NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  DESCRIPTION OF BUSINESS

Organization

Grand Perfecta, Inc. (“Grand Perfecta”) was incorporated in the State of Nevada on March 25, 2002, as STI Holdings, Inc. (“STI”). On May 12, 2012, Grand Perfecta completed an Agreement and Plan of Reorganization whereby it acquired 100% of the issued and outstanding shares of Link Bit Consulting Co, Ltd. (“LinkBit”), a Japanese corporation, for 25,000,000 common shares in a transaction accounted for as a recapitalization of LinkBit. Effective March 29, 2013, STI amended its Articles of Incorporation to change its name to Grand Perfecta, Inc. On May 27, 2013, Grand Perfecta issued 272,668 shares in exchange for 100% of the issued and outstanding shares of Umajin Hong Kong Ltd. (“Umajin HK”), a Hong Kong corporation. In August 2015, Grand Perfecta formed Sports Perfecta, Inc. (“Sports Perfecta”), as a California subsidiary to pursue development of a fantasy sports offering to horse racing fans. The operations of Grand Perfecta, LinkBit, Umajin HK, and Sports Perfecta are collectively referred to as the “Company.”

On December 16, 2015, LinkBit acquired 100% of the outstanding shares of Basougu Shokuninkai Co., Ltd. (“Basougu”), a Japanese corporation (See Note 6). On January 7, 2016, Sports Perfecta acquired 100% of the outstanding stock of Just Mobile Sdn. Bhd. (“Just Mobile”), a Malaysian company (see Note 6). On January 20, 2016, Just Mobile changed its name to Sports Perfecta Technologies Sdn Bhd (“SPT”). The operations of Just Mobile are referred to as SPT after the acquisition date of January 7, 2016.

On June 26, 2018, the Company discontinued operations of its subsidiary Sports Perfecta, Inc. (“SPI”) along with its wholly owned subsidiary, Sports Perfecta Technologies Sdn Bhd (“SPT”). Ownership of these two entities were transferred to Neo Sports Ltd., a Japanese company, in exchange for 23,600,000 shares of the Company’s common stock, 100,000 shares of the Company’s Series A convertible preferred stock and the contract option right to purchase 3,000,000 shares of the Company’s common stock. See note 7.

On June 27, 2018, the Company discontinued operations of its subsidiary Link Bit Consulting Co., Ltd. (“LBC”) and all of its subsidiaries, except for WRN Co., Ltd. (“WRN”). The Company continued operations of WRN. On this date, the Company sold LBC and its subsidiaries and assets to IS Digital Ltd., a Cayman Island company, in exchange for $500,000. See note 7.

Nature of Business

The Company was engaged in the business of transmitting and providing horse racing information via various types of media, including multiple websites owned and operated by the wholly owned subsidiaries of LinkBit, WRN and Umajin HK. LinkBit operated 6 websites through its various subsidiaries, which generated substantially all of the Company’s revenue. Umajin HK had been delivering information on horse racing to its users through its website, however it terminated its service at the end of June 2017. The Company was also pursuing development of a fantasy sports offering through Sports Perfecta, which has not yet generated any significant revenue. In June 2018, the Company discontinued the operations of its subsidiaries, LinkBit and SPI. WRN continues to operate one of these websites and business.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with principles generally accepted in the United States of America (“GAAP”) and include the accounts of Grand Perfecta and its wholly-owned subsidiaries LinkBit, Umajin HK, WRN and Sports Perfecta. The Company discontinued the operations of its wholly-owned subsidiaries LinkBit and SPI in June 2018. The accounts for these subsidiaries have been presented in the discontinued operations in the accompanying consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. The Company has determined that three affiliated entities, Space Cultivation Mobile, Japan Horse Circle and Basougu Shokuninkai, which LinkBit conducts business with were variable interest entities and that the Company was the primary beneficiary of each entity. As a result, the Company has consolidated the accounts of these variable interest entities into the accompanying consolidated financial statements. As the Company does not have any ownership interest in these variable interest entities, the Company has allocated the contributed capital in these variable interest entities as a component of non-controlling interest. These three variable interest entities did business with LinkBit. Therefore, these three entities have also been presented in the discontinued operations in the accompanying consolidated financial statements. After the discontinued operations, the Company consists of Grand Perfecta and its two remaining wholly-owned subsidiaries, Umajin HK and WRN. There are no variable interest entities since the Company discontinued operations in June 2018.

