC Markets Group, Inc., was $0.0021. There were 616,198,035 shares of common stock issued and outstanding as of January 31, 2020. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non-assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of the Company’s common are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
Our Articles of Incorporation, our Bylaws, and the applicable statutes of the state of Wyoming contain a more complete description of the rights and liabilities of holders of our securities.
During the year ended January 31, 2020, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.
Non-cumulative voting
Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.
Securities Authorized for Issuance under Equity Compensation Plans
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of January 31, 2020.
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Plan Category |
| Number of Securities to be issued upon exercise of outstanding options, warrants and rights |
| Weighted average exercise price of outstanding options, warrants and rights |
| Number of securities remaining available for future issuance |
Equity compensation plans approved by security holders. |
| — |
| — |
| — |
|
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|
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|
Equity compensation plans not approved by security holders. |
| — |
| — |
| — |
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|
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Total |
| — |
| — |
| — |
Preferred Stock
Our authorized preferred stock consists of 20,000,000 shares of $0.001 par value preferred stock. The Board of Directors is authorized to designate any series of preferred stock. Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purposes.
Series E Preferred Stock. On November 13, 2015, our board of directors designated 1,000,000 shares of our preferred stock as Series E Preferred Stock. The Series E Preferred Stock is subordinated to our common stock. It does not receive dividends and does not participate in equity distributions. The Series E Preferred stock has 2 votes for each outstanding share of common stock in the company. As of the date of this report, there are 1,000,000 shares Series E Preferred Stock outstanding. Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purposes.
Series F Preferred Stock. On March 15, 2019, our board of directors designated 1,000,000 shares of our preferred stock as Series F Preferred Stock. The Series F Preferred Stock is subordinated to our common stock and superior to all shares of Preferred Stock. It does not receive dividends and does not participate in equity distributions. The Series F Preferred stock retains 2/3 of the voting rights in the company. During the year ended January 31, 2020, the Company issued 1,000,000 shares of Series F Preferred Stock to Sydney Jim, our CEO, in exchange for services. As of the date of this report, there are 1,000,000 shares Series E Preferred Stock outstanding.
Convertible Preferred Stock. In January 2020, our board of directors designated 50,000 shares of our preferred stock as Convertible Preferred Stock. The Convertible Preferred Stock is entitled to receive dividends of 10% of the net profit of VIVIS Corporation. After the Convertible Preferred Stock has received cumulative dividends of $1,100,000, the dividend rate will reduce to 2%. The Convertible Preferred Stock is convertible into 100,000 post reverse shares of common stock of the Company. During the year ended January 31, 2020, the Company issued 50,000 shares of Convertible Preferred Stock and received cash proceeds of $250,000.
Recent Sales of Unregistered Securities
During the quarter ended January 31, 2020, the Company issued shares of common stock as a result of the conversion of Convertible Promissory Notes, as detailed in the following table:
Date |
| Amount Converted |
| Number of Shares Issued | |
December 6, 2019 |
| $ | 9,700 |
| 22,558,140 |
December 6, 2019 |
|
| 9,700 |
| 22,558,140 |
December 9, 2019 |
|
| 9,700 |
| 22,558,140 |
December 11, 2019 |
|
| 11,100 |
| 25,813,953 |
December 24, 2019 |
|
| 9,600 |
| 25,945,946 |
December 27, 2019 |
|
| 9,600 |
| 25,945,946 |
December 28, 2019 |
|
| 6,120 |
| 16,540,541 |
Total |
| $ | 65,520 |
| 161,920,806 |
The above transactions were exempt from registration per SEC Rule 144(a)(3).
ITEM 6. SELECTED FINANCIAL DATA
As a smaller reporting company, we are not required to provide the information required by this item.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives, and performance that involve risk, uncertainties, and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
Background of our Company
Neutra Corp. was incorporated in Florida on January 11, 2011. On October 5, 2015, we reincorporated from Florida to Nevada. On August 16, 2019, Neutra Corp. reincorporated from Nevada to Wyoming. The reincorporation was approved by our board of directors and by a majority of the holders of voting rights in our stock. Our authorized shares increased to unlimited shares of common stock and 20,000,000 shares of preferred stock.
We have established a fiscal year end of January 31.
As the global cannabis market grows exponentially, it is constantly in need of better technologies and products to be more efficient in how it grows, what it grows and how it consumes cannabis and its related products. From lighting to dosage devices, from pesticide replacements to plant enhancers, Neutra Corp. is constantly combing the industry for the latest and greatest to test, prove and bring to market.
We have generated limited revenues to date and our activities have been limited primarily to developing our business plan and research and development of products. We will not have the necessary capital to fully develop or execute our business plan until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise additional funds in order to implement our business plan. Our current cash on hand is insufficient to commercialize our products or fully develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations.
Plan of Operations
We believe we do not have adequate funds to fully execute our business plan for the next twelve months unless we obtain additional funding. However, should we not raise this capital, we will allocate our funding to first assure that all State, Federal and SEC requirements are met.
As of January 31, 2020, we had cash on hand of $177,176.
We intend to pursue capital through public or private financing, as well as borrowing and other sources in order to finance our business activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.
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Results of Operations
We incurred a net loss of $695,621 for the year ended January 31, 2020. We had a working capital deficit of $849,490 as of January 31, 2020. We do not anticipate having positive net income in the immediate future. Net cash used by operating activities for the year ended January 31, 2020 was $181,607.
We continue to rely on advances to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.
Fiscal year ended January 31, 2020 compared to the fiscal year ended January 31, 2019.
Revenue
We recognized revenue of $6,395 for the year ended January 31, 2020. Revenue was generated from the sale of our CBD sports creams.
General and Administrative Expenses
We recognized general and administrative expenses in the amount of $400,640 and $1,709,280 for the years ended January 31, 2020 and 2019, respectively. General and administrative expenses for the year ended January 31, 2019 include expense for common stock valued at $1,464,000 issued to our CEO.
Interest Expense
Interest expense decreased from $720,750 for the year ended January 31, 2019 to $340,701 for the year ended January 31, 2020. Interest expense for the year ended January 31, 2020 included amortization of discount on convertible notes payable in the amount of $233,681, compared to $624,359 for the comparable period of 2019. Excluding the impact of amortization of discounts, interest expense remained relatively flat.
