CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
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 three and six months ended November 30, 2021, and 2020 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 November 30, 2021, and 2020, 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 Companys annual
report on Form 10-K for the year ended May 31, 2021. The results of operations for the three and six months ended November 30, 2021 are
not necessarily indicative of the results to be expected for the full year.
Risk
and Uncertainty Concerning COVID-19 Pandemic
In
March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread
throughout the United States and the World. We are currently monitoring the outbreak of COVID-19 and the related business and travel
restrictions and changes to behavior intended to reduce its spread. All of our Chinese facilities were temporarily closed for a period
of time. Most of these facilities have been reopened since July 2020. Depending on the progression of the outbreak, our ability to obtain
necessary supplies and ship finished products to customers may be partly or completely disrupted globally. Also, our ability to maintain
appropriate labor levels could be disrupted. If the coronavirus continues to progress, it could have a material negative impact on our
results of operations and cash flow, in addition to the impact on its employees. We have concluded that while it is reasonably possible
that the virus could have a negative impact on the results of operations, the specific impact is not readily determinable as of the date
of these financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome
of this uncertainty. Management is focused on growing the Companys existing products offering, as well as its customer base, to
increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus
maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization
at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot
assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes
that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the accompanying
financial statements.
Going
Concern
As
reflected in the accompanying financial statements, the Company had an accumulated deficit of $5,096,502 at November 30, 2021. This raises
substantial doubt about the Companys 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 Companys ability to implement its business
plan, raise capital, and generate sufficient revenue; however, the Companys 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.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Note
2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
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 and
classifications, the useful life of property and equipment, the valuation of deferred tax assets, the value of stock-based compensation,
valuation of lease liabilities and related right of use assets and the fair value of non-cash common stock issuances.
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 $15,085 and $2,430 at November 30, 2021, and May 31, 2021, respectively, consist primarily of cash
prepayments to vendors which will be utilized within a year.
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.
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.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Note
2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Revenue
recognition
The
Company follows Accounting Standards Codification (ASC) 606, Revenue From Contracts With Customers. This revenue
recognition standard 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
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 Companys products is typically recorded as a reduction in revenues.
See Note 12 for revenue disaggregation disclosures.
Cost
of Sales
The
primary components of cost of sales include the cost of the product and shipping fees.
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 $50,895 and $41,195 for the three months ended November 30, 2021 and 2020,
respectively. Shipping costs included in marketing and selling expense were $122,572 and $53,816 for the six months ended November 30,
2021 and 2020, respectively.
Marketing,
selling and advertising
Marketing,
selling and advertising costs are expensed as incurred.
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 Companys 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 entitys own assumptions.
|
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Note
2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
The
Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Boards
(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.
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 assets
estimated fair value and its book value. The Company did not record any impairment loss during the six months ended November 30, 2021
and 2020.
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 non-employee
services received in exchange for an award of equity instruments over the period the employee or non-employee 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,
non-employee and director services received in exchange for an award based on the grant-date fair value of the award.
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 November 30, 2021 and 2020, the Company had no potentially dilutive securities outstanding related to common stock.
Lease
Accounting
In
February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which requires lessees to report on their
balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under
the prior guidance (ASC Topic 840). Under the new guidance, codified as ASC Topic 842, the lease liability must be measured initially
based on the present value of future lease payments, subject to certain conditions. The right-of-use asset must be measured initially
based on the amount of the liability, plus certain initial direct costs. The new guidance further requires that leases be classified
at inception as either (a) operating leases or (b) finance leases. For operating leases, periodic expense generally is flat (straight-line)
throughout the life of the lease. For finance leases, periodic expense declines over the life of the lease. The new standard, as amended,
provides an option for entities to use the cumulative-effect transition method. As permitted, the Company adopted ASC Topic 842 effective
June 1, 2019. The adoption of ASC Topic 842 did not have a material impact on the Companys financial statements.
The
Company renewed lease for its corporate headquarters commencing December 1, 2019, under lease agreements classified as an operating lease.
