NOTES
TO FINANCIAL STATEMENTS
(A
Development Stage Company)
May
31, 2017
Blake
Insomnia Therapeutics Inc. (formerly Book it Local, Inc.)
(“The Company”) was incorporated in the State of Nevada
on August 11, 2012 as Book It Local, Inc. to develop its online booking system to help consumers find and hire live entertainment
for weddings, corporate events, private parties, night clubs, grand openings, and other events. On September 1, 2015, the Company
changed its name to Blake Insomnia Therapeutics Inc. The Company is in the development stage with no revenues and a limited operating
history.
2.
GOING CONCERN CONSIDERATION
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These
financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among
other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has
incurred a cumulative net loss of $395,229 since its inception and requires capital for its contemplated operation and marketing
activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown.
The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition,
ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully
resolve these factors raise substantial doubt about the Company's ability to continue as a going concern.
Future
issuances of the Company's equity or debt securities will be required in order for the Company to continue to finance its operations
and continue as a going concern. The Company's present revenues are insufficient to meet operating expenses. The financial statements
do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Basis
of Presentation
The
financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United
States of America and are presented in US dollars. The Company’s year-end is August 31.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with original maturity of three months or less to be cash equivalents.
Use
of Estimates and Assumptions
The
preparation of financial statements in conformity with generally accepted accounting principles requires that management makes
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 period. Actual results could
differ from those estimates.
Revenue
Recognition
The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes
revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized
or realizable and earned when all of the following criteria are met:
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(i)
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persuasive
evidence of an arrangement exists,
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(ii)
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the
services have been rendered and all required milestones achieved,
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(iii)
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the
sales price is fixed or determinable, and
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(iv)
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collectability
is reasonably assured.
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Foreign
Currency Translation
The
financial statements are presented in United States dollars. In accordance with ASC 830, “Foreign Currency Matters”,
foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange
rates which prevailed at the balance sheet date. Revenue and expenses are translated at average rates of exchange during the year.
Gains or losses resulting from foreign currency transactions are included in results of operations.
Stock-Based
Compensation
The
Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of
the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity
to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair
value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required
to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost
is recognized for equity instruments for which employees do not render the requisite service.
Development
Stage Company
The
Company complies with Financial Accounting Standards Codification (“ASC”) 915 and Securities and Exchange Commission
Act Guide 7 for its characterization of the Company as development stage enterprise.
Fair
Value for Financial Assets and Financial Liabilities
The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial
instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to
measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in
accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value
measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37
establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three
broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical
assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph
820-10-35-37 are described below:
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Level
1
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Quoted
market prices available in active markets for identical assets or liabilities as of the reporting date.
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Level
2
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Pricing
inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable
as of the reporting date.
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Level
3
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Pricing
inputs that are generally observable inputs and not corroborated by market data.
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The
carrying amounts of the Company’s financial assets and liabilities, such as cash, approximate their fair values because
of the short maturity of these instruments.
The
Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently,
the Company did not have any fair value adjustments for assets and liabilities measured at fair value at May 31, 2017, nor gains
or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating
to those assets and liabilities still held at the reporting date for the period ended May 31, 2017.
Income
Taxes
The
Company follows the accrual method of accounting for income taxes. Under this method, deferred income tax assets and liabilities
are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values
and their respective income tax basis (temporary differences). The effect on the deferred income tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the enactment date. At May 31, 2017 a full deferred
tax asset valuation allowance has been provided and no deferred tax asset has been recorded.
Basic
and Diluted Net Income (Loss) per Share
The
Company computes net income (loss) per share in accordance with ASC 260, "Earnings per Share" which requires presentation
of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock
options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise
of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.
Recent
Accounting Pronouncements
In
June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915) Elimination of Certain Financial Reporting Requirements
. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements., including
the elimination of inception-to-date information on the statements of operations, cash flows and shareholders’ equity. The
amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014 and interim
periods within those annual periods, however early adoption is permitted for financial statements not yet issued. The Company
adopted ASU 2014-10 since the quarter ended February 28, 2015, thereby no longer presenting or disclosing any information required
by Topic 915.
