Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
NOTE 1 – ORGANIZATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
Precious Investments, Inc. (Formerly
FIGO Ventures, Inc.) (‘The Company’) was incorporated under the laws of the State of Nevada on May 26, 2004. The Company
was an Exploration Stage Company with the principle business being the acquisition and exploration of resource properties.
The Company had allowed its charter
with the state of Nevada to be revoked by the Secretary of State for failure to file the required annual lists and pay the required
annual fees. Its last known officers and directors reflected in the records of the Secretary of State were unresponsive or stated
they were no longer involved with the Company. The purported replacement officers and directors were unresponsive.
On September 14, 2012, NPNC Management,
LLC filed a petition in the Eighth Judicial District Court in Clark County, Nevada and was appointed custodian of the Company on
October 15, 2012.
In order to obtain basic operating capital
to pay for the reinstatement of the Company’s good standing with the Nevada Secretary of State, to bring the Company’s
account current with creditors essential for the reorganization of the Company, such as the transfer agent, and for basic general
corporate purposes, on October 24, 2012, the interim board authorized the sale of 55,000,000 (2,200,000 split adjusted) shares
of common stock for $6,000 to NPNC Management, LLC, in a private placement transaction exempt from the Securities Act of 1933,
as amended, pursuant to section 4(2) thereof and the rules and regulations promulgated there under.
On October 24, 2012, NPNC Management,
LLC appointed Bryan Clark as director of the Company, to hold office until such time as the shareholders elected a board. The interim
board, consisting of Mr. Clark, further acted to appoint Mr. Clark as president, treasurer, and secretary of the Company, to act
on behalf of the Company, and to hold such offices until removed by any subsequent board elected by the shareholders.
On November 13, 2013, Bryan Clark tendered
his resignation from all positions as an Officer and Director of the Company and the Board appointed Anna Wlodarkiewicz as a Director,
President, Secretary and Treasurer of the Company.
On October 9, 2014, Ania Wlodarkiewicz
tendered her resignation from all positions as an Officer and Director of the Company and the Board appointed Nataliya Hearn as
a Director, President, Secretary and Treasurer of the Company.
On March 28, 2016, Nataliya Hearn resigned
as the Company’s Chief Executive Officer and Director. Mr. Kashif Khan is the Company’s sole officer and director.
The Company has completed an asset purchase
agreement dated August 10, 2015 where the Company acquired from Kashif Khan, its sole officer and director, colored diamonds with
a wholesale value of US$4 Million, which he was in control of, in exchange for issuing three secured demand convertible promissory
notes totaling US$4 Million.
The Company is in the business of purchasing
and selling colored diamonds.
On March 1, 2017, the Company entered
into a joint venture agreement with Eddeb Management (“Eddeb”). The purpose of the joint venture is to build a fund
for the purpose of trading in precious gems, notably, colored diamonds.
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
On November 16, 2017, the Company entered
into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with American Freight Xchange, Inc.,
a privately held New York corporation (“American Freight”), and Shipzooka Acquisition Corp. (“Shipzooka Sub”),
a newly formed wholly-owned Nevada subsidiary of Precious Investments, Inc. In connection with the closing of this merger transaction,
Shipzooka Sub merged with and into American Freight (the “Merger”) on December 5, 2017, with the filing of Articles
of Merger with the Nevada Secretary of State and Certificate of Merger with the New York Division of Corporations.
The transaction resulted in the Company
acquiring Subsidiary by the exchange of all of the outstanding shares of Subsidiary for 1,000,000 newly issued Series C Preferred
shares of stock, $0.001 par value (the “Preferred Stock”) of Parent which have conversion and voting rights of 72.5
votes for each share, representing approximately 90.2% of the voting rights
For accounting purposes, the transaction
was treated as a reverse merger since the acquired entity now forms the basis for operations and the transaction resulted in a
change in control, with the acquired company electing to become the successor issuer for reporting purposes. The accompanying financial
statements have been prepared to reflect the assets, liabilities and operations of American Freight Xchange, Inc. exclusive of
Precious Investments, Inc since all predecessor operations were discontinued.
As part of the transaction, amounts
due to former officers were forgiven, with the balances recorded as Contributed Capital. For equity purposes, accumulated deficit
shown are those American Freight Xchange, Inc.
Principles of consolidation
The consolidated financial statements include the accounts
of Precious Investments, Inc. and its wholly owned subsidiaries American Freight Xchange, Inc and KRG, Inc. All significant inter-company
transactions and balances have been eliminated.
