NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 1 – Organization
Reviv3 Procare Company (the “Company”)
was incorporated in the State of Delaware on May 21, 2015 as a reorganization of Reviv3 Procare, LLC which was organized on July
31, 2013. The Company is engaged in the manufacturing, marketing, sale and distribution of professional quality hair and skin care
products throughout the United States, Canada, Europe and Asia.
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies
Basis of Presentation
The unaudited financial statements for the
nine months ended February 28, 2019 and 2018 have been prepared by us pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of the management, all adjustments necessary to present fairly our financial position, results
of operations, and cash flows as of February 28, 2019 and 2018, and for the periods then ended, have been made. Those adjustments
consist of normal and recurring adjustments. Certain information and note disclosures normally included in our annual financial
statements prepared in accordance with generally accepted accounting principles have been omitted. The unaudited financial statements
should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on
Form 10-K for the year ended May 31, 2018. The results of operations for the nine months ended February 28, 2019 are not necessarily
indicative of the results to be expected for the full year.
Going Concern
As reflected in the accompanying financial
statements, the Company has a net loss and net cash used in operations of $154,911 and $103,989, respectively, for nine months
period ended February 28, 2019. Additionally, the Company has an accumulated deficit of $4,643,078 at February 28, 2019.
These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months
from the issuance date of this report. The ability of the Company to continue as a going concern is dependent on the Company’s
ability to implement its business plan, raise capital, and generate sufficient revenue; however, the Company’s cash position
may not be sufficient to support its daily operations. Management intends to raise additional funds by way of a private or public
offering. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient
revenue and in its ability to raise additional funds, there can be no assurances to that effect. The financial statements do not
include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
Use of estimates
The preparation of the financial statements
in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial
statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates
made by management include, but are not limited to, the allowance for doubtful accounts, inventory valuations, the useful
life of property and equipment, the valuation of deferred tax assets, the value of stock-based compensation, and the fair value
of non-cash common stock issuances.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies (continued)
Cash and cash equivalents
The Company considers all highly liquid
debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The
Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance
Corporation.
Accounts receivable and allowance
for doubtful accounts
The Company has a policy of providing
on allowance for doubtful accounts based on its best estimate of the amount of probable credit losses in its existing accounts
receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary
based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account
balances deemed to be uncollectible are charged to bad debt expense and included in the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote.
Prepaid expenses and other current assets
Prepaid expenses and other current assets
of $0 and $3,505 at February 28, 2019 and May 31, 2018, respectively, consist primarily of costs paid for future services which
will occur within a year.
Advances to suppliers
Advances to suppliers represent the
cash paid in advance for installment payments for the purchase of inventory. The advances to a supplier are interest free and unsecured.
As at February 28, 2019 and May 31, 2018, advances to the Company’s major supplier amounted to $0 and $3,413, respectively.
Upon shipment, by the vendor, of the purchase inventory, the Company reclassifies such advances to supplier into inventory.
Inventory
The Company values inventory, consisting
of finished goods and raw materials, at the lower of cost and net realizable value. Cost is determined using an average cost method.
The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting
marketability, equal to the difference between the cost of the inventory and its net realizable value. The Company evaluates its
current level of inventory considering historical sales and other factors and, based on this evaluation, classifies inventory markdowns
in the statement of operations as a component of cost of goods sold. These markdowns are estimates, which could vary significantly
from actual requirements if future economic conditions, customer demand or competition differ from expectations.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies (continued)
Property and Equipment
Property and equipment are carried at
cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When
assets are retired or disposed of, the cost and accumulated depreciation are removed, and any resulting gains or losses are included
in the statement of operations.
Revenue recognition
Effective June 1, 2018, the Company adopted
Accounting Standards Codification (“ASC”) 606,
Revenue From Contracts With Customers
, which is effective for
public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard
(new guidance) has a five step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine
the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied.
The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and
disclosures and there was no cumulative effect of the adoption of ASC 606.
The Company sells a variety of hair and skin
care products. The Company recognizes revenue for the agreed upon sales price when a purchase order is received from the customer
and subsequently the product is shipped to the customer, which satisfies the performance obligation. Consideration paid to the
customer to promote and sell the Company’s products is typically recorded as a reduction in revenues. See Note 10 for revenue
disaggregation disclosures.
Cost of Sales
The primary components of cost of sales
include the cost of the product and freight-in costs.
