Notes to Financial Statements
May 31, 2018
(Unaudited)
NOTE 1 – ORGANIZATION AND OPERATIONS
Jubilant Flame International, Ltd. (the "Company"), was formed on September 29, 2009 under the name Liberty Vision, Inc. The Company provided web development and marketing services for clients. On December 5, 2012 the Company disposed of its subsidiary corporation to a shareholder for a nominal sum, as well as other management operations. On August 18, 2015, the Company changed its name to Jubilant Flame International, Ltd.
From the fourth quarter of the fiscal year ended February 28, 2018, the Company started to market and sell cosmetics products imported from Asia -Acropass Series products – in the United States market. The Company purchased the inventory from a related party company in China. The Company contracted with a third party to operate the online shopping platform and marketing campaign in the United States.
The Company has the right to develop and market medical products under a license from BioMark. The primary intended products include Bone-Induction Artificial Bone (“BIAB”) and Vacuum Sealing Drainage (“VSD”) but the Company currently does not have any plan to deploy such licenses and is focusing its operation on the Acropass products.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Interim Financial Information
Interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") as promulgated in Item 210 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position as of May 31, 2018, results of operations, changes in stockholders' equity (deficit) and cash flows for the three month periods ended May 31, 2018 and 2017, as applicable, have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Form 10-K.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various 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.
The Company’s significant estimates include income tax provisions and valuation allowances of deferred tax assets; the fair value of financial instruments and the assumption that the company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Recent Accounting Pronouncements
Pronouncements Adopted in Fiscal 2018
In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606).
This ASU represents a single comprehensive model to recognize revenue to depict the transfer of promised goods or services to a customer at an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company adopts this ASU for the interim period ending May 31, 2018, under the modified retrospective approach. The implementation of this ASU will result in no adjustment to retained earnings and current financial statements.
Net Loss Per Common Share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.
NOTE 3 – GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of May 31, 2018 the Company had current assets of $16,823, and current liabilities total $913,607 resulting in a working capital deficit of $896,784. The Company currently has small scale trading activities and has an accumulated deficit of $3,225,425 as of May 31, 2018. This raises substantial doubt about the Company's ability to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. By doing so, the Company hopes to generate sufficient capital to execute its business plan in the cosmetics and medical sector on an ongoing basis. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. There is no guarantee the Company will be successful in achieving these objectives.
NOTE 4 – PREPAID EXPENSE
The Company is paying an annual fee for its OTC Markets service. The service period is from December 1, 2017 to November 30, 2018. The service charge is recorded as a prepaid expense and amortized using straight line amortization over the service period. The prepaid expense balance is $5,000 as of May 31, 2018 compared to $7,500 as of February 28, 2018.
NOTE 5– RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it must rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its common stock or traditional debt financing. There is no formal written commitment for continued support by shareholders. The advances are considered temporary in nature and have not been formalized by a promissory note.
As of May 31, 2018, the Company had a $410,853 loan outstanding with its CEO, Ms. Yan Li. This compares with the outstanding balance of $390,828 for Ms. Yan Li at February 28, 2018. The loans are non-interest bearing, due upon demand and unsecured.
A related party is providing accounting service to the company at an estimated annual service fee of $20,000. From November 2017, the Company started to purchase cosmetic products from a related party controlled by our CEO. As of the three-month period ended May 31, 2018, the Company incurred a total of $9,947 due to related party for inventory purchase. This compares with a total of $12,842 due to related party for inventory purchase and accrued service fee at February 28, 2018.
NOTE 6– ACCRUED OFFICER COMPENSATION AND STOCK COMPENSATION
On December 15, 2015, the Company entered into employment agreements with its president, Ms. Yan Li, and its secretary and treasurer, Mr. Robert Ireland.
On August 30, 2017, Mr. Robert Ireland resigned as Secretary/Treasurer of the company.
As of May 31, 2018, a total of $485,250 had been accrued as salary compensation payable compared to $460,125 at February 28, 2018 to the president only.
During the three months ended May 31, 2018, a total of $52,500 stock compensation had been recorded to the president compared to $105,000 for the same period in the prior year to the president and former secretary and treasurer.
NOTE 7 – STOCKHOLDERS EQUITY
For the quarter ended May 31, 2018, a total of 25,000 Shares were issued to the president as stock compensation. Total value of $52,500 has been recorded for the stock compensation.