Basis of Presentation
The condensed consolidated interim
financial statements are presented in conformity with accounting principles generally accepted in the United States of America,
as reported on our fiscal period ended on July 31, 2018. We have summarized our most significant accounting policies. Management’s
opinion is that all adjustments for a fair statement of the results for the interim periods have been made, and a statement that
all adjustments are of a normal recurring nature or description of the nature and amount of any adjustments other than normal
adjustments.
Cash
and cash equivalents
The
Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The
Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial
institution. The balance at times may exceed federally insured limits. As of July 31, 2018, and 2017, no cash balances exceeded
the federally insured limit.
Restricted
Cash
Based
upon the agreement with The financial institution the Company is required to maintain a cash account for collateral (see Note
11)
Unaudited Condensed Consolidated
Interim Financial Statements
These unaudited condensed consolidated
interim financial statements have been prepared on the same basis as the annual financial statement and should be read in conjunction
with those annual financial statements filed on Form 10-K for the year ended July 31, 2018. In the opinion of management, these
unaudited condensed consolidated interim financial statements reflect adjustments, necessary to present fairly the Company’s
financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are
not necessarily indicative of the results for a full year or for any future period.
Accounts receivable and allowance
for doubtful accounts
Accounts receivable are stated at the
amount management expects to collect. The Company generally does not require collateral to support customer receivables. The Company
provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection
information and existing economic conditions. As of January 31, 2019, and 2018 the allowance for doubtful accounts was $0 and
$0, respectively.
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
Use of Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements
and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Income Taxes
The Company’s calculation
of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing
jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate of whether
it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of January 31,
2019 and 2018.
Deferred income taxes are
recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis
of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences
arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based
and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more
likely than not that some or all of the deferred tax assets will not be realized.
The application of tax laws
and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are
subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings.
Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from management’s
estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.
Interest and penalties are included in tax expense.
The Company includes
interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income
taxes. As of January 31, 2019 and 2017, the Company had no accrued interest or penalties related to uncertain tax positions.
Discontinued Operations
For those businesses where management has committed
to a plan to divest, each business is valued at the lower of its carrying amount or estimated fair value less cost to sell. If
the carrying amount of the business exceeds its estimated fair value, an impairment loss is recognized. Fair value is estimated
using accepted valuation techniques such as a DCF model, valuations performed by third parties, earnings multiples, or indicative
bids, when available. A number of significant estimates and assumptions are involved in the application of these techniques, including
the forecasting of markets and market share, sales volumes and prices, costs and expenses, and multiple other factors. Management
considers historical experience and all available information at the time the estimates are made; however, the fair value that
is ultimately realized upon the divestiture of a business may differ from the estimated fair value reflected in the Consolidated
Financial Statements. Depreciation, depletion, and amortization expense is not recorded on assets of a business to be divested
once they are classified as held for sale. Businesses to be divested are classified in the Consolidated Financial Statements as
either discontinued operations or held for sale.
For businesses classified as discontinued operations,
the balance sheet amounts and results of operations are reclassified from their historical presentation to assets and liabilities
of operations held for sale on the Consolidated Balance Sheet and to discontinued operations on the Consolidated Statement of Operations,
respectively, for all periods presented. The gains or losses associated with these divested businesses are recorded in discontinued
operations on the Consolidated Statement of Operations. The Consolidated Statement of Cash Flows is also reclassified for assets
and liabilities of operations held for sale and discontinued operations for all periods presented.
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
Derivative Financial Instruments
The Company does not use derivative
instruments to hedge exposures to cash flow, market, or foreign currency risks.
The Company reviews the terms
of convertible loans, equity instruments and other financing arrangements to determine whether there are embedded derivative instruments,
including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial
instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding options or warrants
to employees and non-employees in connection with consulting or other services. These options or warrants may, depending on their
terms, be accounted for as derivative instrument liabilities, rather than as equity.
Derivative financial instruments
are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at fair value and then re-valued at each reporting date, with changes in the fair value reported
as charges or credits to income. To the extent that the initial fair values of the freestanding and/or bifurcated derivative instrument
liabilities exceed the total proceeds received an immediate charge to income is recognized in order to initially record the derivative
instrument liabilities at their fair value.
The discount from the face value
of the convertible debt instruments resulting from allocating some or all of the proceeds to the derivative instruments, together
with the stated rate of interest on the instrument, is amortized over the life of the instrument through periodic charges to income,
using the effective interest method.
The classification of derivative
instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each
reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is
reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed.
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within twelve months of the balance sheet date.