Other Income
During the year ended January 31, 2019, we recognized other income of $565 related to an agreement with Artillery. We received income of $2,006 and had associated costs of $1,441.
Net Loss
We incurred a net loss of $695,621 for the year ended January 31, 2020 as compared to $2,429,465 for the comparable period of 2019. The decrease in the net loss was primarily the result of lower general and administrative expense as discussed above.
Liquidity and Capital Resources
As of the date of this filing, we had yet to generate any revenues from our business operations.
We anticipate needing additional financing to fund our operations and to effectively execute our business plan over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status, we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.
We raised the cash amounts to be used in these activities from convertible notes payable. We currently have negative working capital of $849,490.
As of January 31, 2020, we had $177,176 of cash on hand. This amount of cash will be adequate to fund our operations for less than six months.
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We have no known demands or commitments and are not aware of any events or uncertainties as of January 31, 2020 that will result in or that are reasonably likely to materially increase or decrease our current liquidity.
Capital Resources
We had no material commitments for capital expenditures as of January 31, 2020 and 2019. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financing in addition to what is required to fund our present operation.
Additional Financing
Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.
Off-Balance Sheet Arrangements
We do not have 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 that is material to investors.
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the financial statements are prepared; actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies, which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.
USE OF 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 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. Actual results could differ from those estimates.
GOING CONCERN - The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended January 31, 2020, the Company had a net loss of $695,621 and generated negative cash flow from operations in the amount of $181,607. In view of these matters, the Company’s ability to continue as a going concern is dependent upon its ability to achieve a level of profitability or to obtain additional capital to finance its operations. The Company intends on financing its future activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
New Accounting Pronouncements
For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 3: Significant Accounting Polices: Recently Issued Accounting Pronouncements” in Part II, Item 8 of this Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information required by this item.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Neutra Corp.
Consolidated Financial Statements
January 31, 2020
Contents
Report of Independent Registered Public Accounting Firm | 12 |
Consolidated Balance Sheets | 13 |
Consolidated Statements of Operations | 14 |
Consolidated Statement of Change in Shareholders’ Deficit | 15 |
Consolidated Statements of Cash Flows | 16 |
Notes to the Consolidated Financial Statements | 17 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Neutra Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Neutra Corp. (the Company) as of January 31, 2020 and 2019, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for each of the years in the two-year period ended January 31, 2020, 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 January 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended January 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for 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 audits. 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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 error or fraud. 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 audits, 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2014.
Houston, TX
June 24, 2020
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NEUTRA CORP.
CONSOLIDATED BALANCE SHEETS
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| January 31, 2020 |
| January 31, 2019 |
| ||
ASSETS |
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CURRENT ASSETS |
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Cash |
| $ | 177,176 |
| $ | — |
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Deposits |
|
| 1,658 |
|
| 163,596 |
|
Inventory |
|
| 3,500 |
|
| — |
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Total current assets |
|
| 182,334 |
|
| 163,596 |
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TOTAL ASSETS |
| $ | 182,334 |
| $ | 163,596 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 410,620 |
| $ | 458,481 |
|
Accounts payable, related party |
|
| 131,755 |
|
| 83,692 |
|
Advances payable |
|
| 3,450 |
|
| 3,450 |
|
Convertible notes payable, in default |
|
| 288,997 |
|
| 527,568 |
|
Current portion of convertible notes payable, net of discount of $72,621 and $147,302, respectively |
|
| 23,379 |
|
| 61,684 |
|
Current portion of accrued interest payable |
|
| 173,623 |
|
| 134,291 |
|
Total current liabilities |
|
| 1,031,824 |
|
| 1,269,166 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
| 1,031,824 |
|
| 1,269,166 |
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
Common stock, $0.001 par value; unlimited shares authorized; 616,198,035 and 34,126,328 shares issued and outstanding at January 31, 2020 and January 31, 2019, respectively |
|
| 616,198 |
|
| 34,126 |
|
Preferred stock; $0.001 par value; 20,000,000 shares authorized: |
|
|
|
|
|
|
|
Convertible preferred stock; 50,000 shares issued and outstanding at January 31, 2020; convertible into 100,000 shares of common stock |
|
| 50 |
|
| — |
|
Series E preferred stock, 1,000,000 shares issued and outstanding at January 31, 2020 and January 31, 2019 |
|
| 1,000 |
|
| 1,000 |
|
Series F preferred stock; 1,000,000 shares issued and outstanding at January 31, 2020 |
|
| 1,000 |
|
| — |
|
Additional paid-in capital |
|
| 8,091,570 |
|
| 7,722,991 |
|
Accumulated deficit |
|
| (9,559,308 | ) |
| (8,863,687 | ) |
Total stockholders’ deficit |
|
| (849,490 | ) |
| (1,105,570 | ) |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| $ | 182,334 |
| $ | 163,596 |
|
The accompany notes are an integral part of these consolidated financial statements.
- 13 -
NEUTRA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year ended |
| ||||
| 2020 |
| 2019 |
| ||
|
|
|
|
| ||
REVENUE | $ | 6,395 |
| $ | — |
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
General and administrative expenses |
| 400,640 |
|
| 1,709,280 |
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
| (394,245 | ) |
| (1,709,280 | ) |
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
Interest expense |
| (340,701 | ) |
| (720,750 | ) |
Gain on settlement of debt |
| 74,325 |
|
| — |
|
Loss on acquisition of VIVIS |
| (35,000 | ) |
| — |
|
Other income |
| — |
|
| 565 |
|
Total other income (expense) |
| (301,376 | ) |
| (720,185 | ) |
|
|
|
|
|
|
|
NET LOSS | $ | (695,621 | ) | $ | (2,429,465 | ) |
|
|
|
|
|
|
|
NET LOSS PER COMMON SHARE – Basic and fully diluted | $ | (0.00 | ) | $ | (0.16 | ) |
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – Basic and fully diluted |
| 241,537,039 |
|
| 14,907,042 |
|
The accompany notes are an integral part of these consolidated financial statements.
- 14 -
NEUTRA CORP.
CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS’ DEFICIT
|
| Common Stock |
| Convertible |
| Series E |
| Series F |
| Additional |
| Accumulated |
|
|
| |||||||||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, |
| 6,839,274 |
| $ | 6,839 |
| — |
| $ | — |
| 1,000,000 |
| $ | 1,000 |
| — |
| $ | — |
| $ | 5,661,911 |
| $ | (6,434,222 | ) | $ | (764,472 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to a related party for services |
| 20,000,000 |
|
| 20,000 |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
|
| 1,444,000 |
|
| — |
|
| 1,464,000 |
|
Common stock issued for debt conversion |
| 7,287,054 |
|
| 7,287 |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
|
| 145,080 |
|
| — |
|
| 152,367 |
|
Beneficial conversion discount on convertible note payable |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
|
| 472,000 |
|
| — |
|
| 472,000 |
|
Net loss |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
|
| — |
|
| (2,429,465 | ) |
| (2,429,465 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, |
| 34,126,328 |
| $ | 34,126 |
| — |
| $ | — |
| 1,000,000 |
| $ | 1,000 |
| — |
| $ | — |
| $ | 7,722,991 |
| $ | (8,863,687 | ) | $ | (1,105,570 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for debt conversion |
| 582,071,707 |
|
| 582,072 |
| — |
|
| — |
| — |
|
| — |
|
|
|
|
|
|
| (120,301 | ) |
| — |
|
| 461,771 |
|
Preferred stock issued for cash |
| — |
|
| — |
| 50,000 |
|
| 50 |
| — |
|
| — |
| — |
|
| — |
|
| 249,950 |
|
| — |
|
| 250,000 |
|
Preferred stock issued for services |
| — |
|
| — |
| — |
|
| — |
| — |
|
| — |
| 1,000,000 |
|
| 1,000 |
|
| 88,930 |
|
| — |
|
| 89,930 |
|
Beneficial conversion discount on convertible note payable |
| — |
|
| — |
|
|
|
|
|
| — |
|
| — |
|
|
|
|
|
|
| 150,000 |
|
| — |
|
| 150,000 |
|
Net loss |
| — |
|
| — |
|
|
|
|
|
| — |
|
| — |
|
|
|
|
|
|
| — |
|
| (695,621 | ) |
| (695,621 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE, |
| 616,198,035 |
| $ | 616,198 |
| 50,000 |
| $ | 50 |
| 1,000,000 |
| $ | 1,000 |
| 1,000,000 |
| $ | 1,000 |
| $ | 8,091,570 |
| $ | (9,559,308 | ) | $ | (849,490 | ) |
The accompany notes are an integral part of these consolidated financial statements.
- 15 -
NEUTRA CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| Year ended January 31, |
| ||||
|
| 2020 |
| 2019 |
| ||
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net loss |
| $ | (695,621 | ) | $ | (2,429,465 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Amortization of discount on convertible note payable |
|
| 233,681 |
|
| 624,359 |
|
Gain on settlement of convertible note payable |
|
| (74,325 | ) |
| — |
|
Common stock issued for services |
|
| — |
|
| 1,464,000 |
|
Preferred stock issued for services |
|
| 89,930 |
|
| — |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Deposits |
|
| 161,938 |
|
| (151,271 | ) |
Inventory |
|
| (3,500 | ) |
| — |
|
Accounts payable and accrued liabilities |
|
| 202 |
|
| — |
|
Accrued interest payable |
|
| 106,088 |
|
| 75,377 |
|
NET CASH USED IN OPERATING ACTIVITIES |
|
| (181,607 | ) |
| (417,000 | ) |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
Proceeds from convertible notes payable |
|
| 150,000 |
|
| 417,000 |
|
Repayments of convertible notes payable |
|
| (41,217 | ) |
| — |
|
Proceeds from sale of preferred stock |
|
| 250,000 |
|
| — |
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 358,783 |
|
| 417,000 |
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH |
|
| 177,176 |
|
| — |
|
|
|
|
|
|
|
|
|
CASH, at the beginning of the period |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
|
CASH, at the end of the period |
| $ | 177,176 |
| $ | — |
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
Interest |
| $ | 749 |
| $ | 22,500 |
|
Taxes |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
|
Noncash investing and financing transaction: |
|
|
|
|
|
|
|
Beneficial conversion discount on convertible note payable |
| $ | 150,000 |
| $ | 472,000 |
|
Original issue discounts on convertible notes payable |
| $ | 9,000 |
| $ | — |
|
Conversion of convertible notes payable and accrued interest |
| $ | 461,771 |
| $ | 152,367 |
|
The accompany notes are an integral part of these consolidated financial statements.
- 16 -
NEUTRA CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2020
Note 1. Background Information
Neutra Corp. was incorporated in Nevada on January 11, 2011 to market and participate in the nutraceutical space by bringing products derived from all natural and organic origins. Along with participating in the actual nutraceutical products, we plan to research and bring new technology to the nutraceutical space. Nutraceutical natural medicine is an alternative system that focuses on natural remedies and the body’s vital ability to heal and maintain itself. One of the nutraceutical sub-markets is the new thriving medical cannabis market, in which we intend to participate. We intend to entrust the manufacturing to a nutraceutical contractor to private label all of our products and to sell them under our unique brand. We have established a fiscal year end of January 31.
As the global cannabis market grows exponentially, it is constantly in need of better technologies and products to be more efficient in how it grows, what it grows and how it consumes cannabis and its related products. From lighting to dosage devices, from pesticide replacements to plant enhancers, Neutra Corp. is constantly combing the industry for the latest and greatest to test, prove and bring to market.
We have generated limited revenues to date and our activities have been primarily limited to developing our business plan and research and development of products. We will not have the necessary capital to fully develop or execute our business plan until we are able to secure additional financing. There can be no assurance that such financing will be available on suitable terms. We need to raise additional funds in order to implement our business plan. Our current cash on hand is insufficient to commercialize our products or fully develop our business strategy. If we are unable to raise adequate additional funds or if those funds are not available on terms that are acceptable to us, we will not be able to execute our business plan and we may cease operations.
Note 2. Going Concern
For the fiscal year ended January 31, 2020, the Company had a net loss of $695,621 and negative cash flow from operations of $181,607. As of January 31, 2020, the Company has negative working capital of $849,490.