Financial Statement Reclassification

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. The prior year amounts have also been modified in these financial statements to properly report amounts under current operations and discontinued operations (see note 7).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Amounts could materially change in the future. 

Going Concern

Based on operating losses and negative cash from operations and the discontinued operations of most of the Company’s operations, substantial doubt exists about the Company’s ability to continue as a going concern. Management’s plan in this regard is to find new operations to enter into and focus on building profitable operations. To finance operations while it finds new operations, the Company will continue financing activity such as taking loans and issuing new shares of the Company’s common stock.

As of July 31, 2018, we had cash of $52,716 and a working capital deficit of $574,780 as compared to cash of $102,954 at July 31, 2017, of which $665 related to continuing operations and $102,289 related to discontinued operations. As of July 31, 2017 the working capital deficit was $9,117,835.

We continue to have a significant working capital deficit that adversely affects our business by limiting the resources we have available to pursue the promotion of our information services and develop new service opportunities for potential customers. Historically, we have relied on extensions of note payment due dates and new debt financing to repay note obligations as they came due in order to continue operations. Going forward we will continue to use extensions and new debt financing to address note obligations that come due, endeavor to gradually reduce obligations with cash flow provided by operations, and pursue over the next 12 months equity financing that we can apply to debt reduction and business development. Nevertheless, the shortage of working capital adversely affects our ability to develop, sponsor, or participate in activities that promote our information services to prospective customers and to develop new content, because a substantial portion of cash flow goes to reduce debt rather than to advance operating activities. There is no assurance that our plans for addressing our working capital shortages will be successful, and our failure to be reasonably successful should be expected to result in a significant contraction of our operations and potentially a failure of the business.

Foreign Exchange

The Company’s primary operations are conducted in Japan and performed by its wholly owned subsidiaries LinkBit and WRN. The Company also conducts operations through Sports Perfecta, and its Malaysian subsidiary SPT. A wholly owned subsidiary, Umajin HK, had been delivering information on horse racing to its users through its website similar to LinkBit, however it terminated its service at the end of June 2017. WRN and LinkBit’s functional currency is the Japanese Yen and Umajin HK’s functional currency is the Hong Kong Dollar. SPT’s functional currency is the Malaysian Ringgit.

The financial statements of each entity are prepared using the applicable functional currencies, and have been translated into U.S. dollars (“USD”). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders’ equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in the Company’s stockholders’ equity.

The following rates were used to translate the accounts of LinkBit, Umajin HK, SPT and WRN into USD at the following balance sheet dates.

The following rates were used to translate the accounts of LinkBit, Umajin HK, SPT and WRN into USD for the following operating periods.

Cash and Cash Equivalents

The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents as of July 31, 2018 and 2017.

Accounts Receivable

Accounts receivable are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's financial condition and credit history, as well as current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The Company had no allowance for doubtful accounts as of July 31, 2018 or 2017.

Goodwill

The Company’s goodwill represents the excess of purchase price over tangible and intangible assets acquired, less liabilities assumed arising from business acquisitions. Goodwill is not amortized, but is reviewed for potential impairment on an annual basis at the reporting unit level. As required by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-20, the Company conducted an analysis of the goodwill at the reporting unit level. There was no impairment of goodwill during the years ended July 31, 2018 and 2017.

Long-Lived Assets

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company performed this analysis at July 31, 2018 and 2017 and during the prior year determined that the sum of projected future cash flows over the remaining useful life of the intangible assets were negative. Accordingly, the Company recorded an impairment charge of $83,712 during the year ended July 31, 2017. There was no impairment of long-lived assets identified during the year ended July 31, 2018.

Fair Value of Financial Instruments

In accordance with ASC 820, the carrying value of cash and cash equivalents and accounts payable approximates fair value due to the short-term maturity of these instruments. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3- Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The Company has determined that the book value of its outstanding financial instruments as of July 31, 2018 and 2017 approximates the fair value.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk include cash, accounts receivable, notes receivable, and amounts due from related parties. The Company maintains its cash in banks located in Japan, Hong Kong, Malaysia and the United States in financial institutions with high credit ratings. Substantially all of the Company’s revenues are generated from customers in Japan. The Company conducts periodic reviews of the financial condition and payment practices of its customers and note receivable holders. The Company had no losses related to the write off of notes receivable during the year ended July 31, 2018. During the year ended July 31, 2017 the loss related to the write off of notes receivable was $309,400, which is included in discontinued operations in the consolidated statements of operations and comprehensive income (loss).