Please see Note 10 – Leases below for more information about the Companys leases.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Note
2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)
Recently
Issued Accounting Pronouncements
In
August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entitys Own Equity (ASU 2020-06), which simplifies the accounting for certain convertible
instruments. Among other things, under ASU 2020-06, the embedded conversion features no longer must be separated from the host contract
for convertible instruments with conversion features not required to be accounted for as derivatives, or that do not result in substantial
premiums accounted for as paid-in capital. ASU 2020-06 also eliminates the use of the treasury stock method when calculating the impact
of convertible instruments on diluted Earnings per Share. For the Company, the provisions of ASU 2020-06 are effective for its fiscal
year beginning on June 1, 2024. Early adoption is permitted, subject to certain limitations. The Company is evaluating the potential
impact of adoption on its financial statements.
In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (ASU
2019-12). ASU 2019-12, among other things, (a) eliminates the exception to the incremental approach for intra-period tax allocation
when there is a loss from continuing operations and income (or a gain) from other items, (b) eliminates the exception to the general
methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss for the year, (c)
requires than an entity recognize a franchise tax (or a similar tax) that is partially based on income as an income-based tax and account
for any incremental amount incurred as a non-income-based tax, and (d) requires than an entity reflect the effect of an enacted change
in tax laws or rates in the annual effective tax rate computation for the interim period that includes the enactment date. For public
companies, these amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,
2020. The Company adopted ASU 2019-12 effective June 1, 2021 and based on its preliminary evaluation it does not believe adoption had
a material impact on its unaudited 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, net
Accounts
receivable, consisted of the following:
Schedule of accounts receivable
|
|
November 30, 2021
|
|
|
May 31, 2021
|
|
Accounts Receivable
|
|
$
|
91,049
|
|
|
$
|
93,756
|
|
Less: Allowance for doubtful debts
|
|
|
(5,195
|
)
|
|
|
(2,879
|
)
|
Accounts receivable, net
|
|
$
|
85,854
|
|
|
$
|
90,877
|
|
The
Company recorded bad debt expense of $2,316 and $574 during the six months ended November 30, 2021 and 2020, respectively. The Company
recorded bad debt expense of $0 during the three months ended November 30, 2021 and 2020, respectively.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Note
4 – Inventory
Inventory
consisted of the following:
At
November 30, 2021 and May 31, 2021, inventory held at third party locations amounted to $14,730 and $23,401, respectively. At November
30, 2021 and May 31, 2021, inventory in- transit amounted to $3,450 and $0, respectively.
Schedule
of Inventory
|
|
November 30, 2021
|
|
|
May 31, 2021
|
|
Finished Goods
|
|
$
|
20,535
|
|
|
$
|
15,056
|
|
Raw Materials
|
|
$
|
321,086
|
|
|
$
|
475,796
|
|
Inventory, Net
|
|
$
|
341,621
|
|
|
$
|
490,852
|
|
Less: Inventory, non-current
|
|
$
|
(39,130
|
)
|
|
$
|
(39,874
|
)
|
Current Inventory
|
|
$
|
302,491
|
|
|
$
|
450,978
|
|
As
of November 30, 2021 and May 31, 2021, the Company had an allowance of $19,156 on slow moving inventory. The Company also reclassed some
slow-moving inventory, comprising of bottles and packaging, amounting to $39,130 and $39,874, as non-current inventory, as of November 30, 2021 and
May 31, 2021, respectively.
Note
5 – Property and Equipment
Property
and equipment, stated at cost, consisted of the following:
Schedule
of Property and Equipment
|
|
Estimated Life
|
|
November 30, 2021
|
|
|
May 31, 2021
|
|
Furniture and Fixtures
|
|
5 years
|
|
$
|
5,759
|
|
|
$
|
5,759
|
|
Computer Equipment
|
|
3 years
|
|
|
17,392
|
|
|
|
17,392
|
|
Plant Equipment
|
|
5-10 years
|
|
|
45,128
|
|
|
|
45,128
|
|
Less: Accumulated Depreciation
|
|
|
|
|
(35,738
|
)
|
|
|
(31,263
|
)
|
Property and equipment, net
|
|
|
|
$
|
32,541
|
|
|
$
|
37,016
|
|
Depreciation
expense amounted to $2,128 and $2,712 for the three months ended November 30, 2021 and 2020, respectively. Depreciation expense
amounted to $4,475 and $5,276 for the six months ended November 30, 2021 and 2020, respectively.
