NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
1.
|
Organization
and nature of operations
|
Globe
Net Wireless Corp. (“the Company”) was incorporated in the State of Nevada, USA on September 4, 2009. The Company
is in its early development stage since its formation and has realized limited revenues from its planned operations. The Company
is engaged in the development of a telecommunication business to provide internet and related services to both consumers and businesses
currently in under serviced or unserviced areas at real broadband speeds through the proprietary wireless technology it acquired.
The Company is also engaged in the development of the TextPro Connect app and the BizPro app. These are utility services apps
specifically designed for the mobile business market.
The
Company has chosen an August 31 year-end.
2.
|
Basis
of Presentation - Going Concern Uncertainties
|
These
financial statements have been prepared in conformity with generally accepted accounting principles in the United States, which
contemplate continuation of the Company as a going concern. However, the Company has limited operations and has sustained operating
losses resulting in a deficit.
The
Company has accumulated a deficit of $294,304 since inception September 4, 2009, has yet to achieve profitable operations and
further losses are anticipated in the development of its business. The Company’s ability to continue as a going concern
is in substantial doubt and is dependent upon obtaining additional financing and/or achieving a sustainable profitable level of
operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The
Company may seek additional equity as necessary and it expects to raise funds through private or public equity investment in order
to support existing operations and expand the range of its business. There is no assurance that such additional funds will be
available for the Company on acceptable terms, if at all.
3.
|
Summary
of significant accounting policies
|
Basis
of presentation
The
accompanying financial statements are stated in US dollars and have been prepared in accordance with generally accepted accounting
principles in the United States of America.
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 of the financial statements and the reported amounts of revenue and expenses during the reporting period. Management
makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when
the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate,
which is typically in the period when new information becomes available to management. Actual results could differ from those
estimates.
GNTW - Form 10-K - 2019
|
Page F-6
|
GLOBE
NET WIRELESS CORP.
NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
Concentration
of credit risk
The
Company places its cash with a high credit quality financial institution. The Company minimizes its credit risks associated with
cash by periodically evaluating the credit quality of its primary financial institution.
Income
Taxes
The
Company follows the guideline under ASC Topic 740 “Income Taxes” which requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax
returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Since the Company is in
the developmental stage and has losses, no deferred tax asset or income taxes have been recorded in the financial statements.
Comprehensive
income
The
Company has adopted ASC 220 “Comprehensive Income”, which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders’
Equity. Comprehensive income comprises equity except that resulting from investments by owners and distributions to owners.
For
the period ended August 31, 2019, there are no reconciling items between the net loss presented in the statements of operations
and comprehensive loss as defined by ASC 220.
Foreign
currency translations
The
Company is located and operating outside of the United States of America. The functional currency of the Company is the U.S. Dollar.
At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange
rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in
effect at that date. The resulting foreign exchange gains and losses are included in operations.
Financial
instruments
The
Company’s financial instruments consist of cash, accounts payable, accrued liabilities, notes payable and convertible notes
payable. All notes are payable on demand. The carrying values of these instruments approximate fair value because of their short-term
nature. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these
financial instruments.
GNTW - Form 10-K - 2019
|
Page F-7
|
GLOBE
NET WIRELESS CORP.
NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
Loss
per share
The
Company reports basic loss per share in accordance with ASC Topic 260 “Earnings Per Share” (“EPS”). Basic
loss per share is based on the weighted average number of common shares outstanding and diluted EPS is based on the weighted average
number of common shares outstanding and dilutive common stock equivalents. Basic EPS is computed by dividing net loss (numerator)
applicable to common stockholders by the weighted average number of common shares outstanding (denominator) for the period. There
are no potentially dilutive securities outstanding and therefore, diluted earnings per share on not presented. All per share and
per share information are adjusted retroactively to reflect stock splits and changes in par value.
Fair
value measurements
The
Company follows the guidelines in ASC Topic 820 “Fair Value Measurements and Disclosures”. Fair value is defined as
the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required
to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact
and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such
as inherent risk, transfer restrictions and credit risk.
The
Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels
and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair
value measurement:
Level
1 — Quoted prices in active markets for identical assets or liabilities.
Level
2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for
identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities
Level
3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including
option pricing models and discounted cash flow models.
