UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
Form
10-K
(Mark One)
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended May 31, 2015
or
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ____________ to ____________
Commission
file number 333-151434
PORTLOGIC
SYSTEMS INC.
(Exact
name of registrant as specified in its charter)
NEVADA |
|
20-2000407 |
(State or other jurisdiction
of incorporation or organization) |
|
(I.R.S. Employer
Identification
No.) |
2 Toronto Street,
Suite 209, Toronto, Ontario, Canada |
|
M5C 2B5 |
(Address of principal executive
offices) |
|
(Zip Code) |
Registrant’s
telephone number, including area code (647) 847-8350
Securities
registered under Section 12(b) of the Exchange Act: None.
Securities
registered under Section 12(g) of the Exchange Act: None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes No ☒
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 ☒
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 No ☐
Indicate
by check mark if disclosure 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 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.
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 ☐ (Do not
check if a smaller reporting company) |
Smaller reporting company ☒ |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes No ☒
As
of September 15, 2015, the registrant had 33,525,784 shares of common stock, par value $0.001, outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
PORTLOGIC
SYSTEMS INC.
FORM
10-K
For
the fiscal year ended May 31, 2015
TABLE
OF CONTENTS
CAUTIONARY
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Statements
in this annual report on Form 10-K may be "forward-looking statements". Forward-looking statements include, but are
not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions, or any other statements
relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates,
and projections about our business based, in part, on assumptions made by our management. These statements are not guarantees
of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes
and results may, and probably will, differ materially from what is expressed or forecasted in the forward-looking statements due
to numerous factors, including those described above and those risks discussed from time to time in this annual report on Form
10-K, including the risks described under "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in other documents we file with the Securities and Exchange Commission.
In
addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect
our industry, market and customer acceptance, competition, government regulations and requirements and pricing, as well as general
industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as
of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect
events or circumstances after the date of this annual report on Form 10-K, except as required by law.
PART
I
ITEM
1. Business
GENERAL
We
incorporated on June 22, 2004 as Portlogic Systems Inc. under the laws of the State of Nevada. On June 5, 2008, the Company filed
a Form S-1 Registration Statement under the United States Securities Act of 1933. It became effective June 24, 2008. The address
of our principal executive office is 2 Toronto Street, Suite 209, Toronto, Ontario, Canada M5C 2B5. Our telephone number is (647)
847-8350. Our website address is www.portlogicsystems.com. We have a financial year end of May 31.
We
have not been profitable since our inception. We have no significant assets or financial resources. The limited extent of our
assets and revenues and our limited operating history make us subject to the risks associated with start-up companies, including
potentially negative cash flows. The report of our independent auditors for the fiscal year ended May 31, 2015 states that there
is substantial doubt that we will be able to continue as a going concern. If we cannot continue to obtain additional financing,
we may cease to exist.
We
offer enterprise mobile marketing applications solutions, kiosk hardware and software products which fall into six principal product
families: m2Meet, m2Bank, m2Market, m2Ticket, m2Kiosk, and m2Workflow. Prior to January 2010. Portlogic created and licensed online
interactive community portal software systems and developed a series of web-based community portal products. In September 2013,
FAMILIES social media family network site was launched.
On
September 16, 2009, we incorporated a wholly-owned subsidiary, Sunlogic Energy Corporation in Panama City, Republic of Panama
for the purpose of looking at solar and alternative green energy software and products. To date, our subsidiary has not had any
operations.
On
June 18, 2012, we incorporated a wholly-owned subsidiary, VOIP 1, Inc. under the laws of the State of Nevada. VOIP 1, Inc. specializes
in data and voice telecommunications technologies. VOIP 1 began earning revenues in September 2012.
PRINCIPAL
PRODUCTS AND SERVICES
Our
scope of technology offerings includes marketing mobile applications solutions and kiosk hardware and software products.
Our
6 divisions are as follows:
| 1. | m2Meet:
A community networking software solution. Currently being developed from our proprietary
web based source code. Internet and mobile users with similar interests will use m2Meet
to socially network and connect using location based technology such as GPS. |
| | |
| 2. | m2Bank:
(Mobile to Bank) is a financial transactions system that facilitates bill payments, money
transfers, and account management. |
| | |
| 3. | m2Market:
Mobile marketing solutions including a Bluetooth push technology that is used to deliver
marketing materials to mobile phones. |
| | |
| 4. | m2Ticket:
Mobile ticketing sales engine which manages the sale and delivery of tickets through
mobile phones for the transportation and entertainment industry. |
| | |
| 5. | m2Kiosk:
A line of standard and custom kiosks hardware and software which integrates with mobile
phone applications in the marketing, financial, and ticketing industries. |
| | |
| 6. | m2Workflow:
Customer relations management (CRM) on mobile phones for service industries. |
Since
June 2012, we have started specializing in data and voice telecommunications technologies. We began to earn telecom revenues in
September 2012.
We
also develop and license portal software products and provide custom software programming services to customers who license our
products. Our portal software products are designed to enable our customers to operate their own online social networking portal
without requiring any technical programming or website design skills. Each type of portal that we license to our customers has
a standard pre-programmed functional framework along with content and appearance customized according to the customer’s
particular requirements. Our licensing agreements with customers provide that we retain exclusive ownership rights over the portal
software and any related products or features that we license to our customers. Our customers retain ownership rights over any
content that they provide to customize their portal.
We
host the portal software licensed to our customers on our own servers. Our portal software products include an online administration
interface which our customers can use to manage the functionality, appearance, and content of their portal, such as what users
are able to see and do when they visit the portal. As a result, customers that license our software can operate their online portal
using only a personal computer and internet connection. They do not need to have any programming knowledge, additional software,
hosting capabilities, or additional hardware.
We
also offer, in exchange for additional licensing fees, ‘plug-in’ products that can provide additional functions to
the basic portal software licensed by our customers. A plug-in is a discrete piece of software that provides a specific feature
that our customers can add to their portal that we believe will enhance the experience of users accessing the portal. We either
own the plug-ins or license them from third parties. Examples include video chat, instant messaging chat, modules that display
automatically updating financial data or news, photo galleries, a payment facility to charge users for access and enable our customers
to accept credit card payment.
One
fully developed portal software product is an online social networking system marketed to entrepreneurs who wish to operate their
own online social networking or dating business. We market this product through one of our websites, at www.internetdatingsoftware.com.
We
earn revenues from our social networking software system in five primary ways:
| 1. | We
charge a lump sum initial setup fee for each portal that we provide to a customer. |
| | |
| 2. | Monthly
or annual basic licensing fees, along with variable bandwidth and other fees that we
charge to allow end users to access a customer’s portal stored on our server, are
payable on an ongoing basis when our customers are licensing one of our portal products. |
| | |
| 3. | We
charge ongoing licensing fees for any plug-ins that we provide to our customers. |
| | |
| 4. | We
provide customized programming, graphic design, or other services to assist customers
with customizing the appearance or functions of their portal. Fees for customized services
are based on a quotation agreed to between us and the customer that sets out the scope
of services to be performed. |
| | |
| 5. | We
offer master licensing agreements with resellers that wish to license our products to
their own customers in return for the reseller paying us a fixed fee or proportion of
revenues received from their customers. |
Currently,
we have been focusing on our data and telecommunications operations.
OUR BUSINESS
STRATEGY
Our
business strategy was to offer a product that allows small and midsize businesses to compete in various online markets at comparatively
low cost. Packages are customizable and are managed though a backend management administration area. We provide all technical
support, including payment and tracking systems, servers, and client support.
Not
all entrepreneurs who start up an online business will succeed, but we believe the ones who do can be expected to become long-term
stable income centers for our company. As they develop, they will usually require more customization and may require more plug-ins
on their site, all of which we can charge for.
Due
to the cost of developing the technology to offer our marketing mobile applications solutions and kiosk hardware and software
products, we have decided to offer many of our products by bundling technology from third party suppliers. Agreements can include
but are not limited to licensing agreements, reseller agreements, partnership agreements, memoranda of understanding, and software
development agreements.
We are not a software company; rather we market mobile, kiosk and other technological solutions. And now we offer telecom as one
of our solutions.
MARKETS
FOR OUR PRINCIPAL PRODUCTS AND SERVICES
We
believe our market consists of three groups: portal owners (active domains seeking to maximize the amount of traffic that they
attract by adding functions that we can provide), private entrepreneurs (entrepreneurs interested in developing online businesses
from scratch themselves) and data and telecommunications companies.
We
also introduce mobile application solutions to marketing companies that may be interested in our technology partners. We are directly
targeting Telco operators and governmental agencies.
CUSTOMERS
Our
customers are mostly other businesses that also offer telecom and mobile technology solutions.
Our
current revenues were evenly supported by our customer base; none of our clients represented major customers as a percentage or
dollar amount of total revenues.
All
of our revenues for the year ended May 31, 2015 were telecom customers which was our main focus. We do not have any customers
for our mobile application solutions yet. We did not earn any revenue for our social networking software solutions for the year
ended May 31, 2015.
COMPETITION
With
our past product offering, we faced the portal software products industry, which is occupied by a wide variety of businesses,
with numerous substitutes for the products and services that we offered. We competed with companies that offer do-it-yourself
website design software products, website programmers, software developers, online social networking community service providers,
and portal software products dedicated to a specific industry.
Our
direct competitors now consist of companies that sell or license mobile marketing solutions. The direct competitors that we are
aware of are privately held and we do not have access to certain information that would enable us to compare our business with
them. Accordingly, it is difficult to determine some aspects of our competitive position. Based on information that is publicly
available, we believe that the methods of competition that we use are similar to the methods that most of our direct competitors
are using. Like most of our direct competitors, we market ourselves by maintaining a website that describes the features of our
product, providing a mechanism to enable customers to order our products and services online, and we bid for key words with search
engines to help our company and our products appear prominently in the results of searches made by potential customers. The method
that we use to earn revenues also appears to be similar to the method used by most of our direct competitors. This method involves
charging low fees for initial setup and ongoing licensing of our basic product and then marketing additional services and products
to customers who license a basic product from us. Our fees to provide these additional services and products, including customized
programming services and plug-ins, are intended to provide us with a high profit margin.
We
offer master licensing agreements with resellers who wish to license our products to their own customers. We are not aware of
any competitors marketing their products using master licensing agreements, although this information may not be publicly disclosed.
We believe that the master licensing method of marketing our products provides us with a competitive advantage compared to our
other direct competitors because under these arrangements our resellers incur the costs of marketing to potential customers and
providing customer service on our behalf. The cost of providing the products that are being licensed are primarily fixed and have
already been incurred, and resellers may be able to access new niche markets if they have a reputation or specific subject matter
expertise that we lack and are viewed favorably by a specific class of potential customers.
Because
of our relatively limited revenues and cash, compared to our competitors we have less capacity to perform services for our customers
or develop new features for our products. We are unable to incur significant upfront cash expenses to market our products and
services. Unlike some of our more established competitors, we do not compete for customers by using high value marketing campaigns
or building personal relationships with large business customers. We do, however, compete against larger companies because they
advertise and provide their products and services to smaller businesses whom we are capable of providing products and services
to and therefore represent potential customers.
We
believe that the principal competitive factors in our industry are:
| ● | value
of the products and services provided compared to their price; |
| | |
| ● | quality
of the products and services; |
| | |
| ● | capability
to generate revenues by producing add-on products and services to existing customers; |
| | |
| ● | reputation
for services provided to past customers; |
| | |
| ● | brand
recognition and size of the firm; |
| | |
| ● | ability
to provide complete, integrated solutions; |
| | |
| ● | speed
of development and implementation of solutions; |
| | |
| ● | effectiveness
of sales and marketing efforts; and |
| | |
| ● | financial
stability. |
We
believe that we can currently compete favorably with respect to the first three of these factors. However, given our developmental
stage of business, small size, and limited scope of operations, we believe that we are currently at a competitive disadvantage
relative to more established competitors with respect to the other factors listed above. Established competitors who have greater
access to capital and positive cash flow from revenues may be in a better position to capture a share of the available market.
We
hope to offset the competitive advantages of our established competitors by providing, at relatively low cost, high quality customer
service, innovative ideas, and products that have some customization that makes them more appealing to each specific segment of
customers. In addition, our lack of affiliation with a larger company such as Google or Yahoo! means that we are not limited in
our choice of technology. We are free to select the software or other technology that suits our own or our customers’ needs.
As a result, we may be able to offer products and services that are more innovative or appealing to our customers at a lower cost
than our competitors. However, we may not be able to compete successfully against our current or future competitors and competition
may have a material adverse effect on our business, results of operations, or financial condition.
INTELLECTUAL
PROPERTY
As
of May 31, 2015, we do not own any patents or trademarks. We are not licensing any product or service from a third party that
is material to our business. Depending upon the particular needs and demands of our clients, we may, in the future, seek patents
or copyrights for the intellectual material we produce.
Our
business plan contemplates that we will market our products and services in part by entering into master licensing agreements
with resellers who wish to license our products to their own customers in return for the reseller paying us a fixed fee or proportion
of revenues received from their customers. We have also entered into exclusive distribution agreements for our mobile applications
solutions and kiosk hardware and software products. We have licensing agreements with telecom suppliers.
EFFECT OF
EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON OUR BUSINESS
There
are numerous laws and regulations that apply to commerce on the Internet or are of more general application but have an effect
on our operations. These include laws and regulations with respect to user privacy, freedom of expression, pricing, characteristics
and quality of products and services, taxation, advertising, intellectual property rights, information security, language use,
and the convergence of traditional telecommunications services with Internet communications. Due to the increasing popularity
of use of the Internet by consumers and businesses, it is possible that additional laws and regulations with respect to the Internet
may be adopted at federal, state, provincial, and local levels. There may be additional laws and regulations that will apply to
the transaction of business by us that we will need to explore as we enter international markets. We are subject to laws in every
jurisdiction in which we conduct business. Currently, we are incorporated in the United States and maintain a main office in the
Province of Ontario, Canada. Current and future laws and regulations within and outside of the United States may have a material
adverse effect on us and our business.
NEW PRODUCT
DEVELOPMENT
Using
the programming source code of the portal software for our online social networking system, we have been further developing to
offer location-based services. We believe this will bring a new customer base for our m2Meet division as well as aid with our
m2Market services. In September 2013, we launched FAMILIES social media family network site.
However,
due to the cost of developing the technology to offer our marketing mobile applications solutions and kiosk hardware and software
products, we have decided to offer many of our products by bundling technology from third party suppliers. Agreements can include
but are not limited to licensing agreements, reseller agreements, partnership agreements, memoranda of understanding, and software
development agreements.
EMPLOYEES
AND CONTRACTORS
As
of May 31, 2015 we had one employee, consisting of our officer, Jueane Thiessen. Ms. Thiessen is our Chief Financial Officer,
Treasurer, and Secretary and acting Chief Executive Officer and President. Mr. Joseph Putegnat was our Chief Executive Officer
and President until February 19, 2014, at which point he resigned. The resignation was not a result of any disagreement with the
Company and Mr. Putegnat continues to assist as we transition. We also retain contractors to provide services related to software
programming, website hosting, sales, office work, and consulting services as necessary based on the phase of our business plan
and available funds.
Our
contractors include programmers, website designers, system administrators, business writers, sales personnel, and telecom consultants.
We plan to continue using our existing network of contractors to assist us with the ongoing development of our business and to
retain the services of additional contractors as needed. We believe that our use of contractors to conduct our day-to-day operations
and product and service development enables us to react to customer demands without the need to incur large fixed overhead costs.
We therefore believe that the use of contractors will help us to maintain low day-to-day costs of business during our development
stage, and we expect to be able to quickly expand our operations as the number and size of our customers increase. We believe
that our network of contractors is sufficient to support our current levels of business activity, as well as increased levels
of activity.
ITEM
1A. Risk Factors
Risks
Relating To Our Business
The
independent accountant’s opinion on the financial statements for the fiscal years ended May 31, 2015 and May 31, 2014, includes
an explanatory paragraph about our ability to continue as a going concern and, if we cannot continue to obtain additional financing,
we may have to curtail operations and may ultimately cease to exist.
Our
audited financial statements for the years ended May 31, 2015 and 2014 reflect a cumulative net loss of $1,452,030. These conditions
raise substantial doubt about our ability to continue as a going concern. However, our financial statements do not include any
adjustments that might result if we are unable to continue our business. The independent auditor’s report for the year ended
May 31, 2015 includes an explanatory paragraph to the audit opinion stating that we have a working capital deficiency, an accumulated
deficit and operating cash flow deficit that raise substantial doubt about our ability to continue as a going concern. Our continued
operations are contingent on our ability to raise additional capital and obtain financing and success in future operations. If
we do not acquire sufficient additional funding or alternative sources of capital to meet our working capital, we may have to
substantially curtail our operations and business plan. To meet our future obligations, from time to time, we intend to issue
debt or shares of our common stock or other equity instruments such as warrants.
We have
a limited operating history and may never achieve or sustain profitable operations.
We
have a short operating history and have not been profitable since our incorporation in June 2004. Even if we obtain future revenues
sufficient to expand operations, increased operational or marketing expenses could adversely affect our liquidity. The limited
extent of our assets and revenues, and our limited operating history make us subject to the risks associated with start-up companies,
including potentially negative cash flows. We have no significant assets or financial resources. Our lack of operating history
makes it very difficult for you to make an investment decision. We may never become profitable. You may lose your entire investment.
We
depend on our officers and directors to perform our business activities and our ability to recruit and retain the qualified individuals
needed to operate and develop our business is unknown.
We
rely on our officers and directors to perform many of our business activities. Currently, our Chief Financial Officer, Secretary,
and Treasurer, and acting Chief Executive Officer and President, Jueane Thiessen, personally performs most of our accounting and
financial management functions, and liases with external contractors who provide additional programming and consulting services.
Ms. Thiessen is also involved in carrying out our sales activities. Our prior Chief Executive Officer and President, Joseph Putegnat
performed most of our management functions, and also oversaw our sales activities. On February 19, 2014, Mr. Putegnat resigned.
The resignation was not a result of any disagreement with the Company and Mr. Putegnat has continued to assist us as we transition.
Our present management structure, although adequate for the early stage of our operations, will likely have to be significantly
augmented as our operations expand. Our future success will depend in part on the services of our key personnel and, additionally,
on our ability to identify, hire and retain additional qualified personnel. There is intense competition for qualified management,
marketing, accounting, and sales personnel in our new business line: marketing mobile application solutions. We may not be able
to continue to attract and retain the personnel needed to operate and develop our business. Because we rely on our officers and
directors to perform our sales, accounting, and financial management activities, failure to attract and retain key personnel could
have a material adverse effect on us.
We
have limited cash which we anticipate will be insufficient to fund our plan of operations for the twelve months ending May 31,
2016 and if we are unable to raise additional capital, our business may fail and stockholders may lose their entire investment.
We
have limited capital reserves to finance expansion or to protect us from a downturn in business. We currently do not have sufficient
cash to fund operations for the forthcoming next twelve months ending May 31, 2016. We will need to continue to raise additional
funds to fully fund our operations for the next twelve month period beginning June 1, 2015. Additional financing may come in the
form of an offering of common shares, borrowing from a bank or one of our directors, or from revenues generated by our current
or new business. If additional shares are issued to raise capital, our existing stockholders will suffer a dilution of their stock
ownership and the value of our outstanding shares may fall. If we borrow more money, we will have to pay interest and may also
have to agree to restrictions that limit our operating flexibility. We have no commitments for additional financing and there
can be no assurance that additional funds will be available when needed, or on terms acceptable to us, if at all. If adequate
funds are not available, we may be required to change our planned business strategies. If we are unable to obtain adequate financing,
we may not be able to successfully develop and market our products and services. As a result, we would need to curtail business
operations which would have a material negative effect on operating results, the value of our outstanding stock is likely to fall,
and our business may fail causing our stockholders to lose their entire investment.
Our sole
director, Jueane Thiessen, also serves as our sole officer. This interrelationship may create a conflict of interest that might
be detrimental to us.
Currently,
our sole director, Jueane Thiessen, is also our sole officer, serving as our Chief Financial Officer, Treasurer, Secretary, and
acting Chief Executive Officer and President. Up until February 19, 2014, a second director, Joseph Putegnat, served as our Chief
Executive Officer and President. Our board of directors, which appoints our officers, consisted of four persons up until November
23, 2012: Mr. Putegnat, Ms. Thiessen, Mr. Donald Gilpin and Mr. Bruce Maschmeyer. As of December 5, 2012, Mr. Putegnat and Ms.