Shipping and Handling Costs
The Company accounts for shipping and
handling fees in accordance with ASC 606. While amounts charged to customers for shipping products are included in revenues, the
related costs of shipping products to customers are classified in marketing and selling expenses as incurred. Shipping costs included
in marketing and selling expense were $11,900 and $11,516 for the three months period ended February 28, 2019 and 2018, respectively.
Shipping costs included in marketing and selling expense were $30,601 and $27,628 for the nine months period ended February 28,
2019 and 2018, respectively.
Marketing, selling and advertising
Marketing, selling and advertising costs
are expensed as incurred.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies (continued)
Customer Deposits
Customer deposits consisted of prepayments
from customers to the Company. The Company will recognize the prepayments as revenue upon delivery of products in compliance with
its revenue recognition policy.
Fair value measurements and fair value of financial
instruments
The Company adopted Accounting Standards
Codification (“ASC”) 820, “
Fair Value Measurements and Disclosures”
(“ASC 820”), for
assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be
applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework
for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an
impact on the Company’s financial position or operating results, but did expand certain disclosures. ASC 820 defines
fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize
the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1:
|
Observable inputs such as quoted market prices in active markets for identical assets or liabilities
|
Level 2:
|
Observable market-based inputs or unobservable inputs that are corroborated by market data
|
Level 3:
|
Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
|
The Company analyzes all financial instruments
with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting
standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on
the lowest level of input that is significant to the fair value measurement.
The estimated fair value of certain
financial instruments, including prepaid expenses, deposits, accounts payable and accrued expenses are carried at historical cost
basis, which approximates their fair values because of the short-term nature of these instruments.
Income Taxes
The Company accounts for income taxes
pursuant to the provision of ASC 740-10, “
Accounting for Income Taxes
” (“ASC 740-10”), which requires,
among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires
the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred
tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies (continued)
The Company follows the provision of
ASC 740-10 related to
Accounting for Uncertain Income Tax Positions
. When tax returns are filed, there may be uncertainty
about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance
of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all
available evidence, management believes it is more likely than not that the position will be sustained upon examination, including
the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
Tax positions that meet the more likely
than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized
upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed
the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance
sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company
believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a
liability for uncertain tax benefits.
The Company has adopted ASC 740-10-25,
“
Definition of Settlement
”, which provides guidance on how an entity should determine whether a tax position
is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can
be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions
considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered
more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The
federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally
for three years after they are filed.
Impairment of long-lived assets
The Company reviews long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable,
or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less
than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated
fair value and its book value.
Stock-based compensation
Stock-based compensation is accounted
for based on the requirements of the Share-Based Payment Topic of ASC 718, “
Compensation — Stock Compensation
”
(“ASC 718”), which requires recognition in the financial statements of the cost of employee and director services received
in exchange for an award of equity instruments over the period the employee or director is required to perform the services in
exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director
services received in exchange for an award based on the grant-date fair value of the award.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies (continued)
Effective June 1, 2018, the Company
adopted the proposed update to ASC 718 whereby, the accounting for share-based payments to nonemployees and employees is substantially
aligned. The ASU supersedes Subtopic 505-50,
Equity - Equity-Based Payments to Non-Employees
. Consistent with the accounting
requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured
at grant-date fair value of the equity instruments that the Company is obligated to issue when the good has been delivered or the
service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.
The adoption of the standard did not have a material impact on the financial statements of the Company.
Net loss per share of common stock
Basic net loss per share is computed
by dividing the net loss by the weighted average number of common shares during the period. Diluted net loss per share is computed
using the weighted average number of common shares and potentially dilutive securities outstanding during the period. At February
28, 2019 and 2018, the Company had no potentially dilutive securities.
Recently Issued Accounting Pronouncements
In February 2016, FASB issued ASU 2016-02,
“
Leases
” (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either
finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.
This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line
basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases
with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted
for similar to existing guidance for operating leases. The new guidance will be effective for fiscal years beginning after December
15, 2018, and interim periods within those annual periods and is applied retrospectively. Early adoption is permitted. The Company
does not believe the guidance will have a material impact on its financial statements.
In January 2017, the FASB issued ASU
No. 2017-4, “
Intangibles – Goodwill and Other
” (Topic 350): Simplifying the Test for Goodwill Impairment,
which eliminates Step 2 from the goodwill impairment test. When an indication of impairment was identified after performing the
first step of the goodwill impairment test, Step 2 required that an entity determine the fair value at the impairment testing date
of its assets and liabilities (including unrecognized assets and liabilities) using the same procedure that would be required in
determining the fair value of assets acquired and liabilities assumed in a business combination. Under the amendments in ASU No.