These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.
The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.
Management has plans to address the Company’s financial situation as follows:
In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raises doubts about the Company’s ability to continue as a going concern.
In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company that will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.
Note 3. Significant Accounting Policies
The significant accounting policies that the Company follows are:
- 17 -
Basis of Presentation
The consolidated financial statements and related disclosures have been prepared pursuant to the rules and regulations of the SEC. The consolidated financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Consolidated Financial Statements
The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries, Diamond Anvil Designs, LLC and Vivis Corporation, from the date of their formations or acquisition. Significant intercompany transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates.
Cash and Cash Equivalents
All cash, other than held in escrow, is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of three months or less are considered to be cash equivalents. Cash and cash equivalents were $177,176 and $0 at January 31, 2020 and 2019, respectively.
Cash Flow Reporting
The Company follows ASC 230, Statement of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.
Deposits
Deposits represent cash on deposit with the Company’s attorney.
Impairment of long-lived assets
Long-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. The Company determined that there was no impairment of long-lived assets during the years ended January 31, 2020 and 2019.
Common stock
The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.
- 18 -
Revenue Recognition
On February 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340 40 (collectively, the new revenue standard) using the modified retrospective method applied to those contracts which were not completed as of February 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after February 1, 2019 are presented under the new revenue standard. The comparative information has not been restated.
ASC 606 requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For the year ended January 31, 2020, revenue from contracts with customers was $6,395.
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. 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 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 the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of January 31, 2020 and 2019, respectively.
Earnings (Loss) per Common Share
We compute basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing our net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing our net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no dilutive shares outstanding for any periods reported.
Financial Instruments
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.
FASB Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 - | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
|
|
Level 2 - | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
|
|
Level 3 - | Inputs that are both significant to the fair value measurement and unobservable. |
- 19 -
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of January 31, 2020 and 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.
Commitments and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no known commitments or contingencies as of January 31, 2020 and January 31, 2018.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
Recently Adopted Accounting Pronouncements
In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. The Company adopted this ASU on February 1, 2019. The adoption did not have an impact on its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases, as a new Topic, ASC Topic 842. The new lease guidance supersedes Topic 840. The core principle of the guidance is that a company should recognize the assets and liabilities that arise from leases. The Company adopted this guidance on February 1, 2019 by applying the optional transition approach as of the beginning of the period of adoption. Comparative periods, including the disclosures related to those periods, were not restated. On the adoption date, the Company elected the following practical expedients which are provided in the lease standard:
● | an election not to apply the recognition requirements in the lease standard to short-term leases (a lease that at commencement date has a lease term of 12 months or less and does not contain a purchase option that the Company is reasonably certain to exercise); |
|
|
● | a package of practical expedients to not reassess whether a contract is or contains a lease, lease classification and initial direct costs; |
|
|
● | a practical expedient to use hindsight when determining the lease term; and |
|
|
● | a practical expedient that permits combining lease and non-lease components in a contract and accounting for the combination as a lease (elected by asset class). |
For the nine months ended October 31, 2019, the Company recognized short-term lease expense of $5,200. The adoption of the lease standard had no other impact on the Company’s financial position or results of operations.
- 20 -
Recently Issued Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this Update modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The adoption of the Update is not expected to have an impact on the Company’s financial position or results of operations. The Company is currently unable to determine the impact on its financial statement disclosures of the adoption of this new accounting pronouncement.
In January 2017, the FASB issued ASU No. 2017-4, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity should apply the amendments in this update on a prospective basis. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition. That disclosure should be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments in this update. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company currently does not have any goodwill. The adoption of ASU No. 2017-4 is not expected to have a material impact on the Company’s financial statements.
In January 2017, the FASB issued ASU No. 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments of this ASU are effective for public business entities for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The amendments in this Update are to be applied prospectively on or after the effective date. The Company is currently unable to determine the impact on its financial statements of the adoption of this new accounting pronouncement.
Note 4. Related Party Transactions
During the years ended January 31, 2020 and 2019, we incurred salary expense of $76,000 and $78,000, respectively, related to services provided by our former CEO Christopher Brown. We paid Mr. Brown $76,000 and $78,000 in salary during the year ended January 31, 2020 and 2019, respectively. As of January 31, 2020, we owe Mr. Brown an additional $83,692, which is recorded on the balance sheet in “Accounts Payable – Related Party”.
During the years ended January 31, 2020 and 2019, we incurred and paid salary expense of $91,666 and $41,667, respectively, to our CEO, Sydney Jim. As of October 31, 2019, we owe Mr. Jim $49,555, which is recorded on the balance sheet in “Accounts Payable – Related Party.” On October 2, 2018, we issued 20,000,000 shares of common stock to Mr. Jim for services. The shares were valued at $1,464,000 based on the fair market value of the stock on the date of issuance. On March 15, 2019, we issued 1,000,000 shares of Series F Preferred Stock to Mr. Jim for services. The shares were valued at $89,930 based on a third-party valuation of stock on the date of issuance.
Acquisition of Vivis
Effective August 30, 2019, the Company entered into an agreement to purchase all of the outstanding stock of Vivis Corporation, a Wyoming corporation, (“Vivis”) from Sydney Jim, the Company’s CEO. The purchase price for Vivis is $35,000 cash and a royalty of 40 percent of gross revenue until $100,000 is paid declining to 25 percent until an additional $100,000 has been paid. There will be a 10 percent royalty in perpetuity. Since this transaction involves our CEO, it will be accounted for as a related party transaction. The assets acquired in the acquisition of Vivis were valued at $0 for accounting purposes. For the year ended January 31, 2010, we recognized a loss on acquisition of Vivis of $35,000.
The acquisition of Vivis was accounted for as an asset acquisition according to ASC 805-10 Business Combinations. The primary asset held by Vivis at the date of the acquisition was inventory.
- 21 -
Note 5. Advances
As of January 31, 2020 and 2019, we had amounts due under advances of $3,450 at each period. These advances are not collateralized, non-interest bearing and are due on demand.
Note 6. Income Taxes
There is no current or deferred income tax expense or benefit for the period ended January 31, 2020. As of January 31, 2020, the Company has a total deferred tax asset of $651,535 which is offset by an equal valuation allowance, resulting in a net deferred tax asset of $0.