Thiessen were the only remaining directors; Mr. Gilpin and Mr. Maschmeyer’s service terms have expired. On February 19,
2014, Mr. Putegnat resigned as an officer and a director. Because Ms. Thiessen is the only remaining director and officer, there
exists a potential future conflict of interest regarding the decision to remove our officers or appoint new officers. Our directors
and officers will deal with any such conflicts of interest, should they arise, in accordance with our Corporate Code of Ethics
and applicable corporate law principles.
We
may be subject to foreign currency fluctuation and such fluctuation may adversely affect our financial position and results.
Our
main office is currently located in Canada and we pay most of our expenses in United States dollars. However, our target market
is global. We may enter into contracts that require customers to pay us in currencies other than United States dollars. Therefore,
our potential operations make us subject to foreign currency fluctuation. We do not make investments that offset the risk of adverse
foreign currency fluctuations and we may suffer increased expenses and overall losses as a result.
We
do not own patents on our products and, if other companies copy our products, our revenues may decline which may result in a decrease
in our stock price.
We
do not own patents on our products we have developed and we do not currently intend to file for patent protection on those products.
Therefore, another company could recreate our products and could compete against us, which would adversely affect our revenues.
We
do not carry any insurance and we may be subject to significant lawsuits which could substantially increase our expenses.
We
do not carry any insurance. There are a number of occurrences that could adversely affect our financial condition. These include
damage to our assets, financial records, or other property by fire or water, as well as any successful lawsuits against us involving
recovery of damages arising out of our contractual, legal, or other duties. Should such an uninsured loss occur, our costs may
substantially increase which would lower our overall profitability, if any.
Amendments
to telecommunications regulations could have a material adverse effect on our business by increasing the cost of our operations
or the costs that customers must incur to use our products and services.
We
use telecommunications services to deliver our online software licensing and programming services to customers. In addition, our
customers typically require telecommunications systems to use our products and services. The telecommunications industry is subject
to regulatory control. Any amendments to current regulations in any jurisdiction where we operate or where our customers conduct
business could have a material adverse effect on our business, results of operations, and prospects. If amendments to regulations
increase the cost of using telecommunications services, our operating expenses may increase. Additionally, if regulatory amendments
increase the cost that our customers must incur to use our services, we may experience difficulty attracting new customers or
retaining existing customers.
Equipment
loss or malfunctions and telecommunication service interruptions or delays may adversely affect our ability to provide our products
and services.
Our
business is highly dependent on our computer and telecommunications equipment and software systems for the operation and quality
of our services. The temporary or permanent loss of all or a portion of these systems, including as a result of physical damage
or operating malfunction, or significant replacement delays, could have a materially adverse effect on our business, financial
condition, and results of operations. Any interruptions, delays or capacity problems experienced on the Internet or with telephone
services could adversely affect our ability to provide our products and services.
Substantially
all of our revenue has been derived from short-term contract engagements. If these customers do not enter into additional contracts
with us, you may lose your entire investment because we may be unable to obtain new revenues that generate sufficient cash to
meet our obligations.
Our
contracts with our current customers are short-term in nature and there is no guarantee that we will enter into new contracts
and receive additional revenues from these customers in the future. We anticipate that we will rely on a small number of short-term
engagements and customers for at least the next 12 months. Our existing customers and/or new customers may not provide us with
sufficient levels of revenue to generate profits or even to sustain operations. We may not be able to replace the revenues generated
by any existing customer that chooses not to enter into additional contract engagements with us.
Risks
Relating To Our Stock
"Penny
Stock" rules may make buying or selling our securities difficult which may make our stock less liquid and make it harder
for investors to buy and sell our shares.
Trading
in our securities is subject to the SEC's "penny stock" rules and we anticipate that trading in our securities will
continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally
define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.
These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited
investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser's
written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior
to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated
with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer
and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon
broker-dealers by these requirements may discourage broker-dealers from recommending transactions in our securities, which could
severely limit the liquidity of our securities and consequently adversely affect the market price for our securities.
Existing
and prospective shareholders may experience significant dilution if we enter into a business combination with a private concern
or public company and issue securities to shareholders of such private company.
Our
business plan contemplates that we may acquire other companies or assets. As a result, we may enter into a business combination
with a private concern or public company that, depending on the terms of merger or acquisition, may result in us issuing securities
to shareholders of any such private company. The issuance of previously authorized and unissued shares of common stock would result
in reduction in percentage of shares owned by our present and prospective shareholders and may result in a change in control or
management of our Company.
One
of our shareholders and our sole director, Jueane Thiessen, controls 89.5% of our shares of common stock as of September 15, 2015,
and she may not vote her shares in a manner that benefits minority shareholders.
One
of our shareholders and our sole director, Jueane Thiessen, owns a significant percentage of our voting stock. As a result, Ms.
Thiessen is able to significantly influence all matters requiring approval by shareholders, including the election of directors
and the approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying,
deterring, or preventing a change in control and may make some transactions more difficult or impossible to complete without the
support of Ms. Thiessen. In addition, Ms. Thiessen may not have an interest in fully promoting the sale of our common stock if
such sales would reduce the opportunity for her to sell her own shares at any time in the future.
Our
common stock has experienced in the past, and is expected to experience in the future, significant price and volume volatility,
which substantially increases the risk that our stockholders may not be able to sell their shares at or above the price that they
paid for the shares.
Because
of the limited trading market for our common stock, and because of the possible price volatility, you may not be able to sell
your shares of common stock when you desire to do so. From June 1, 2014 and through May 31, 2015, our common stock was sold and
purchased at prices that ranged from a high of $5.99 to a low of $0.01 per share. An inability for our stockholders to sell their
shares in a rapidly declining market as a result of the illiquidity in our stock may substantially increase their risk of loss
because the price for our common stock may suffer greater declines due to its price volatility.
The
price of our common stock that will prevail in the market may be higher or lower than the price that our stockholders pay. Certain
factors, some of which are beyond our control, that may cause our share price to fluctuate significantly include, but are not
limited to, the following:
| ● | Variations
in our quarterly operating results; |
| | |
| ● | Development
of a market in general for our products and services; |
| | |
| ● | Changes
in market valuations of similar companies; |
| | |
| ● | Announcement
by us or our competitors of significant contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments; |
| | |
| ● | Loss
of a major customer or failure to complete significant transactions; |
| | |
| ● | Additions
or departures of key personnel; and |
| | |
| ● | Fluctuations
in stock market price and volume. |
Additionally,
in recent years the stock market in general, and stocks quoted on the Over-The-Counter, or OTC in particular, have experienced
significant price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating
performance of the underlying companies. These market and industry factors may materially and adversely affect our stock price,
regardless of our operating performance.
Over
the past few months, there have been periods of significant increases in trading volume of our common stock during which the price
of our stock has both increased and decreased. The historical trading of our common stock is not necessarily an indicator of how
it will trade in the future and our trading price as of the date of this annual report does not necessarily portend what the trading
price of our common stock might be in the future.
Moreover,
class action litigation has often been brought against companies following periods of volatility in the market price of the common
stock of those companies. If we become involved in this type of litigation in the future, it could result in substantial costs
and diversion of management attention and resources, which could have a further negative effect on investments in our stock.
Our
directors have the right to authorize the issuance of preferred stock and additional shares of our common stock.
Our
directors, within the limitations and restrictions contained in our articles of incorporation and without further action by our
stockholders, have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number
of shares and the relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and any
other preferences, special rights and qualifications of any such series. We have no intention of issuing preferred stock at the
present time. Any issuance of preferred stock could adversely affect the rights of holders of our common stock.
Should
we issue additional shares of our common stock at a later time, the ownership interest of each of our current stockholders would
be proportionally reduced. Our stockholders do not have any preemptive right to acquire additional shares of our common stock,
or any of our other securities.
If
we fail to remain current on our reporting requirements, we could be removed from the OTC which would limit the ability of broker-dealers
to sell our securities and the ability of stockholders to sell their securities in the secondary market.
Companies
trading on the OTC, such as us, must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports
under Section 13, in order to maintain price quotation privileges on the OTC. If we fail to remain current on our reporting requirements,
we could be removed from the OTC. As a result, the market liquidity for our securities could be severely adversely affected by
limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the
secondary market.
As
a result of being a public company, we will incur increased costs that will adversely affect our liquidity and increase the risk
that we will become insolvent.
As
a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company associated
with public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate
governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the
Securities and Exchange Commission. We expect these rules and regulations to increase our legal and financial compliance costs
and to make some activities more time-consuming and costly. We are currently evaluating and monitoring developments with respect
to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
The costs that we will incur as a result of being a public company will adversely affect our already limited liquidity, making
it difficult for us to proceed with our business development plans and increasing the risk that we will become insolvent. We may
never become profitable. You may lose your entire investment.
Item
2. Properties
Our
business operations are conducted from our principal executive offices at 2 Toronto Street, Suite 209, Toronto, Ontario, Canada
M5C 2B5. Because our business model currently relies on retaining diverse contractors to help us develop our products and perform
our operations, we believe that we can accommodate growth with little or no requirements for additional capital for infrastructure.
Item
3. Legal Proceedings
We
may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect
on our operations or finances. We are not aware of any pending or threatened litigation against us or our officers and directors
in their capacity as such that could have a material impact on our operations or finances.
Item
4. Submission of Matters to a Vote of Security Holders
During
the fourth quarter of our fiscal year ended May 31, 2015, no matter was submitted to a vote of security holders through the solicitation
of proxies or otherwise.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our
common stock is quoted on the OTC under the symbol "PGSY" Our stock was not actively traded until March 1, 2010.
The
following table sets forth, for the quarterly periods indicated, the range of high and low bid prices of our common stock as reported
on the OTC in the last two fiscal years. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.
For the Fiscal Year Ended May 31, 2015 | |
High | | |
Low | |
Quarter ended May 31, 2015 | |
$ | 2.24 | * | |
$ | 0.01 | * |
Quarter ended February 28, 2015 | |
$ | 5.99 | * | |
$ | 1.50 | * |
Quarter ended November 30, 2014 | |
$ | 3.74 | * | |
$ | 1.50 | * |
Quarter ended August 31, 2014 | |
$ | 4.49 | * | |
$ | 2.99 | * |
| |
| | | |
| | |
For the Fiscal Year Ended May 31, 2014 | |
| | | |
| | |
Quarter ended May 31, 2014 | |
$ | 11.22 | * | |
$ | 3.74 | * |
Quarter ended February 28, 2014 | |
$ | 14.96 | * | |
$ | 5.99 | * |
Quarter ended November 30, 2013 | |
$ | 52.37 | * | |
$ | 3.74 | * |
Quarter ended August 31, 2013 | |
$ | 22.44 | * | |
$ | 6.73 | * |
*
close price adjusted for dividends and splits
DIVIDENDS
On
March 30, 2012 we paid a 3:1 common stock dividend for shareholders on record as of March 28, 2012. Since then, we have not
paid any further dividends on our common stock and do not expect to declare or pay any further dividends on our common stock
in the foreseeable future. Payment of any dividends will depend upon our future earnings, if any, our financial condition,
and other factors as deemed relevant by the board of directors.
On
March 16, 2015, we effected a 1:750 common stock split for shareholders on record as of February 18, 2015.
HOLDERS
As
of May 31, 2015, we had approximately 30 holders of record of our common equity.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We
do not have any compensation plan under which equity securities are authorized for issuance.
Item
6. Selected Financial Data
Smaller
reporting companies are not required to provide the information required by this Item.
Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
The
following discussion and analysis compares our results of operations for the year ended May 31, 2015 to the same period in 2014. This
discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere
in this annual report for the year ended May 31, 2015. This annual report contains certain forward-looking statements and our
future operation results could differ materially from those discussed herein.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
annual report on Form 10-K contains forward-looking statements that involve risks and uncertainties. You should not place undue
reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking
statements for many reasons, including the risks described in this report and other reports we file with the U.S. Securities and
Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are
reasonable, they relate only to events as of the date on which the statements are made. We do not intend to
update any of the forward-looking statements after the date of this report to conform these statements to actual results or to
changes in our expectations, except as required by law.
OVERVIEW
We
incorporated on June 22, 2004 as Portlogic Systems Inc. under the laws of the State of Nevada. On June 5, 2008, the Company filed
a Form S-1 Registration Statement under the United States Securities Act of 1933. It became effective June 24, 2008.
We
offer enterprise mobile marketing applications solutions, kiosk hardware and software products which fall into six principal product
families: m2Meet, m2Bank, m2Market, m2Ticket, m2Kiosk, and m2Workflow. Prior to January 2010. Portlogic created and licensed online
interactive community portal software systems and developed a series of web-based community portal products. In September 2013,
FAMILIES social media family network site was launched.
On
September 16, 2009, we incorporated a wholly-owned subsidiary, Sunlogic Energy Corporation in Panama City, Republic of Panama
for the purpose of looking at solar and alternative green energy software and products. To date, our subsidiary has not had any
operations.
On
June 18, 2012, we incorporated a wholly-owned subsidiary, VOIP 1, Inc. under the laws of the State of Nevada. VOIP 1, Inc. specializes
in data and voice telecommunications technologies. VOIP 1 began earning revenues in September 2012.
We
have a financial year end of May 31.
CRITICAL
ACCOUNTING POLICIES
Management's
Discussion and Analysis of Financial Condition and Results of Operations is based upon our financial statements, which have been
prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the
reported amounts of revenues and expenses, bad debt, investments, intangible assets, income taxes, and contingencies and litigation.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results could differ from these estimates under different assumptions or conditions. We consider
the following accounting policies to be critical because the nature of the estimates or assumptions is material due to the levels
of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change
or because the impact of the estimates and assumptions on financial condition or operating performance is material.
CASH
AND CASH EQUIVALENTS
Cash
equivalents comprise highly liquid instruments with a maturity of three months or less when purchased. As at May 31, 2015, cash
equivalents amounted to $Nil (May 31, 2014 - $Nil).
REVENUE
RECOGNITION
We
recognize revenue at the point of passage to the customer of title and risk of loss when there is persuasive evidence of an arrangement,
the sales price is determinable, and collection of the resulting receivable is reasonably assured.
We
recognize service revenues at the time of performance. Revenues billed in advance under contracts are deferred and recognized
over the corresponding service periods.
FOREIGN
CURRENCY TRANSLATION
We
maintain our accounting records in US dollars, which is its functional and reporting currency. At the transaction date, each asset,
liability, revenue and expense denominated in a foreign currency is translated into the functional currency by the use of the
exchange rate in effect at that date. At the period end, we translate monetary assets and liabilities denominated in a foreign
currency into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange
gains and losses are included in operations. Foreign exchange loss amounted to $Nil for the year end May 31, 2015 (May 31, 2014
– loss of $37).
RESULTS
OF OPERATIONS
COMPARISON
OF RESULTS FOR THE YEARS ENDED MAY 31, 2015 and MAY 31, 2014
REVENUE
For
the year ended May 31, 2015, we recognized $122,768 in revenue from our Voip 1 telecommunications operations. For the year ended
May 31, 2014, we recognized $809,383 in revenue. We have not yet begun to generate revenues from our mobile marketing offerings.
COST
OF GOODS SOLD
We
incurred $106,946 in cost of goods sold against our telecommunications operations for the year ended May 31, 2015. We incurred
$781,209 in cost of goods sold for the year ended May 31, 2014.
EXPENSES
During
the year ended May 31, 2015, we incurred total expenses of $55,472 comprised of selling and administrative expense. During the
year ended May 31, 2014, we incurred total expenses of $187,317 comprised of selling and administrative expense of $187,003 and
depreciation of $314. Higher expenses for the prior year ended May 31, 2014 resulted almost entirely to the higher accounting
expense of $120,000 vs. $6,100 in the year ended May 31, 2015 due to the end of the Chief Financial Officer’s consulting
agreement. As well, interest expense was higher in the prior year ended May 31, 2014 coming in at $28,719 vs. $15,848 due to refinancing
of loans in the current year ended May 31, 2015.
NET
INCOME/LOSS
During
the year ended May 31, 2015, we incurred net loss of $39,650 compared with a net loss of $159,143 for the year ended May 31, 2014.
The combination of higher net profit from our telecommunications operations, even with decreased activity, and much lower accounting
expense in the current period ended May 31, 2015 vs. the prior period resulted in the lower net loss in the current period.
LIQUIDITY
AND CAPITAL RESOURCES
As
part of our expansion of operations, on June 18, 2012, we incorporated a wholly-owned subsidiary, VOIP 1, Inc. VOIP 1, Inc. specializes
in data and voice telecommunications technologies. Because of the success we have had with our operations, we have been focusing
on this business line as our main operations.
We
have begun to have an adequate source of reliable, long-term revenue to fund operations. However, we have no significant assets
or financial resources. The amount of working capital that we will require depends on several factors, including without limitation,
the extent and timing of sales of our products and related services, future costs of development, the timing and costs associated
with the expansion of our customer support capabilities, and our operating results.
As
of May 31, 2015, we had cash and cash equivalents of $1,156. We had total current assets of $63,473.
We
anticipate that we will require $350,000 in total, over the next twelve months, to adequately fund the growth of our operations.
We need to be assured that we have strong presentation support, an organized implementation strategy and ongoing technical support.
As we sign more clients and technology partners with proven large scale application experience, we will begin to hire project
managers and begin marketing our solutions to even more targeted potential clients.
Any
additional cash revenues that we generate from our operations will ease the burden on our cash and enable us to finance operations
beyond the next twelve months. If we generate no cash revenues other than the $1,156 that we had available as of May 31, 2015,
we will need to raise additional funds. Potential sources of such working capital could include senior debt facilities, new lines
of credit, bank financings or additional sales of our securities. If we raise funds through the sale of our securities, the common
stock currently outstanding would be diluted. There is a risk that such additional financing may not be available, or may not
be available on acceptable terms, and the inability to obtain additional financing or generate sufficient cash from operations
could require us to reduce or eliminate expenditures for capital equipment, production, or marketing of our products, or otherwise
curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results
of operations.
Our
consolidated financial statements have been prepared on a continuing operation basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business.
As
of May 31, 2015, our total assets were $63,473, our total liabilities were $1,118,203, and stockholders’ deficiency was
$1,054,730.
OFF-BALANCE
SHEET TRANSACTION
On March
10, 2014, a former officer issued a promissory note to the Company, in consideration of a loan of $150,000 for funds advanced,
over a term of two years. Proceeds from any repayment of the promissory note will be credited against start-up costs of our telecommunications
operations.
Besides
the aforementioned, we currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or
future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk
Smaller
reporting companies are not required to provide the information required by this Item.
Item
8. Financial Statements and Supplementary Data
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
CONSOLIDATED
FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
FORMING
A PART OF ANNUAL REPORT
PURSUANT
TO THE SECURITIES EXCHANGE ACT OF 1934
PORTLOGIC
SYSTEMS INC.
| |
Page # |
| |
|
Consolidated Balance Sheets as of May 31, 2015 and May 31, 2014 | |
21 |
| |
|
Consolidated Statements of Operations for the Years ended May 31, 2015 and May 31, 2014 | |
22 |
| |
|
Consolidated Statement of Changes in Stockholders’ Deficiency from June 22, 2004 (Inception) to May 31, 2015 | |
23-24 |
| |
|
Consolidated Statements of Cash Flows for the Years ended May 31, 2015 and 2014 | |
25 |
| |
|
Notes to Consolidated Financial Statements | |
26-34 |
PORTLOGIC
SYSTEMS INC.
CONSOLIDATED
BALANCE SHEETS
AS
OF MAY 31, 2015 AND MAY 31, 2014
(Amounts
expressed in US Dollars)
| |
May 31, 2015 | | |
May 31, 2014 | |
| |
$ | | |
$ | |
ASSETS | |
| | |
| |
Current | |
| | |
| |
Cash and cash equivalents | |
| 1,156 | | |
| 4,011 | |
Loan receivable, net of allowance for doubtful accounts of $0 at May 31, 2015 and May 31, 2014 | |
| 7,850 | | |
| 7,850 | |
Accounts receivable | |
| 48,212 | | |
| 59,651 | |
Prepaid expenses and deposits | |
| 6,255 | | |
| 6,255 | |
| |
| 63,473 | | |
| 77,767 | |
| |
| | | |
| | |
TOTAL ASSETS | |
| 63,473 | | |
| 77,767 | |
| |
| | | |
| | |
LIABILITIES | |
| | | |
| | |
Current | |
| | | |
| | |
Accounts payable and accrued liabilities | |
| 236,620 | | |
| 404,726 | |
Short term loans | |
| 23,025 | | |
| 23,025 | |
New convertible loans | |
| 812,936 | | |
| 636,546 | |
Shareholder loan | |
| 36,072 | | |
| 19,000 | |
Other loan | |
| 2,550 | | |
| 2,550 | |
Convertible loan | |
| 7,000 | | |
| 7,000 | |
| |
| 1,118,203 | | |
| 1,092,847 | |
| |
| | | |
| | |
STOCKHOLDERS’ DEFICIENCY | |
| | | |
| | |
Capital stock | |
| | | |
| | |
Preference stock; $0.001 par value; 1,000,000 shares authorized; 0 issued and outstanding at May 31, 2015 and May 31, 2014 | |
| - | | |
| - | |
Common stock; $0.001 par value; 225,000,000 shares authorized; 275,784* issued and outstanding at May 31, 2015 and May 31, 2014 | |
| 275 | | |
| 275 | |
Additional paid in capital | |
| 397,025 | | |
| 397,025 | |
Accumulated deficit | |
| (1,452,030 | ) | |
| (1,412,380 | ) |
| |
| (1,054,730 | ) | |
| (1,015,080 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | |
| 63,473 | | |
| 77,767 | |
* Common
stock figures reflect the 1:750 reverse common stock split effective March 16, 2015 on a retroactive basis.
