Electronic Servitor Publication Network, Inc 10-Q/A for FY2021 Q1
Electronic Servitor Publication Network, Inc. (XESP)
About this 10-Q/A
Electronic Servitor Publication Network, Inc filed this 10-Q/A on August 27, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).
Headline figures
Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $217.97K
- Net loss
- $72.76K
- compared with a net loss of $2.78M a year earlier
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
ACT OF 1934
For the quarterly period ended
ACT OF 1934
Commission file number:
(Exact name of registrant as specified in its charter)
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| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
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).
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| x | 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(1) of the Exchange Act.
Indicate by checkmark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes o
Securities registered pursuant to Section 12(b) of the Act: None
As of May 14, 2021, the Company had shares of its common stock, par value $ per share, issued and outstanding.
Explanatory Note:
| 2 |
TABLE OF CONTENTS
| PART I | ||
| Item 1. | Condensed Unaudited Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 |
| Item 4. | Controls and Procedures | 16 |
| PART II | ||
| Item 1. | Legal Proceedings | 17 |
| Item 1A. | Risk Factors | 17 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 17 |
| Item 3. | Defaults Upon Senior Securities | 17 |
| Item 4. | Mining Safety Disclosures | 17 |
| Item 5. | Other Information | 17 |
| Item 6. | Exhibits | 18 |
| Signatures | 19 |
| 3 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CANNASSIST INTERNATIONAL CORP.
INDEX TO FINANCIAL STATEMENTS
| Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020 | 5 |
| Statements of Operations for the three months ended March 31, 2021 and 2020 | 6 |
|
Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2021 and 2020 (unaudited) |
7 |
| Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited) | 8 |
| Notes to Condensed Financial Statements (Unaudited) | 9 |
| 4 |
CannAssist International Corp.
Balance Sheets
| March 31, 2021 | December 31, 2020 | |||||||
| ASSETS | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Inventory | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accruals | $ | $ | ||||||
| Accounts payable – related party | ||||||||
| Convertible notes payable, net of debt discount of $ | ||||||||
| Due to a related party | ||||||||
| Loans payable | ||||||||
| Total current liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock, $ par value shares authorized; issued and outstanding | ||||||||
| Common Stock, $ par value, shares authorized; and issued and outstanding, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 5 |
|
CannAssist International Corp. Statements of Operations (Unaudited) |
| For the Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross margin | ||||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Commissions – related party | ||||||||
| Professional fees | ||||||||
| Preferred stock issued for change of control | ||||||||
| Total operating expenses | ||||||||
Loss from operations | ( | ) | ( | ) | ||||
| Other expense: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares outstanding, basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 6 |
| CannAssist International Corp. Statements of Changes in Stockholders’ Deficit For the Three Months Ended March 31, 2020 and 2021 |
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2019 | - | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Preferred stock issued for change of control | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Common stock issued for services | - | |||||||||||||||||||||||||||
| Common stock issued for debt conversion | - | |||||||||||||||||||||||||||
| Common stock units sold for cash | - | |||||||||||||||||||||||||||
Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 7 |
CannAssist International Corp.
Statements of Cash Flows
| For the Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash | ||||||||
| Preferred stock issued for change of control | ||||||||
| Debt discount | ||||||||
| Common stock issued for services | ||||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Customer deposits | ( | ) | ||||||
| Net cash used by operating activities | ( | ) | ( | ) | ||||
| Cash flows from Investing activities: | ||||||||
| Cash flows from Financing activities: | ||||||||
| Proceeds from loans - related party | ||||||||
| Proceeds from sale of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Cash Paid For: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Conversion of debt | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 8 |
CANNASSIST INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
March 31, 2021
NOTE 1 - DESCRIPTION OF BUSINESS AND HISTORY
Description of business
CannAssist International Corp. (the “Company” or “CannAssist”) was incorporated on May 17, 2017 under the laws of the state of Delaware under the name Iris Grove Acquisition Corporation to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. On May 23, 2018 the Company changed its name to CannAssist International Corporation.
On June 18, 2018, the Company cancelled all
shares of its issued and outstanding stock and issued shares of common stock pursuant to Section 4(a)(2) of the Securities Act
of 1933 at par representing
On July 12, 2018, the “Company, entered into a share exchange acquisition agreement with Xceptor LLC, a private company organized under the laws of Wyoming (“Xceptor”). The Acquisition was effected by the Company through the exchange of all the outstanding membership interests of Xceptor for shares of common stock of the Company, valued at $ per share. At the time of the Acquisition, there was one shareholder of the Company who was also a shareholder and manager of Xceptor. Xceptor has become a wholly owned subsidiary of the Company and the Company has taken over its operations and business plan. Prior to the Acquisition, the Company had no ongoing business or operations. Since the Company and Xceptor were entities under common control prior to the Acquisition, the transaction is accounted for as a restructuring transaction. The Company has recast prior period financial statements to reflect the conveyance of Xceptor’s common shares as if the restructuring transaction had occurred as of the earliest date of the financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying unaudited condensed financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending December 31, 2021. These unaudited condensed financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounts Receivable
Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value when needed. The allowance for uncollectible amounts is evaluated quarterly.
| 9 |
CANNASSIST INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2021
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery.