Revenue Recognition

The Company’s revenue consists primarily of sales of comprehensive horse racing information through multiple websites focusing on all aspects of the horse racing industry in Japan. Publication of horse racing digital magazines, and participating in other public events and media programs related to the horse racing industry do not generate significant revenue directly. These activities are undertaken for the purpose of increasing the number of horse racing fans and driving potential customers to our websites so as to hopefully eventually convert them to paying customers.

The Company recognizes revenue on arrangements in accordance with ASC 605, Revenue Recognition. Revenue is recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured. The majority of the Company’s revenue is generated by per-item sales. For certain users, payment is received at the time of purchase and for others it is received after purchase. In either case, the Company recognizes revenue for per-item sales when the requested information is supplied to the user and collection is reasonably assured. For information packages that span a period of time, the Company recognizes revenue over the term of the package. Revenues are presented net of refunds, credits and known and estimated credit card chargebacks. The Company reports revenue net of any required taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Rights to content purchased by customers in advance of the content being provided are recorded as deferred revenue.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs incurred amounted to $94,997 from discontinued operations and $241,623 ($2,413 from continuing operations and $239,210 from discontinued operations) for the years ended July 31, 2018 and 2017, respectively.

Basic and Diluted Earnings Per Share

In accordance with ASC 260, Earnings Per Share, the basic income per common share is computed by dividing the net income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. No dilutive potential common shares were included in the computation of diluted net income per share because their impact was anti-dilutive. As of July 31, 2017, the Company had total options of 3,000,000 which were excluded from the computation of net income per share because they are anti-dilutive. As of July 31, 2018, the Company did not have any convertible notes or the options of 3,000,000. As a result, the basic and diluted earnings per share were the same for each of the periods presented.

Recent Accounting Pronouncements  

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

3. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue up to 100,000,000 shares of preferred stock with a par value of $0.001, with 100,000 shares designated as Series A Preferred Stock. The Series A Preferred Stock receive a 10 to 1 voting preference over common stock. Accordingly, for every share of Series A Preferred Stock held, the holder receives the voting rights equal to 10 shares of common stock. As such, the holders of the Series A Preferred Stock have the equivalent voting capability of 1,000,000 shares of common stock. The Series A Preferred Stock also has a $0.05 per share liquidation preference over common stock, and can be redeemed by the Company at any time, upon thirty days’ notice, for $0.05 per share.

On June 26, 2018, as part of the transfer agreement of SPI, the Company received the outstanding 100,000 shares of Series A Preferred Stock and immediately cancelled these shares (see note 7).

The Company had 0 and 100,000 shares of Series A Preferred Stock issued and outstanding as of July 31, 2018 and 2017, respectively.

Common Stock Transactions

On August 23, 2016, the Company entered into an Offshore Securities Purchase Agreement with an investor whereby the Company sold 1,000,000 shares of common stock for a purchase price of JPY100,000,000 (US $1,000,000 as of August 23, 2016).

On April 10, 2017, the Company entered into an Offshore Securities Purchase Agreement with an investor whereby the Company sold 700,000 shares of common stock for a purchase price of JPY70,000,000 (US $630,000 as of April 10, 2017).

On June 26, 2018, as part of the transfer agreement of SPI, the Company received 23,600,000 shares of Common Stock and immediately cancelled these shares (see note 7).

On July 9, 2018, the Company cancelled 3,222,668 shares of common stock that had been returned to the Company by the stock holders for no compensation.

The Company had 4,977,332 and 31,800,000 shares of Common Stock issued and outstanding as of July 31, 2018 and 2017, respectively.

Stock Options

On June 26, 2018, as part of the transfer agreement of SPI, the Company received the contract option right to purchase 3,000,000 shares of Common Stock and immediately cancelled this contract option (see note 7). There were no options outstanding as of July 31, 2018.