2017-4, an entity will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting
unit with its carrying value. An entity would recognize an impairment charge for the amount by which the carrying value exceeds
the reporting unit’s fair value. In addition, an entity must consider income tax effects from any tax deductible goodwill
on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity
that is a SEC filer should adopt the amendments in ASU No. 2017-4 for its annual, or any interim, goodwill impairment tests
in fiscal years beginning after December 15, 2019. The Company does not believe the guidance will have a material impact on its
financial statements.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 2 – Basis of Presentation
and Summary of Significant Accounting Policies (continued)
In July 2017, the FASB issued ASU No.
2017-11, “
Earnings Per Share
(Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and
Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the
Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests with a Scope Exception”. The ASU was issued to address the complexity associated with applying
generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity.
The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt,
warrants and other financing instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion
option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature.
The amendments are effective for fiscal years beginning after December 15, 2018 and should be applied retrospectively. Early adoption
is permitted, including adoption in an interim period. The Company does not expect the adoption to have any significant impact
on its Financial Statements. The Company is currently in the process of evaluating the impact of the adoption of this standard
on its financial statements.
Other accounting standards that have
been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on
the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an
impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
Note 3 – Accounts Receivable
Accounts receivable, consisted of the
following:
|
|
February 28,
2019
|
|
May 31,
2018
|
|
|
(Unaudited)
|
|
|
Accounts receivable
|
|
$
|
44,049
|
|
|
$
|
32,733
|
|
Less: Allowance for bad debts
|
|
|
(5,528
|
)
|
|
|
(2,742
|
)
|
|
|
$
|
38,521
|
|
|
$
|
29,991
|
|
The Company recorded bad debt expense
of $2,786 and $2,757 during the nine months periods ended February 28, 2019 and 2018, respectively. The Company recorded bad debt
expense of $0 and $0 during the three months periods ended February 28, 2019 and 2018, respectively.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 4 – Inventory
Inventory consisted of the following:
|
|
February 28,
2019
|
|
May 31,
2018
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Finished goods
|
|
$
|
229,746
|
|
|
$
|
113,134
|
|
Raw materials
|
|
|
198,015
|
|
|
|
208,403
|
|
|
|
$
|
427,761
|
|
|
$
|
321,537
|
|
At February 28, 2019 and May 31, 2018,
inventory held at third party locations and inventory in transit amounted to $117,104 and $64,485, respectively. During the quarter
ended February 28, 2018, Management abandoned $11,496 of inventory held at a former distributor at a foreign location outside of
the United States as it was not cost efficient to import the inventory back into the United States. The $11,496 is included in
cost of sales for the three and nine months ended February 28, 2018.
Note 5 – Property and Equipment
Property and equipment, stated at cost,
consisted of the following:
|
|
Estimated life
|
|
February 28,
2019
|
|
May 31,
2018
|
|
|
|
|
(Unaudited)
|
|
|
Furniture and fixtures
|
|
5 years
|
|
$
|
5,759
|
|
|
$
|
5,759
|
|
Computer equipment
|
|
3 years
|
|
|
17,392
|
|
|
|
7,495
|
|
Machinery & equipment
|
|
5-10 years
|
|
|
20,490
|
|
|
|
-
|
|
Less: Accumulated depreciation
|
|
|
|
|
(8,530)
|
|
|
|
(4,905)
|
|
|
|
|
|
$
|
35,111
|
|
|
$
|
8,349
|
|
Depreciation expense amounted to $3,625
and $2,116 for the nine months periods ended February 28, 2019 and 2018, respectively. Depreciation expense amounted to $1,582
and $913 for the three months periods ended February 28, 2019 and 2018, respectively.
Note 6 – Accounts Payable and
Accrued Expenses
Accounts payable and accrued expenses
comprised of the following:
|
|
February 28,
2019
|
|
May 31,
2018
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Trade Payables
|
|
$
|
127,977
|
|
|
$
|
41,320
|
|
Accrued Freight
|
|
|
22,532
|
|
|
|
22,532
|
|
Credit Cards
|
|
|
17,754
|
|
|
|
15,521
|
|
Other
|
|
|
3,004
|
|
|
|
386
|
|
|
|
$
|
171,267
|
|
|
$
|
79,759
|
|
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 7- Equipment Financing Payable
During the nine months period ended
February 28, 2019, the Company purchased a forklift under an installment purchase plan. The loan amount is $16,500 and is payable
in 60 monthly instalment payments of $317 comprising of principal payment of $275 and interest payment of $42. As of February 28,
2019, the balance outstanding on the loan was $16,178 of which $3,300 is payable within one year and the balance $12,878 is payable
after one year. The Company recorded an interest expense of $42 on the loan in the accompanying unaudited financial statements.