The accompanying
notes form an integral part of these consolidated financial statements.
PORTLOGIC
SYSTEMS INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED MAY 31, 2015 AND 2014
(Amounts
expressed in US Dollars)
| |
For the Year | | |
For the Year | |
| |
ended | | |
ended | |
| |
May 31, 2015 | | |
May 31, 2014 | |
| |
$ | | |
$ | |
Gross margin | |
| | |
| |
Revenue | |
| 122,768 | | |
| 809,383 | |
Cost of goods sold | |
| 106,946 | | |
| 781,209 | |
| |
| 15,822 | | |
| 28,174 | |
| |
| | | |
| | |
Expenses | |
| | | |
| | |
Selling and administrative | |
| 55,472 | | |
| 187,003 | |
Depreciation | |
| - | | |
| 314 | |
| |
| 55,472 | | |
| 187,317 | |
| |
| | | |
| | |
Net
loss for the period | |
| (39,650 | ) | |
| (159,143 | ) |
| |
| | | |
| | |
Net loss per share for the period | |
| | | |
| | |
Basic and fully diluted | |
| (0.14 | ) | |
| (0.58 | ) |
| |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | |
Basic and fully diluted | |
| *275,784 | | |
| *275,784 | |
* Reflects the 1:750 reverse common stock split effective March 16, 2015 on a retroactive basis.
The accompanying notes form an integral part of these consolidated financial statements.
PORTLOGIC
SYSTEMS INC.
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FROM
JUNE 22, 2004 (INCEPTION) TO MAY 31, 2015
(Amounts
Expressed in US Dollars)
| |
| | |
Deficit | | |
| | |
| |
| |
Common
Stock * | | |
Common
Stock
Amount | | |
Additional
Paid in
Capital | | |
Accumulated
During
Development
Stage | | |
Unamortized
Stock-based
Compensation | | |
Total
Stockholders’
Equity
(Deficiency) | |
| |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
Balance as of June 22, 2004 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Stock issued in January 2005 for cash @ 0.0005 (pre-stock split of 0.001) a share | |
| 23,605 | | |
| 23 | | |
| 2,927 | | |
| - | | |
| - | | |
| 2,950 | |
Stock issued in February 2005 for cash @ 0.001 (pre-stock split of 0.002) a share | |
| 800 | | |
| 1 | | |
| 199 | | |
| - | | |
| - | | |
| 200 | |
Stock issued in May 2005 for cash @ 0.001 (pre-stock split of 0.002) a share | |
| 12,000 | | |
| 12 | | |
| 2,988 | | |
| - | | |
| - | | |
| 3,000 | |
Net loss for the period | |
| | | |
| | | |
| | | |
| (7,125 | ) | |
| - | | |
| (7,125 | ) |
Balance as of
May 31, 2005 | |
| 36,405 | | |
| 36 | | |
| 6,114 | | |
| (7,125 | ) | |
| - | | |
| (975 | ) |
Stock issued in July 2005 for cash @ 0.001 (pre-stock split of 0.002) a share | |
| 202,200 | | |
| 202 | | |
| 50,348 | | |
| - | | |
| - | | |
| 50,550 | |
Stock issued in September 2005 for cash @ 0.001 (pre-stock split of 0.002) a share | |
| 10,000 | | |
| 10 | | |
| 2,490 | | |
| - | | |
| - | | |
| 2,500 | |
Stock issued in October 2005 for software @ 0.025 (pre-stock split of 0.05) a share | |
| 17,920 | | |
| 18 | | |
| 111,982 | | |
| - | | |
| - | | |
| 112,000 | |
Stock issued in April 2006 for cash @ 0.025 (pre-stock split of 0.05) a share | |
| 240 | | |
| - | | |
| 1,500 | | |
| - | | |
| - | | |
| 1,500 | |
Stock issued in May 2006 for cash @ 0.025 (pre-stock split of 0.05) a share | |
| 1,920 | | |
| 2 | | |
| 11,998 | | |
| - | | |
| - | | |
| 12,000 | |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (11,954 | ) | |
| - | | |
| (11,954 | ) |
Balance as of
May 31, 2006 | |
| 268,685 | | |
| 268 | | |
| 184,432 | | |
| (19,079 | ) | |
| - | | |
| 165,621 | |
Stock issued in June 2006 for cash @ 0.025 (pre-stock split of 0.05) a share | |
| 250 | | |
| - | | |
| 1,500 | | |
| - | | |
| - | | |
| 1,500 | |
Stock issued in July 2006 for cash @ 0.025 (pre-stock split of 0.05) a share | |
| 82 | | |
| - | | |
| 500 | | |
| - | | |
| - | | |
| 500 | |
Stock issued in December 2006 for cash @ 0.025 (pre-stock split of 0.05) a share | |
| 250 | | |
| 1 | | |
| 1,499 | | |
| - | | |
| - | | |
| 1,500 | |
Stock issued in February 2007 for cash @ 0.075 (pre-stock split of 0.15) a share | |
| 1,068 | | |
| 1 | | |
| 19,999 | | |
| - | | |
| - | | |
| 20,000 | |
Stock issued in May 2007 for cash @ 0.10 (pre-stock split of 0.20) a share | |
| 820 | | |
| 1 | | |
| 19,999 | | |
| - | | |
| - | | |
| 20,000 | |
Stock issued in May 2007 for cash @ 0.15 (pre-stock split of 0.30) a share | |
| 4,318 | | |
| 4 | | |
| 149,496 | | |
| - | | |
| - | | |
| 149,500 | |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (39,305 | ) | |
| - | | |
| (39,305 | ) |
PORTLOGIC
SYSTEMS INC. (A Development Stage Company)
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FROM
JUNE 22, 2004 (INCEPTION) TO MAY 31, 2015 (cont’d)
(Amounts
Expressed in US Dollars)
| |
| | |
Deficit | | |
| | |
| |
| |
Common Stock * | | |
Common Stock Amount | | |
Additional Paid in Capital | | |
Accumulated During Development Stag | | |
Unamortized Stock-based Compensation | | |
Total Stockholders’ Equity (Deficiency) | |
| |
| | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
Balance as of May 31, 2007 | |
| 275,473 | | |
| 275 | | |
| 377,425 | | |
| (58,384 | ) | |
| - | | |
| 319,316 | |
Stock issued in January 2008 for cash @ 0.175 (pre-stock split of 0.35) a share | |
| 231 | | |
| - | | |
| 10,000 | | |
| - | | |
| - | | |
| 10,000 | |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (187,428 | ) | |
| | | |
| (187,428 | ) |
Balance as of May 31, 2008 | |
| 275,704 | | |
| 275 | | |
| 387,425 | | |
| (245,812 | ) | |
| - | | |
| 141,888 | |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (157,555 | ) | |
| | | |
| (157,555 | ) |
Balance as of
May 31, 2009 | |
| 275,704 | | |
| 275 | | |
| 387,425 | | |
| (403,367 | ) | |
| - | | |
| (15,667 | ) |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (216,373 | ) | |
| - | | |
| (216,373 | ) |
Balance as of
May 31, 2010 | |
| 275,704 | | |
| 275 | | |
| 387,425 | | |
| (619,740 | ) | |
| - | | |
| (232,040 | ) |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (208,079 | ) | |
| - | | |
| (208,079 | ) |
Balance as of
May 31, 2011 | |
| 275,704 | | |
| 275 | | |
| 387,425 | | |
| (827,819 | ) | |
| - | | |
| (440,119 | ) |
Issuance of restricted stock for services | |
| 80 | | |
| - | | |
| 9,600 | | |
| - | | |
| (9,600 | ) | |
| - | |
Amortization of stock-based compensation for stockholders | |
| - | | |
| - | | |
| - | | |
| - | | |
| 800 | | |
| 800 | |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (129,460 | ) | |
| - | | |
| (129,460 | ) |
Balance as of
May 31, 2012 | |
| 275,784 | | |
| 275 | | |
| 397,025 | | |
| (957,279 | ) | |
| (8,800 | ) | |
| (568,779 | ) |
Amortization of stock-based compensation for stockholders | |
| - | | |
| - | | |
| - | | |
| - | | |
| 8,800 | | |
| 8,800 | |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (295,958 | ) | |
| - | | |
| (295,958 | ) |
Balance as of
May 31, 2013 | |
| 275,784 | | |
| 275 | | |
| 397,025 | | |
| (1,253,237 | ) | |
| - | | |
| (855,937 | ) |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (159,143 | ) | |
| - | | |
| (159,143 | ) |
Balance
as of May 31, 2014 | |
| 275,784 | | |
| 275 | | |
| 397,025 | | |
| (1,412,380 | ) | |
| - | | |
| (1,015,080 | ) |
Net loss for the year | |
| - | | |
| - | | |
| - | | |
| (39,650 | ) | |
| - | | |
| (39,650 | ) |
Balance
as of May 31, 2015 | |
| 275,784 | | |
| 275 | | |
| 397,025 | | |
| (1,452,030 | ) | |
| - | | |
| (1,054,730 | ) |
* The
figure in Common Stock reflects the 1:750 reverse common stock split effective March 16, 2015 on a retroactive basis.
The accompanying
notes form an integral part of these consolidated financial statements.
PORTLOGIC
SYSTEMS INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MAY 31, 2015 AND 2014
(Amounts
expressed in US Dollars)
| |
For the Year ended May 31,
2015 | | |
For the Year ended May 31,
2014 | |
| |
$ | | |
$ | |
Cash Flows from Operating Activities | |
| | |
| |
Net Loss | |
| (39,650 | ) | |
| (159,143 | ) |
Adjustments made to reconcile net loss to net cash from operating activities | |
| | | |
| | |
Depreciation of equipment | |
| - | | |
| 314 | |
Changes in operating assets and liabilities | |
| | | |
| | |
Decrease (increase) in accounts and other receivables | |
| 11,439 | | |
| (8,718 | ) |
Increase (decrease) in accounts payable and accrued liabilities | |
| (168,106 | ) | |
| 102,345 | |
Cash flows used in operating activities | |
| (196,317 | ) | |
| (65,202 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities | |
| | | |
| | |
Purchase of equipment | |
| - | | |
| - | |
Cash flows used in investing activities | |
| - | | |
| - | |
| |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | |
Proceeds from issuance of short term loans | |
| | | |
| 23,025 | |
Assignment of notes payable | |
| | | |
| (391,486 | ) |
Assignment of new loan | |
| | | |
| (200,060 | ) |
Proceeds from new convertible loans | |
| 176,390 | | |
| 636,546 | |
Proceeds from/payments toward shareholder loan | |
| 17,072 | | |
| (3,632 | ) |
Proceeds from issuance of other loan | |
| - | | |
| 2,550 | |
Cash flows provided by financing activities | |
| 193,462 | | |
| 66,943 | |
Increase (decrease) in cash and cash equivalents | |
| (2,855 | ) | |
| 1,741 | |
Cash and cash equivalents, beginning of period | |
| 4,011 | | |
| 2,270 | |
Cash and cash equivalents, end of period | |
| 1,156 | | |
| 4,011 | |
The accompanying notes form an integral part of these consolidated financial statements.
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Portlogic
Systems Inc. (“Portlogic”) was incorporated under the laws of the State of Nevada on June 22, 2004. On June 5, 2008,
Portlogic filed a Form S-1 Registration Statement under the United States Securities Act of 1933. It became effective June 24,
2008.
Portlogic
is a Toronto, Canada based development stage company with enterprise mobile marketing applications solutions, kiosk hardware and
software products which fall into six principal product families: m2Meet, m2Bank, m2Market, m2Ticket, m2Kiosk, and m2Workflow.
Prior to January 2010. Portlogic created and licensed online interactive community portal software systems and developed a series
of web-based community portal products.
On
September 16, 2009, Portlogic incorporated a wholly-owned subsidiary, Sunlogic Energy Corporation in Panama City, Republic of
Panama for the purpose of looking at solar and alternative green energy software and products. Sunlogic Energy Corporation is
still incorporated as a subsidiary but its operations are on hold.
On
June 18, 2012, Portlogic incorporated a wholly owned subsidiary, VOIP 1, Inc. under the laws of the State of Nevada. VOIP 1, Inc.
specializes in data and voice telecommunications technologies. VOIP 1 began earning revenues in September 2012.
The
accompanying audited consolidated financial statements include Portlogic and its subsidiary (hereinafter referred to collectively
as the “Company”). All intercompany balances and transactions have been eliminated in consolidation.
The
accompanying audited consolidated financial statements present the balance sheet, statements of operations, stockholders’
deficiency and cash flows of the Company. The accompanying audited consolidated financial statements have been prepared by management
in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for financial statements.
NOTE
2. GOING CONCERN
The
accompanying consolidated financial statements are presented on a going concern basis which contemplates the realization of assets
and discharge of obligations in the normal course of business as they come due. No adjustments have been made to assets or liabilities
in these consolidated financial statements should the Company not be able to continue normal business operations.
The
Company has incurred losses from inception and, during the year ended May 31, 2015, the Company utilized $196,317 (May 31, 2014
- $65,202) of cash in operations. At May 31, 2015, the Company reported a deficit of $1,452,030 and continues to expend cash in
amounts that exceed revenues. These conditions cast substantial doubt on the ability of the Company to continue as a going concern
and meet its obligations as they come due. Management is considering various alternatives and is pursuing raising additional capital
resources. Nevertheless, there can be no assurance that these initiatives if undertaken will be successful.
The
Company has shifted its focus to specializing in mobile applications solutions marketing, and data and telecommunications technology.
The Company also develops a series of web-based community portal products as well as a series of off-the-shelf template based
websites. The Company’s continuance as a going concern is dependent on the commercialization of more of the Company’s
products and the achievement of profitable operations as well as the success of the Company in raising additional long-term financing
through debt or equity offerings. In the event that the Company is not successful in these efforts, the assets may not be realized
or liabilities discharged at their carrying amounts, and differences from the carrying amounts reported in these consolidated
financial statements could be material.
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
3. SIGNIFICANT ACCOUNTING POLICIES
Accounting
Estimates
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the period. Financial statement items subject to significant
judgment include the expected life of equipment and source code, the net realizable value of accounts receivable, the completeness
of expense accruals, as well as income taxes and loss contingencies. Actual results may differ from those estimates.
Cash
and Cash Equivalents
Cash
equivalents comprise highly liquid instruments with a maturity of three months or less when purchased. As at May 31, 2015, cash
equivalents amounted to $Nil (May 31, 2014 - $Nil).
Equipment
Equipment
is recorded at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the assets’
estimated useful lives (three years for computer hardware and mobile hardware and two years for computer software).
Asset
Impairment
Long-lived
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows
that are expected to result from the use of the asset and its eventual disposition.
Advertising
Costs
Advertising
costs are expensed as incurred. Advertising costs amounted to $Nil for the year ended May 31, 2015 (May 31, 2014 - $768), which
was included as part of selling and administrative expenses.
Revenue
Recognition
The
Company recognizes revenue at the point of passage to the customer of title and risk of loss when there is persuasive evidence
of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.
Service
revenues are generally recognized at the time of performance. Revenues billed in advance under contracts are deferred and recognized
over the corresponding service periods.
Foreign
Currency Translation
The
Company maintains its accounting records in US dollars, which is its functional and reporting currency. At the transaction date,
each asset, liability, revenue and expense denominated in a foreign currency is translated into the functional currency by the
use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities denominated in a foreign currency
are translated into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange
gains and losses are included in operations. Foreign exchange loss amounted to $Nil for the year end May 31, 2015 (May 31, 2014
– loss of $37).
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Income
Taxes
The
Company accounts for its income taxes in accordance with ASC 740, “Income Taxes”, which requires recognition of deferred
tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases and tax credit carryforwards. 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 operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that the deferred tax assets will not be realized.
Earnings
(Loss) per Share
The
Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per
share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares available.
Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased
to include the number of additional common shares that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of
the assumed conversion of the convertible loan into common shares would have an anti-dilutive effect.
Comprehensive
Income
The
Company has adopted ASC 220, "Comprehensive Income," which establishes standards for reporting and the display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those
resulting from investments by owners or distributions to owners. Among other disclosures, the standard requires that all items
that are required to be recognized under the current accounting standards as a component of comprehensive income be reported in
a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income would be
displayed in the statement of shareholders' equity and in the balance sheet as a component of shareholders' equity (deficiency).
The Company had no other comprehensive income (loss) for the years ended May 31, 2015 and 2014. As such, net loss is equivalent
to total comprehensive loss.
Financial
Instruments and Risk Concentrations
The
Company’s financial instruments comprise cash and cash equivalents, loan receivables, accounts payable and accrued liabilities,
notes payable and convertible loan. Unless otherwise indicated, the fair value of financial assets and financial liabilities approximate
their recorded values due to their short-terms to maturity. The Company determines the fair value of its long-term financial instruments
based on quoted market values or discounted cash flow analyses.
Financial
instruments that may potentially subject the Company to concentrations of credit risk comprise primarily cash and cash equivalents
and accounts receivable. Cash and cash equivalents comprise deposits with major commercial banks and/or checking account balances.
With respect to accounts receivable, the Company performs periodic credit evaluations of the financial condition of its customers
and typically does not require collateral from them. Allowances are maintained for potential credit losses consistent with the
credit risk of specific customers and other information. Unless otherwise noted, it is management's opinion that the Company is
not exposed to significant interest or currency risks in respect of its financial instruments.
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Leases
Leases
entered into by the Company as a lessee are classified as capital or operating leases. Leases that transfer substantially the
entire risks and benefits incidental to ownership are classified as capital leases. At the inception of a capital lease, an asset
and an obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the asset’s
fair market value at the beginning of each lease. Rental payments under operating leases are expensed as incurred.
Stock-Based
Compensation
The
Company has adopted SFAS 123 (Revised), “Share Based Payment,” which requires the Company to measure the cost of employee
and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.
That cost will be recognized over the period during which an employee or a non-employee is required to provide service in exchange
for the award-the requisite service period. No compensation cost is recognized for equity instruments for which employees do not
render the requisite service. The grant-date fair value of employee and non-employee share options and similar instruments will
be estimated using option-pricing models adjusted for the unique characteristics of those instruments.
NOTE
4. FAIR VALUE MEASUREMENTS
Beginning
June 1, 2008, the Company partially applied accounting standard, “Fair Value Measurements,” codified as ASC 820. The
standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
The standard defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability
in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market
for that asset or liability. The fair value, in this context, should be calculated based on assumptions that market participants
would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities
should include consideration of non-performance risk including our own credit risk.