4. INCOME TAXES

The Company records its deferred taxes under the liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined based on multi-national, multi-jurisdictional nature of the Company’s operations. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets from continuing operations consisted of the following as of July 31, 2018 and 2017.

The income tax provision differs from the amount of income tax determined by applying the applicable income tax rate to pretax income from continuing operations for the years ended July 31, 2018 and 2017 due to the following.

The Company classifies income tax penalties and interest, if any, as part of other general and administrative expenses in the accompanying consolidated statements of operations. The Company had accrued penalties of $600,000 as of July 31, 2018 and 2017 resulting from the failure to timely file required returns in the US from 2013 through 2016.

At July 31, 2018, the Company had net operating loss carryforwards of approximately $2,713,000 that may be offset against future taxable income from the year 2019 through 2038. No tax benefit has been reported in the July 31, 2018 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. The Company's tax years for its Federal and State US jurisdictions which are currently open for examination are the years of 2014 - 2017. The Company’s tax years in Japanese jurisdictions that are open for examination are the years of 2013 – 2017.

The Company adopted the provisions of ASU 2015-17 prospectively, with the first annual period of change effective July 31, 2018. Prior periods were not retrospectively adjusted.

5. COMMITMENTS AND CONTINGENCIES

Operating Leases

Prior to June 27, 2018, the Company was leasing its corporate headquarters and administrative offices in Tokyo, Japan, as well as the administrative offices of SPT in Kuala Lumpur, Malaysia under non-cancelable operating leases extending through April 15, 2019. These leases were transferred with the discontinued operations. The lease of the Umajin HK office ended on July 21, 2017. The Company also leases other office space as needed on a month-to-month basis.

The Company incurred rent expense for continuing operations of $0 and for discontinued operations of $363,976 for the year ended July 31, 2018 and for continuing operations of $9,575 and for discontinued operations of $710,565 for the year ended July 31, 2017.

Litigation

In the ordinary course of business, the Company may be or has been involved in legal proceedings from time to time. As of the date of this annual report, there have been no material legal proceedings relating to the Company.

6. RELATED PARTY TRANSACTIONS

In June 2018, the Company entered into a consulting agreement with its new CEO and sole director. The agreement was for five months from June through October. The Company agreed to pay him $3,000 per month for his services in running the Company and making sure that the required audit and filings get completed. As of July 31, 2018 the Company had $6,000 in accrued liabilities for this agreement.

The following related party transactions were all related to the Company’s previous management and the discontinued operations. These related party transactions all were eliminated with the discontinuation of LBC and SPI (see note 7):

As of July 31, 2018 and 2017, the Company had $0 and $3,258,309, respectively of notes payable due to related parties (see note 7).

Umajin Co., Ltd. (“Umajin Japan”), was a related party entity owned by one of the former directors of the Company. The Company and Umajin Japan entered into a service agreement which was modified on November 1, 2015 to set the monthly fee payable by the Company to Umajin Japan for providing horserace information at 16 million Yen per month (inclusive of consumption tax), and to set the monthly fee payable for providing a horseracing related email magazine and web page content at 7 million Yen per month (inclusive of consumption tax) for a total of 23 million Yen per month. The Company and Umajin Japan agreed to reduce the monthly fees from 23 million Yen to 11 million Yen subsequent to October 2016. Subsequent to February 2017, the Company and Umajin Japan agreed to reduce the fee to 8 million Yen per month through July 2018.

Total fees paid to Umajin Japan for the year ended July 31, 2018 and 2017 amounted to $793,520 and $1,255,800, respectively. The fees paid to Umajin Japan are included in income (loss) from operations of discontinued operations in the accompanying consolidated statements of operations. As of July 31, 2018 the Company had $0 due to Umajin Japan due to the sale of LBC (see note 7). As of July 31, 2017 the Company had $108,604 due to Umajin Japan which is reflected in current liabilities of discontinued operations in the accompanying consolidated balance sheets.

During the years ended July 31, 2018 and 2017, the Company received consulting services from Cheval Attache, a related party entity owned by one of the Company’s former directors, (including amounts for consumption tax) of $108,108 and $117,938, respectively, which are included in income (loss) from operations of discontinued operations in the accompanying consolidated statements of operations. During the year ended July 31, 2017, the Company also charged Cheval Attache (including amounts for consumption tax) $100,300 of revenue related to information provided relating to providing horseracing contacts, which is included in income (loss) from operations of discontinued operations in the accompanying consolidated statement of operations.

