NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2021
NOTE 1 –
ORGANIZATION AND BUSINESS
Yuengling’s
Ice Cream Corporation (formerly Aureus Incorporated) (the “Company”, “Yuengling’s”) was incorporated in
the state of Nevada on April 19, 2013. The Company was organized to develop and explore mineral properties in the state of Nevada. The
Company is currently in active status in the state of Nevada.
We are a food brand
development company that builds and represents popular food concepts throughout the United States and international markets. Management
is highly experienced at business integration and re-branding potential. With little territory available for the older brands, we intend
to bring to our customers fresh innovative brands that have great potential. All of our brands will be unique in nature as we focus on
niche markets that are still in need of development.
We operate two
lines of business. Through our subsidiary, YIC Acquisitions Corp. (“YICA”), we acquired the assets of Yuengling’s
Ice Cream in June 2019. YICA produces and sells high-quality ice cream without artificial colors, flavoring, or preservatives and no
added hormones. In September 2020, we entered into the micro market segment and launched our second business line, Aureus Micro Markets
(“AMM”). Closely tied to the vending machine industry, Micro Markets look and feel like modern convenience stores
while functioning with the ease and efficiency of vending foodservice and refreshment services. They provide an improved customer experience
and greater product variety, with a proven track record of increasing sales at vending locations while keeping labor costs down and improving
operating efficiencies. Micro markets are a hybrid form of vending, food service, coffee service, and convenience stores that
provide an improved customer experience, exponentially greater product variety, and increased sales within a single location while keeping labor
costs down and improving operational efficiencies. The expanded product variety, open flow, and cashless payment options mean that
consumers spend less time in line fumbling with cash/change, can purchase multiple items with one transaction, and buy more items per
transaction than with cash transactions.
NOTE 2 –
SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The Company’s
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”).
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 revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Concentrations of Credit Risk
We maintain our
cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking
relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit
risk on cash.
Cash Equivalents
The Company considers
all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents
for the years ended October 31, 2021 or 2020.
Restricted Cash
The Company has
an obligation to transfer $50,000 to Mid Penn Bank as security pursuant to the Agreement of Sale and Security Agreement with Mid Penn
Bank and Yuengling Ice Cream Corp, by September 30, 2022. If the funds are not transferred by September 30, 2022, the Bank the has option
to call the loan and to require the Company to pay any attorney’s fees incurred.
Principles
of Consolidation
The accompanying
consolidated financial statements include the accounts of the Company and its wholly owned subsidiary YIC Acquisitions Corp. All material
transactions and balances have been eliminated on consolidation.
Inventory
Inventories
are stated at the lower of cost or market. Cost is principally determined using the last-in, first-out (LIFO) method. The Company periodically
assesses if any of the inventory has expired or if the value has fallen below cost. When this occurs, the Company recognizes an expense
for inventory write down. Total inventories at October 31, 2021 and 2020 were $56,211 and $202,724, respectively.
Property and Equipment
Property and equipment
are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is calculated using the straight-line
method over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are amortized over
the lesser of the remaining term of the lease or the estimated useful life of the asset. Expenditures for repairs and maintenance are
expensed as incurred.
Stock-based
Compensation
In
June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to
account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December
15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019. The adoption of ASU 2018-07 did not
have a material impact on our consolidated financial statements.
Income Taxes
Income taxes are
provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred
taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return
consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as
well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is
established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets
will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that
may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about
the need for a valuation allowance for deferred taxes could change in the near term.
Tax benefits are
recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized
is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized
tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and
measurement standards. As of October 31, 2021, and 2020, no liability for unrecognized tax benefits was required to be reported.
Revenue recognition
Revenue is recognized
when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an
entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount,
timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects
the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model
in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised
goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction
price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and
(v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts
when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers
to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract
to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company
recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance
obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point
in time, typically upon delivery. YIC Acquisitions Corp (Yuengling’s Ice Cream) generates
its revenue through the sale of pints to retailers, through the online sales of pints directly to consumers, and through the sale of
3 gallon tubs to food service establishments, such as restaurants, stadiums, and universities. Revenue is recognized at the time of delivery
or, for online sales, at the time of the transaction. Retailers and food service customers’ terms are generally 15 or 30 days.
Online sales are paid via credit card and funds are generally received within 30 days.
Basic and
Diluted Earnings Per Share
Net income (loss)
per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss)
per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during
the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number
of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common
shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period
presented. As of October 31, 2021 and 2020, there are 3,070,821,710 and 1,620,604,188 potentially dilutive shares, respectively, if the
Preferred A were to be converted. As of October 31, 2021 and 2020, the Company’s diluted loss per share is the same as the basic
loss per share, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.