The amounts of loan payments due in the next
five years ended February 28, are as follows:
|
|
|
|
Amount
|
|
|
2020
|
|
|
|
$
|
3,300
|
|
|
|
|
2021
|
|
|
|
|
3,300
|
|
|
|
|
2022
|
|
|
|
|
3,300
|
|
|
|
|
2023
|
|
|
|
|
3,300
|
|
|
|
|
2024
|
|
|
|
|
2,978
|
|
|
|
|
|
|
|
|
$
|
16,178
|
|
|
|
|
Note 8 – Stockholders’
Equity
Shares Authorized
The authorized capital of the Company
consists of 100,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value
$0.0001 per share.
Preferred Stock
The preferred stock may be issued from
time to time in one or more series. The Board of Directors of the Company is expressly authorized to provide for the issuance of
all or any of the shares of the preferred stock in one or more series, and to fix the number of shares and to determine or alter,
for each such series, such voting powers, full or limited, or no voting powers and such designations, preferences, and relative,
participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and
expressed until the resolution adopted by the Board of Directors providing the issuance of such shares. The Board of Directors
is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issue of shares of that
series. In case the number of shares of any such series shall be so decreased, the decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of shares of such series.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 8 – Stockholders’
Equity (continued)
Common Stock
During the nine months period ended
February 28, 2019, the Company issued 760,000 shares of common stock for $304,000 cash proceeds to third party investors at $0.40
per share.
During the nine months period ended
February 28, 2019, the Company recorded 12,500 shares of common stock for shares earned by third party consultant for services
provided to the Company. The shares were valued at $0.40 per share or $5,000, based on the recent common stock sales.
In June 2017, the Company issued an
aggregate of 80,000 shares of the Company’s common stock to various consultants pursuant to consulting agreements related
to marketing and business advisory services. The term of the consulting agreements ranges from 2 months to 6 months. The Company
valued these common shares at the fair value of $20,000 based on the sale of common stock in the recent private placements at $0.25
per common share. In connection with the issuance of these common shares, the Company recorded stock-based compensation of $20,000.
On September 26, 2017, the Company sold 100,000
shares of its common stock at $0.25 per common share for proceeds of $25,000.
Between September 27, 2017 and October 2, 2017,
the Company sold an aggregate of 271,000 shares of its common stock at $0.40 per common share for proceeds of $108,400.
On September 29, 2017, the Company sold 375,000
shares of its common stock to an affiliated company at $0.40 per common share for proceeds of approximately $150,000. The affiliated
company is managed by the brother of the Company’s Chief Executive Officer.
As of February 28, 2019, 41,275,547
shares of common stock were outstanding.
Note 9 – Commitments and Contingencies
In September 2016, the Company executed
a lease agreement in connection with its office and warehouse facility in California under operating leases for a period of 37
months commencing in October 2016 and expiring in October 2019. The Company shall pay a monthly base rent starting at $6,782 plus
a pro rata share of operating expenses. The base rent is subject to an annual increase beginning in October 2017 as defined in
the lease agreement. Base rent for the period from October 2018 amounted to $7,210 per month. Rent expense amounted to $71,203
and $53,751 for the nine month periods ended February 28, 2019 and 2018, respectively. Future minimum rental payments required
under this operating lease are as follows:
|
|
Total
|
|
1 Year
|
|
2-3 Year
|
|
Thereafter
|
Operating lease
|
|
$
|
57,897
|
|
|
$
|
57,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
|
$
|
57,897
|
|
|
$
|
57,897
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The Company entered into an agreement
with a consultant, during the six months period ended November 30, 2018, for services for a term of one year commencing from September
1, 2018. The consultant shall be entitled to receive 10% of the gross revenues generated as a direct result of their activities,
a monthly fee of $1,000 and 12,500 shares of common stock of the Company on a quarterly basis. The agreement was rescinded in January
2019. The accompanying financials include a $5,000 expense for the 12,500 shares earned and issued to the consultant before the
rescission of agreement.