G-Liberta, a subsidiary of Cheval Attache, performed certain advertising and research services for the Company. Total expenses related to G-Liberta during the year ended July 31, 2018 and 2017 amounted to $2,800 and $1,209, respectively, and are reflected as part of income (loss) from operations of discontinued operations in the accompanying consolidated statements of operations. As of July 31, 2018 the Company had $0 due to G-Liberta due to the sale of LBC (see note 7) and as of July 31, 2017 the Company had $1,209 due to G-Liberta which is reflected in current liabilities of discontinued operations in the accompanying consolidated balance sheets.

On October 17, 2016, the Company entered into an agreement with Clara Ltd., a related party entity owned by one of the Company’s former directors, allowing Clara Ltd. access to the Company’s database containing certain horse racing information owned by the Company for an indefinite period. As compensation, the Company was to receive a total of 30,000,000 Yen, payable in 10 monthly installments starting in November 2016. As of July 31, 2017 the amount due under this agreement was $27,300 which is reflected in current liabilities of discontinued operations in the accompanying consolidated balance sheets, which was paid in full in August of 2017. The revenue related to this transaction of $273,000 is reflected as income (loss) from operations of discontinued operations on the accompanying consolidated statement of operations for the year ended July 31, 2017 with no revenue recorded from the related party during the year ended July 31, 2018.

7. DISCONTINUED OPERATIONS

During the year ended July 31, 2018 the Company decided to discontinue most of its operating activities. This was done by way of the following two transactions:

On June 26, 2018, the Company exchanged all the issued and outstanding shares of common stock of its wholly owned subsidiary, Sports Perfecta, Inc. (“SPI”) to Neo Sports, Ltd, a Japanese company, for 100,000 shares of the Company’s series A preferred stock, 23,600,000 shares of the Company’s common stock and an option contract right for 3,000,000 shares of the Company’s common stock. This transaction included SPI’s wholly owned subsidiary, Sports Perfecta Technologies Sdn Bhd.

On June 27, 2018, the Company exchanged all the issued and outstanding shares of common stock of its wholly owned subsidiary, Link Bit Consulting Co. Ltd. (“LBC”) to IS Digital Ltd., a Cayman Island company for $420,000 in cash and 100% of the account receivable balance owed to the Company by LBC for $80,000 in cash. This transaction included all of LBC’s subsidiaries, except for WRN Co. Ltd. (“WRN”). WRN’s issued and outstanding common stock was transferred to the Company from LBC on this date.

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of July 31, 2018 and July 31, 2017, and consist of the following:

The income tax provision differs from the amount of income tax determined by applying the applicable income tax rate to pretax income from discontinued operations for the years ended July 31, 2018 and 2017 due to the following:

Depreciation expense amounted to $25,867 and $54,053 for the year ended July 31, 2018 and 2017, respectively.

Substantially all of the above outstanding notes payable were personally guaranteed by the Company’s former Chief Executive Officer.

The Company imputed interest on the above notes payable received on June 14, 2016 and September 21, 2016 using the effective interest rate of 12%, which approximated the Company’s incremental borrowing rate. The total interest imputed amounted to $78,628, including $61,754 during the year ended July 31, 2017 and $0 during the year ended July 31, 2018. The imputed interest was recorded as a discount to the note payable and an increase to additional paid-in capital. The amounts are being amortized as interest expense through the maturity dates of the notes, which amounted to $16,515 and $57,128 during the year ended July 31, 2018 and 2017, respectively.

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive income (loss). The results of operations for these entities for the period ended June 27, 2018 and year ended July 31, 2017 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive income (loss) for the years ended July 31, 2018 and 2017, and consist of the following:

In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the period ended June 27, 2018 and year ended July 31, 2017 have been reflected as discontinued operations in the consolidated statements of cash flows for the years ended July 31, 2018 and 2017, and consist of the following:

8. SUBSEQUENT EVENTS

Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through January 16, 2019, the date which the consolidated financial statements were available to be issued and there are no material subsequent events.