The
Company has reviewed all recently issued, but not yet effective, and does not believe the future adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the results of its operations.
4.
DEVELOPMENT STAGE COMPANY
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The
Company is in the development stage as of May 31, 2017 and to date has had no significant operations. Recovery of the Company’s
assets is dependent on future events, the outcome of which is indeterminable. In addition, successful completion of the Company’s
development program and its transition, ultimately, to attaining profitable operations is dependent upon obtaining adequate financing
to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure.
On
February 6, 2017, Blake Insomnia Therapeutics Inc. and Sajo Consulting LLC announced entry into a Letter of Intent to provide
joint development and commercialization of Zleepax™, in combination with formulations to produce a series of oral drug products
to aid in the treatment of insomnia. This venture looks to develop a product to treat transient insomnia through the mechanism
of Blake’s proprietary formula.
On
August 31, 2014 the Company issued a promissory note payable in the amount of $ 5,000. The note is due on May 31, 2017 and bears
interest at 10% per annum.
On
November 20, 2014 the Company issued a promissory note payable in the amount of $ 10,000. The note is due on demand and bears
interest at 10% per annum
On
January 18, 2015 the Company issued a promissory note payable in the amount of $ 10,000. The note is due on demand and bears interest
at 10% per annum.
On
June 24, 2015 the Company issued a promissory note payable in the amount of $ 12,500. The note is due on demand and bears interest
at 10% per annum.
On
December 10, 2015 the Company issued a promissory note payable in the amount of $15,000. The note is due on demand and bears interest
at 10% per annum.
On
July 29, 2016 the Company issued a promissory note payable in the amount of $15,000. The note is due on demand and bears interest
at 10% per annum.
On
September 19, 2016 the Company issued a promissory note payable in the amount of $42,000. The note is due on demand and bears
interest at 10% per annum.
On
March 17, 2017 the Company issued a promissory note payable in the amount of $10,000. The note is due on demand and bears interest
at 10% per annum.
On
April 19, 2017 the Company issued a promissory note payable in the amount of $20,000. The note is due on demand and bears interest
at 10% per annum.
The
interest expense for the nine months ended May 31, 2017 and May 31, 2016 is $8,427 and $3,521, respectively.
7.
RELATED PARTY TRANSACTIONS
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The
President of the Company provides management and office premises to the Company for no compensation. The effects of this immaterial
to the financial statements taken as a whole.
A
shareholder of the company paid expenses on behalf of the company in the amount of $ 3,058 during the year ended August 31, 2016.
During the year ended August 31, 2016, $ 2,522 was repaid. During the period ended May 31, 2017, a shareholder of the company
paid expenses of $31,101 of expenses on behalf of the company. As at May 31, 2017, there is a balance owing to the shareholder
of $31,637. This balance is non-interest bearing and has no specified terms of repayment. In June 2017, the company repaid $ 20,000
of expenses to the shareholder.
In
August, 2012, the Company authorized the issue of 100,000,000 common shares of the Company at par value of $.0001and authorized
the issue of 10,000,000 preferred shares at par value of $.0001.
During
the year ended August 31, 2014, the Company issued 21,000,000 common shares in exchange for $210,000 in services rendered, valued
at the closing stock price at the date of issuance.
On
December 23, 2014, a former director of the Company agreed to tender 3,000,000 shares of the Company for cancellation in exchange
for $ 10,000. In addition, the Company agreed to issue 1,500,000 shares of the Company for $ 5,000 cash and 1,500,000 for advisory
services
At
May 31, 2017, there are total of 31,597,572 common shares of the Company issued and outstanding.
9.
SUPPLEMENTAL CASH FLOW INFORMATION
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Supplemental
disclosures of cash flow information for the periods ended May 31, 2017 and May 31, 2016 is summarized as follows:
Cash
paid during the periods ended May 31, 2017 and May 31, 2016 for interest and income taxes is as follows:
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2017
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2016
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Interest
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$
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—
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$
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—
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Taxes
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$
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—
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$
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—
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In
accordance with ASC 855-10, the Company has analyzed its operations subsequent to May 31, 2017 to the date these financial statements
were issued, and has determined that it does not have any material subsequent events to disclose.