Note
6 – Accounts Payable and Accrued Expenses
Accounts
payable and accrued expenses comprised of the following:
Schedule of Accounts Payable and Accrued Expenses
|
|
November 30, 2021
|
|
|
May 31, 2021
|
|
Trade Payables
|
|
$
|
376,725
|
|
|
$
|
436,138
|
|
Credit Cards
|
|
|
8,596
|
|
|
|
11,115
|
|
Accrued Interest and Other
|
|
|
12,895
|
|
|
|
11,709
|
|
Accounts Payable and Accrued Expenses, net
|
|
$
|
398,216
|
|
|
$
|
458,962
|
|
Note
7 – Equipment Payable
During
the year ended May 31, 2019, the Company purchased a forklift under an installment purchase plan. The loan amount is $16,500 payable
in 60 monthly instalment payments of $317 comprising of principal payment of $275 and interest payment of $42. As at November 30, 2021
and May 31, 2021, the balance outstanding on the loan was $7,150 and $8,800, respectively, of which $3,300 is payable within one year
and the balance is payable after one year. The Company recorded an interest expense of $125 and $125, during the three months ended November
30, 2021 and 2020, on the loan in the accompanying financial statements. The Company recorded an interest expense of $250 and $250, during
the six months ended November 30, 2021 and 2020, on the loan in the accompanying financial statements.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
The
amounts of loan payments due in the next three years ended November 30, are as follows:
Schedule of Loan Payment Due
|
|
Total
|
|
|
|
|
|
2022
|
|
$
|
3,300
|
|
2023
|
|
$
|
3,300
|
|
2024
|
|
$
|
550
|
|
Equipment Payable, Net
|
|
$
|
7,150
|
|
Note
8 – Loan Payable
During
the year ended May 31, 2020, a commercial bank granted to the Company a loan (the Loan) in the amount of $12,900, which
is administered under the authority and regulations of the U.S. Small Business Administration pursuant to the Paycheck Protection Program
(the PPP) of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). The Loan was evidenced
by a note dated May 8, 2020, bore interest at an annual rate of 1.0% and matured on May 8, 2022. The Note may be prepaid without
penalty, at the option of the Company, at any time prior to maturity. Proceeds from loans granted under the CARES Act are intended to
be used for payroll, costs to continue employee group health care benefits, rent, utilities, and certain other qualified costs (collectively,
qualifying expenses). The Company intends to use the loan proceeds for qualifying expenses. The Companys borrowings
under the Loan may be eligible for loan forgiveness if used for qualifying expenses incurred during the covered period,
as defined in the CARES Act, except that the amount of loan forgiveness is limited to the amount of qualifying expenses incurred during
the 8-week period commencing on the loan effective date. In addition, the amount of any loan forgiveness may be reduced if there is a
decrease in the average number of full-time equivalent employees of the Company during the covered period, compared to the comparable
period in the prior calendar year. The Companys indebtedness, after any such loan forgiveness, is payable in 18 equal monthly
installments commencing on November 8, 2020, with all amounts due and payable by the maturity. The Company did not pay any instalment
of the loan and recorded an accrued interest of $120 on the loan during the year ended May 31, 2021. On March 19, 2021 the loan was forgiven
by the US Small Business Administration and the Company recorded a gain on debt forgiveness of $13,020.