In
addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value
hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used
in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which
are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
● |
Level
1 |
Quoted
prices (unadjusted) in active markets for identical assets or liabilities; |
|
|
|
● |
Level 2 |
Inputs other than
quoted prices included within Level 1 that are either directly or indirectly observable; |
|
|
|
● |
Level 3 |
Assets
or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result
in the use of management estimates. |
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
4. FAIR VALUE MEASUREMENTS (cont’d)
| |
Assets/Liabilities
| |
Fair Value Measurements Using | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
At
Fair Value | |
Asset | |
| | |
| | |
| | |
| |
Cash
and cash equivalents | |
$ | 1,156 | | |
$ | - | | |
| - | | |
$ | 1,156 | |
Loan receivable | |
| - | | |
| | | |
$ | 7,850 | | |
$ | 7,850 | |
Liability | |
| | | |
| | | |
| | | |
| | |
Short term loans | |
| - | | |
| | | |
$ | 23,025 | | |
$ | 23,025 | |
New convertible
loan | |
| | | |
| | | |
$ | 812,936 | | |
$ | 812,936 | |
Shareholder loan | |
| - | | |
| | | |
$ | 36,072 | | |
$ | 36,072 | |
Other loan | |
| | | |
| | | |
$ | 2,550 | | |
$ | 2,550 | |
Convertible loan | |
| - | | |
| | | |
$ | 7,000 | | |
$ | 7,000 | |
NOTE
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
| |
May
31,
2015 | | |
May
31,
2014 | |
| |
$ | | |
$ | |
Cost of goods sold &
Telecom | |
| - | | |
| 26,953 | |
Audit and review | |
| 20,400 | | |
| 14,800 | |
Bookkeeping and accounting * | |
| 11,612 | | |
| 165,312 | |
Legal | |
| - | | |
| - | |
Consulting | |
| 37,000 | | |
| 37,000 | |
IT | |
| 48,000 | | |
| 48,000 | |
Other | |
| (2,861 | ) | |
| 6,040 | |
Interest
payable | |
| 122,469 | | |
| 106,621 | |
| |
| 236,620 | | |
| 404,726 | |
*
On March 30, 2015, the Company entered into a debt conversion agreement with the Chief Financial Officer whereby $150,000 of Accounts
Payable owed by the Company to the officer was converted to 30,000,000 shares of restricted common stock in full satisfaction
of the $150,000 amount owed.
NOTE
6. SHORT TERM LOANS
In
the year ended May 31, 2014, the Company received short-term loans from two separate parties to help meet cash flow needs for
operations. These are short term loans that the Company has already started repaying in installments. The aggregate balance payable
on these short term loans is $23,025 as of May 31, 2015 (May 31, 2014 - $23,025).
NOTE
7. ASSIGNMENT AND NEW CONVERTIBLE LOANS
On
October 11, 2012, the Company entered into a convertible loan agreement with Bedford International Ltd. for $25,000 which was
received on October 4, 2012 to meet cash flow needs for operations. On January 12, 2014, the Company received notice that this
convertible loan was assigned to Haynes Gallo Wealth Management Ltd. by Bedford International. On May 8, 2015, the Company agreed
to settle the convertible note in full by issuing 1,250,000 share of common stock to Haynes Gallo Wealth Management at the conversion
rate of $0.02 per share. The common stock was issued on July 15, 2015.
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
7. ASSIGNMENT AND NEW CONVERTIBLE LOANS (cont’d)
On
December 31, 2013, the Board of Directors approved to amend an existing $636,546 in Notes Payable and New Loan to provide for
conversion and assignment of outstanding amounts due and owing into shares of the Company’s common stock. $70,000 of the
Notes Payable were loaned by separate third parties and therefore reclassed. Therefore, the total balance payable on this convertible
loan is restated as $566,546 as of May 31, 2015 (May 31, 2014 - $636,546).
On
December 3, 2013, the Company borrowed $45,000, structured as a convertible loan, from KJV Property Group LLC to help meet cash
flow needs for operations. On March 26, 2015, $20,000 of this loan was assigned to Fenwood Capital LLC. On May 5, 2015, $20,000
of this loan was elected to be converted into 1,000,000 shares of common stock at the conversion rate of $0.02 per share. The
common stock was issued on July 15, 2015. As of May 31, 2015, there is a balance remaining of $5,000 payable on this convertible
loan. Interest accrued on the $40,000 prior loaned amounts has been written off. On October 16, 2014, the Company borrowed a further
$9,800 from KJV Property. The total balance payable on this convertible loan is $9,800 as of May 31, 2015. On May 1, 2015, the
Company entered into a Convertible Drawdown Loan Agreement with KJV Property, in consideration of a drawdown loan up to $100,000
for funds advanced over a term of two years. Interest payable on the principal amount shall accrue at a fixed rate equal to the
prime interest rate plus 2%.
On
September 4, 2014, the Company borrowed $12,390, structured as a convertible loan, from Fenwood Capital LLC to help meet cash
flow needs for operations. On November 20, 2014, a further $4,200 was borrowed. As of May 31, 2015, the total balance payable
on this convertible loan is $16,590.
On
March 26, 2015, a convertible loan for $20,000 was assigned to Fenwood Capital by another party. On May 5, 2015, Fenwood Capital
elected to convert the loan into 1,000,000 shares of common stock at the conversion rate of $0.02 per share. The common stock
was issued on July 15, 2015.
Interest
expense on all the above loans of the Company has been corrected and calculated to May 31, 2015 and amounted to $15,848 for the
year ended May 31, 2015 (May 31, 2014 - $28,719) and is included in selling and administrative expense. As at May 31, 2015, accrued
interest of $122,469 (May 31, 2014 - $106,621) is included in accounts payable and accrued liabilities.
NOTE
8. DEBT CONVERSION AGREEMENT
On
March 30, 2015, the Company entered into a debt conversion agreement with the Chief Executive and Financial Officer whereby $150,000
of Accounts Payable owed by the Company to the officer was converted to 30,000,000 shares of restricted common stock in full satisfaction
of the $150,000 amount owed. The restricted common stock was issued on June 22, 2015.
NOTE
9. SHAREHOLDER LOAN
A
shareholder of the Company has advanced amounts to the Company as required to help meet cash flow needs for operations. The total
balance payable to the shareholder as of May 31, 2015 is $36,072 (May 31, 2014 - $19,000).
NOTE
10. CONVERTIBLE LOAN
A
convertible debenture, issued March 11, 2005, was unsecured, matured March 11, 2012 and carried interest at a rate of 10% per
annum. The instrument is convertible at the option of the holder into common shares of the Company at a rate of $0.05 per share,
and may be redeemed at any time prior to maturity at the option of the holder, should certain conditions prevail. The holder of
the debenture has signed agreements waiving interest accrued from March 11, 2005 through to March 10, 2015. This convertible debenture
has not been repaid and is due on March 10, 2016.
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
11. STOCK TRANSACTIONS *
Transactions,
other than employees’ stock issuance, are in accordance with paragraph 8 of SFAS 123 “Share Based Payment”.
Thus issuances shall be accounted for on the fair value of the consideration received. Transactions with employees’ stock
issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value
of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.
In
January 2005, the Company issued a total of 23,605* shares of common stock to nine individuals for cash in the amount of $0.1250
per share for a total of $2,950.
On
February 7, 2005, the Company issued a total of 800* shares of common stock to one individual for cash in the amount of $0.25
per share for a total of $200.
On
May 26, 2005, the Company issued a total of 12,000* shares of common stock to one individual for cash in the amount of $0.25 per
share for a total of $3,000.
In
July 2005, the Company issued a total of 202,200* shares of common stock to nine individuals for cash in the amount of $0.25 per
share for a total of $50,550.
On September
14, 2005, the Company issued a total of 10,000* shares of common stock to one director for cash in the amount of $0.25 per share
for a total of $2,500.
On
October 31, 2005, the Company issued a total of 17,920* shares of common stock in the amount of $6.25 per share for a total of
$112,000, which was the fair value of the stock on date of issuance, in consideration for the purchase of source code software.
A further $40,000 in cash was also paid as consideration for this asset purchase agreement.
In
April 2006, the Company issued a total of 240* shares of common stock to three individuals for cash in the amount of $6.25 per
share for a total of $1,500.
In
May 2006, the Company issued a total of 1,920* shares of common stock to five individuals for cash in the amount of $6.25 per
share for a total of $12,000.
In
June 2006, the Company issued a total of 250* shares of common stock to three individuals for cash in the amount of $6.00 per
share for a total of $1,500.
On
July 22, 2006, the Company issued a total of 82* shares of common stock to one individual for cash in the amount of $6.09 per
share for a total of $500.
On
December 22, 2006, the Company issued a total of 250* shares of common stock to one individual for cash in the amount of $6.00
per share for a total of $1,500.
On
February 22, 2007, the Company issued a total of 1,068* shares of common stock to one individual for cash in the amount of $18.72
per share for a total of $20,000.
In
May 2007, the Company issued a total of 5,138* shares of common stock to three individuals for cash in the amount of $32.99 per
share for a total of $169,500.
On
January 10, 2008, the Company issued a total of 231* shares of common stock to one individuals for cash in the amount of $43.29
per share for a total of $10,000.
On
April 11, 2012, the Company issued a total of 40* shares of common stock to a director in return for services. The market value
of shares on the date of issuance was $120.00 per share.
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
11. STOCK TRANSACTIONS * (cont’d)
On
April 11, 2012, the Company issued a total of 40* shares of common stock to another director in return for services. The market
value of shares on the date of issuance was $120.00 per share.
As
of May 31, 2015, the Company had 275,784* share of common stock issued and outstanding.
* After
giving retroactive effect of 1:750 reverse common stock split effective March 16, 2015
NOTE
12. STOCKHOLDERS’ DEFICIENCY
The
stockholders' deficiency section of the Company contains the following classes of capital stock as of May 31, 2015 and May 31,
2014:
Preferred
stock: $0.001 par value: 1,000,000 shares authorized and 0 shares issued and outstanding.
Common
stock, $0.001 par value; 225,000,000 shares authorized and 275,784* shares issued and outstanding.
*
After giving retroactive effect of 2:1 stock split effective January 20, 2010 and 3:1 forward common stock split effective March
30, 2012 and the 1:750 reverse common stock split effective March 16, 2015.
NOTE
13. COMMITMENTS AND RELATED PARTY TRANSACTIONS
| a) | On
June 25, 2008, the Company advanced $9,807 to UOMO Media Inc. (“UOMO”). The
director of the Company is also a director of UOMO. This advance was paid back to the
Company on February 19, 2010. In April and May 2010, the Company advanced a total amount
of $13,500 as a temporary loan again. In June 2010, a further $1,600 was advanced totaling
the temporary loan to $15,100. In August 2011, a payment of $1,624 was applied against
this loan. On September 11, 2011, a payment of $490 was applied against this loan. In
December 2011, payments of $4,043 were further applied against this loan. On October
1, 2012, $1,094 was repaid. As at May 31, 2015, $7,850 remains receivable from UOMO (May
31, 2014 – $7,850). |
| b) | On
May 1, 2007, an independent contractor agreement was entered into under which compensation
of $3,000 per month was to be paid to perform services as an officer to October 31, 2007.
New agreements have been entered into with this contractor from November 1, 2007 to October
31, 2008 at $3,000 per month. The agreement was continued on a month-to-month basis.
On June 30, 2012, the Company entered into a new agreement with the independent contractor
under which compensation of $3,000 per month would be paid from July 1, 2012 to November
30, 2012. Then compensation of $10,000 per month would be paid from December 1, 2012
through to June 30, 2014. The officer has waived compensation for the final month of
the term. On March 30, 2015, the Company entered into a debt conversion agreement with
the officer whereby $150,000 of Accounts Payable owed by the Company to the officer for
past services was converted to 30,000,000 shares of restricted common stock. Until the
Company begins earning profits, the officer will accrue $1,200 per quarter to provide
services plus an additional $1,300 for the final quarter to engage year end services.
Therefore, the related service fee for the year ended May 31, 2015 amounted to $6,100
(May 31, 2014 - $120,000). |
| c) | On
March 10, 2014, a former officer issued a promissory note to the Company, in consideration
of a loan of $150,000 for funds advanced, over a term of two years. Proceeds from any
repayment of the promissory note will be credited against start-up costs of our telecommunications
operations. As of May 31, 2015, $150,000 remains payable by the former officer. |
PORTLOGIC
SYSTEMS INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MAY
31, 2015 AND 2014
(Amounts
expressed in US Dollars)
NOTE
14. SUBSEQUENT EVENTS
On
June 4, 2015, the Company borrowed $12,461 against the $100,000 drawdown loan available.
On
June 22, 2015, pursuant to the Debt Conversion Agreement dated March 30, 2015, the Company issued 30,000,000 shares of restricted
common stock to an officer of the Company in full satisfaction of $150,000 of Accounts Payable owed to the officer for past services.
On
July 15, 2015, pursuant to the Conversion Notice dated May 5, 2015, the Company issued 1,000,000 shares of common stock to Fenwood
Capital LLC.
On
July 15, 2015, pursuant to the Conversion Notice dated May 5, 2015, the Company issued 1,000,000 shares of common stock to KJV
Property Group LLC.
On
July 15, 2015, pursuant to the Conversion Notice dated May 8, 2015, the Company issued 1,250,000 shares of common stock to Haynes
Gallo Wealth Management Ltd.
On
August 18, 2015, $10,000 was received from Fenwood Capital LLC as a private placement for 200,000 common shares at $0.05 per share.
As of September 15, 2015, the shares have not been issued yet.
The
Company evaluated all events or transactions that occurred after May 31, 2015 up through the date these financial statements were
available for issuance. With the exception of the above, during this period, the Company did not have any other material recognizable
subsequent events.
Item
9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
On
December 30, 2010, our Audit Committee of the Board of Directors dismissed MSCM LLP (“MSCM”) as our independent registered
public accounting firm. There were no disagreements with MSCM on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of MSCM, would have caused MSCM to make
reference to the subject matter of the disagreement in its reports on our Company’s financial statements.
On
December 31, 2010, our Audit Committee of the Board of Directors approved the engagement of George Stewart, CPA (“Stewart”)
as our independent accountants for the fiscal year ending May 31, 2011 effective immediately and for fiscal years moving forward.
During
our five most recent fiscal years, neither our Company nor anyone acting on our behalf consulted with Stewart regarding (i) the
application of accounting principles to a specified transaction, either completed or proposed, (ii) the type of audit opinion
that might be rendered on the Company’s financial statements or (iii) any matter that was either a subject of disagreement
(as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
Prior
to our engagement, Stewart did not provide us with either written or oral advice that was an important factor considered by our
Company in reaching a decision to continue the appointment of Stewart as our Company’s new independent registered public
accounting firm.
Item
9A(T). Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Our
management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)) as of the end of the period covered by this annual report on Form 10-K. Based on
that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures
cannot be relied upon to ensure that information we are required to disclose in reports that we file or submit under the Securities
Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange
Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding required reasonable assurance that such information
is accumulated and communicated to our management. Our disclosure controls and procedures are designed to provide reasonable assurance
that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components
of our internal control over financial reporting. Management's assessment of the effectiveness of our internal control over financial
reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated,
can provide only reasonable, but not absolute, assurance that the control system's objectives will be met.
Management’s
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934. We have assessed the effectiveness of those internal controls as of May 31,
2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control—Integrated Framework.
Because
of 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 and 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.
A
material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely
affects a company's ability to initiate, authorize, record, process, or report external financial data reliably in accordance
with accounting principles generally accepted in the United States of America such that there is more than a remote likelihood
that a material misstatement of the company's annual or interim financial statements that is more than inconsequential will not
be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting,
we identified a material weakness in our internal control over financial reporting. This material weakness consisted of inadequate
staffing within the accounting operations of our Company. The small number of employees who are responsible for accounting functions
prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because
it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to
perform timely and effective reviews. Due to this material weakness, management could not conclude that its internal control over
financial reporting was effective as of May 31, 2015.
Our
review also indicated the existence of certain high level procedures that might or might not serve to provide compensating control
over these weaknesses. These procedures consisted of analytical review of key operating results by our senior management, including
preparation and review of monthly operating results, comparison of such results to budgets and to historical amounts. In addition,
the board of directors received monthly updates on operations, and on a quarterly basis, reviews, investigates and discusses apparent
inconsistencies and concerns with senior operating management.
Our review also revealed that although a number of controls appeared to exist, and were observed
to have been in operation, documentary evidence that such controls were operating throughout the period was found to be lacking.
Such evidence as signatures indicating that a certain procedure had been carried out and affixing responsibility were lacking
in the internal control system.
This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this
annual report.
Changes
in Internal Control Over Financial Reporting
There
was no change in our internal controls over financial reporting that occurred during the year ended May 31, 2015 that has materially
affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Item
9B. Other Information
None.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
OUR
DIRECTORS AND EXECUTIVE OFFICERS
The
following table sets forth the name, age, positions, and offices or employments for the past five years as of May 31, 2015, of
our directors and executive officers.
Name |
Age |
Position |
Officer
or Director Since |
Jueane
Thiessen |
41 |
Director,
President, Secretary, Treasurer |
2004 |
Joseph
Putegnat |
56 |
Chief
Executive Officer* |
2012 |
Bruce
Maschmeyer |
64 |
Director
** |
2011 |
Donald
Gilpin |
66 |
Director
*** |
2011 |
Rafik
Jallad |
42 |
Chief
Executive Officer **** |
2010 |
Edvard
Halupa |
31 |
Director,
Chief Technology Officer ***** |
2008 |
* |
Mr. Putegnat resigned from
office and our board of directors effective February 19, 2014. |
** |
Mr. Maschmeyer resigned from
office effective December 5, 2012, the end of the term of his Agreement. |
*** |
Mr. Gilpin resigned from office
effective November 23, 2012, the end of the term of his Agreement. |
**** |
Mr. Jallad resigned from office
effective July 31, 2011, the end of the term of his Agreement. |
***** |
Mr. Halupa resigned from office
and our board of directors, effective November 15, 2010. |
BIOGRAPHIES
OF OUR DIRECTORS AND EXECUTIVE OFFICERS
Jueane
Thiessen has served as our Treasurer since June 2004 and as a director since January 2005. Ms. Thiessen served as our President
from June 2004 through February 2007 and again served as our President from November 30, 2007 until August 1, 2010. Ms. Thiessen
served as acting President again from August 1, 2011 until June 30, 2012 and currently again since February 19, 2014. Ms. Thiessen
has over 20 years of experience performing accounting and financial management services for accounting, property management, and
marketing firms. Her experience includes serving as the Treasurer of Algorithmics Inc., a Toronto-based enterprise risk management
firm, from November 2000 through May 2002. From May 2002 through January 2003, Ms. Thiessen was Assistant Controller to Mosaic
Group Inc., a marketing consulting firm located in Toronto, Canada. From January 2003 until November 2006, she was Director of
Finance of FUSE Marketing Group, a Toronto-based marketing consulting agency, and from November 2006 until April 2007 she served
as Chief Financial Officer of the N5R Group of companies, a real estate marketing agency with operations in Canada and the United
States. In addition to her work with us, Ms. Thiessen currently performs management work for UOMO Media, Inc., a publicly traded
development-stage multi-channel entertainment company based in Toronto, Canada, where she was appointed as Chief Financial Officer
and to the board of directors in October 2006. Ms. Thiessen is a Certified General Accountant of the Province of Ontario, Canada
and a Certified Public Accountant. She devotes a minimum of 15 hours per week to activities relating to Portlogic Systems Inc.
pursuant to her Independent Contractor Agreement with us.
Joseph
Putegnat was appointed as Chief Executive Officer and President on July 1, 2012. Mr. Putegnat is an experienced telecommunications
executive and entrepreneur with more than 20 years’ extensive career in the development of wholesale carrier sales; credited
with several start-up ventures in addition to his tenures at major telecommunications companies. From 2010 through 2011, Mr. Putegnat
was the founder and President of XcomIP, LLC. From 2007 to 2008 he was the founder and President of XchangeTel, Inc., an international
long-distance wholesale carrier focused on the use of VoIP technologies. Mr. Putegnat founded and served as President and CEO
of Jupiter Telecom, Inc., an international long-distance wholesale carrier also focused on the use of VoIP technologies in the
early years of integration from 2003 to 2005. Prior to founding Jupiter Telecom, from 1996 to 2000, Mr. Putegnat was founder and
President of LDExchange.com, Inc., a technology-oriented long-distance wholesale carrier, which he built to more than $80 million
in annual revenues with 220 carriers connected to the network. In November 1998, he negotiated the sale of LDExchange.com to Micro
General, Inc. (since acquired by Fidelity National Information Systems, NYSE: FNF) for approximately $38 million. From 1993 to
1995, Mr. Putegnat was a founder of San Diego-based telecom consulting firm I-Tel, where he provided strategic consulting to two
major U.S. carriers, and helped to establish a route to China that grossed revenues of approximately $17 million per month. From
1986 to 1990, Mr. Putegnat served as a national account representative for U.S. Sprint, consistently ranking as one of the top
sales representatives nationwide, and was a member of the President’s Club from 1986 to 1990. Mr. Putegnat attended University
of Florida in 1977 and University of Central Florida in 1979. Mr. Putegnat resigned on February 19, 2014. The resignation was
not a result of any disagreement with the Company and Mr. Putegnat continues to assist as we transition.
Bruce
Maschmeyer served on our board of directors from December 6, 2011 until December 5, 2012, which was the end of the term of
his Agreement. Bruce Maschmeyer has over 36 years of executive and senior management experience running several large and small
companies. Mr. Maschmeyer has been the CEO of Abaan & Associates Inc. since its inception in May 2008. Prior to that, from
1975 to 1998, Mr. Maschmeyer was the Senior Sales and Marketing Executive at Gillette Canada. From 1998-2002, Mr. Maschmeyer served
as General Manager at Tribar Industries Inc., a leading radar and LED indoor/outdoor advertising sign manufacturer and outdoor
advertising company. And since 1997, Mr. Maschmeyer has owned and managed RGB Outdoor, a private LED video advertising company.