The statutory tax rate for the years ended January 31, 2020 and 2019 was 21%. The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference for the periods ended January 31, 2020 and 2019 are as follows.
|
| 2020 |
|
| 2019 |
| ||
Tax benefit at U.S. statutory rate |
| $ | 146,080 |
|
| $ | 510,188 |
|
less: amortization of beneficial conversion feature |
|
| (49,073 | ) |
|
| (131,115 | ) |
less: valuation allowance |
|
| (97,007 | ) |
|
| (379,073 | ) |
Tax benefit, net |
| $ | — |
|
| $ | — |
|
We have net operating loss carryforwards of approximately $3,102,547 as of January 31, 2020. This generated a deferred tax asset of $651,535 which is fully allowed for.
- 22 -
Note 7. Convertible Notes Payable
Convertible notes payable consists of the following as of January 31, 2020 and 2019:
|
| January 31, 2020 |
| January 31, 2019 |
| ||
Convertible note, dated July 31, 2015, bearing interest at 10% per annum, matured on July 31, 2017 and convertible into shares of common stock at $0.01 per share |
|
| — |
|
| 72,640 |
|
Convertible note, dated October 31, 2015, bearing interest at 10% per annum, bearing default interest at 25% per annum, matured on October 31, 2018 and convertible into shares of common stock at $0.50 per share, in default |
|
| 156,976 |
|
| 156,976 |
|
Convertible note, dated January 31, 2016, bearing interest at 10% per annum, bearing default interest at 25% per annum, matured on January 31, 2019 and convertible into shares of common stock at a 60% discount to the market price, in default |
|
| 82,735 |
|
| 82,735 |
|
Convertible note, dated March 14, 2016, bearing interest at 8% per annum, matured on March 14, 2017, and convertible into shares of common stock at a 45% discount to the market price |
|
| — |
|
| 1,217 |
|
Convertible note, dated May 26, 2016, bearing interest at 10% per annum, bearing default interest at 25% per annum, matured on May 26, 2017, and convertible into shares of common stock at a 45% discount to the market price, in default |
|
| 49,286 |
|
| 67,986 |
|
Convertible note, dated February 6, 2018, bearing interest at 8% per annum, bearing default interest at 24% per annum, maturing November 6, 2018, and convertible into shares of common stock at a 45% discount to the lowest trading price in the 20 days prior to conversion with a floor on the conversion price of $0.00005 |
|
| — |
|
| 78,000 |
|
Convertible note, dated February 6, 2018, bearing interest at 8% per annum, bearing default interest at 24% per annum, maturing November 6, 2018, and convertible into shares of common stock at a 45% discount to the lowest trading price in the 20 days prior to conversion with a floor on the conversion price of $0.00005, in default |
|
| — |
|
| 136,000 |
|
Convertible note, dated November 1, 2018, bearing interest at 8% per annum, bearing default interest at 22% per annum, maturing August 15, 2019, and convertible into shares of common stock at a 39% discount to the lowest trading price in the 15 days prior to conversion with a floor on the conversion price of $0.00005 |
|
| — |
|
| 103,000 |
|
Convertible note, dated December 31, 2018, bearing interest at 8% per annum, bearing default interest at 22% per annum, maturing October 15, 2019, and convertible into shares of common stock at a 39% discount to the lowest trading price in the 15 days prior to the conversion with a floor on the conversion price of $0.00005 |
|
| — |
|
| 38,000 |
|
Convertible note, dated May 21, 2019, bearing interest at 8% per annum, bearing default interest at 22% per annum, maturing March 21, 2020, and convertible into shares of common stock at a 39% discount to the lowest trading price in the 15 days prior to the conversion with a floor on the conversion price of $0.00005 |
|
| — |
|
| — |
|
Convertible note, dated August 6, 2019, bearing interest at 8% per annum, bearing default interest at 22% per annum, maturing July 31, 2020, and convertible into shares of common stock at a 39% discount to the lowest trading price in the 15 days prior to the conversion with a floor on the conversion price of $0.00005 |
|
| 53,000 |
|
| — |
|
Convertible note, dated November 4, 2019, bearing interest at 8% per annum, bearing default interest at 22% per annum, maturing November 4, 2020, and convertible into shares of common stock at a 39% discount to the lowest trading price in the 15 days prior to the conversion with a floor on the conversion price of $0.00005 |
|
| 43,000 |
|
| — |
|
Total convertible notes payable |
| $ | 384,997 |
| $ | 736,554 |
|
Less: discount on current convertible notes payable |
|
| (71,621 | ) |
| (147,302 | ) |
Less: convertible notes payable, in default |
|
| (288,997 | ) |
| (527,568 | ) |
Current convertible notes payable, net of discount |
| $ | 24,379 |
| $ | 61,684 |
|
Convertible Promissory Notes Issued for Cash
On May 21, 2019, we issued a convertible promissory note to a third party for cash proceeds of $60,000. The note is in the amount of $63,000, and it matures on March 21, 2020. The note bears interest at 8% and default interest at 22% per year. The note is convertible into shares of our common stock at a 39% discount to our lowest bid price over the preceding 15 days with a floor on the conversion price of $0.00005.
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On August 6, 2019, we issued a convertible promissory note to a third party for cash proceeds of $50,000. The note is in the amount of $53,000, and it matures on July 31, 2020. The note bears interest at 8% per year and is convertible into shares of our common stock at a 39% discount to our lowest trading price over the preceding 15 days with a floor on the conversion price of $0.00005.
On November 4, 2019, we issued a convertible promissory note to a third party for cash proceeds of $40,000. The note is in the amount of $43,000, and it matures on November 4, 2020. The note bears interest at 8% per year and is convertible into shares of our common stock at a 39% discount to our lowest trading price over the preceding 15 days with a floor on the conversion price of $0.00005.
We evaluated the terms of the note in accordance with ASC Topic No. 815 – 40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We then evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, we recognized beneficial conversion discount of $60,000 on May 21, 2019, a beneficial conversion discount of $50,000 on August 6, 2019, and a beneficial conversion discount of $40,000 on November 4, 2019. We recorded the beneficial conversion discount as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. Discounts to the Convertible Notes Payable are amortized to interest expense using the effective interest method over the life of the respective notes.