During
the year ended May 31, 2020, a commercial bank granted to the Company a loan (the Loan) in the amount of $150,000, which
is administered under the authority and regulations of the U.S. Small Business Administration pursuant to the Economic Injury Disaster
Loan Program (the EIDL) of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). The
Loan, which is evidenced by a note dated May 18, 2020, bears interest at an annual rate of 3.75% and is payable instalments
of $731 per month, beginning May 18, 2021 until May 13, 2050. The Company has to maintain a hazard insurance policy including fire, lightning,
and extended coverage on all items used to secure this loan to at least 80% of the insurable value. Proceeds from loans granted under
the CARES Act are intended to be used for payroll, costs to continue employee group health care benefits, rent, utilities, and certain
other qualified costs (collectively, qualifying expenses). The Company intends to use the loan proceeds for qualifying
expenses. The Companys borrowings under the loan are eligible for up to $10,000 of loan forgiveness. The Company received the
loan forgiveness for $10,000 during the six months ended November 30, 2021. During the six months ended November 30, 2021, the Company
received additional $10,000 under the program. The Company recorded an accrued interest of $8,818 and $5,923, as of November 30, 2021
and May 31, 2021, respectively. The Company has not paid any instalment of the loan as of November 30, 2021 and the loan is currently
in default.
On
February 7, 2021, a commercial bank granted to the Company a loan (the Loan) in the amount of $6,300, which is administered
under the authority and regulations of the U.S. Small Business Administration pursuant to the Second Draw Paycheck Protection Program
(the PPP) of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). The Loan, which
is evidenced by a note dated February 7, 2021, bears interest at an annual rate of 1.0% and matures on February 6, 2026. The
Note may be prepaid without penalty, at the option of the Company, at any time prior to maturity. Proceeds from loans granted under the
CARES Act are intended to be used for payroll, costs to continue employee group health care benefits, rent, utilities, and certain other
qualified costs (collectively, qualifying expenses). The Company intends to use the loan proceeds for qualifying expenses.
The Companys borrowings under the Loan may be eligible for loan forgiveness if used for qualifying expenses incurred during the
covered period, as defined in the CARES Act. The Companys indebtedness, after any such loan forgiveness, is payable
in 54 equal monthly installments commencing on September 7, 2021, with all amounts due and payable by the maturity. The Company recorded
an accrued interest of $47 and $0, as of November 30, 2021 and May 31, 2021, respectively. The Company has not paid any instalment of
the loan as of November 30, 2021 and the loan is currently in default.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
During
the six-month period ended November 30, 2021, the Company received $25,000 in grant awards pursuant to the California Small Business
Covid-19 Relief Grant Program. This grant was recorded as other income in the accompanying unaudited financial statements as no repayment is required to be made.
Schedule of Loan Payable
|
|
November 30, 2021
|
|
|
May 31, 2021
|
|
Second Draw Paycheck Protection Program (PPP- 2)
|
|
$
|
6,300
|
|
|
$
|
6,300
|
|
Economic Injury Disaster Loan Program (EIDL)
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Total
|
|
$
|
156,300
|
|
|
$
|
156,300
|
|
Less: Current portion
|
|
$
|
(156,300
|
)
|
|
$
|
(4,261
|
)
|
Non-current portion
|
|
$
|
—
|
|
|
$
|
152,039
|
|
The
amounts of loan payments due in the upcoming years ended November 30, are as follows:
Schedule of loan payments due in the next five years
|
|
Total
|
|
2022
|
|
$
|
6,504
|
|
2023
|
|
$
|
4,585
|
|
2024
|
|
$
|
4,720
|
|
2025
|
|
$
|
4,861
|
|
2026
|
|
$
|
3,923
|
|
Thereafter
|
|
$
|
131,707
|
|
Total
|
|
$
|
156,300
|
|
Note
9 – 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
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Common
Stock
As
of November 30, 2021, 41,945,881 shares of common stock were issued and outstanding.
No
shares were issued during the six months period ended November 30, 2021.
During
the six months period ended November 30, 2020, the Company issued 200,000 shares to a consultant for past services. The shares were valued
at the fair market value of the $16,000, which expense was recognized immediately.