Mr. Maschmeyer received a Bachelor of Science and Bachelor of Arts from the University of Alberta in 1975.
Donald
Gilpin served on our board of directors from November 24, 2011 until November 23, 2012, which was the end of the term of his
Agreement. Mr. Donald Gilpin has had a career spanning over 30 years in product development and sales management in the packaging
and point-of-sale display industries. Prior to joining Portlogic Systems Inc., Mr. Gilpin’s headed Image Pak Display Group,
a division of Smurfit Stone. Mr. Gilpin was also responsible for the creation, development and implementation of the Shoppers
Drug Mart: Sidewinder Display program, which, today, is utilized by the point-of-purchase display industry in all major retail
stores throughout North America. Mr. Gilpin has been the President of Abaan & Associates Inc. since its inception in May 2008.
Prior to that, Mr. Gilpin was an Executive at Talon Retail Strategies Group Inc. He received a Bachelor of Business Administration
from York University in Toronto in 1973.
Rafik
Jallad served as our Chief Executive Officer from August 1, 2010 until July 31, 2011, which was the end of the term of his
Agreement. Prior to joining, Mr. Jallad was the Chief Executive Officer of Blue-Creation, a UK-based technical consultancy company.
Before joining Blue-Creation, Mr. Jallad was Vice President, Automotive, at Cambridge Silicon Radio (CSR), a leading connectivity
company, responsible for their Automotive business unit and leading the strategy work from 2007 to 2010. From 2002 to 2007, Mr.
Jallad held two senior management positions; from 2004 to 2007, Mr. Jallad was in charge of business development in US, Europe
and Asia at Ubinetics, which was then acquired by CSR. From 2002 to 2004, Mr. Jallad headed British Telecom Syntegra’s mobility
solutions. Prior to this, Mr. Jallad was an Associate for management and strategy consultants McKinsey and Company in Paris, France,
from 1999 to 2002. Mr. Jallad holds a Masters Degree in engineering from EPFL - Swiss Federal Institute of Technology Lausanne,
as well as an MBA from the INSEAD management business school.
Edvard
Halupa has served as our Technology Manager since January 2007. On March 27, 2008, Mr. Halupa was appointed Chief Technological
Officer and elected as a director. Mr. Halupa resigned from the Company on November 15, 2010. Mr. Halupa has extensive experience
developing and managing online advertising campaigns, affiliate marketing, search engine marketing, or SEM, and knowledge of online
communities and social media trends. From August 2005 through December 2006, Mr. Halupa was Marketing Manager for Interkod Technologie
s.r.o., a web-development company in Slovak Republic. From September 2002 through July 2005, Mr. Halupa worked as a Webmaster
and Freelance Marketer for clients including Technicom Computers. He holds a Bachelor of Arts and a Masters Degree in Management
of Information Systems from the Faculty of Management, Comenius University in Bratislava, Slovakia. Mr. Halupa is an Associate
Member (ASI) of the Securities and Investment Institute, London, UK since January 2008, and holds a Level III Certificate in Investment
Securities.
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Section
16(a) of the Exchange Act requires that certain reports be made by persons who own more than 10 percent of a class of equity securities
registered pursuant to Section 12 of the Exchange Act, and directors and executive officers of an issuer that has a class of equity
securities registered pursuant to Section 12 of the Exchange Act. These reports include initial reports of ownership and reports
of changes in ownership of the registered securities. Section 16(a) of the Exchange Act does not apply to our directors, officers,
or greater-than-ten percent stockholders because we do not have a class of equity securities registered pursuant to Section 12
of the Exchange Acct.
CODE
OF ETHICS
On
June 29, 2007, we adopted a Code of Ethics that applies to our Chief Executive Officer and Chief Financial Officer.
PROCEDURE
FOR NOMINATING DIRECTORS
Our
board of directors does not have a written policy or charter regarding how director candidates are evaluated or nominated to serve
on our board. Additionally, our board has not created particular qualifications or minimum standards that candidates for the board
must meet. Instead, each director on the board considers how a candidate could contribute to our business and meet our needs.
Our
board will consider candidates for director that are recommended by our stockholders. Candidates recommended by stockholders are
evaluated with the same methodology as candidates recommended by management or members of our board of directors. To refer a candidate
for director, please send a resume or detailed description of the candidate's background and experience with a letter describing
the candidate's interest in serving on our board to Portlogic Systems Inc., 2 Toronto Street, Suite 209, Toronto, Ontario, Canada
M5C 2B5, attention: Jueane Thiessen. All candidate referrals are reviewed by at least one current board member.
During
the fiscal year ended May 31, 2015, there were no material changes to the procedures by which our stockholders can recommend nominees
to our board of directors.
COMMITTEES
OF THE BOARD OF DIRECTORS
We
do not have a standing audit committee, compensation committee, or nomination committee. Currently, our full board of directors
performs the functions normally delegated to such committees. The board believes that at this time it is in the best interests
of our Company and our stockholders for each member of the board to participate in all functions of the board as long as no conflicts
are present. As of September 15, 2015, our board consists of one member and the board believes that all the directors must participate
in all board activities including those normally performed by an audit committee, compensation committee, or nominating committee.
However, as our board expands in the future, we will consider creating committees and delegating appropriate board functions to
those committees at that time.
AUDIT
COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
The
board of directors has not designated a separate audit committee and the functions of such committee are conducted by the entire
board, whose members are named above. We do not have an “audit committee financial expert,” as defined in Item 407(d)(5)(ii)
of Regulation S-K. At the present time, we do not believe the services of a financial expert are warranted. We believe the cost
related to retaining a financial expert at this time is prohibitive in view of the financial resources that we have available.
Further, because of the development stage of our operations, we believe the services of a financial expert are not warranted.
Currently, our full board of directors performs the functions normally delegated to an audit committee. The board believes that
at this time it is in the best interests of our Company and our stockholders for each member of the board to participate in all
functions of the board as long as no conflicts are present. Our board consists of two members and the board believes that all
the directors should participate in all board activities including those normally performed by an audit committee. However, as
our board expands in the future, we will consider creating an audit committee and appointing an audit committee financial expert
at that time.
Item
11. Executive Compensation.
SUMMARY
COMPENSATION
The
following table presents the compensation information during the fiscal years ended May 31, 2015, May 31, 2014, May 31, 2013,
May 31, 2012, and May 31, 2011 for our Principal Executive Officers. We refer to these executive officers as our “name executive
officers” elsewhere in this annual report.
Summary
Compensation Table
for
Fiscal Years Ended May 31, 2015, 2014, 2013, 2012, and 2011
Name
and Principal Position |
Year
ended May 31 |
Salary
($) |
Total
($) |
Joseph
Putegnat,
Principal
Executive Officer |
2014
2013 |
Nil
72,000 |
Nil
72,000 |
Jueane
Thiessen,
Principal Executive Officer (1) |
2015
2014
2013
2012
2011 |
6,100
120,000
78,000
36,000
36,000 |
6,100
120,000
78,000
36,000
36,000 |
Rafik
Jallad,
Principal
Executive Officer |
2012
2011 |
4,000
20,000 |
4,000
20,000 |
(1)
Jueane Thiessen served as our President from June 22, 2004 until February 1, 2007, then since November 30, 2007 until August 1,
2010. Then again from August 1, 2011 until June 30, 2012. And currently since February 19, 2014.
NARRATIVE
TO SUMMARY COMPENSATION TABLE
Employment
Agreements with Each Named Executive Officer
Consulting
Agreement with our current Principal Executive Officer, Jueane Thiessen
On
May 1, 2007, we entered into an Independent Contractor Agreement with Jueane Thiessen for a term beginning May 1, 2007 and ending
October 31, 2007. Pursuant to this agreement, Ms. Thiessen performed services as our Treasurer for a minimum of 30 hours per week
and was compensated at a rate of $3,000 per month. New agreements have been entered into with Jueane Thiessen from November 1,
2007 to October 31, 2008 at $3,000 per month. The agreement has been continued on a month-to-month basis to May 31, 2012. On June
30, 2012, we entered into a new agreement under which compensation of $3,000 per month would be paid from July 1, 2012 to November
30, 2012. Then compensation of $10,000 per month would be paid from December 1, 2012 through to June 20, 2014. Ms. Thiessen waived
compensation for the final month of the term. Until we begin earning profits, Ms. Thiessen will accrue $1,200 per quarter to provide
services plus an additional $1,300 for the final quarter to engage year end services, until further notice.
Consulting
Agreement with our prior Principal Executive Officer, Joseph Putegnat
On
July 1, 2012, we entered into an Independent Contractor Agreement with Joseph Putegnat under which compensation of $12,000 per
month was to be paid to perform services as our Chief Executive Officer for a period of six months. Mr. Putegnat resigned on February
19, 2014
Consulting
Agreement with our prior Principal Executive Officer, Rafik Jallad
On
August 1, 2010, we entered into an Independent Contractor Agreement with Rafik Jallad under which compensation of $2,000 per month
was to be paid to perform services as our Chief Executive Officer for a period of one year. The Independent Contractor Agreement
was not renewed.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
As
of May 31, 2015, we have not issued equity awards to our named executive officers included in the Summary Compensation Table.
DIRECTOR
COMPENSATION
During
the fiscal year ended May 31, 2015, no compensation was paid to our directors
During
the fiscal year ended May 31, 2014, no compensation was paid to our directors.
During
the fiscal year ended May 31, 2013, no compensation was paid to our directors.
During
the fiscal year ended May 31, 2012, we paid two of our directors as follows for serving on our board of directors:
Name |
Year
ended
May 31, |
Cash
Compensation
($) |
Common
Stock |
Donald
Gilpin |
2012 |
$
5,000 |
30,000 |
Bruce
Maschmeyer |
2012 |
$
5,000 |
30,000 |
Prior
to the above, no compensation has been paid to our directors for any of the last five fiscal years.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The
following table sets forth, as of September 15, 2015, the number and percentage of our outstanding shares of common stock that,
according to the information supplied to us, were beneficially owned by (i) each person who is currently a director, (ii) each
named executive officer, (iii) all current directors and executive officers as a group and (iv) each person who, to our knowledge,
is the beneficial owner of more than five percent of the outstanding common stock. Except as otherwise indicated, the persons
named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community
property laws where applicable.
| | |
Name and Address of | |
Amount and Nature | |
Percent of | |
|
Title of Class | | |
Beneficial
Owner | |
of
Beneficial Owner | |
Class
(1) | |
| | | |
| |
| |
| | |
| Common | | |
Jueane Thiessen | |
30,010,002 | |
| 89.5 | % |
| | | |
503-23 Brant Street, | |
Direct Ownership | |
| | |
| | | |
Toronto, Ontario, | |
| |
| | |
| | | |
Canada, L7G 2H2 | |
| |
| | |
| | | |
| |
| |
| | |
| Common | | |
Management as a | |
30,010,002 | |
| 89.5 | % |
| | | |
group including all | |
Direct Ownership | |
| | |
| | | |
executive officers | |
| |
| | |
| | | |
and directors (1 Person) | |
| |
| | |
| (1) | Based
on 33,525,784 shares outstanding as of September 15, 2016 and reflects the 1:750 reverse
stock split effective March 16, 2015. |
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
As
of May 31, 2015, we had no equity securities authorized for issuance.
Item
13. Certain Relationships and Related Transactions, and Director Independence
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
On
May 1, 2007, we entered into an Independent Contractor Agreement with Jueane Thiessen for a term beginning May 1, 2007 and ending
October 31, 2007. Pursuant to this agreement, Ms. Thiessen performed services as our Treasurer for a minimum of 30 hours per week
and was compensated at a rate of $3,000 per month. This agreement was renewed on October 31, 2007 under the same terms for a period
of three months. On November 30, 2007, Ms. Thiessen was appointed President. On January 31, 2008, we entered into new Independent
Contractor Agreements with Jueane Thiessen, our President, Secretary, Treasurer and one of our directors, for terms beginning
from February 1, 2008 through to October 31, 2008. Pursuant to this agreement, Ms. Thiessen performed services as our President,
Secretary, and Treasurer for a minimum of 30 hours per week and was compensated at a rate of $3,000 per month. Ms. Thiessen served
as our acting President again from August 1, 2011 to June 30, 2012. On June 30, 2012, we entered into a new agreement under which
compensation of $3,000 per month would be paid from July 1, 2012 to November 30, 2012. Then compensation of $10,000 per month
would be paid from December 1, 2012 through to June 20, 2014. Ms. Thiessen waived compensation for the final month of the term.
On March 30, 2015, we entered into a debt conversion agreement with Ms. Thiessen whereby $150,000 of Accounts Payable owed for
past services was converted to 30,000,000 shares of restricted common stock. The restricted common stock was issued on June 22,
2015. Until we begin earning profits, Ms. Thiessen has agreed to accrue $1,200 per quarter to provide services plus an additional
$1,300 for the final quarter to engage year end services, until further notice. Ms. Thiessen has served as our acting Chief Executive
Officer and President since February 19, 2014.
On
July 1, 2012, we entered into an Independent Contractor Agreement with Joseph Putegnat under which compensation of $12,000 per
month was to be paid to perform services as our Chief Executive Officer for a period of six months. Mr. Putegnat resigned on February
19, 2014 as our Chief Executive Officer and President.
On
December 6, 2011, we appointed Bruce Maschmeyer to serve on our Board of Directors for a term of one year or until removed as
a director. Pursuant to this agreement, Mr. Maschmeyer was compensated with 20,000 restricted common shares and $5,000 cash for
his services. Mr. Maschmeyer resigned on December 5, 2012, the last day of the term of his Agreement.
On
November 24, 2011, we appointed Donald Gilpin to serve on our Board of Directors for a term of one year or until removed as a
director. Pursuant to this agreement, Mr. Gilpin was compensated with 20,000 restricted common shares and $5,000 cash for his
services. Mr. Gilpin resigned from office on November 23, 2012, the last day of the term of his Agreement.
On
August 1, 2010, we entered into an Independent Contractor Agreement with Rafik Jallad under which compensation of $2,000 per month
was to be paid to perform services as our Chief Executive Officer for a period of one year. Mr. Jallad resigned from office on
July 31, 2011, the last day of the term of his Agreement.
On
May 1, 2007, we entered into an Independent Contractor Agreement with Javed Mawji, our former President, Secretary, and Director,
for a term beginning May 1, 2007 and ending October 31, 2007. Pursuant to this agreement, Mr. Mawji performed services as our
President for a minimum of 25 hours per week and was compensated at a rate of $1,000 per month. Mr. Mawji resigned from office
and as a director on November 30, 2007.
On
March 27, 2008, Edvard Halupa was appointed to serve as our Chief Technological Officer and was elected to serve on our Board
of Directors. Pursuant to this agreement, Mr. Halupa spent approximately 10 hours per week on services provided to us and was
compensated at a salary of $0 for his services. Mr. Halupa resigned from office and as a director on November 15, 2010.
DIRECTOR
INDEPENDENCE
As
of September 15, 2015, the following individuals each served as a director on our Board:
None
of the members of our Board are “independent” directors, as defined under the standards of independence set forth
in the Marketplace Rules of the NASDAQ Stock Market. We intend to apply to have our common stock traded on the Over-the-Counter
Bulletin Board, or OTCBB. The OTCBB does not require that a majority of our Board be independent.
Item
14. Principal Accounting Fees and Services
We
dismissed our previous independent auditors MSCM LLP on December 30, 2010 and engaged George Stewart, CPA on December 31, 2010
as our independent auditors to report on our balance sheet as of May 31, 2011, and the related combined statements of income,
stockholders' equity, and cash flows for the year then ended. George Stewart, CPA remains as our independent auditor to report
on our balance sheet as of May 31, 2012, and the related combined statements of income, stockholders' equity, and cash flows for
the year then ended.
We
do not expect our auditors to attend our annual meeting of stockholders but they will have an opportunity to make a statement
by telephone if they wish to do so.
AUDIT
FEES
2014:
The
aggregate fees billed by our current auditors, George Stewart, CPA, for professional services rendered for the audit of our annual
financial statements and review of financial statements included in the Form 10-Qs for the fiscal year ended May 31, 2014 totaled
$21,100.
2015:
The
aggregate fees billed by our current auditors, George Stewart, CPA, for professional services rendered for the audit of our annual
financial statements for fiscal year ended May 31, 2015 have not been billed as of September 15, 2015 but we estimate that they
will be approximately $7,800. The fees charged by our current auditors to review our interim financial statements for the first,
second and third quarters of 2015 were $12,745. Therefore, we estimate the aggregate fees billed by our auditors for professional
services rendered for the audit of our annual financial statements and review of financial statements included in the Form 10-Qs
for the fiscal year ended May 31, 2015 will total $20,545.
AUDIT-RELATED
FEES
During
the last two fiscal years, no fees were billed or incurred for assurance or related services by our auditors that were reasonably
related to the audit or review of financial statements reported above.
TAX
FEES
During
the last two fiscal years, no fees were billed or incurred for services which were related to tax compliance, tax advice, or tax
planning by our auditors. No fees were paid for tax preparation services.
ALL
OTHER FEES
During
the last two fiscal years, no other fees were billed or incurred for services by our auditors other than the fees noted above.
Our board, acting as an audit committee, deemed the fees charged to be compatible with maintenance of the independence of our
auditors.
THE
BOARD OF DIRECTORS PRE-APPROVAL POLICIES
We
do not have a separate audit committee. Our full board of directors performs the functions of an audit committee. Before an independent
auditor is engaged by us to render audit or non-audit services, our board of directors pre-approves the engagement. Board of directors
pre-approval of audit and non-audit services will not be required if the engagement for the services is entered into pursuant
to pre-approval policies and procedures established by our board of directors regarding our engagement of the independent auditor,
provided the policies and procedures are detailed as to the particular service, our board of directors is informed of each service
provided, and such policies and procedures do not include delegation of our board of directors' responsibilities under the Exchange
Act to our management. Our board of directors may delegate to one or more designated members of our board of directors the authority
to grant pre-approvals, provided such approvals are presented to the board of directors at a subsequent meeting. If our board
of directors elects to establish pre-approval policies and procedures regarding non-audit services, the board of directors must
be informed of each non-audit service provided by the independent auditor. Board of directors’ pre-approval of non-audit
services, other than review and attest services, also will not be required if such services fall within available exceptions established
by the SEC. For the fiscal year ended May 31, 2015, 100% of audit-related services, tax services and other services performed
by our independent auditors were pre-approved by our board of directors.
Our
board has considered whether the services described above under the caption "All Other Fees", which are currently none,
is compatible with maintaining the auditor's independence.
The
board approved all fees described above.
PART
IV
Item
15. Exhibits, Financial Statement Schedules
| a. | The
following documents are filed as part of this 10-K: |
1.
FINANCIAL STATEMENTS
The
following documents are filed in Part II, Item 8 of this annual report on Form 10-K:
|
● |
Report of Independent Registered Certified Public Accounting Firm |
|
● |
Consolidated Balance Sheets as of May 31, 2015 and 2014 |
|
● |
Consolidated Statements of Operations for the years ended May 31, 2015 and 2014 |
|
● |
Consolidated Statements of Changes in Stockholders’ Deficiency from June 22, 2004 (inception) to May 31, 2015 |
|
● |
Consolidated Statements of Cash Flows for the years ended May 31, 2015 and 2014 |
|
● |
Notes to Financial Statements |
2.
FINANCIAL STATEMENT SCHEDULES
All
financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise
included.
3.
EXHIBITS
The
exhibits listed below are filed as part of or incorporated by reference in this report.
Exhibit
No. |
|
Identification
of Exhibit |
|
|
|
3.1 |
|
Certificate of Change –
Nevada Secretary of State, dated March 12, 2015 (included as Exhibit 3.1 to the Form 8-K filed March 18, 2015 and incorporated
herein by reference). |
|
|
|
10.1 |
|
Debt Conversion Agreement
between Portlogic Systems Inc. and Jueane Thiessen, dated March 30, 2015 (included as Exhibit 10.1 to the Form 8-K filed March
31, 2015 and incorporated herein by reference). |
|
|
|
10.2 |
|
Convertible Drawdown Loan
Agreement between Portlogic Systems Inc. and KJV Property Group LLC, dated May 1, 2015 (included as Exhibit 10.1 to the Form
8-K filed June 5, 2015 and incorporated herein by reference). |
|
|
|
21.1 |
|
Subsidiaries of the Registrant
(filed herewith). |
|
|
|
31.1 |
|
Certification of the Principal
Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
|
|
|
32.1 |
|
Certification of Officers
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
|
Portlogic
Systems Inc. |
|
|
(Registrant) |
|
|
|
|
By |
/s/
Jueane Thiessen |
|
|
President,
Principal Executive Officer, Principal
Accounting Officer and Treasurer |
|
|
|
|
Date |
September
15, 2015 |
-
45 -
EXHIBIT
21.1
SUBSIDIARIES
OF THE REGISTRANT
As of September
15, 2015, we have two wholly-owned subsidiaries:
Sunlogic
Energy Corporation. This entity is incorporated in Panama City, Republic of Panama.