Fair value of financial instruments
The Company’s financial instruments
consist of its liabilities. The carrying amount of payables and the loan payable – related party approximate fair value because
of the short-term nature of these items. The promissory notes, and convertible notes payables are measured at amortized cost using
the effective interest method, which approximates fair value due to the relationship between the interest rate on long-term debt
and the Company’s incremental risk adjusted borrowing rate.
Inventories
The Company does not hold any inventory as assets. All
inventory in operations is owned by the shipper.
Revenue Recognition
The Company recognizes revenue related to product sales
when (i) the seller’s price is substantially fixed, (ii) shipment has occurred causing the buyer to be obligated to pay
for product, (iii) the buyer has economic substance apart from the seller, and (iv) there is no significant obligation for future
performance to directly bring about the resale of the product by the buyer as required by ASC 606 – Revenue Recognition.
Cost of sales, rebates.
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
NOTE 2 – GOING CONCERN
These condensed consolidated interim
financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
As of January 31, 2019, the Company has an accumulated deficit of $2,609,868. The Company’s ability to continue as a going
concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain
profitable operations. While we are expanding our best efforts to achieve the above plans, there is no assurance that any such
activity will generate funds that will be available for operations. These conditions raise substantial doubt about our ability
to continue as a going concern. These condensed consolidated interim financial statements do not include any adjustments that might
arise from this uncertainty.
NOTE 3 – EQUIPMENT AND IMPROVEMENTS
Equipment and improvements are summarized
as follows:
|
|
January 31
|
|
July 31
|
Furniture and fixtures
|
|
$
|
71,513
|
|
|
$
|
71,513
|
Machinery and equipment
|
|
|
201,139
|
|
|
|
195,813
|
Transportation equipment
|
|
|
11,293
|
|
|
|
11,293
|
Building improvements
|
|
|
4,456
|
|
|
|
4,456
|
|
|
|
288,401
|
|
|
|
283,075
|
Less accumulated depreciation
|
|
|
|
|
|
|
|
and amortization
|
|
|
245,127
|
|
|
|
237,945
|
|
|
$
|
43,274
|
|
|
$
|
45,130
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
$
|
7,182
|
|
|
$
|
15,802
|
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
NOTE 4 – PROMISSORY NOTES
Description
|
|
July
31, 2018
|
|
|
July
31, 2017
|
Note payable dated January
15, 2014, matured January 15, 2015 bearing interest at 12% per annum.
|
|
$
|
3,000
|
|
|
$
|
3,000
|
Note payable dated February 14, 2014 matured
February 14, 2015, bearing interest at 12% per annum.
|
|
|
3,750
|
|
|
|
3,750
|
Note payable dated April 1, 2014 matured April
1, 2015, bearing interest at 12% per annum.
|
|
|
4,700
|
|
|
|
4,700
|
Note payable dated January 30, 2014, matured
January 30, 2015, bearing interest at 12% per annum.
|
|
|
5,000
|
|
|
|
5,000
|
Note payable dated March
8, 2018, matures March 8, 2019 bearing interest at 10% per annum.
|
|
$
|
23,900
|
|
|
$
|
23,900
|
Note payable dated July 20, 2018 matures October
1, 2019, bearing interest at 0% per annum.
|
|
|
175,000
|
|
|
|
175,000
|
Note payable effective
January 9, 2019 matures January 9, 2020 bearing interest at 12% per annum including $200,000
CAD Escrow
|
|
|
625,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
840,350
|
|
|
$
|
215,350
|
Less current portion of long-term debt
|
|
|
840,350
|
|
|
|
40,350
|
Total long-term debt
|
|
$
|
0
|
|
|
$
|
175,000
|
Some notes have matured as of July
31, 2017 and have not been paid. They are due on demand and recorded as current liabilities. Interest expense for the three months
ended January 31, 2019 and 2018 was $5,019 and $498 respectively.
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
NOTE 5 - CONVERTIBLE DEBT
Convertible debt as of January 31, 2019 and July 31,
2018 consisted of the following:
Description
|
|
|
January
31, 2019
|
|
|
|
July
31, 2018
|
Convertible
note agreement dated February 20, 2018 in the amount of $1,034,000 payable and due on demand bearing interest at
10% per annum. Principal and accrued interest is convertible at $.028712 per share. .
|
|
$
|
1,034,0000
|
|
|
$
|
1,034,000
|
|
|
|
|
|
|
|
|
Convertible notes, net
of discount
|
|
$
|
1,034,000
|
|
|
$
|
1,034,000
|
The Company recognized $0 of debt
discount accretion expense on the above notes. Interest expense related to these notes for the three months ended January 31,
2019 and 2018 was $21,475 and $0, respectively.
