KGNR Kange Corporation (PK)

NOTES TO FINANCIAL STATEMENTS

NOVEMBER 30, 2018 and 2017

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Organization

Kange Corp. (“Kange,” the “Company,” “we,” “us,” or “our”) was incorporated under the laws of the State of Nevada on August 16, 2013. We are a start-up company developing mobile software products for Apple and Android platforms, starting in Estonia and Europe, which is our initial intended market. Apple is a trademark of Apple Inc., and Android is a trademark of Alphabet Inc. During 2017, we began focusing on the intersection of technology and wholistic technology-based health treatments. We retained an advisor having substantial experience in the technology sector, and two former professional athletes to advise us regarding sports health issues and treatments. We intend to provide services to formulate a treatment model to meet the needs of professional athletes that suffer from PTSD and the early onset of dementia and Alzheimer’s. The Company is currently evaluating operations in the wholistic health industry.

Basis of Presentation

The accompanying financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and short-term loans the carrying amounts approximate fair value due to their short maturities.

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

The Company’s financial instruments, including cash, prepaid expenses, accounts payable, accrued expenses, and due to related parties are carried at historical cost. At November 30, 2018 and 2017, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. The Company values marketable securities as level 1 and are measured at fair value (see Note 3).

Investments in Equity

We measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with the change in fair value included in net income. We use quoted market prices to determine the fair value of equity securities with readily determinable fair values. For equity securities without readily determinable fair values, we have elected the measurement alternative under which we measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Management assesses each of these investments on an individual basis.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company used cash in operating activities of $7,103 for the year ended November 30, 2018. The Company had an accumulated deficit of $1,320,254 at November 30, 2018. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from related parties to sustain its current level of operations. The Company is in the process of securing working capital from investors for common stock, convertible notes payable, and/or strategic partnerships. No assurance can be given that the Company will be successful in these efforts.

The financial statements do not include any adjustments relating 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 financial statements in conformity with accounting principles generally accepted in the United States of America 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. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

Net Earnings (Loss) Per Share

In accordance with ASC 260-10, “Earnings per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period, which are excluded from the computation if anti-dilutive. There are no dilutive or potentially dilutive securities outstanding during the periods presented.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of November 30, 2018 and 2017, the Company has not established a liability for uncertain tax positions.

Recent Accounting Pronouncements

The Company reviews new accounting pronouncements as issued. Except as disclosed in Note 3, no new pronouncements had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to November 30, 2018 through the date these financial statements were issued.

NOTE 2 – PREPAID EXPENSES

During the year ended November 30, 2017, the Company issued a total of 155,000 shares of common stock to five separate consultants pursuant to advisory board agreements. Three advisory board agreements were made effective on May 25, 2017 with terms of 15,000 shares each to be issued for one year of services to be rendered. Two advisory board agreements were made effective on October 1, 2017 with terms of 30,000 shares each to be issued for one year of services. The Company valued the advisory agreement shares based on the closing stock price of the Company on the date of the executed agreement (the grant date), which resulted in a total combined value of $124,000 initially recorded as prepaid expense to be amortized ratably over the contract term.

During the years ended November 30, 2018 and 2017, the Company recorded consulting expense in the amounts of $66,312 and $57,688, respectively, resulting in the remaining balance of prepaid expense, the uncompleted portion of the contract, of $0 and $66,312 at November 30, 2018 and 2017, respectively.

NOTE 3 – MARKETABLE SECURITIES

We adopted ASU 2016-01 on December 1, 2017, which requires us to measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in earnings. We use quoted market prices to determine the fair value of equity securities with readily determinable fair values.

On November 1, 2017, the Company executed a stock purchase agreement (the “SPA”) with AMJ Global Entertainment, LLC, a related party and holder of 4,803,195 shares of common stock in Patient Access Solutions Inc., a Nevada corporation with ticker symbol “PASO”. Pursuant to the SPA, the Company issued 157,142 shares of common stock in exchange for 1,157,142 shares of Patient Access Solutions Inc. On November 1, 2017, the Company recorded the shares of Patient Access Solutions Inc. at $81,000. As of November 30, 2018, based quoted market prices, the Company recognized an unrealized loss of $74,751.

The carrying values and unrealized loss of our equity securities were included in the following line items in our balance sheets and statements of operations:

NOTE 4 – RELATED PARTY TRANSACTIONS

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are non-interest bearing, considered temporary in nature, and have not been formalized by a promissory note.

On November 1, 2017, the Company entered into a one-year office lease agreement with AMJ Global Entertainment LLC, a related party controlled by the Company’s CEO and director, ending November 2, 2018. The location of the leased office space is 11724 Ventura Blvd Suite B, Studio City, California 91604. The lease states monthly rent due of $1,000. During the year ended November 30, 2018, the Company accrued $11,000 due to related party. As of November 30, 2018 and 2017, the Company has accrued lease expense due to related party of $8,000 and $1,000, respectively.

At November 30, 2018 and 2017, the Company owed $5,776 and $26,901, respectively, to AMJ Global Entertainment LLC, a related party controlled by the Company’s CEO and director. The amount is unsecured, non-interest bearing and due on demand. During the year ended November 30, 2018 and 2017, the Company received proceeds of $7,026 and $16,651, respectively, from the related party. On March 5, 2018, the Company settled the loans totaling $28,151 plus $4,000 of accrued related party lease expense by the issuance of 387,623 shares of common stock valued at $484,529. As a result, the Company recorded a loss on settlement of debt of $452,378.

NOTE 5 – COMMON STOCK

Common Stock

The Company has authorized common shares of 750,000,000, par value $0.001 per share. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.

In the year ended November 30, 2017, the Company issued 3,283,700 shares to a related party for the conversion of $54,252 of principal convertible debt and $11,423 of accrued interest.

During the year ended November 30, 2017, the Company issued a total of 155,000 shares of common stock to five separate consultants pursuant to advisory board agreements.

On November 1, 2017, the Company executed a stock purchase agreement (the “SPA”) with AMJ Global Entertainment, LLC, another related party company controlled by our CEO and director, Dr. Arthur Malone, Jr., to purchase 1,157,142 shares of Patient Access Solutions Inc., a Nevada corporation with ticker symbol “PASO” (“PASO”), in consideration of the issuance of 157,142 shares of our common stock. On January 13, 2020, the transaction was rescinded, and on July 19, 2021 the Company returned 1,157,142 shares of Patient Access Solutions Inc. back to AMJ Global Entertainment, LLC in exchange for 157,142 shares of the Company.

On March 5, 2018, the Company issued 387,623 shares of common stock valued at $484,529 to settle debt of $32,151 owed to a related party (Note 4).

There were 14,553,465 and 14,165,842 shares of common stock issued and outstanding as of November 30, 2018 and 2017, respectively.

The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.

The tax effect of significant components of the Company’s deferred tax assets and liabilities at November 30, 2018 and 2017, respectively, are as follows:

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Because of the historical earnings history of the Company, the net deferred tax asset for 2018 was fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $156,734 and $28,215 as of November 30, 2018 and 2017, respectively.