VOIP
1, Inc. This entity is incorporated under the laws of the State of Nevada.
EXHIBIT
31.1
CERTIFICATION
PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I,
Jueane Thiessen, certify that:
1. I
have reviewed this Annual Report on Form 10-K of Portlogic Systems Inc.;
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. The
registrant's other certifying officer(s) and I are 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 15d-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. The
registrant's other certifying officer(s) and 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:
September 15, 2015
|
By: |
/s/
Jueane Thiessen |
|
|
Jueane
Thiessen |
|
|
Principal
Executive Officer, Principal Accounting Officer, Secretary, and Treasurer |
EXHIBIT
32.1
CERTIFICATIONS
PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
(18
U.S.C. SECTION 1350)
In
connection with the Annual Report of Portlogic Systems Inc. (the “Company”) on Form 10-K for the year ended May 31,
2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned
officers of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 that:
| i. | The
Report fully complies with the requirements of 13(a) or 15(d) of the Securities Exchange
Act of 1934; and |
| ii. | The
information contained in the Report fairly presents, in all material respects, the financial
condition and Result of operations of the company. |
IN
WITNESS WHEREOF, the undersigned have executed this certification as of the 15th day of September 2015.
|
By: |
/s/ Jueane
Thiessen |
|
|
Jueane Thiessen |
|
|
Principal
Executive Officer, Principal Accounting Officer, Treasurer, and Secretary |
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v3.3.0.814
Consolidated Balance Sheets - USD ($)
|
May. 31, 2015 |
May. 31, 2014 |
Current |
|
|
Cash and cash equivalents |
$ 1,156
|
$ 4,011
|
Loan receivable, net of allowance for doubtful accounts of $0 at May 31, 2015 and May 31, 2014 |
7,850
|
7,850
|
Accounts receivable |
48,212
|
59,651
|
Prepaid expenses and deposits |
6,255
|
6,255
|
Total Current Assets |
63,473
|
77,767
|
TOTAL ASSETS |
63,473
|
77,767
|
Current |
|
|
Accounts payable and accrued liabilities |
236,620
|
404,726
|
Short term loans |
23,025
|
23,025
|
New convertible loans |
812,936
|
636,546
|
Shareholder loan |
36,072
|
19,000
|
Other loan |
2,550
|
2,550
|
Convertible loan |
7,000
|
7,000
|
Total Current Liabilities |
$ 1,118,203
|
$ 1,092,847
|
Capital stock |
|
|
Preference stock; $0.001 par value; 1,000,000 shares authorized; 0 issued and outstanding at May 31, 2015 and May 31, 2014 |
|
|
Common stock; $0.001 par value; 225,000,000 shares authorized; 275,784* issued and outstanding at May 31, 2015 and May 31, 2014 |
$ 275
|
$ 275
|
Additional paid in capital |
397,025
|
397,025
|
Accumulated deficit |
(1,452,030)
|
(1,412,380)
|
Total Stockholders' Deficiency |
(1,054,730)
|
(1,015,080)
|
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY |
$ 63,473
|
$ 77,767
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v3.3.0.814
Consolidated Balance Sheets (Parentheticals) - USD ($)
|
May. 31, 2015 |
May. 31, 2014 |
Statement of Financial Position |
|
|
|
Net of allowance for doubtful accounts |
|
$ 0
|
$ 0
|
Preferred stock, par value |
|
$ 0.001
|
$ 0.001
|
Preferred stock, shares authorized |
|
1,000,000
|
1,000,000
|
Preferred stock, shares issued |
|
0
|
0
|
Preferred stock, shares outstanding |
|
0
|
0
|
Common stock, par value |
|
$ 0.001
|
$ 0.001
|
Common stock, shares authorized |
|
225,000,000
|
225,000,000
|
Common stock, shares issued |
[1] |
275,784
|
275,784
|
Common stock, shares outstanding |
[1] |
275,784
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275,784
|
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v3.3.0.814
Consolidated Statements of Operations - USD ($)
|
12 Months Ended |
May. 31, 2015 |
May. 31, 2014 |
Gross margin |
|
|
|
Revenue |
|
$ 122,768
|
$ 809,383
|
Cost of goods sold |
|
106,946
|
781,209
|
Total Gross Margin |
|
15,822
|
28,174
|
Expenses |
|
|
|
Selling and administrative |
|
$ 55,472
|
187,003
|
Depreciation |
|
|
314
|
Total Expenses |
|
$ 55,472
|
187,317
|
Net loss for the period |
|
$ (39,650)
|
$ (159,143)
|
Net loss per share for the period |
|
|
|
Basic and fully diluted |
|
$ (0.14)
|
$ (0.58)
|
Weighted average number of shares outstanding |
|
|
|
Basic and fully diluted |
[1] |
275,784
|
275,784
|
|
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v3.3.0.814
Consolidated Statement of Changes in Stockholders' Equity (Deficiency) - USD ($)
|
Total |
Common Stock |
Additional Paid in Capital |
Deficit Accumulated During Development Stage |
Unamortized Stock-based Compensation |
Balance at Jun. 22, 2004 |
|
|
|
|
|
|
Balance (in shares) at Jun. 22, 2004 |
[1] |
|
|
|
|
|
Stock issued in January 2005 for cash @ 0.0005 (pre-stock split of 0.001) a share |
|
$ 2,950
|
$ 23
|
$ 2,927
|
|
|
Stock issued in January 2005 for cash @ 0.0005 (pre-stock split of 0.001) a share, (in shares) |
[1] |
|
23,605
|
|
|
|
Stock issued in February 2005 for cash @ 0.001 (pre-stock split of 0.002) a share |
|
200
|
$ 1
|
199
|
|
|
Stock issued in February 2005 for cash @ 0.001 (pre-stock split of 0.002) a share, (in shares) |
[1] |
|
800
|
|
|
|
Stock issued in May 2005 for cash @ 0.001 (pre-stock split of 0.002) a share |
|
3,000
|
$ 12
|
$ 2,988
|
|
|
Stock issued in May 2005 for cash @ 0.001 (pre-stock split of 0.002) a share, (in shares) |
[1] |
|
12,000
|
|
|
|
Net loss for the period |
|
(7,125)
|
|
|
$ (7,125)
|
|
Balance at May. 31, 2005 |
|
(975)
|
$ 36
|
$ 6,114
|
$ (7,125)
|
|
Balance (in shares) at May. 31, 2005 |
[1] |
|
36,405
|
|
|
|
Stock issued in July 2005 for cash @ 0.001 (pre-stock split of 0.002) a share |
|
50,550
|
$ 202
|
50,348
|
|
|
Stock issued in July 2005 for cash @ 0.001 (pre-stock split of 0.002) a share, (in shares) |
[1] |
|
202,200
|
|
|
|
Stock issued in September 2005 for cash @ 0.001 (pre-stock split of 0.002) a share |
|
2,500
|
$ 10
|
2,490
|
|
|
Stock issued in September 2005 for cash @ 0.001 (pre-stock split of 0.002) a share, (in shares) |
[1] |
|
10,000
|
|
|
|
Stock issued in October 2005 for software @ 0.025 (pre-stock split of 0.05) a share |
|
112,000
|
$ 18
|
111,982
|
|
|
Stock issued in October 2005 for software @ 0.025 (pre-stock split of 0.05) a share, (in shares) |
[1] |
|
17,920
|
|
|
|
Stock issued in April 2006 for cash @ 0.025 (pre-stock split of 0.05) a share |
|
1,500
|
|
1,500
|
|
|
Stock issued in April 2006 for cash @ 0.025 (pre-stock split of 0.05) a share, (in shares) |
[1] |
|
240
|
|
|
|
Stock issued in May 2006 for cash @ 0.025 (pre-stock split of 0.05) a share |
|
12,000
|
$ 2
|
$ 11,998
|
|
|
Stock issued in May 2006 for cash @ 0.025 (pre-stock split of 0.05) a share, (in shares) |
[1] |
|
1,920
|
|
|
|
Net loss for the period |
|
(11,954)
|
|
|
$ (11,954)
|
|
Balance at May. 31, 2006 |
|
165,621
|
$ 268
|
$ 184,432
|
$ (19,079)
|
|
Balance (in shares) at May. 31, 2006 |
[1] |
|
268,685
|
|
|
|
Stock issued in June 2006 for cash @ 0.025 (pre-stock split of 0.05) a share |
|
1,500
|
|
1,500
|
|
|
Stock issued in June 2006 for cash @ 0.025 (pre-stock split of 0.05) a share, (in shares) |
[1] |
|
250
|
|
|
|
Stock issued in July 2006 for cash @ 0.025 (pre-stock split of 0.05) a share |
|
500
|
|
500
|
|
|
Stock issued in July 2006 for cash @ 0.025 (pre-stock split of 0.05) a share, (in shares) |
[1] |
|
82
|
|
|
|
Stock issued in December 2006 for cash @ 0.025 (pre-stock split of 0.05) a share |
|
1,500
|
$ 1
|
1,499
|
|
|
Stock issued in December 2006 for cash @ 0.025 (pre-stock split of 0.05) a share, (in shares) |
[1] |
|
250
|
|
|
|
Stock issued in February 2007 for cash @ 0.075 (pre-stock split of 0.15) a share |
|
20,000
|
$ 1
|
19,999
|
|
|
Stock issued in February 2007 for cash @ 0.075 (pre-stock split of 0.15) a share, (in shares) |
[1] |
|
1,068
|
|
|
|
Stock issued in May 2007 for cash @ 0.10 (pre-stock split of 0.20) a share |
|
20,000
|
$ 1
|
19,999
|
|
|
Stock issued in May 2007 for cash @ 0.10 (pre-stock split of 0.20) a share, (in shares) |
[1] |
|
820
|
|
|
|
Stock issued in May 2007 for cash @ 0.15 (pre-stock split of 0.30) a share |
|
149,500
|
$ 4
|
$ 149,496
|
|
|
Stock issued in May 2007 for cash @ 0.15 (pre-stock split of 0.30) a share, (in shares) |
[1] |
|
4,318
|
|
|
|
Net loss for the period |
|
(39,305)
|
|
|
$ (39,305)
|
|
Balance at May. 31, 2007 |
|
319,316
|
$ 275
|
$ 377,425
|
$ (58,384)
|
|
Balance (in shares) at May. 31, 2007 |
[1] |
|
275,473
|
|
|
|
Stock issued in January 2008 for cash @ 0.175 (pre-stock split of 0.35) a share |
|
10,000
|
|
$ 10,000
|
|
|
Stock issued in January 2008 for cash @ 0.175 (pre-stock split of 0.35) a share, (in shares) |
[1] |
|
231
|
|
|
|
Net loss for the period |
|
(187,428)
|
|
|
$ (187,428)
|
|
Balance at May. 31, 2008 |
|
141,888
|
$ 275
|
$ 387,425
|
(245,812)
|
|
Balance (in shares) at May. 31, 2008 |
[1] |
|
275,704
|
|
|
|
Net loss for the period |
|
(157,555)
|
|
|
(157,555)
|
|
Balance at May. 31, 2009 |
|
(15,667)
|
$ 275
|
$ 387,425
|
(403,367)
|
|
Balance (in shares) at May. 31, 2009 |
[1] |
|
275,704
|
|
|
|
Net loss for the period |
|
(216,373)
|
|
|
(216,373)
|
|
Balance at May. 31, 2010 |
|
(232,040)
|
$ 275
|
$ 387,425
|
(619,740)
|
|
Balance (in shares) at May. 31, 2010 |
[1] |
|
275,704
|
|
|
|
Net loss for the period |
|
(208,079)
|
|
|
(208,079)
|
|
Balance at May. 31, 2011 |
|
$ (440,119)
|
$ 275
|
$ 387,425
|
$ (827,819)
|
|
Balance (in shares) at May. 31, 2011 |
[1] |
|
275,704
|
|
|
|
Issuance of restricted stock for services |
|
|
|
$ 9,600
|
|
$ (9,600)
|
Issuance of restricted stock for services, (in shares) |
[1] |
|
80
|
|
|
|
Amortization of stock-based compensation for stockholders |
|
$ 800
|
|
|
|
$ 800
|
Net loss for the period |
|
(129,460)
|
|
|
$ (129,460)
|
|
Balance at May. 31, 2012 |
|
(568,779)
|
$ 275
|
$ 397,025
|
$ (957,279)
|
$ (8,800)
|
Balance (in shares) at May. 31, 2012 |
[1] |
|
275,784
|
|
|
|
Amortization of stock-based compensation for stockholders |
|
8,800
|
|
|
|
$ 8,800
|
Net loss for the period |
|
(295,958)
|
|
|
$ (295,958)
|
|
Balance at May. 31, 2013 |
|
(855,937)
|
$ 275
|
$ 397,025
|
(1,253,237)
|
|
Balance (in shares) at May. 31, 2013 |
[1] |
|
275,784
|
|
|
|
Net loss for the period |
|
(159,143)
|
|
|
(159,143)
|
|
Balance at May. 31, 2014 |
|
(1,015,080)
|
$ 275
|
$ 397,025
|
(1,412,380)
|
|
Balance (in shares) at May. 31, 2014 |
[1] |
|
275,784
|
|
|
|
Net loss for the period |
|
(39,650)
|
|
|
(39,650)
|
|
Balance at May. 31, 2015 |
|
$ (1,054,730)
|
$ 275
|
$ 397,025
|
$ (1,452,030)
|
|
Balance (in shares) at May. 31, 2015 |
[1] |
|
275,784
|
|
|
|
|
|
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v3.3.0.814
Consolidated Statement of Changes in Stockholders' Equity(Deficiency) (Parentheticals) - $ / shares
|
11 Months Ended |
12 Months Ended |
May. 31, 2005 |
May. 31, 2008 |
May. 31, 2007 |
May. 31, 2006 |
Statement of Stockholders' Equity [Abstract] |
|
|
|
|
Stock issued in January 2005 for cash, Per Share |
$ 0.0005
|
|
|
|
Stock issued in January 2005 for cash, pre-stock split |
0.001
|
|
|
|
Stock issued in February 2005 for cash, Per Share |
0.001
|
|
|
|
Stock issued in February 2005 for cash, pre-stock split |
0.002
|
|
|
|
Stock issued in May 2005 for cash, Per Share |
0.001
|
|
|
|
Stock issued in May 2005 for cash, pre-stock split |
$ 0.002
|
|
|
|
Stock issued in July 2005 for cash, Per Share |
|
|
|
$ 0.001
|
Stock issued in July 2005 for cash, pre-stock split |
|
|
|
0.002
|
Stock issued in September 2005 for cash, Per Share |
|
|
|
0.001
|
Stock issued in September 2005 for cash, pre-stock split |
|
|
|
0.002
|
Stock issued in October 2005 for software, Per Share |
|
|
|
0.025
|
Stock issued in October 2005 for software, pre-stock split |
|
|
|
0.05
|
Stock issued in April 2006 for cash, Per Share |
|
|
|
0.025
|
Stock issued in April 2006 for cash, pre-stock split |
|
|
|
0.05
|
Stock issued in May 2006 for cash, Per Share |
|
|
|
0.025
|
Stock issued in May 2006 for cash, pre-stock split |
|
|
|
$ 0.05
|
Stock issued in June 2006 for cash, Per Share |
|
|
$ 0.025
|
|
Stock issued in June 2006 for cash, pre-stock split |
|
|
0.05
|
|
Stock issued in July 2006 for cash, Per Share |
|
|
0.025
|
|
Stock issued in July 2006 for cash, pre-stock split |
|
|
0.05
|
|
Stock issued in December 2006 for cash, Per Share |
|
|
0.025
|
|
Stock issued in December 2006 for cash, pre-stock split |
|
|
0.05
|
|
Stock issued in February 2007 for cash, Per Share |
|
|
0.075
|
|
Stock issued in February 2007 for cash, pre-stock split |
|
|
0.15
|
|
Stock issued in May 2007 for cash, Per Share |
|
|
0.10
|
|
Stock issued in May 2007 for cash, pre-stock split |
|
|
0.20
|
|
Stock issued in May 2007 for cash, Per Share |
|
|
0.15
|
|
Stock issued in May 2007 for cash, pre-stock split |
|
|
$ 0.30
|
|
Stock issued in January 2008 for cash, Per Share |
|
$ 0.175
|
|
|
Stock issued in January 2008 for cash pre-stock split |
|
$ 0.35
|
|
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v3.3.0.814
Consolidated Statements of Cash Flows - USD ($)
|
12 Months Ended |
May. 31, 2015 |
May. 31, 2014 |
Cash Flows from Operating Activities |
|
|
Net Loss |
$ (39,650)
|
$ (159,143)
|
Adjustments made to reconcile net loss to net cash from operating activities |
|
|
Depreciation of equipment |
|
314
|
Changes in operating assets and liabilities |
|
|
Decrease (increase) in accounts and other receivables |
$ 11,439
|
(8,718)
|
Increase (decrease) in accounts payable and accrued liabilities |
(168,106)
|
102,345
|
Cash flows used in operating activities |
$ (196,317)
|
$ (65,202)
|
Cash Flows from Investing Activities |
|
|
Purchase of equipment |
|
|
Cash flows used in investing activities |
|
|
Cash Flows from Financing Activities |
|
|
Proceeds from issuance of short term loans |
|
$ 23,025
|
Assignment of notes payable |
|
(391,486)
|
Assignment of new loan |
|
(200,060)
|
Proceeds from new convertible loans |
$ 176,390
|
636,546
|
Proceeds from/payments toward shareholder loan |
$ 17,072
|
(3,632)
|
Proceeds from issuance of other loan |
|
2,550
|
Cash flows provided by financing activities |
$ 193,462
|
66,943
|
Increase (decrease) in cash and cash equivalents |
(2,855)
|
1,741
|
Cash and cash equivalents, beginning of period |
4,011
|
2,270
|
Cash and cash equivalents, end of period |
$ 1,156
|
$ 4,011
|
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v3.3.0.814
Organization and Description of Business
|
12 Months Ended |
May. 31, 2015 |
Organization and Description of Business [Abstract] |
|
ORGANIZATION AND DESCRIPTION OF BUSINESS |
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Portlogic Systems Inc. (“Portlogic”) was incorporated under the laws of the State of Nevada on June 22, 2004. On June 5, 2008, Portlogic filed a Form S-1 Registration Statement under the United States Securities Act of 1933. It became effective June 24, 2008.
Portlogic is a Toronto, Canada based development stage company with enterprise mobile marketing applications solutions, kiosk hardware and software products which fall into six principal product families: m2Meet, m2Bank, m2Market, m2Ticket, m2Kiosk, and m2Workflow. Prior to January 2010. Portlogic created and licensed online interactive community portal software systems and developed a series of web-based community portal products.
On September 16, 2009, Portlogic incorporated a wholly-owned subsidiary, Sunlogic Energy Corporation in Panama City, Republic of Panama for the purpose of looking at solar and alternative green energy software and products. Sunlogic Energy Corporation is still incorporated as a subsidiary but its operations are on hold.
On June 18, 2012, Portlogic incorporated a wholly owned subsidiary, VOIP 1, Inc. under the laws of the State of Nevada. VOIP 1, Inc. specializes in data and voice telecommunications technologies. VOIP 1 began earning revenues in September 2012.
The accompanying audited consolidated financial statements include Portlogic and its subsidiary (hereinafter referred to collectively as the “Company”). All intercompany balances and transactions have been eliminated in consolidation.
The accompanying audited consolidated financial statements present the balance sheet, statements of operations, stockholders’ deficiency and cash flows of the Company. The accompanying audited consolidated financial statements have been prepared by management in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for financial statements.
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v3.3.0.814
Going Concern
|
12 Months Ended |
May. 31, 2015 |
Going Concern [Abstract] |
|
GOING CONCERN |
NOTE 2. GOING CONCERN
The accompanying consolidated financial statements are presented on a going concern basis which contemplates the realization of assets and discharge of obligations in the normal course of business as they come due. No adjustments have been made to assets or liabilities in these consolidated financial statements should the Company not be able to continue normal business operations.