The Company recognizes revenue when product is shipped. The Company will often receive payment and/or pay for the cost of goods prior to shipping. When this occurs, the result is both a prepaid for the supplies to be used in their product and a customer deposit.
Cost of Sales
Cost of sales is determined on the basis of the cost of production or the purchase of goods, adjusted for the variation of inventory Cost of sale is recognized as the direct cost of products or services sold during the period.
Recently issued accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying unaudited financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has generated revenues of $
| 10 |
CANNASSIST INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2021
NOTE 4 – LOANS PAYABLE
On October 11, 2017, the Company received a $
On June 29, 2020, the Company received a $
NOTE 5 – CONVERTIBLE NOTES PAYABLE
During July and August 2020, the Company issued
convertible notes payable to third parties for a total of $
On November 19, 2020, the Company issued a convertible
note payable to a third party for $
NOTE 6 – RELATED PARTY TRANSACTIONS
Marla Palumbo has advanced the Company a limited
amount of funds to cover some general operating expenses and travel costs. These advances are unsecured, due on demand and non-interest
bearing. As of March 31, 2021 and December 31, 2020, the balance due to Ms. Palumbo for cash advances is $
During the three months ended March 31, 2021 and
2020, the Company paid sales commissions of $
NOTE 7 – COMMON STOCK
On February 8, 2021, the Company entered into
an agreement with an independent consultant pursuant to which the consultant was issued restricted shares of the common stock of
the Company for services, at a cost basis of $ per share, for total non-cash expense of $
On February 24, 2021, in connection with its qualified
offering under Regulation A, the Company sold units to one investor at a price per unit of $ per unit for aggregate proceeds
of $.25.
During three months ended March 31, 2021, note
holders converted $
| 11 |
CANNASSIST INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2021
NOTE 8 – PREFERRED STOCK
The Company has designated shares of Series
A Preferred Stock. The shares of Series A Preferred Stock have a par value of $ per share. The Series A Preferred Shares do not
have a dividend rate or liquidation preference and are not convertible into shares of common stock.
NOTE 9 – WARRANTS
On February 24, 2021, the Company sold
Schedule of estimated the fair value of these warrants using Black-Scholes
| Warrants | ||||
| Share price | $ | |||
| Exercise Price | $ | |||
| Term | 5 years | |||
| Volatility | % | |||
| Risk Free Interest Rate | . | % | ||
| Dividend rate |
| 12 |
CANNASSIST INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2021
NOTE 9 – WARRANTS (CONTINUED)
A summary of the status of the Company’s outstanding stock warrants and changes during the year is presented below:
Activity for three months ended March 31, 2021 is as follows:
Schedule of outstanding stock warrants and changes
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2019 | - | |||||||||||||||
| Granted | $ | $ | - | |||||||||||||
| Expired | - | $ | - | - | $ | - | ||||||||||
| Exercised | - | $ | - | - | $ | - | ||||||||||
| Outstanding at December 31, 2020 | $ | $ | - | |||||||||||||
| Granted | $ | $ | - | |||||||||||||
| Expired | - | $ | - | - | $ | - | ||||||||||
| Exercised | - | $ | - | - | $ | - | ||||||||||
| Outstanding at March 31, 2021 | $ | $ | - | |||||||||||||
| Exercisable at March 31, 2021 | $ | $ | - | |||||||||||||
| Range of Exercise Prices |
Number Outstanding 3/31/2021 | Weighted Average Remaining Contractual Life |
Weighted Average Exercise Price | |||
| $ | years | $ |
NOTE 11 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements
| 13 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
·our future strategic plans
·our future operating results;
·our business prospects;
·our contractual arrangements and relationships with third parties;
·the dependence of our future success on the general economy;
·our possible future financings; and
·the adequacy of our cash resources and working capital.
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Executive Overview
CannAssist International Corp. (formerly Iris Grove Acquisition Corporation) (the “Company”) was incorporated on May 17, 2017 under the laws of the State of Delaware. The business purpose of the Company is to produce, sell and market its CBD based products. The Company's corporate offices are located at 855 South Mission Avenue, Suite #K400, Fallbrook CA 92028. The Company's email address is info@xceptorllc.com, and its website is xceptorcbd.com. The Company’s telephone number is 760-990-3091.
CannAssist produces and sells its cannabidiol ("CBD") product, “Cibidinol,” which is formulated based on a process developed by its founder Mark Palumbo (US Provisional Patent Number 62/581,605). CBD is a non-psychoactive compound found in hemp. CannAssist’s initial research and development work, aimed at enhancing the bioavailability of desired molecular structures, resulted in the creation of a line of CBD products, most notably its CBD product, Cibidinol. Cibidinol will be available in a line of consumable and topical products that the Company believes will make enhanced CBD products more available and accessible to consumers.