ASC
Topic 820, in and of itself, does not require any fair value measurements. As at August 31, 2019, the Company did not have assets
or liabilities subject to fair value measurement.
Intangible
assets
Intangible
assets are non-monetary identifiable assets, controlled by the Company that will produce future economic benefits, based on reasonable
and supportable assumptions about conditions that will exist over the life of the asset. An intangible asset that does not meet
these attributes will be recognized as an expense when it is incurred. Intangible assets that do, are capitalized and initially
measured at cost. Those with a determinable life will be amortized on a systematic basis over their future economic life. Those
with a indefinite useful life shall not be amortized until its useful life is determined to be longer indefinite. An intangible
asset subject to amortization shall be periodically reviewed for impairment. A recoverability test will be performed and, if
applicable, unscheduled amortization is considered.
Amortization
is based on estimated useful life on a straight-line basis and will start when the software is ready for use.
GNTW - Form 10-K - 2019
|
Page F-8
|
GLOBE
NET WIRELESS CORP.
NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
Convertible
debt
The
Company accounts for convertible debt according to ASC 470, “Debt with Conversion and Other Options”. No portion of
the proceeds is attributable to the conversion feature when there is no beneficial conversion feature (“BCF”), There
is no BCF when the debt instrument is convertible into common stock at a specified price at the option of the holder and when
the debt instrument is issued at a price not significantly in excess of the face amount. If there is no BCF, the conversion
feature is determined by the intrinsic value of that feature and recording it as an addition to paid in capital. The difference
between the proceeds and the conversion feature is then recorded as a liability and is accreted using the effective interest rate.
Recently
issued accounting pronouncements
The
Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued,
which may be in advance of their effective date. There are no pronouncements adopted that has a material effect of the accompanying
financial statements, nor does management believe that any pronouncement not yet effective but recently issued would, if adopted,
have a material effect on the accompanying financial statements.
Intangible
assets represent costs paid to third parties for the development of utility software applications (“apps”). The assets
are amortized over 3 years on a straight-line basis.
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
Item
|
|
Cost
|
|
|
Amortization
|
|
|
Net
|
|
|
Costs
|
|
|
Amortization
|
|
|
Net
|
|
Text Pro App
|
|
$
|
8,333
|
|
|
$
|
7,638
|
|
|
$
|
694
|
|
|
$
|
8,333
|
|
|
$
|
4,861
|
|
|
$
|
3,472
|
|
Biz Pro App
|
|
|
1,913
|
|
|
|
1,701
|
|
|
|
213
|
|
|
|
1,913
|
|
|
|
1,063
|
|
|
|
850
|
|
Total
|
|
$
|
10,246
|
|
|
$
|
9,339
|
|
|
$
|
907
|
|
|
$
|
10,246
|
|
|
$
|
5,924
|
|
|
$
|
4,322
|
|
There
are four notes payable that are unsecured, bear interest at 8% per annum and are due on demand. Interest has not been paid and
is classified with accrued liabilities for financial statement purposes. The principal and interest owing as of August 31, 2019:
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
Date of Issue
|
|
Principal
|
|
|
Interest
|
|
|
Principal
|
|
|
Interest
|
|
September 16, 2011
|
|
$
|
5,000
|
|
|
$
|
3,185
|
|
|
$
|
5,000
|
|
|
$
|
2,785
|
|
October 4, 2011
|
|
|
5,000
|
|
|
|
3,165
|
|
|
|
5,000
|
|
|
|
2,765
|
|
November 4, 2011
|
|
|
10,000
|
|
|
|
6,262
|
|
|
|
5,000
|
|
|
|
5,462
|
|
December 3, 2012
|
|
|
10,000
|
|
|
|
5,396
|
|
|
|
10,000
|
|
|
|
4,596
|
|
|
|
$
|
30,000
|
|
|
$
|
18,008
|
|
|
$
|
30,000
|
|
|
$
|
15,608
|
|
GNTW - Form 10-K - 2019
|
Page F-9
|
GLOBE
NET WIRELESS CORP.
NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
6.
|
Convertible
Note Payable
|
Five
convertible notes payable are unsecured, bearing interest at 8% per annum, due on demand, and convertible into shares at the lenders’
option at a conversion price of $0.005 per share. Interest has not been paid and is classified with accrued liabilities for financial
statement purposes.