During the year ended January 31, 2019, we issued Convertible Promissory Notes. The Convertible Promissory Notes bear interest and are payable at maturity along with accrued interest. The Convertible Promissory Notes and unpaid accrued interest are convertible into common stock at the option of the holder.
Date Issued |
| Maturity Date |
| Interest Rate |
| Conversion Rate |
| Amount of Note |
| |
February 6, 2018 |
| November 6, 2018 |
| 8% |
| 45% discount |
| $ | 150,000 |
|
October 10, 2018 |
| July 17, 2019 |
| 8% |
| 39% discount |
|
| 55,000 |
|
October 23, 2018 |
| October 23, 2019 |
| 8% |
| 45% discount |
|
| 150,000 |
|
November 1, 2018 |
| August 15, 2019 |
| 8% |
| 39% discount |
|
| 103,000 |
|
December 31, 2018 |
| October 15, 2019 |
| 8% |
| 39% discount |
|
| 38,000 |
|
Total 2019 |
|
|
|
|
|
|
| $ | 496,000 |
|
We evaluated the terms of the new notes in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. We determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. We then evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, each of the above notes was fully discounted with a beneficial conversion discount o the date of issuance. We recorded the beneficial conversion discounts as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. Discounts to the Convertible Notes Payable are amortized to interest expense over the life of the respective notes using the effective interest method.
During the years ended January 31, 2020 and 2019, we recorded amortization of discounts on convertible notes payable and recognized interest expense of $233,681 and $624,359, respectively.
Conversions to Common Stock
During the year ended January 31, 2020, the holders of our convertible notes converted $461,771 of principal and accrued interest into 582,071,707 shares of our common stock. During the year ended January 31, 2019, the holders of our convertible promissory notes converted $152,637 of principal and accrued interest into 7,287,054 shares of our common stock.
See Note 8 for a detail of the conversions. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement which provided for conversion.
Settlement of Convertible Note Payable
During the year ended January 31, 2020, the Company paid $40,000 to fully settle the convertible note payable dated July 31, 2015. At the time of the settlement, outstanding principal was $72,640 and accrued interest was $41,685. The Company recognized a gain on settlement of convertible note payable of $74,325 during the year ended January 31, 2020.
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Note 8. Shareholders’ Equity
Reincorporation
On August 16, 2019, the Company reincorporated from Nevada to Wyoming. The reincorporation was approved by its board of directors and by the holders of a majority of the voting rights for its common stock. There was no change in share ownership as a result of the reincorporation. Authorized shares in the Wyoming corporation are unlimited shares of common stock and 20,000,000 shares of preferred stock.
Common stock issued for services
On October 2, 2018, we issued 20,000,000 shares of common stock to Mr. Jim for services. The shares were valued at $1,464,000 based on the fair market value of the stock on the date of issuance.
Series F preferred stock issued for services
On March 15, 2019, we issued 1,000,000 shares of Series F Preferred Stock to Mr. Jim for services. The shares were valued at $89,930 based on a third-party valuation of stock on the date of issuance. The shares were valued at $89,930 based on a third-party estimate of the fair market value of the stock on the date of issuance.
The Series F Preferred Stock is subordinated to our common stock and superior to all shares of Preferred Stock. It does not receive dividends and does not participate in equity distributions. The Series F Preferred stock retains 2/3 of the voting rights in the company.
Series E preferred stock issued for services
On November 13, 2015, our board of directors designated 1,000,000 shares of our preferred stock as Series E Preferred Stock. The Series E Preferred Stock is subordinated to our common stock. It does not receive dividends and does not participate in equity distributions. The Series E Preferred stock has 2 votes for each outstanding share of common stock in the company. As of January 31, 2020, there are 1,000,000 shares Series E Preferred Stock outstanding. Dividends, when, as and if declared by the Board of Directors, shall be paid out of funds at the time legally available for such purposes.
Convertible preferred stock issued for services
In January 2020, our board of directors designated 50,000 shares of our preferred stock as Convertible Preferred Stock. The Convertible Preferred Stock is entitled to receive dividends of 10% of the net profit of VIVIS Corporation. After the Convertible Preferred Stock has received cumulative dividends of $1,100,000, the dividend rate will reduce to 2%. The Convertible Preferred Stock is convertible into 100,000 post reverse shares of common stock of the Company. During the year ended January 31, 2020, the Company issued 50,000 shares of Convertible Preferred Stock and received cash proceeds of $250,000.