The Company has incurred losses from inception and, during the year ended May 31, 2015, the Company utilized $196,317 (May 31, 2014 - $65,202) of cash in operations. At May 31, 2015, the Company reported a deficit of $1,452,030 and continues to expend cash in amounts that exceed revenues. These conditions cast substantial doubt on the ability of the Company to continue as a going concern and meet its obligations as they come due. Management is considering various alternatives and is pursuing raising additional capital resources. Nevertheless, there can be no assurance that these initiatives if undertaken will be successful.
The Company has shifted its focus to specializing in mobile applications solutions marketing, and data and telecommunications technology. The Company also develops a series of web-based community portal products as well as a series of off-the-shelf template based websites. The Company’s continuance as a going concern is dependent on the commercialization of more of the Company’s products and the achievement of profitable operations as well as the success of the Company in raising additional long-term financing through debt or equity offerings. In the event that the Company is not successful in these efforts, the assets may not be realized or liabilities discharged at their carrying amounts, and differences from the carrying amounts reported in these consolidated financial statements could be material.
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v3.3.0.814
Significant Accounting Policies
|
12 Months Ended |
May. 31, 2015 |
Significant Accounting Policies [Abstract] |
|
SIGNIFICANT ACCOUNTING POLICIES |
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES
Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Financial statement items subject to significant judgment include the expected life of equipment and source code, the net realizable value of accounts receivable, the completeness of expense accruals, as well as income taxes and loss contingencies. Actual results may differ from those estimates.
Cash and Cash Equivalents
Cash equivalents comprise highly liquid instruments with a maturity of three months or less when purchased. As at May 31, 2015, cash equivalents amounted to $Nil (May 31, 2014 - $Nil).
Equipment
Equipment is recorded at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the assets’ estimated useful lives (three years for computer hardware and mobile hardware and two years for computer software).
Asset Impairment
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows that are expected to result from the use of the asset and its eventual disposition.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs amounted to $Nil for the year ended May 31, 2015 (May 31, 2014 - $768), which was included as part of selling and administrative expenses.
Revenue Recognition
The Company recognizes revenue at the point of passage to the customer of title and risk of loss when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.
Service revenues are generally recognized at the time of performance. Revenues billed in advance under contracts are deferred and recognized over the corresponding service periods.
Foreign Currency Translation
The Company maintains its accounting records in US dollars, which is its functional and reporting currency. At the transaction date, each asset, liability, revenue and expense denominated in a foreign currency is translated into the
functional currency by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Foreign exchange loss amounted to $Nil for the year end May 31, 2015 (May 31, 2014 – loss of $37).
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. 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 operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that the deferred tax assets will not be realized.
Earnings (Loss) per Share
The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of the convertible loan into common shares would have an anti-dilutive effect.
Comprehensive Income
The Company has adopted ASC 220, "Comprehensive Income," which establishes standards for reporting and the display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners or distributions to owners. Among other disclosures, the standard requires that all items that are required to be recognized
under the current accounting standards as a component of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income would be displayed in the statement of shareholders' equity and in the balance sheet as a component of shareholders' equity (deficiency). The Company had no other comprehensive income (loss) for the years ended May 31, 2015 and 2014. As such, net loss is equivalent to total comprehensive loss.
Financial Instruments and Risk Concentrations
The Company’s financial instruments comprise cash and cash equivalents, loan receivables, accounts payable and accrued liabilities, notes payable and convertible loan. Unless otherwise indicated, the fair value of financial assets and financial liabilities approximate their recorded values due to their short-terms to maturity. The Company determines the fair value of its long-term financial instruments based on quoted market values or discounted cash flow analyses.
Financial instruments that may potentially subject the Company to concentrations of credit risk comprise primarily cash and cash equivalents and accounts receivable. Cash and cash equivalents comprise deposits with major commercial banks and/or checking account balances. With respect to accounts receivable, the Company performs periodic credit evaluations of the financial condition of its customers and typically does not require collateral from them. Allowances are maintained for potential credit losses consistent with the credit risk of specific customers and other information. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or currency risks in respect of its financial instruments.
Leases
Leases entered into by the Company as a lessee are classified as capital or operating leases. Leases that transfer substantially the entire risks and benefits incidental to ownership are classified as capital leases. At the inception of a capital lease, an asset and an obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the asset’s fair market value at the beginning of each lease. Rental payments under operating leases are expensed as incurred.
Stock-Based Compensation
The Company has adopted SFAS 123 (Revised), “Share Based Payment,” which requires the Company to measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee or a non-employee is required to provide service in exchange for the award-the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee and non-employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments.
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v3.3.0.814
Fair Value Measurements
|
12 Months Ended |
May. 31, 2015 |
Fair Value Measurements [Abstract] |
|
FAIR VALUE MEASUREMENTS |
NOTE 4. FAIR VALUE MEASUREMENTS
Beginning June 1, 2008, the Company partially applied accounting standard, “Fair Value Measurements,” codified as ASC 820. The standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value, in this context, should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
● |
Level 1 |
Quoted prices (unadjusted) in active markets for identical assets or liabilities; |
|
|
|
● |
Level 2 |
Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; |
|
|
|
● |
Level 3 |
Assets or liabilities for which fair value is based on valuation models with significant unobservable pricing inputs and which result in the use of management estimates. |
|
|
Assets/Liabilities |
|
Fair Value Measurements Using |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
At Fair Value |
|
Asset |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,156 |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
1,156 |
|
Loan receivable |
|
|
- |
|
|
|
|
|
|
$ |
7,850 |
|
|
$ |
7,850 |
|
Liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term loans |
|
|
- |
|
|
|
|
|
|
$ |
23,025 |
|
|
$ |
23,025 |
|
New convertible loan |
|
|
|
|
|
|
|
|
|
$ |
812,936 |
|
|
$ |
812,936 |
|
Shareholder loan |
|
|
- |
|
|
|
|
|
|
$ |
36,072 |
|
|
$ |
36,072 |
|
Other loan |
|
|
|
|
|
|
|
|
|
$ |
2,550 |
|
|
$ |
2,550 |
|
Convertible loan |
|
|
- |
|
|
|
|
|
|
$ |
7,000 |
|
|
$ |
7,000 |
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v3.3.0.814
Accounts Payable and Accrued Liabilities
|
12 Months Ended |
May. 31, 2015 |
Accounts Payable and Accrued Liabilities [Abstract] |
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
NOTE 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
May 31, 2015 |
|
|
May 31, 2014 |
|
|
|
$ |
|
|
$ |
|
Cost of goods sold & Telecom |
|
|
- |
|
|
|
26,953 |
|
Audit and review |
|
|
20,400 |
|
|
|
14,800 |
|
Bookkeeping and accounting * |
|
|
11,612 |
|
|
|
165,312 |
|
Legal |
|
|
- |
|
|
|
- |
|
Consulting |
|
|
37,000 |
|
|
|
37,000 |
|
IT |
|
|
48,000 |
|
|
|
48,000 |
|
Other |
|
|
(2,861 |
) |
|
|
6,040 |
|
Interest payable |
|
|
122,469 |
|
|
|
106,621 |
|
|
|
|
236,620 |
|
|
|
404,726 |
|
* On March 30, 2015, the Company entered into a debt conversion agreement with the Chief Financial Officer whereby $150,000 of Accounts Payable owed by the Company to the officer was converted to 30,000,000 shares of restricted common stock in full satisfaction of the $150,000 amount owed.
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v3.3.0.814
Short Term Loans
|
12 Months Ended |
May. 31, 2015 |
Short Term Loans/Convertible Loan/Debt Conversion Agreement [Abstract] |
|
SHORT TERM LOANS |
NOTE 6. SHORT TERM LOANS
In the year ended May 31, 2014, the Company received short-term loans from two separate parties to help meet cash flow needs for operations. These are short term loans that the Company has already started repaying in installments. The aggregate balance payable on these short term loans is $23,025 as of May 31, 2015 (May 31, 2014 - $23,025).
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v3.3.0.814
Assignment and New Convertible Loans
|
12 Months Ended |
May. 31, 2015 |
Assignment and New Convertible Loans [Abstract] |
|
ASSIGNMENT AND NEW CONVERTIBLE LOANS |
NOTE 7. ASSIGNMENT AND NEW CONVERTIBLE LOANS
On October 11, 2012, the Company entered into a convertible loan agreement with Bedford International Ltd. for $25,000 which was received on October 4, 2012 to meet cash flow needs for operations. On January 12, 2014, the Company received notice that this convertible loan was assigned to Haynes Gallo Wealth Management Ltd. by Bedford International. On May 8, 2015, the Company agreed to settle the convertible note in full by issuing 1,250,000 share of common stock to Haynes Gallo Wealth Management at the conversion rate of $0.02 per share. The common stock was issued on July 15, 2015.
On December 31, 2013, the Board of Directors approved to amend an existing $636,546 in Notes Payable and New Loan to provide for conversion and assignment of outstanding amounts due and owing into shares of the Company’s common stock. $70,000 of the Notes Payable were loaned by separate third parties and therefore reclassed. Therefore, the total balance payable on this convertible loan is restated as $566,546 as of May 31, 2015 (May 31, 2014 - $636,546).
On December 3, 2013, the Company borrowed $45,000, structured as a convertible loan, from KJV Property Group LLC to help meet cash flow needs for operations. On March 26, 2015, $20,000 of this loan was assigned to Fenwood Capital LLC. On May 5, 2015, $20,000 of this loan was elected to be converted into 1,000,000 shares of common stock at the conversion rate of $0.02 per share. The common stock was issued on July 15, 2015. As of May 31, 2015, there is a balance remaining of $5,000 payable on this convertible loan. Interest accrued on the $40,000 prior loaned amounts has been written off. On October 16, 2014, the Company borrowed a further $9,800 from KJV Property. The total balance payable on this convertible loan is $9,800 as of May 31, 2015. On May 1, 2015, the Company entered into a Convertible Drawdown Loan Agreement with KJV Property, in consideration of a drawdown loan up to $100,000 for funds advanced over a term of two years. Interest payable on the principal amount shall accrue at a fixed rate equal to the prime interest rate plus 2%.
On September 4, 2014, the Company borrowed $12,390, structured as a convertible loan, from Fenwood Capital LLC to help meet cash flow needs for operations. On November 20, 2014, a further $4,200 was borrowed. As of May 31, 2015, the total balance payable on this convertible loan is $16,590.
On March 26, 2015, a convertible loan for $20,000 was assigned to Fenwood Capital by another party. On May 5, 2015, Fenwood Capital elected to convert the loan into 1,000,000 shares of common stock at the conversion rate of $0.02 per share. The common stock was issued on July 15, 2015.
Interest expense on all the above loans of the Company has been corrected and calculated to May 31, 2015 and amounted to $15,848 for the year ended May 31, 2015 (May 31, 2014 - $28,719) and is included in selling and administrative expense. As at May 31, 2015, accrued interest of $122,469 (May 31, 2014 - $106,621) is included in accounts payable and accrued liabilities.
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v3.3.0.814
Debt Conversion Agreement
|
12 Months Ended |
May. 31, 2015 |
Short Term Loans/Convertible Loan/Debt Conversion Agreement [Abstract] |
|
DEBT CONVERSION AGREEMENT |
NOTE 8. DEBT CONVERSION AGREEMENT
On March 30, 2015, the Company entered into a debt conversion agreement with the Chief Executive and Financial Officer whereby $150,000 of Accounts Payable owed by the Company to the officer was converted to 30,000,000 shares of restricted common stock in full satisfaction of the $150,000 amount owed. The restricted common stock was issued on June 22, 2015.
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v3.3.0.814
Shareholder Loan
|
12 Months Ended |
May. 31, 2015 |
Shareholder Loan [Abstract] |
|
SHAREHOLDER LOAN |
NOTE 9. SHAREHOLDER LOAN
A shareholder of the Company has advanced amounts to the Company as required to help meet cash flow needs for operations. The total balance payable to the shareholder as of May 31, 2015 is $36,072 (May 31, 2014 - $19,000).
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v3.3.0.814
Convertible Loan
|
12 Months Ended |
May. 31, 2015 |
Short Term Loans/Convertible Loan/Debt Conversion Agreement [Abstract] |
|
CONVERTIBLE LOAN |
NOTE 10. CONVERTIBLE LOAN
A convertible debenture, issued March 11, 2005, was unsecured, matured March 11, 2012 and carried interest at a rate of 10% per annum. The instrument is convertible at the option of the holder into common shares of the Company at a rate of $0.05 per share, and may be redeemed at any time prior to maturity at the option of the holder, should certain conditions prevail. The holder of the debenture has signed agreements waiving interest accrued from March 11, 2005 through to March 10, 2015. This convertible debenture has not been repaid and is due on March 10, 2016.
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v3.3.0.814
Stock Transactions
|
12 Months Ended |
May. 31, 2015 |
Stock Transactions [Abstract] |
|
STOCK TRANSACTIONS |
NOTE 11. STOCK TRANSACTIONS *
Transactions, other than employees’ stock issuance, are in accordance with paragraph 8 of SFAS 123 “Share Based Payment”. Thus issuances shall be accounted for on the fair value of the consideration received. Transactions with employees’ stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.
In January 2005, the Company issued a total of 23,605* shares of common stock to nine individuals for cash in the amount of $0.1250 per share for a total of $2,950.
On February 7, 2005, the Company issued a total of 800* shares of common stock to one individual for cash in the amount of $0.25 per share for a total of $200.
On May 26, 2005, the Company issued a total of 12,000* shares of common stock to one individual for cash in the amount of $0.25 per share for a total of $3,000.
In July 2005, the Company issued a total of 202,200* shares of common stock to nine individuals for cash in the amount of $0.25 per share for a total of $50,550.
On September 14, 2005, the Company issued a total of 10,000* shares of common stock to one director for cash in the amount of $0.25 per share for a total of $2,500.
On October 31, 2005, the Company issued a total of 17,920* shares of common stock in the amount of $6.25 per share for a total of $112,000, which was the fair value of the stock on date of issuance, in consideration for the purchase of source code software. A further $40,000 in cash was also paid as consideration for this asset purchase agreement.
In April 2006, the Company issued a total of 240* shares of common stock to three individuals for cash in the amount of $6.25 per share for a total of $1,500.
In May 2006, the Company issued a total of 1,920* shares of common stock to five individuals for cash in the amount of $6.25 per share for a total of $12,000.
In June 2006, the Company issued a total of 250* shares of common stock to three individuals for cash in the amount of $6.00 per share for a total of $1,500.
On July 22, 2006, the Company issued a total of 82* shares of common stock to one individual for cash in the amount of $6.09 per share for a total of $500.
On December 22, 2006, the Company issued a total of 250* shares of common stock to one individual for cash in the amount of $6.00 per share for a total of $1,500.
On February 22, 2007, the Company issued a total of 1,068* shares of common stock to one individual for cash in the amount of $18.72 per share for a total of $20,000.
In May 2007, the Company issued a total of 5,138* shares of common stock to three individuals for cash in the amount of $32.99 per share for a total of $169,500.
On January 10, 2008, the Company issued a total of 231* shares of common stock to one individuals for cash in the amount of $43.29 per share for a total of $10,000.
On April 11, 2012, the Company issued a total of 40* shares of common stock to a director in return for services. The market value of shares on the date of issuance was $120.00 per share.
On April 11, 2012, the Company issued a total of 40* shares of common stock to another director in return for services. The market value of shares on the date of issuance was $120.00 per share.
As of May 31, 2015, the Company had 275,784* share of common stock issued and outstanding.
* After giving retroactive effect of 1:750 reverse common stock split effective March 16, 2015
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v3.3.0.814
Stockholders' Deficiency
|
12 Months Ended |
May. 31, 2015 |
Stockholders' Deficiency [Abstract] |
|
STOCKHOLDERS' DEFICIENCY |
NOTE 12. STOCKHOLDERS’ DEFICIENCY
The stockholders' deficiency section of the Company contains the following classes of capital stock as of May 31, 2015 and May 31, 2014:
Preferred stock: $0.001 par value: 1,000,000 shares authorized and 0 shares issued and outstanding.
Common stock, $0.001 par value; 225,000,000 shares authorized and 275,784* shares issued and outstanding.
* After giving retroactive effect of 2:1 stock split effective January 20, 2010 and 3:1 forward common stock split effective March 30, 2012 and the 1:750 reverse common stock split effective March 16, 2015.
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v3.3.0.814
Commitments and Related Party Transactions
|
12 Months Ended |
May. 31, 2015 |
Commitments and Related Party Transactions [Abstract] |
|
COMMITMENTS AND RELATED PARTY TRANSACTIONS |
NOTE 13. COMMITMENTS AND RELATED PARTY TRANSACTIONS
|
a) |
On June 25, 2008, the Company advanced $9,807 to UOMO Media Inc. (“UOMO”). The director of the Company is also a director of UOMO. This advance was paid back to the Company on February 19, 2010. In April and May 2010, the Company advanced a total amount of $13,500 as a temporary loan again. In June 2010, a further $1,600 was advanced totaling the temporary loan to $15,100. In August 2011, a payment of $1,624 was applied against this loan. On September 11, 2011, a payment of $490 was applied against this loan. In December 2011, payments of $4,043 were further applied against this loan. On October 1, 2012, $1,094 was repaid. As at May 31, 2015, $7,850 remains receivable from UOMO (May 31, 2014 – $7,850). |
|
b) |
On May 1, 2007, an independent contractor agreement was entered into under which compensation of $3,000 per month was to be paid to perform services as an officer to October 31, 2007. New agreements have been entered into with this contractor from November 1, 2007 to October 31, 2008 at $3,000 per month. The agreement was continued on a month-to-month basis. On June 30, 2012, the Company entered into a new agreement with the independent contractor under which compensation of $3,000 per month would be paid from July 1, 2012 to November 30, 2012. Then compensation of $10,000 per month would be paid from December 1, 2012 through to June 30, 2014. The officer has waived compensation for the final month of the term. On March 30, 2015, the Company entered into a debt conversion agreement with the officer whereby $150,000 of Accounts Payable owed by the Company to the officer for past services was converted to 30,000,000 shares of restricted common stock. Until the Company begins earning profits, the officer will accrue $1,200 per quarter to provide services plus an additional $1,300 for the final quarter to engage year end services. Therefore, the related service fee for the year ended May 31, 2015 amounted to $6,100 (May 31, 2014 - $120,000). |
|
c) |
On March 10, 2014, a former officer issued a promissory note to the Company, in consideration of a loan of $150,000 for funds advanced, over a term of two years. Proceeds from any repayment of the promissory note will be credited against start-up costs of our telecommunications operations. As of May 31, 2015, $150,000 remains payable by the former officer. |
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v3.3.0.814
Subsequent Events
|
12 Months Ended |
May. 31, 2015 |
Subsequent Events [Abstract] |
|
SUBSEQUENT EVENTS |
NOTE 14. SUBSEQUENT EVENTS
On June 4, 2015, the Company borrowed $12,461 against the $100,000 drawdown loan available.
On June 22, 2015, pursuant to the Debt Conversion Agreement dated March 30, 2015, the Company issued 30,000,000 shares of restricted common stock to an officer of the Company in full satisfaction of $150,000 of Accounts Payable owed to the officer for past services.
On July 15, 2015, pursuant to the Conversion Notice dated May 5, 2015, the Company issued 1,000,000 shares of common stock to Fenwood Capital LLC.
On July 15, 2015, pursuant to the Conversion Notice dated May 5, 2015, the Company issued 1,000,000 shares of common stock to KJV Property Group LLC.
On July 15, 2015, pursuant to the Conversion Notice dated May 8, 2015, the Company issued 1,250,000 shares of common stock to Haynes Gallo Wealth Management Ltd.
On August 18, 2015, $10,000 was received from Fenwood Capital LLC as a private placement for 200,000 common shares at $0.05 per share. As of September 15, 2015, the shares have not been issued yet.
The Company evaluated all events or transactions that occurred after May 31, 2015 up through the date these financial statements were available for issuance. With the exception of the above, during this period, the Company did not have any other material recognizable subsequent events.