Fair Value Measurements
Fair value is defined
as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described
below:
Level 1: Level
1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Level
2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly.
Level 2 inputs
include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other
than quoted prices such as interest rates.
Level 3: Level
3 inputs are unobservable inputs.
The following required
disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information
and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates
of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
The methods and
assumptions used to estimate the fair values of each class of financial instruments are as follows: Cash and Cash Equivalents, Accounts
Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the
consolidated balance sheets are reasonable approximations of their fair values.
The carrying amounts
of Notes Receivable and Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current market
rates.
The following table
classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of October 31,
2021:
|
Schedule of measured at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains
|
|
|
Derivative
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
14,875
|
|
|
Total
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
14,875
|
|
The following table
classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of October 31,
2020:
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total Gains
|
|
|
Derivative
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
154,620
|
|
|
Total
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
154,620
|
|
Recent Accounting
Pronouncements
In November 2019,
the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivative and Hedging (Topic 815, and Leases (Topic
841). This new guidance will be effective for annual reporting periods beginning after December 15, 2019, including interim periods
within those annual reporting periods. The adoption of ASU 2019-10 does not have a material effect on its financial statements.
In August 2020,
the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU
2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments
with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging,
or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated
from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation
under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain
requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share
(EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that
meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies
as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all
other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those
fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods
within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year.
The Company is currently evaluating the impact this ASU will have on its consolidated financial statements.
The Company has
implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial
statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have
been issued that might have a material impact on our financial position or results of operations.
NOTE 3 – 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 has an accumulated deficit of $3,550,773 at October 31, 2021, had a net loss
of $602,452, and net cash used in operating activities of $416,801 for the year ended October 31, 2021. The Company’s ability to
raise additional capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional
financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the
attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully
resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements
of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
NOTE 4 - PROPERTY
& EQUIPMENT
Property and Equipment
are first recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes
of assets as follows between three and five years.
Long lived assets,
including property and equipment, to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows
of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset.
Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Maintenance and
repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost
and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on
the disposition included as income.
Property and equipment
stated at cost, less accumulated depreciation consisted of the following:
|
Schedule of property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2021
|
|
|
October
31,
2020
|
|
|
Property and equipment
|
|
$
|
30,300
|
|
|
$
|
30,300
|
|
|
Less: accumulated
depreciation
|
|
|
–
|
|
|
|
–
|
|
|
Property and equipment, net
|
|
$
|
30,300
|
|
|
$
|
30,300
|
|
Depreciation
expense
Depreciation
expense for the year ended October 31, 2021 and 2020 was $0 and $0, respectively. As of October 31, 2021, the Company’s fixed asset
have not yet been placed in service. Depreciation will begin on the date the assets are placed into service.
During the year
ended October 31, 2021, the Company sold some equipment recognizing a gain of $1,000 on the sale.
NOTE 5 –
NOTES PAYABLE
On September 9,
2015, the Company issued to Backenald Corp. a promissory note in the principal amount of $20,000, bearing interest at the rate of 5%
per annum and maturing on the first anniversary of the date of issuance. This note is in default and its interest rate has been increased
to 10%. As of October 31, 2021, accrued interest amounted to $11,151.
On August 31, 2016,
the Company issued Success Zone Tech Ltd. a promissory note in the principal amount of $100,000, bearing interest at the rate of 8% per
annum, compounded annually, and maturing on the first anniversary of the date of issuance. On January 7, 2019, this note was purchased
by and assigned to Device Corp. This note has been fully converted as of October 31, 2021.
On February 23,
2017, the Company issued Travel Data Solutions a promissory note in the principal amount of $17,500, bearing interest at the rate of
8% per annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October
31, 2021, accrued interest amounted to $7,946.
On March 27, 2017,
the Company issued Craigstone Ltd. a promissory note in the principal amount of $12,465, bearing interest at the rate of 8% per annum,
compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2021,
accrued interest amounted to $5,307.
On May 16, 2017,
the Company issued Travel Data Solutions a promissory note in the principal amount of $4,500, bearing interest at the rate of 8% per
annum, compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31,
2021, accrued interest amounted to $1,849.
On July 28, 2017,
we issued Backenald Trading Ltd. a promissory note in the principal amount of $20,000, bearing interest at the rate of 8% per annum,
compounded annually, and maturing on the first anniversary of the date of issuance. This note is in default. As of October 31, 2021,
accrued interest amounted to $7,782.
On January 24,
2020, the company issued a third party a promissory note in the principal amount of $15,000, bearing interest at the rate of 10% per
annum, and maturing on April 30, 2020. As of October 31, 2021, there is $0 and $1,155, principal and interest, respectively, due on this
note.