Note
10 – Commitments and contingencies
Leases
As
discussed in Note 2 above, the Company adopted ASU No. 2016-02, Leases on June 1, 2019, which require lessees to report on their
balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under
the prior guidance. The Company has a lease agreement in connection with its office and warehouse facility in California under an operating
lease which expired in October 2019. On December 1, 2019, the Company signed an extension of the lease for 3 years. The rent will be
$7,567 per month for the first year and increase by a certain amount each year.
The
Company treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange
for consideration, or the Company directs the use of the asset and obtains substantially all the economic benefits of the asset. These
leases are recorded as right-of-use (ROU) assets and lease obligation liabilities for leases with terms greater than 12
months. ROU assets represent the Companys right to use an underlying asset for the entirety of the lease term. Lease liabilities
represent the Companys obligation to make payments over the life of the lease. A ROU asset and a lease liability are recognized
at commencement of the lease based on the present value of the lease payments over the life of the lease. Initial direct costs are included
as part of the ROU asset upon commencement of the lease. Since the interest rate implicit in a lease is generally not readily determinable
for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments. The incremental
borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease
term to obtain an asset of similar value.
The
Company reviews the impairment of ROU assets consistent with the approach applied for the Companys other long-lived assets. The
Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying
value of the asset may not be recoverable. The assessment of possible impairment is based on the Companys ability to recover the
carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.
Lease
expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Variable
payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result
in a remeasurement of lease liabilities. The Companys lease agreements do not contain any residual value guarantees or restrictive
covenants.
Pursuant
to the new standard, the Company recorded an initial lease liability of $235,748 and an initial right of use asset in the same amount.
During the three months ended November 30, 2021 and 2020, the Company recorded a lease expense in the amount of $23,559 and $23,559,
respectively. During the six months ended November 30, 2021 and 2020, the Company recorded a lease expense in the amount of $47,117 and
$47,117, respectively. As of November 30, 2021, the lease liability balance was $91,599 and the right of use asset balance was $88,172.
A lease term of three years and a discount rate of 12% was used.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Supplemental
balance sheet information related to leases was as follows:
Schedule of Supplemental balance sheet information
Assets
|
|
November 30, 2021
|
|
Right of use assets
|
|
$
|
235,748
|
|
Accumulated reduction
|
|
|
(147,576
|
)
|
Operating lease assets, net
|
|
$
|
88,172
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Lease liability
|
|
$
|
235,748
|
|
Accumulated reduction
|
|
|
(144,149
|
)
|
Total lease liability, net
|
|
|
91,599
|
|
Current portion
|
|
|
(91,599
|
)
|
Non-current portion
|
|
$
|
—
|
|
Maturities
of operating lease liabilities were as follows as of November 30, 2021:
Schedule of future minimum rental payments required under operating lease
Operating Lease
|
|
|
|
Year 1
|
|
$
|
97,662
|
|
Total
|
|
$
|
97,662
|
|
Less: Imputed interest
|
|
$
|
(6,063
|
)
|
Present value of lease liabilities
|
|
$
|
91,599
|
|
Contingencies
On
November 23, 2020, the Company was served a copy of a complaint filed by Jacksonfill, LLC in the Fourth Circuit Court for Duval County,
Florida. The complaint alleges breach of Agreement for non-payments for certain products against the Company. The allegations arise from
alleged discrepancies discovered by the Company in the manufacturing of certain product. The Company has retained counsel and intends
to vigorously defend the allegations. The product was delivered to the Company. However, the Company believes that the product was defective.
The amount of the claim of $204,182 has been recorded as accounts payable, in the accompanying financial statements as of November 30,
2021.
Note
11 – Related Party Transactions
The
Companys Chief Executive Officer, from time to time, provided advances to the Company for working capital purposes. At November
30, 2021 and May 31, 2021, the Company had a payable to the officer of $32,927 and $54,304, respectively as $21,377 was repaid during
the six months ended November 30, 2021. These advances are due on demand and non-interest bearing.