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v3.3.0.814
Significant Accounting Policies (Policies)
|
12 Months Ended |
May. 31, 2015 |
Significant Accounting Policies [Abstract] |
|
Accounting Estimates |
Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Financial statement items subject to significant judgment include the expected life of equipment and source code, the net realizable value of accounts receivable, the completeness of expense accruals, as well as income taxes and loss contingencies. Actual results may differ from those estimates.
|
Cash and Cash Equivalents |
Cash and Cash Equivalents
Cash equivalents comprise highly liquid instruments with a maturity of three months or less when purchased. As at May 31, 2015, cash equivalents amounted to $Nil (May 31, 2014 - $Nil).
|
Equipment |
Equipment
Equipment is recorded at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the assets’ estimated useful lives (three years for computer hardware and mobile hardware and two years for computer software).
|
Asset Impairment |
Asset Impairment
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows that are expected to result from the use of the asset and its eventual disposition.
|
Advertising Costs |
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs amounted to $Nil for the year ended May 31, 2015 (May 31, 2014 - $768), which was included as part of selling and administrative expenses.
|
Revenue Recognition |
Revenue Recognition
The Company recognizes revenue at the point of passage to the customer of title and risk of loss when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.
Service revenues are generally recognized at the time of performance. Revenues billed in advance under contracts are deferred and recognized over the corresponding service periods.
|
Foreign Currency Translation |
Foreign Currency Translation
The Company maintains its accounting records in US dollars, which is its functional and reporting currency. At the transaction date, each asset, liability, revenue and expense denominated in a foreign currency is translated into the functional currency by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities denominated in a foreign currency are translated into the functional currency by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Foreign exchange loss amounted to $Nil for the year end May 31, 2015 (May 31, 2014 – loss of $37).
|
Income Taxes |
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards. 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 operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that the deferred tax assets will not be realized.
|
Earnings (Loss) per Share |
Earnings (Loss) per Share
The Company reports earnings (loss) per share in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of the convertible loan into common shares would have an anti-dilutive effect.
|
Comprehensive Income |
Comprehensive Income
The Company has adopted ASC 220, "Comprehensive Income," which establishes standards for reporting and the display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners or distributions to owners. Among other disclosures, the standard requires that all items that are required to be recognized under the current accounting standards as a component of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income would be displayed in the statement of shareholders' equity and in the balance sheet as a component of shareholders' equity (deficiency). The Company had no other comprehensive income (loss) for the years ended May 31, 2015 and 2014. As such, net loss is equivalent to total comprehensive loss.
|
Financial Instruments and Risk Concentrations |
Financial Instruments and Risk Concentrations
The Company’s financial instruments comprise cash and cash equivalents, loan receivables, accounts payable and accrued liabilities, notes payable and convertible loan. Unless otherwise indicated, the fair value of financial assets and financial liabilities approximate their recorded values due to their short-terms to maturity. The Company determines the fair value of its long-term financial instruments based on quoted market values or discounted cash flow analyses.
Financial instruments that may potentially subject the Company to concentrations of credit risk comprise primarily cash and cash equivalents and accounts receivable. Cash and cash equivalents comprise deposits with major commercial banks and/or checking account balances. With respect to accounts receivable, the Company performs periodic credit evaluations of the financial condition of its customers and typically does not require collateral from them. Allowances are maintained for potential credit losses consistent with the credit risk of specific customers and other information. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or currency risks in respect of its financial instruments.
|
Leases |
Leases
Leases entered into by the Company as a lessee are classified as capital or operating leases. Leases that transfer substantially the entire risks and benefits incidental to ownership are classified as capital leases. At the inception of a capital lease, an asset and an obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the asset’s fair market value at the beginning of each lease. Rental payments under operating leases are expensed as incurred.
|
Stock-Based Compensation |
Stock-Based Compensation
The Company has adopted SFAS 123 (Revised), “Share Based Payment,” which requires the Company to measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee or a non-employee is required to provide service in exchange for the award-the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee and non-employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments.
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v3.3.0.814
Fair Value Measurements (Tables)
|
12 Months Ended |
May. 31, 2015 |
Fair Value Measurements [Abstract] |
|
Schedule of fair value measurements |
|
|
Assets/Liabilities |
|
Fair Value Measurements Using |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
At Fair Value |
|
Asset |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,156 |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
1,156 |
|
Loan receivable |
|
|
- |
|
|
|
|
|
|
$ |
7,850 |
|
|
$ |
7,850 |
|
Liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term loans |
|
|
- |
|
|
|
|
|
|
$ |
23,025 |
|
|
$ |
23,025 |
|
New convertible loan |
|
|
|
|
|
|
|
|
|
$ |
812,936 |
|
|
$ |
812,936 |
|
Shareholder loan |
|
|
- |
|
|
|
|
|
|
$ |
36,072 |
|
|
$ |
36,072 |
|
Other loan |
|
|
|
|
|
|
|
|
|
$ |
2,550 |
|
|
$ |
2,550 |
|
Convertible loan |
|
|
- |
|
|
|
|
|
|
$ |
7,000 |
|
|
$ |
7,000 |
|
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v3.3.0.814
Accounts Payable and Accrued Liabilities (Tables)
|
12 Months Ended |
May. 31, 2015 |
Accounts Payable and Accrued Liabilities [Abstract] |
|
Schedule of accounts payable and accrued liabilities |
|
|
May 31, 2015 |
|
|
May 31, 2014 |
|
|
|
$ |
|
|
$ |
|
Cost of goods sold & Telecom |
|
|
- |
|
|
|
26,953 |
|
Audit and review |
|
|
20,400 |
|
|
|
14,800 |
|
Bookkeeping and accounting * |
|
|
11,612 |
|
|
|
165,312 |
|
Legal |
|
|
- |
|
|
|
- |
|
Consulting |
|
|
37,000 |
|
|
|
37,000 |
|
IT |
|
|
48,000 |
|
|
|
48,000 |
|
Other |
|
|
(2,861 |
) |
|
|
6,040 |
|
Interest payable |
|
|
122,469 |
|
|
|
106,621 |
|
|
|
|
236,620 |
|
|
|
404,726 |
|
* On March 30, 2015, the Company entered into a debt conversion agreement with the Chief Financial Officer whereby $150,000 of Accounts Payable owed by the Company to the officer was converted to 30,000,000 shares of restricted common stock in full satisfaction of the $150,000 amount owed.
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v3.3.0.814
Fair Value Measurements (Details) - USD ($)
|
May. 31, 2015 |
May. 31, 2014 |
May. 31, 2013 |
Asset |
|
|
|
Cash and cash equivalents |
$ 1,156
|
$ 4,011
|
$ 2,270
|
Loan receivable |
7,850
|
7,850
|
|
Liability |
|
|
|
Short term loans |
23,025
|
23,025
|
|
New convertible loan |
812,936
|
636,546
|
|
Shareholder loan |
36,072
|
19,000
|
|
Other loan |
2,550
|
2,550
|
|
Convertible loan |
7,000
|
$ 7,000
|
|
Level 1 [Member] |
|
|
|
Asset |
|
|
|
Cash and cash equivalents |
$ 1,156
|
|
|
Loan receivable |
|
|
|
Liability |
|
|
|
Short term loans |
|
|
|
New convertible loan |
|
|
|
Shareholder loan |
|
|
|
Other loan |
|
|
|
Convertible loan |
|
|
|
Level 2 [Member] |
|
|
|
Asset |
|
|
|
Cash and cash equivalents |
|
|
|
Loan receivable |
|
|
|
Liability |
|
|
|
Short term loans |
|
|
|
New convertible loan |
|
|
|
Shareholder loan |
|
|
|
Other loan |
|
|
|
Convertible loan |
|
|
|
Level 3 [Member] |
|
|
|
Asset |
|
|
|
Cash and cash equivalents |
|
|
|
Loan receivable |
$ 7,850
|
|
|
Liability |
|
|
|
Short term loans |
23,025
|
|
|
New convertible loan |
812,936
|
|
|
Shareholder loan |
36,072
|
|
|
Other loan |
2,550
|
|
|
Convertible loan |
$ 7,000
|
|
|
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Accounts Payable and Accrued Liabilities (Details) - USD ($)
|
May. 31, 2015 |
May. 31, 2014 |
Accounts Payable and Accrued Liabilities [Abstract] |
|
|
|
Cost of goods sold & Telecom |
|
|
$ 26,953
|
Audit and review |
|
$ 20,400
|
14,800
|
Bookkeeping and accounting |
[1] |
$ 11,612
|
$ 165,312
|
Legal |
|
|
|
Consulting |
|
$ 37,000
|
$ 37,000
|
IT |
|
48,000
|
48,000
|
Other |
|
(2,861)
|
6,040
|
Interest payable |
|
122,469
|
106,621
|
Accounts payable and accrued liabilities |
|
$ 236,620
|
$ 404,726
|
|
|
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|
1 Months Ended |
|
|
Mar. 30, 2015 |
May. 31, 2015 |
May. 31, 2014 |
Accounts Payable and Accrued Liabilities (Textuals) |
|
|
|
Accounts payable |
|
$ 236,620
|
$ 404,726
|
Chief Financial Officer [Member] |
|
|
|
Accounts Payable and Accrued Liabilities (Textuals) |
|
|
|
Accounts payable |
$ 150,000
|
|
|
Debt converted to shares |
30,000,000
|
|
|
Debt converted to shares, value |
$ 150,000
|
|
|
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v3.3.0.814
Assignment and New Convertible Loans (Details) - USD ($)
|
|
|
|
|
1 Months Ended |
12 Months Ended |
|
|
|
|
|
May. 08, 2015 |
May. 05, 2015 |
May. 01, 2015 |
Nov. 20, 2014 |
Dec. 31, 2013 |
May. 31, 2015 |
May. 31, 2014 |
Mar. 26, 2015 |
Oct. 16, 2014 |
Sep. 04, 2014 |
Dec. 03, 2013 |
Oct. 04, 2012 |
Assignment and New Convertible Loans (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan, conversion price |
|
|
|
|
|
$ 0.05
|
|
|
|
|
|
|
Convertible loan |
|
|
|
|
|
$ 7,000
|
$ 7,000
|
|
|
|
|
|
Convertible loan payable |
|
|
|
|
|
812,936
|
636,546
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
15,848
|
28,719
|
|
|
|
|
|
Accrued interest |
|
|
|
|
|
122,469
|
106,621
|
|
|
|
|
|
Board of Directors [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
Assignment and New Convertible Loans (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
Additional borrowings |
|
|
|
|
$ 70,000
|
|
|
|
|
|
|
|
Convertible loan payable |
|
|
|
|
$ 636,546
|
566,546
|
$ 636,546
|
|
|
|
|
|
Bedford International Ltd [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
Assignment and New Convertible Loans (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan |
|
|
|
|
|
|
|
|
|
|
|
$ 25,000
|
Haynes Gallo Wealth Management Ltd [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
Assignment and New Convertible Loans (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan, conversion price |
$ 0.02
|
|
|
|
|
|
|
|
|
|
|
|
Debt converted to shares |
1,250,000
|
|
|
|
|
|
|
|
|
|
|
|
KJV Property Group LLC [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
Assignment and New Convertible Loans (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan, conversion price |
|
$ 0.02
|
|
|
|
|
|
|
|
|
|
|
Convertible loan |
|
$ 20,000
|
$ 100,000
|
|
|
5,000
|
|
|
$ 9,800
|
|
$ 45,000
|
|
Additional borrowings |
|
|
|
|
|
9,800
|
|
|
|
|
|
|
Debt converted to shares |
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
2.00%
|
|
|
|
|
|
|
|
|
|
Accrued interest |
|
|
|
|
|
40,000
|
|
|
|
|
|
|
Debt instrument, Term |
|
|
2 years
|
|
|
|
|
|
|
|
|
|
Fenwood Capital LLC [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
Assignment and New Convertible Loans (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan, conversion price |
|
$ 0.02
|
|
|
|
|
|
|
|
|
|
|
Convertible loan |
|
|
|
|
|
|
|
$ 20,000
|
|
$ 12,390
|
|
|
Additional borrowings |
|
|
|
$ 4,200
|
|
|
|
|
|
|
|
|
Convertible loan payable |
|
|
|
|
|
$ 16,590
|
|
|
|
|
|
|
Debt converted to shares |
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
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v3.3.0.814
Debt Conversion Agreement (Details) - USD ($)
|
1 Months Ended |
|
|
Mar. 30, 2015 |
May. 31, 2015 |
May. 31, 2014 |
Debt Conversion Agreement (Textual) |
|
|
|
Accounts payable |
|
$ 236,620
|
$ 404,726
|
Chief Executive and Financial Officer [Member] |
|
|
|
Debt Conversion Agreement (Textual) |
|
|
|
Accounts payable |
$ 150,000
|
|
|
Debt converted to shares |
30,000,000
|
|
|
Debt converted to shares, value |
$ 150,000
|
|
|
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v3.3.0.814
Stock Transactions (Details)
|
|
|
|
|
1 Months Ended |
|
|
Apr. 11, 2012
$ / shares
shares
|
Jan. 10, 2008
USD ($)
Individual
$ / shares
shares
|
Sep. 14, 2005
USD ($)
Director
$ / shares
shares
|
Feb. 07, 2005
USD ($)
Individual
$ / shares
shares
|
Mar. 16, 2015 |
May. 31, 2007
USD ($)
Individual
$ / shares
shares
|
Feb. 22, 2007
USD ($)
Individual
$ / shares
shares
|
Dec. 22, 2006
USD ($)
Individual
$ / shares
shares
|
Jul. 22, 2006
USD ($)
Individual
$ / shares
shares
|
Jun. 30, 2006
USD ($)
Individual
$ / shares
shares
|
May. 31, 2006
USD ($)
Individual
$ / shares
shares
|
Apr. 30, 2006
USD ($)
Individual
$ / shares
shares
|
Oct. 31, 2005
USD ($)
$ / shares
shares
|
Jul. 31, 2005
USD ($)
Individual
$ / shares
shares
|
May. 26, 2005
USD ($)
Individual
$ / shares
shares
|
Jan. 31, 2005
USD ($)
Individual
$ / shares
shares
|
May. 31, 2015
shares
|
May. 31, 2014
shares
|
Stock Transactions (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued during the period for cash, shares |
[1] |
|
231
|
10,000
|
800
|
|
5,138
|
1,068
|
250
|
82
|
250
|
1,920
|
240
|
17,920
|
202,200
|
12,000
|
23,605
|
|
|
Price per share | $ / shares |
|
|
$ 43.29
|
$ 0.25
|
$ 0.25
|
|
$ 32.99
|
$ 18.72
|
$ 6.00
|
$ 6.09
|
$ 6.00
|
$ 6.25
|
$ 6.25
|
$ 6.25
|
$ 0.25
|
$ 0.25
|
$ 0.1250
|
|
|
Stock issued during the period for cash, value | $ |
|
|
$ 10,000
|
$ 2,500
|
$ 200
|
|
$ 169,500
|
$ 20,000
|
$ 1,500
|
$ 500
|
$ 1,500
|
$ 12,000
|
$ 1,500
|
$ 112,000
|
$ 50,550
|
$ 3,000
|
$ 2,950
|
|
|
Number of individuals |
|
|
1
|
1
|
1
|
|
3
|
1
|
1
|
1
|
3
|
5
|
3
|
|
9
|
1
|
9
|
|
|
Cash consideration for asset purchase agreement | $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 40,000
|
|
|
|
|
|
Common stock, shares issued |
[2] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275,784
|
275,784
|
Common stock, shares outstanding |
[2] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275,784
|
275,784
|
Common stock reverse split |
|
|
|
|
|
1:750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Transactions (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per share | $ / shares |
|
$ 120.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
[1] |
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director One [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Transactions (Textual) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price per share | $ / shares |
|
$ 120.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
[1] |
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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v3.3.0.814
Stockholders' Deficiency (Details) - $ / shares
|
|
1 Months Ended |
|
|
Mar. 30, 2012 |
Mar. 16, 2015 |
Jan. 20, 2010 |
May. 31, 2015 |
May. 31, 2014 |
Stockholders' Deficiency (Textual) |
|
|
|
|
|
|
Preferred stock, par value |
|
|
|
|
$ 0.001
|
$ 0.001
|
Preferred stock, shares authorized |
|
|
|
|
1,000,000
|
1,000,000
|
Preferred stock, shares issued |
|
|
|
|
0
|
0
|
Preferred stock, shares outstanding |
|
|
|
|
0
|
0
|
Common stock, par value |
|
|
|
|
$ 0.001
|
$ 0.001
|
Common stock, shares authorized |
|
|
|
|
225,000,000
|
225,000,000
|
Common stock, shares issued |
[1] |
|
|
|
275,784
|
275,784
|
Common stock, shares outstanding |
[1] |
|
|
|
275,784
|
275,784
|
Stock split ratio |
|
|
|
2:1
|
|
|
Forward common stock split |
|
3:1
|
|
|
|
|
Common stock reverse split |
|
|
1:750
|
|
|
|
|
|
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v3.3.0.814
Commitments and Related Party Transactions (Details) - USD ($)
|
|
|
|
|
1 Months Ended |
5 Months Ended |
6 Months Ended |
12 Months Ended |
19 Months Ended |
|
|
Mar. 10, 2014 |
Oct. 01, 2012 |
Sep. 11, 2011 |
Jun. 25, 2008 |
Mar. 31, 2015 |
Dec. 31, 2011 |
Aug. 31, 2011 |
Jun. 30, 2010 |
Nov. 30, 2012 |
Oct. 31, 2007 |
May. 31, 2015 |
May. 31, 2014 |
Oct. 31, 2008 |
Jun. 30, 2014 |
May. 31, 2010 |
Apr. 30, 2010 |
Related Party Transaction [Line Items] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan receivable |
|
|
|
|
|
|
|
|
|
|
$ 7,850
|
$ 7,850
|
|
|
|
|
Proceeds from repayment of loans |
|
|
|
|
|
|
|
|
|
|
17,072
|
(3,632)
|
|
|
|
|
Former Officer [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related Party Transaction [Line Items] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration for promissory note |
$ 150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term of promissory note |
2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivable from former officer |
$ 150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent Contractor Agreement [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related Party Transaction [Line Items] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers compensation |
|
|
|
|
|
|
|
|
$ 3,000
|
$ 3,000
|
|
|
$ 3,000
|
$ 10,000
|
|
|
Accrued officer compensation |
|
|
|
|
|
|
|
|
|
|
1,200
|
|
|
|
|
|
Related parties service fee |
|
|
|
|
|
|
|
|
|
|
$ 6,100
|
$ 120,000
|
|
|
|
|
Officers compensation additional |
|
|
|
|
$ 1,300
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common stock converted |
|
|
|
|
30,000,000
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable owed by company |
|
|
|
|
$ 150,000
|
|
|
|
|
|
|
|
|
|
|
|
UOMO Media Inc. [Member] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related Party Transaction [Line Items] |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from repayment of loans |
|
$ 1,094
|
$ 490
|
|
|
$ 4,043
|
$ 1,624
|
|
|
|
|
|
|
|
|
|
Payments for advance |
|
|
|
$ 9,807
|
|
|
|
$ 1,600
|
|
|
|
|
|
|
|
|
Temporary loan |
|
|
|
|
|
|
|
$ 15,100
|
|
|
|
|
|
|
$ 13,500
|
$ 13,500
|
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v3.3.0.814
Subsequent Events (Details) - USD ($)
|
|
|
|
1 Months Ended |
12 Months Ended |
|
|
Jun. 22, 2015 |
Jun. 04, 2015 |
Nov. 20, 2014 |
Aug. 18, 2015 |
May. 31, 2015 |
Jul. 15, 2015 |
May. 31, 2014 |
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Common stock, shares issued |
[1] |
|
|
|
|
275,784
|
|
275,784
|
Common stock per share |
|
|
|
|
|
$ 0.001
|
|
$ 0.001
|
Fenwood Capital LLC [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Borrwowings |
|
|
|
$ 4,200
|
|
|
|
|
KJV Property Group LLC [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Borrwowings |
|
|
|
|
|
$ 9,800
|
|
|
Subsequent Event [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Borrwowings |
|
|
$ 12,461
|
|
|
|
|
|
Drawdown loans |
|
|
$ 100,000
|
|
|
|
|
|
Subsequent Event [Member] | Officer [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ 150,000
|
|
|
|
|
|
|
Restricted common stock converted |
|
30,000,000
|
|
|
|
|
|
|
Subsequent Event [Member] | Fenwood Capital LLC [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Common stock, shares issued |
|
|
|
|
200,000
|
|
1,000,000
|
|
Common stock per share |
|
|
|
|
$ 0.05
|
|
|
|
Received as private placement |
|
|
|
|
$ 10,000
|
|
|
|
Subsequent Event [Member] | KJV Property Group LLC [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Common stock, shares issued |
|
|
|
|
|
|
1,000,000
|
|
Subsequent Event [Member] | Haynes Gallo Wealth Management Ltd [Member] |
|
|
|
|
|
|
|
|
Subsequent Events (Textual) |
|
|
|
|
|
|
|
|
Common stock, shares issued |
|
|
|
|
|
|
1,250,000
|
|
|
|
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