- 25 -
Conversions to common stock
During year ended January 31, 2020, the holders of our convertible notes elected to convert principal and interest into shares of common stock as detailed below:
Date |
| Amount |
| Number of | |
February 21, 2019 |
| $ | 10,856 |
| 981,959 |
March 7, 2019 |
|
| 10,889 |
| 989,899 |
March 28, 2019 |
|
| 8,748 |
| 1,060,417 |
April 9, 2019 |
|
| 7,296 |
| 1,326,599 |
April 30, 2019 |
|
| 11,009 |
| 2,042,466 |
May 9, 2019 |
|
| 10,000 |
| 1,639,344 |
May 17, 2019 |
|
| 8,600 |
| 2,000,000 |
May 20, 2019 |
|
| 8,600 |
| 2,000,000 |
May 28, 2019 |
|
| 7,750 |
| 2,236,589 |
May 31, 2019 |
|
| 8,200 |
| 2,000,000 |
June 3, 2019 |
|
| 8,200 |
| 2,000,000 |
June 5, 2019 |
|
| 6,800 |
| 2,000,000 |
June 5, 2019 |
|
| 7,761 |
| 2,565,511 |
June 7, 2019 |
|
| 6,600 |
| 2,000,000 |
June 10, 2019 |
|
| 6,000 |
| 2,000,000 |
June 12, 2019 |
|
| 7,773 |
| 5,047,474 |
June 12, 2019 |
|
| 4,600 |
| 2,000,000 |
June 13, 2019 |
|
| 6,900 |
| 3,000,000 |
June 13, 2019 |
|
| 7,800 |
| 3,391,304 |
June 14, 2019 |
|
| 7,800 |
| 3,391,304 |
June 14, 2019 |
|
| 7,404 |
| 5,049,494 |
June 17, 2019 |
|
| 5,300 |
| 4,076,923 |
June 18, 2019 |
|
| 5,300 |
| 4,076,923 |
June 18, 2019 |
|
| 5,942 |
| 5,144,165 |
June 20, 2019 |
|
| 4,900 |
| 4,083,333 |
June 21, 2019 |
|
| 1,520 |
| 1,551,020 |
June 21, 2019 |
|
| 8,428 |
| 9,577,773 |
July 1, 2019 |
|
| 4,700 |
| 4,795,918 |
July 1, 2019 |
|
| 4,700 |
| 4,795,918 |
July 2, 2019 |
|
| 4,700 |
| 4,795,918 |
July 3, 2019 |
|
| 4,700 |
| 4,795,918 |
July 8, 2019 |
|
| 6,300 |
| 6,428,571 |
July 8, 2019 |
|
| 6,200 |
| 6,326,531 |
July 9, 2019 |
|
| 6,300 |
| 6,428,571 |
July 10, 2019 |
|
| 1,920 |
| 2,086,957 |
July 23, 2019 |
|
| 9,122 |
| 13,820,803 |
July 26, 2019 |
|
| 8,278 |
| 12,543,030 |
August 1, 2019 |
|
| 8,608 |
| 13,041,818 |
August 12, 2019 |
|
| 13,527 |
| 18,918,755 |
August 21, 2019 |
|
| 11,741 |
| 15,247,623 |
August 29, 2019 |
|
| 11,491 |
| 16,070,713 |
September 3, 2019 |
|
| 11,496 |
| 16,077,622 |
September 6, 2019 |
|
| 11,456 |
| 16,022,559 |
September 12, 2019 |
|
| 11,792 |
| 16,492,308 |
September 25, 2019 |
|
| 10,000 |
| 25,000,000 |
September 26, 2019 |
|
| 12,684 |
| 28,826,568 |
October 4, 2019 |
|
| 10,930 |
| 33,122,485 |
October 11, 2019 |
|
| 6,471 |
| 19,608,091 |
October 16, 2019 |
|
| 8,700 |
| 29,000,000 |
October 24, 2019 |
|
| 9,462 |
| 28,671,727 |
December 6, 2019 |
|
| 9,700 |
| 22,558,140 |
December 6, 2019 |
|
| 9,700 |
| 22,558,140 |
December 9, 2019 |
|
| 9,700 |
| 22,558,140 |
December 11, 2019 |
|
| 11,100 |
| 25,813,953 |
December 24, 2019 |
|
| 9,600 |
| 25,945,946 |
December 27, 2019 |
|
| 9,600 |
| 25,945,946 |
December 28, 2019 |
|
| 6,117 |
| 16,540,541 |
Total |
| $ | 461,771 |
| 582,071,707 |
- 26 -
During the year ended January 31, 2019, the holders of our convertible notes elected to convert principal and interest into shares of common stock as detailed below:
Date |
| Amount |
| Number of | |
April 26, 2018 |
| $ | 18,904 |
| 343,709 |
September 12, 2018 |
|
| 21,209 |
| 550,094 |
September 28, 2018 |
|
| 21,280 |
| 552,727 |
October 25, 2018 |
|
| 14,006 |
| 505,275 |
November 5, 2018 |
|
| 26,545 |
| 965,252 |
November 29, 2018 |
|
| 26,678 |
| 2,425,253 |
January 23, 2019 |
|
| 23,745 |
| 1,944,744 |
Total |
| $ | 152,367 |
| 7,287,054 |
Note 9. Subsequent Event
During the period from February 1, 2020 through the date of this report, the holders of our convertible notes elected to convert $99,820 of principal and interest into 767,367,387 shares of common stock.
- 27 -
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Changes in Accountants
None.
Disagreements with Accountants
There were no disagreements with accountants on accounting and financial disclosures for the years ended January 31, 2020 and 2019.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Limitations on Systems of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
• | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
|
|
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
|
|
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. |
- 28 -
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of January 31, 2020, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: lack of a functioning audit committee; lack of a majority of independent members and a lack of a majority of outside directors on our board of directors; inadequate segregation of duties consistent with control objectives; lack of a formal written policy for the approval, identification and authorization of related party transactions; and management is dominated by a single individual. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of January 31, 2020.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our directors will each serve until a successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.
The name, address, age and position of our president, secretary/treasurer, and director and vice president is set forth below:
Name |
| Age |
| Position |
Sydney Jim |
| 35 |
| President, Secretary, Treasurer, Principal Executive Officer, |
Mr. Jim was appointed as CEO and a member of the board of directors on September 26, 2018.
Family Relationships
There are no family relationships among our directors, executive officers or persons nominated to become executive officers or directors.
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Involvement in Certain Legal Proceedings
During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.
Arrangements
There are no arrangements or understandings between an executive officer, director or nominee and any other person pursuant to which he was or is to be selected as an executive officer or director.
Committees of the Board of Directors
Our board of directors has not established any committees, including an Audit Committee, a Compensation Committee, or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by our sole director. Because we do not have any independent directors, our sole director believes that the establishment of committees of the Board would not provide any benefits to our company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our sole director established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our sole director has not considered or adopted any of these policies, as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future.
While there have been no nominations of additional directors proposed, in the event such a proposal is made, all current members of our Board will participate in the consideration of director nominees.
Our directors are not an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:
• | understands generally accepted accounting principles and financial statements, |
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• | is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves, |
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• | has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements, |
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• | understands internal controls over financial reporting, and |
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• | understands audit committee functions |
Our Board of Directors is comprised of Mr. Jim, Mr. Daniel Chen, Mr. Gilbert Fung, Mr. Cole Munger and Mr. Amar Raval. Mr. Jim is also an officer of the Company and is involved in our day-to-day operations. We would prefer to have an audit committee financial expert on our board of directors. As with most small, early stage companies until such time our company further develops its business, achieves a stronger revenue base and has sufficient working capital to purchase directors’ and officers’ insurance, the Company does not have any immediate prospects to attract independent directors. When the Company is able to expand our Board of Directors to include independent directors, the Company intends to establish an Audit Committee of our Board of Directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a majority of our Board members be independent and the Company is not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.