There
was no value assigned to the conversion feature of these notes as the shares that would have been issued on conversion would not
have been readily convertible into cash. The principal and interest owing as at August 31, 2019 is as follows:
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
Date of Issue
|
|
Principal
|
|
|
Interest
|
|
|
Principal
|
|
|
Interest
|
|
May 17, 2013
|
|
$
|
10,000
|
|
|
$
|
5,034
|
|
|
$
|
10,000
|
|
|
$
|
4,234
|
|
September 11, 2015
|
|
|
10,000
|
|
|
|
3,178
|
|
|
|
10,000
|
|
|
|
2,378
|
|
November 12, 2015
|
|
|
5,000
|
|
|
|
1,521
|
|
|
|
5,000
|
|
|
|
1,121
|
|
November 13, 2015
|
|
|
5,000
|
|
|
|
1,520
|
|
|
|
5,000
|
|
|
|
1,120
|
|
April 11, 2016
|
|
|
500
|
|
|
|
136
|
|
|
|
500
|
|
|
|
96
|
|
|
|
$
|
30,500
|
|
|
$
|
11,389
|
|
|
$
|
30,500
|
|
|
$
|
8,949
|
|
Two
convertible notes payable bear interest at 8% per annum, are due on demand, and convertible at a conversion price of $0.5625 per
share at the lender’s option. The interest is classified as accrued liabilities for financial statement purposes.
One
note for $20,000 was issued for which no value was assigned to the conversion feature as the shares that would have been issued
on conversion would not have been readily convertible into cash.
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
Date of Issue
|
|
Principal
|
|
|
Interest
|
|
|
Principal
|
|
|
Interest
|
|
July 11, 2016
|
|
$
|
20,000
|
|
|
$
|
5,024
|
|
|
$
|
20,000
|
|
|
$
|
3,424
|
|
The
other note for $20,000 was issued on October 31, 2016, when the market price per share was $1.48. The conversion feature was valued
at $20,000. $1,600 was accreted and charged to interest during the twelve months ended August 31, 2019 ($1,600 for the year ended
August 31, 2018). At August 31, 2019, the unamortized discount was $15,467 (August 31, 2018 - $17,067).
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
|
|
Principal
|
|
|
Interest
|
|
|
Principal
|
|
|
Interest
|
|
Proceeds on issue
|
|
$
|
20,000
|
|
|
|
-
|
|
|
$
|
20,000
|
|
|
|
-
|
|
Value assigned to conversion feature
|
|
|
20,000
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
Value of convertible note payable at issuance
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Accretion charges
|
|
$
|
4,533
|
|
|
|
-
|
|
|
$
|
2,933
|
|
|
|
-
|
|
Interest
|
|
|
-
|
|
|
$
|
4,533
|
|
|
|
-
|
|
|
$
|
2,933
|
|
Balance, convertible note payable, end of period
|
|
$
|
4,533
|
|
|
$
|
4,533
|
|
|
$
|
2,933
|
|
|
$
|
2,933
|
|
GNTW - Form 10-K - 2019
|
Page F-10
|
GLOBE
NET WIRELESS CORP.
NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
One
convertible note payable bears interest at 10% per annum, is due on demand and convertible at a conversion price of $0.10 per
share at the lender’s option. The interest is classified as accrued liabilities for financial statement purposes.
There
was no beneficial conversion feature at the time of issuance and, accordingly, no value has been assigned to the conversion feature.
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
Date of Issue
|
|
Principal
|
|
|
Interest
|
|
|
Principal
|
|
|
Interest
|
|
April 17, 2017
|
|
$
|
20,000
|
|
|
$
|
4,745
|
|
|
$
|
20,000
|
|
|
$
|
2,745
|
|
One
convertible note payable bear interest at 8% per annum, is due on demand and convertible at a conversion price of $0.02 per share
at the lender’s option. There was no beneficial conversion feature at the time of issuance and, accordingly, no value has
been assigned to the conversion feature.