Note
12 – Concentrations
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist primarily of trade accounts receivable and cash
deposits, investments and cash equivalents instruments. The Company maintains its cash in bank deposits accounts. The Companys
account at this institution is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At November
30, 2021 and May 31, 2021, the Company held cash of approximately $213,766 and $224,395, respectively, in excess of federally insured
limits. The Company has not experienced any losses in such accounts through November 30, 2021.
REVIV3
PROCARE COMPANY
CONDENSED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOVEMBER
30, 2021
Concentration
of Revenue, Product Line, and Supplier
During
the three months ended November 30, 2021 sales to one customer, which represented over 10% of our total sales amounted to approximately
12% of the Companys net sales. During the six months ended November 30, 2021 sales to two customers, which each represented over
10% of our total sales, aggregated to approximately 34% of the Companys net sales at 13% and 21%. During the three months ended
November 30, 2020 sales to two customers, which each represented over 10% of our total sales, aggregated to approximately 50% of the
Companys net sales at 11%, and 39%. During the six months ended November 30, 2020 sales to two customers, which each represented
over 10% of our total sales, aggregated to approximately 51% of the Companys net sales at 12%, and 39%.
During
the three months ended November 31, 2021, sales to customers outside the United States represented approximately 27% which consisted
of sales of 20% from Canada and 7% from Italy. During the six months ended November 30, 2021, sales to customers outside the United States
represented approximately 16% which consisted of 13% from Canada and 3% from the EU. During the three months ended November 30, 2020,
sales to customers outside the United States represented approximately 14% which consisted of sales of 8% from Canada and 6% from the
EU. During the six months ended November 30, 2020, sales to customers outside the United States represented approximately 18% which consisted
of 14% from Canada and 4% from the EU.
During
the six months ended November 30, 2021, sales by product line which each represented over 10% of sales consisted of approximately 21%
from sale of fragrance shampoo and conditioner, 22% from sales of bundled packages and 29% from sale of introductory kit (shampoo, conditioner
and treatment spray). During the three months ended November 30, 2021, sales by product line which each represented over 10% of sales
consisted of approximately 14% from sales of hair shampoo, 11% from sales of hair moisturizer and conditioner, 18% from sale of introductory
kit (shampoo, conditioner and treatment spray) and 39% from sale of bundled packages. During the six months ended November 30, 2020,
sales by product lines which each represented over 10% of sales consisted of approximately 32% from sale of introductory kit (shampoo,
conditioner and treatment spray) and 37% from sale of fragrance shampoo and conditioner. During the three months ended November 30, 2020,
sales by product lines which each represented over 10% of sales consisted of approximately 36% from sale of introductory kit (shampoo,
conditioner and treatment spray) and 37% from sale of fragrance shampoo and conditioner.
During
the six months ended November 30, sales by product line comprised of the following:
Schedule of Sales by Product Line
|
|
|
|
|
|
|
|
|
|
|
For the Six Months ended
|
|
Hair Care Products
|
|
November 30, 2021
|
|
|
November 30, 2020
|
|
Shampoos and Conditioners
|
|
|
88
|
%
|
|
|
86
|
%
|
Ancillary Products
|
|
|
12
|
%
|
|
|
14
|
%
|
Total
|
|
|
100
|
%
|
|
|
100
|
%
|
At
November 30, 2021, accounts receivable from four customer represented approximately 76% at 12%, 13%, 19%, and 32%. At May 31, 2021, accounts
receivable from four customers represented approximately 83%
at 11%, 12%, 25% and 35%.
The
Company purchased inventories and products from three vendors totaling approximately $121,859 (96% of the purchases at 27%, 48% and 21%)
and one vendor totaling approximately $257,810 (74% of the purchases) during the six months ended November 30, 2021 and 2020, respectively.
The Company purchased inventories and products from three vendors totaling approximately $71,240 (100% of the purchases at 40%, 42% and
18%) and two vendors totaling approximately $32,582 (67% of the purchases at 39% and 28%) during the three months ended November 30,
2021 and 2020, respectively.