WE DO NOT HAVE ANY INDEPENDENT DIRECTORS AND THE COMPANY HAS NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN THE ABSENCE OF WHICH, STOCKHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST, AND SIMILAR MATTERS.
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Code of Business Conduct and Ethics
We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely, and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethic.
ITEM 11. EXECUTIVE COMPENSATION
Mr. Brown is paid $120,000 per year for his services to the company.
The table below summarizes all compensation awards to, earned by, or paid to our named executive officer for all service rendered in all capacities to us for the fiscal years ended January 31, 2020, 2018 and 2017.
SUMMARY COMPENSATION TABLE
Name and Principal Position |
| Fiscal Year |
| Salary ($) |
| Bonus ($) |
| Stock Awards ($) |
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($) |
| Nonqualified Deferred Compensation ($) |
| All Other Compensation ($) |
| Total |
Christopher Brown |
| 2019 |
| 78,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| 78,000 |
Former CEO and |
| 2018 |
| 78,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| 78,000 |
Chairman |
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Sydney Jim |
| 2020 |
| 91,666 |
| — |
| 89,930 |
| — |
| — |
| — |
| — |
| 181,596 |
CEO and chairman |
| 2019 |
| 76,000 |
| — |
| 1,464,000 |
| — |
| — |
| — |
| — |
| 1,540,000 |
of the board |
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OUTSTANDING EQUITY AWARDS AT JANUARY, 31, 2020
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| Option Awards |
| Stock Awards | ||||||||||||||
Name |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| Option Exercise Price ($) |
| Option Expiration Date |
| Number of Shares of Stock That Have Not Vested (#) |
| Market Value of Shares of Stock That Have Not Vested ($) |
| Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#) |
| Equity Incentive Plan Awards: market or Payout Value of Unearned Shares or Other Rights That Have Not Vested ($) |
Sydney Jim |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
Employment Agreements & Retirement Benefits
None of our executive officers is subject to employment agreements, but we may enter into such agreements with them in the future. We have no plans providing for the payment of any retirement benefits.
Director Compensation
Directors receive no compensation for serving on the Board. We have no non-employee directors.
Our Board of Directors is comprised of Sydney Jim. Mr. Jim also serves as the CEO of the Company. None of our directors has or had a compensation arrangement with the Company for director services, nor have any of them been compensated for director services since the Company’s inception.
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We reimburse our directors for all reasonable ordinary and necessary business related expenses, but we did not pay director’s fees or other cash compensation for services rendered as a director in the year ended January 31, 2020 to any of the individuals serving on our Board during that period. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. We may pay fees for services rendered as a director when and if additional directors are appointed to the Board of Directors.
Director Independence
We do not currently have any independent directors and we do not anticipate appointing additional directors in the foreseeable future. If we engage further directors and officers, however, we plan to develop a definition of independence.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
We do not currently have a stock option plan in favor of any director, officer, consultant, or employee of our company. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs have been made to our sole director and officer since our inception; accordingly, no stock options have been granted or exercised by our sole director and officer since we were founded.
The following table sets forth certain information as of June 17, 2020, with respect to the beneficial ownership of our common stock by each beneficial owner of more than 5% of the outstanding shares of common stock of the Company, each director, each executive officer named in the “Summary Compensation Table” and all executive officers and directors of the Company as a group, and sets forth the number of shares of common stock owned by each such person and group. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.
Name of Beneficial Owner |
| Number of Shares Beneficially Owned |
| Percentage of Outstanding Common Stock Owned | |
Sydney Jim, CEO (1) |
| 20,000,000 |
| 2 | % |
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All directors and executive officers as a group (1) person. |
| 20,000,000 |
| 2 | % |
__________
(1) In addition to the common stock, Mr. Jim owns 1,000,000 shares of the Company’s Series F Preferred Stock which represents 100% of the outstanding Series F Preferred Stock. The Series F Preferred Stock carries 2/3 voting control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table summarize the fees billed to the Company by its independent accountants, M&K CPAs PLLC, for the years ended January 31, 2020 and 2019:
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| 2019 |
| 2018 | ||
Audit Fees |
| $ | 18,600 |
| $ | 12,000 |
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Audit Related Fees (1) |
| $ | — |
| $ | — |
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Tax Fees (2) |
| $ | — |
| $ | — |
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All Other Fees (3) |
| $ | — |
| $ | — |
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Total Fees |
| $ | 18,600 |
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| 12,000 |
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Notes to the Accountants Fees Table:
(1) | Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.” |
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(2) | Consists of fees for professional services rendered by our principal accountants for tax related services. |
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(3) | Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit Fees,” “Audit-Related Fees” and “Tax Fees” above. |
As part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board. All of the services provided by M&K CPAs PLLC described above were approved by our Board.
The Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
3.1 | |
3.2 | Bylaws (1) |
21 | |
31.1 | |
32.2 | |
101 | XBRL Interactive Data (3) |
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(1) | Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on February 24, 2011. |
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(2) | Filed or furnished herewith. |
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(3) | To be submitted by amendment. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Neutra Corp. |
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Date: June 24, 2020 | BY: /s/ Sydney Jim |
| Sydney Jim |
| President, Secretary, Treasurer, Principal Executive Officer, |
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Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
Diamond Anvil Designs, LLC, a Texas limited-liability corporation, is a wholly owned subsidiary of Neutra Corp.
Vivis Corporation, a Wyoming corporation, is a wholly owned subsidiary of Neutra Corp.
Exhibit 31.1
RULE 13A-14(A)/15D-14(A) CERTIFICATION
I, Sydney Jim, certify that:
1. I have reviewed this annual report on Form 10-K for the period ended January 31, 2020 of Neutra Corp.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: June 24, 2020 | BY: /s/ Sydney Jim |
| Sydney Jim |
| President, Secretary, Treasurer, Principal Executive Officer, |
Exhibit 32.1
SECTION 1350 CERTIFICATION
In connection with the annual report of Neutra Corp. (the “Company”) on Form 10-K for the period ended January 31, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, Sydney Jim, President of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
Date: June 24, 2020 | BY: /s/ Sydney Jim |
| Sydney Jim |
| President, Secretary, Treasurer, Principal Executive Officer, |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.