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
Date of Issue
|
|
Principal
|
|
|
Interest
|
|
|
Principal
|
|
|
Interest
|
|
April 04, 2018
|
|
$
|
25,000
|
|
|
$
|
2,813
|
|
|
$
|
25,000
|
|
|
$
|
813
|
|
One
convertible note payable bear interest at 8% per annum, is due on demand and convertible at a conversion price of $0.035 per share
at the lender’s option. There was no beneficial conversion feature at the time of issuance and, accordingly, no value has
been assigned to the conversion feature.
|
|
Aug 31, 2019
|
|
Date of Issue
|
|
Principal
|
|
|
Interest
|
|
July 29, 2019
|
|
$
|
3,500
|
|
|
$
|
37
|
|
A
summary of the value assigned to the convertible debt and accrued interest thereon is as follows:
Conversion price of
|
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
notes into shares
|
|
|
Convertible debt
|
|
|
Interest
|
|
|
Convertible debt
|
|
|
Interest
|
|
$
|
0.005
|
|
|
$
|
30,500
|
|
|
$
|
11,389
|
|
|
$
|
30,500
|
|
|
$
|
8,949
|
|
$
|
0.5625
|
|
|
|
24,533
|
|
|
|
9,556
|
|
|
|
22,933
|
|
|
|
6,357
|
|
$
|
0.10
|
|
|
|
20,000
|
|
|
|
4,745
|
|
|
|
20,000
|
|
|
|
2,745
|
|
$
|
0.02
|
|
|
|
25,000
|
|
|
|
2,813
|
|
|
|
25,000
|
|
|
|
813
|
|
$
|
0.035
|
|
|
|
3,500
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
103,533
|
|
|
$
|
28,540
|
|
|
$
|
98,833
|
|
|
$
|
18,864
|
|
On
September 14, 2009, the Company issued 2,000,000 shares of common stock at $0.001 per share for cash proceeds of $2,000.
On
January 26, 2010, the Company issued 7,200,000 shares of common stock at $.002 per share for cash proceeds of $15,000.
GNTW - Form 10-K - 2019
|
Page F-11
|
GLOBE
NET WIRELESS CORP.
NOTES
TO THE FINANCIAL STATEMENTS
August
31, 2019
On
September 7, 2013, the Company issued 700,000 shares of common stock at $.05 per share for cash proceeds of $35,000.
On
November 8, 2013, the Company issued 600,000 shares of common stock at $.05 per share for cash proceeds of $30,000.
There
were no warrants or stock options outstanding as of August 31, 2019 or August 31, 2018.
Income
tax recovery differs from that which would be expected from applying the effective tax rates to the net loss as follows:
|
|
For the year Ended
|
|
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(33,827
|
)
|
|
$
|
(37,269
|
)
|
Statutory and effective tax rate
|
|
|
21
|
%
|
|
|
25.7
|
%
|
|
|
|
|
|
|
|
|
|
Income tax expense (recovery) at the effective rate
|
|
$
|
(7,100
|
)
|
|
$
|
(9,600
|
)
|
Change in statutory rates and other
|
|
|
12,300
|
|
|
|
32,800
|
|
Permanent differences
|
|
|
300
|
|
|
|
400
|
|
Change in unrecognized deductible temporary differences
|
|
|
(5,500
|
)
|
|
|
(23,600
|
)
|
|
|
|
|
|
|
|
|
|
Income tax recovery
|
|
$
|
-
|
|
|
$
|
-
|
|
As
at August 31, 2018, the tax effect of the temporary timing differences that give rise to significant components of deferred income
tax asset are noted below. A valuation allowance has been recorded as management believes it is more likely than not that the
deferred income tax asset will not be realized.
Tax attributes:
|
|
August 31, 2019
|
|
|
August 31, 2018
|
|
|
|
|
|
|
|
|
Deferred income tax assets
|
|
$
|
61,500
|
|
|
$
|
67,000
|
|
Valuation allowance
|
|
|
(61,500
|
)
|
|
|
(67,000
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company has accumulated non-capital income tax losses of $292,971. Under normal circumstances $260,744 of the losses will expire
in the years 2032 to 2038. The balance of $32,227 has no expiry date.
The
US Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017 and reduced
the US federal corporate tax rate from 35% to 21% effective January 1, 2018.
Subsequent
to August 31, 2019, the Company entered into a $25,000 promissory note whereby the Principal, in whole or portion thereof, may
be convertible to capital stock of the Company at $0.024 for each one share of the Company’s common stock. The note is due
on demand and bears an interest rate of 8% per annum.
GNTW - Form 10-K - 2019
|
Page F-12
|