NOTE 6 - LINE OF CREDIT
The Company has line of credit
with a maximum borrowing limit of $400,000, bearing an interest rate of prime plus 3.25% per annum and secured by a General Security
Agreement. As of January 31, 2019, and July 31, 2018, $247,043 and $264,935 were drawn on the line of credit, respectively. Interest
expense for the three months ended January 31 2019 was $4,433 and $0 respectively. Subsequent to the July 31, 2018 the financial
institution made modification to the borrowing agreement regarding collateral. Please see note 11 Subsequent Events for further
details.
NOTE 7 – RELATED PARTY TRANSACTIONS
A shareholder of the Company has
paid certain expenses of the Company. These amounts are reflected as a loan payable to related party. The shareholder advanced
$0 and $13,605 during the six months ended January 31, 2019 and 2018. As of the January 31, 2019 and July 31, 2018, there were
$499,583 and $406,274 due to related parties, respectively.
The Company has consulting agreements
with two of its shareholders to provide management and financial services that commenced on December 1, 2017. For the six months
ended January 31, 2019 consulting fees paid were $153,987.
Precious Investments, Inc.,
also known as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
NOTE 7 – RELATED PARTY TRANSACTIONS - continued
The Company on February 20, 2018 entered
into a related party (Recommerce Group, Inc) note receivable in the amount of $1,034,000. The Company made an additional advance
in the amount of $175,000 that is non-interest bearing. The Company has received payment of $81,780 of the non-interest bearing
note. The note is payable and due on demand and bears interest at the rate of 10%. Interest income in the amount of $43,220 for
the six months ended January 31, 2019 has been recorded in the financial statements
.
NOTE 8 – TRANSFER AND ASSIGNMENT
OF ASSETS
On November 16, 2017, the Company entered
into an agreement of conveyance, transfer and assignment of assets (the “Agreement”) with its former officer Kashif
Khan and the non-controlling owners of the Company subsidiary Flawless Funds GP (assignees), in which the Company was returned
16,000,000 shares of its common stock in consideration of all assets related to its previous colored diamond business which had
a book value related to accounts receivable of $20,000. Additionally, the assignees agreed to pay up to $100,000 in liabilities
on the behalf of the Company. As of April 30, 2018, the 16,000,000 shares have been returned and the Company has recorded the net
consideration received of $80,000 as an increase to additional paid in capital
NOTE 9 – STOCKHOLDERS’
EQUITY
The Company is authorized to issue 250,000,000
shares of its $0.001 par value common stock and 10,000,000 shares of Preferred stock. As of January 31, 2019, and July 31, 2018
there were 14,355,645 shares of common stock outstanding. There were also 1,000,000 shares of Series C Preferred stock outstanding
as of January 31, 2019, and July 31, 2018.
On November 1, 2017, we effected a one-for-four reverse stock split. All share and per share information has been retroactively adjusted to reflect the stock split.
On November 7, 2017, the Company designated
1,000,000 shares of Preferred Stock as Series C Preferred stock, par value $0.001 per share (the “Series C Preferred Stock”).
Each share of Series C Preferred Stock is convertible into 72.5 common shares and has voting rights based on this ratio. As of
January 31, 2019, there were 1,000,000 shares of Preferred C shares issued and outstanding.
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Litigations, Claims and Assessments
The Company may become involved in
various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent
uncertainties, and an adverse result in these or other matters may arise that may harm its business. The Company is currently
not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse
effect on its business, financial condition or operating results.
Precious Investments, Inc., also known
as
GLOBASL3PL INC and Subsidiaries
Notes to Condensed Interim Financial
Statements (unaudited)
January 31, 2019
NOTE 10 – COMMITMENTS AND CONTINGENCIES
- continued
On January 8, 2018, the Company
executed an amendment to an existing lease agreement to extend the lease term for one year at a rate of $19,132 per month. Rent
expense was $186,167 for the six months ended January 31, 2019.
Future minimum lease payments of
the lease are below:
Year
|
|
Amount
|
|
2019
|
|
|
$
|
229,584
|
|
|
2020
|
|
|
$
|
95,660
|
|
On February 23, 2016, the Company
entered into a sixty-six (66) month lease for two copiers for quarterly payment of $1,350.
Future minimum lease payments of
the lease are below:
Year
|
|
Amount
|
|
2019
|
|
|
$
|
2,700
|
|
|
2020
|
|
|
$
|
5,400
|
|
|
2021
|
|
|
$
|
5,400
|
|
NOTE 11 – SUBSEQUENT EVENTS
The Company as of February 1, 2019
is required by the financial institution to maintain a cash collateral account in the amount of $200,000 CAD.