For the period ended December 31, 2020, the Company’s independent auditors issued a report raising substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon financial support from its principal stockholders, its ability to obtain necessary equity financing, or its ability to sell its services to generate consistent profitability.
Results of Operation for the Three Months Ended March 31, 2021 and 2020
Revenues
For the three months ended March 31, 2021, the Company had revenues of $217,973, and costs of revenue of $157,793. In comparison, for the three months ended March 31, 2020, the Company had revenues of $210,087, and costs of revenue of $99,005. The increase in revenue is not material for the purposes of comparison.
For the three months ended March 31, 2021, the Company had a gross margin of $60,180. In comparison, the three months ended March 31, 2020, the Company had a gross margin of $111,082. The increase in gross margin is a result of the decrease in cost of revenue.
| 14 |
General and administrative expenses
General and administrative expenses were $82,412 for the three months ended March 31, 2021 compared to $82,377 for the three months ended March 31, 2020. The increase in general and administrative expenses is not material for the purposes of comparison.
Commissions
Commission expense was $0 for the three months ended March 31, 2021 compared to $4,373 for the three months ended March 31, 2020. Commission expense was paid to EME, LLC, a related party.
Professional fees
Professional fees were $42,370 for the three months ended March 31, 2021 compared to $32,610 for the three months ended March 31, 2020. Professional fees consist of audit, accounting and legal fees. The increase in professional fees are the result of increased fees related to becoming a public company.
Preferred Stock
Preferred Stock expense was $0 for the three months ended March 31, 2021 compared to $2,765,250 for the three months ended March 31, 2020. The preferred stock was issued to Mark Palumbo, a related party, and was a one-time expense.
Net Loss
For the three months ended March 31, 2021, we realized a net loss of $72,758 as compared to a net loss of $2,775,369 for three months ended March 31, 2020. The decrease in net loss in the current period is primarily due to fact that the expense incurred in connection with the issuance of preferred stock in 2020 was a one-time expense.
Liquidity and Capital Resources
The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated revenues of $217,973 during the three months ended March 31, 2021 and had a net loss of $72,758 for the three months ended March 31, 2021. The Company has an accumulated deficit of $3,406,160 as of March 31, 2021. The Company requires capital for its contemplated operational and marketing activities. The obtainment of additional financing, through an additional capital raise, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of continued profitable operations are necessary for the Company to continue operations.
The Company used $166,550 of cash from operations for the three months ended March 31, 2021. Net cash provided by financing activities for the three months ended March 31, 2021 was $13,459.
As of March 31, 2021, the Company had $22,406 in cash.
Critical Accounting Estimates and Policies
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 the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.
| 15 |
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were not effective for the quarterly period ended March 31, 2021.
The following aspects of the Company were noted as potential material weaknesses:
| · | timely and accurate reconciliation of accounts |
| · | lack of segregation of duties |
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, 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.
Changes in Internal Controls
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended March 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In the first quarter of 2021, the Company issued a total of 58,000 shares of its restricted common stock, at a conversion price of $0.25 per share, to 10 investors in connection with the conversion of convertible promissory notes with an aggregate principal amount of $14,500 bearing an interest rate of 0% per annum. The shares were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act.
On February 24, 2021, in connection with its qualified offering under Regulation A, the Company sold 2667 units to 1 investor at a price per unit of $0.75 per unit for aggregate proceeds of $2,000.25. Each unit is comprised of (i) 3 shares of the common stock of the Company and (ii) 1 warrant entitling the holder rights to purchase 1 share of the common stock of the Company at an exercise price equal to $0.50 for a period of 5 years from the date of issuance. The Company has not yet used the proceeds of this sale, but intends to use the proceeds for administrative purposes in connection with the operation of its business.
On February 8, 2021, the Company entered into an agreement with an independent consultant pursuant to which the consultant was issued 75,000 restricted shares of the common stock of the Company for services, at a cost basis of $0.09 per share, subject to certain conditions regarding vesting. The shares of common stock granted to this consultant were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINING SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
None
| 17 |
ITEM 6. EXHIBITS
| No. | Description | |
| 31.1 | Chief Executive Officer Section 302 Certification | |
| 31.2 | Chief Financial Officer Section 302 Certification | |
| 32.1 | Section 906 Certification | |
| Exhibit 101.INS | XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| Exhibit 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| Exhibit 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| Exhibit 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| Exhibit 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| Exhibit 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| Exhibit 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CANNASSIST INTERNATIONAL CORPORATION
Dated: August 27, 2021 |
By: /s/ Mark Palumbo Mark Palumbo Chief Executive Officer |
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By: /s/ Mark Palumbo Mark Palumbo Chief Financial Officer |
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