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 10 – Related Party Transactions
The Company’s Chief Executive
Officer, from time to time, provided advances to the Company for working capital purposes. At February 28, 2019 and May 31, 2018,
the Company had a payable to the officer of $3,210 and $210, respectively. These advances were short-term in nature and non-interest
bearing.
During the nine months period ended February
28, 2019, the Company paid $280 to an affiliated company for advisory services rendered. The affiliated company is managed by the
Company’s Chief Executive Officer.
Note 11 – Concentrations
Cash concentration
As of February 28, 2019, the Company
held cash of approximately $129,200 in excess of federally insured limits.
Concentration
of Revenue, Customers, Product Line, and Suppliers
During the nine months period ended
February 28, 2019, sales to two customers represented approximately 51% of the Company’s net sales at 38% and 13%. During
the three months period ended February 28, 2019, one customer represented approximately 50% of the Company’s net sales. During
the nine months ended February 28, 2018 sales to three customers represented approximately 54% of the Company’s net sales
at 21%, 19% and 14%. During the three months ended February 28, 2018, sales to three customers
represented approximately 71% of net sales at 44%, 14% and 13%.
During the nine months period ended
February 28, 2019 sales to customers outside the United States represented approximately 30% which consisted of 20% from Canada,
5% from Italy, 3% from Hong Kong and 2% from United Kingdom. During the three months period ended February 28, 2019 sales to customers
outside the United States represented approximately 26% which consisted of 22% from Canada and 4% from United Kingdom. .During
the nine months ended February 28, 2018 sales to customers outside the United States represented approximately 36% which consisted
of 27% from Canada and 9% from Italy. During the three months period ended February 28,
2018 sales to customers outside of the United States represented approximately 25% which consisted of sales of 21% from Canada
and 3% from Italy, and 1% from China.
During the nine months period ended February
28, 2019, sales by product line comprised of the following:
Prep cleanser and shampoo
|
|
|
16
|
%
|
Moisturizer and conditioner
|
|
|
11
|
%
|
Treatment spray
|
|
|
5
|
%
|
Cellular complex
|
|
|
5
|
%
|
Hair masque
|
|
|
5
|
%
|
Thickening spray
|
|
|
4
|
%
|
Introductory kit
|
|
|
20
|
%
|
Fragrance shampoo and conditioner
|
|
|
29
|
%
|
Thermal protect
|
|
|
3
|
%
|
Thickening spray
|
|
|
2
|
%
|
Total
|
|
|
100
|
%
|
REVIV3 PROCARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
FEBRUARY 28, 2019 AND 2018
(UNAUDITED)
Note 11 – Concentrations (continued)
During the nine months period ended
February 28, 2019, sales by product line which each represented over 10% of sales consisted of approximately 20% from sale of introductory
kit (shampoo, conditioner and treatment spray), 16% from prep shampoo and conditioner, 11% from sale of moisturizer and conditioner
and 29% from fragrance shampoo and conditioner. During the three months period ended February 28, 2019, sales by product line which
each represented over 10% of sales consisted of approximately 15% from sale of introductory kit (shampoo, conditioner and treatment
spray), 21% from fragrance shampoo and 21% from fragrance conditioner. During the nine months period ended February 28, 2018, sales
by product line which each represented over 10% of sales consisted of approximately 29% from sales of hair shampoo, 24% from sales
of hair shampoo and conditioner, 21% from sale of hair treatment spray and repair products and 24% from sale of introductory kit
(shampoo, conditioner and treatment spray). During the three months period ended February 28, 2018, sales by product line which each
represented over 10% of sales consisted of approximately 35% from sales of hair shampoo, 31% from sales of hair conditioner, and
17% from sale of introductory kit.
As of February 28, 2019, accounts receivable
from four customers represented approximately 93% at 24%, 31%, 23% and 15% and at May 31, 2018, accounts receivable from three
customers represented approximately 60% at 34%, 14% and 12% of the accounts receivable, respectively.
The Company purchased inventories and
products from three vendors totaling approximately $308,761 (76% of the purchases at 10%, 28% and 38%) and three vendors totaling
approximately $283,000 (82% of the purchases at 18%, 14% and 50%) during the nine months periods ended February 28, 2019 and
2018, respectively. The Company purchased inventories and products from two vendors totaling approximately $210,805 (92% of the
purchases at 24% and 68%) during the three months periods ended February 28, 2019. The Company purchased inventories and products
from seven vendors totaling approximately $271,877 during the three months periods ended February 28, 2018.