On March 24, 2020,
the company issued a third party a promissory note in the principal amount of $20,000, bearing interest at the rate of 10% per annum,
and maturing on May 30, 2020. As of October 31, 2021, the balance due on this note for principal and interest is $5,000 and $2,975, respectively.
This note is in default.
On April 10, 2020,
the Company issued a convertible promissory note to Device Corp., in the principal amount of $49,328, bearing interest at the rate of
10% per annum, and maturing on April 10, 2021. The note is convertible into shares of common stock at $0.0001 per share. The note was
issued pursuant to the terms of the Debt Purchase and assignment agreement between Tiger Trout Capital Puerto Rico LLC and Device Corp,
whereby Device purchased from Tiger Trout debt in the amount of $49,328 plus any accrued interest. As of October 31, 2021, the balance
due on this note is $13,000.
As of October 31,
2021, the Company was also indebted to two other third parties for a total of $39,656, These notes are non-interest bearing and are currently
past due and in default.
NOTE 6 –
LOANS PAYABLE
YIC Acquisition
assumed two loans that the Company still has. The first loan was an SBA loan with a balance of $1,056,807 and annual interest of 5.25%.
The loan has monthly payments and matures March 13, 2026. The balance due on this loan as of October 31, 2021 and 2020 is $735,502 and
$801,992, respectively. The second loan is a line of credit with a balance of $814,297 and an annual interest rate of 4.25%. Payments
on this line of credit are monthly. The balance due on this loan as of October 31, 2021 and 2020 is $800,000 and $800,000, respectively.
During the year
ended October 31, 2021, the Mid Penn Bank made several of the Company’s loan payments as part of the CARES Act. This amount has
been recognized as a gain on forgiveness of debt of $33,536.
On August 31,
2020, the Company received a Paycheck Protection Program loan under the CARES Act for $83,300 (the “PPP
Loan”). The Paycheck Protection Program provides that the use
of PPP Loan proceeds is limited to certain qualifying expenses and may be partially or wholly forgiven in accordance
with the requirements set forth in the CARES Act. The Company has used the PPP Loan only for permitted uses, although no
assurance can be given that the Company will obtain forgiveness of all or any portion of amounts due under the PPP Loan.
During year ended October 31, 2021, this loan was forgiven per the terms of the PPP
loan. This amount has been recognized as a gain on forgiveness of debt of $83,300.
On March 16, 2021,
the Company received a Paycheck Protection Program loan under the CARES Act for $114,582 (the “PPP Loan”). The
Paycheck Protection Program provides that the use of PPP Loan proceeds are limited to certain qualifying expenses and
may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. The Company has used the PPP Loan
only for permitted uses, although no assurance can be given that the Company will obtain forgiveness of all or any portion of amounts
due under the PPP Loan. If not forgiven the loan bears interest at 1% per annum and matures in five years. During year ended
October 31, 2021, $34,582 of this loan was forgiven per the terms of the PPP loan. This
amount has been recognized as a gain on forgiveness of debt of $34,582.
NOTE 7 –
CONVERTIBLE NOTES
The following table
summarizes the convertible notes and related activity as of October 31, 2021:
|
Schedule of convertible notes and related activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note Holder
|
|
Date
|
|
Maturity Date
|
|
Interest
|
|
|
Balance
October 31,
2020
|
|
|
Additions
|
|
|
Repayments
|
|
|
Balance
October 31, 2021
|
|
|
Geneva Roth Remark Holding Inc
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
)
|
|
|
|
|
Geneva Roth Remark Holding Inc
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
$
|
–
|
|
|
$
|
93,750
|
|
|
$
|
(93,750
|
)
|
|
$
|
–
|
|
A summary of the
activity of the derivative liability for the notes above is as follows:
|
Schedule of derivative liability
|
|
|
|
|
|
Balance at October 31, 2020
|
|
$
|
–
|
|
|
Increase to derivative due to new issuances
|
|
|
145,278
|
|
|
Decrease to derivative due to repayments
|
|
|
(130,403
|
)
|
|
Derivative loss due to mark to market
adjustment
|
|
|
(14,875
|
)
|
|
Balance at October 31, 2021
|
|
$
|
–
|
|
A summary of quantitative
information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are
categorized within Level 3 of the fair value hierarchy as of October 31, 2021 is as follows:
|
Schedule of derivative liability
|
|
|
|
|
|
|
|
|
|
Inputs
|
|
At
payment date
|
|
|
Initial
Valuation
|
|
|
Stock price
|
|
$
|
0.0016 - 0.0017
|
|
|
$
|
0.0016 - 0.0024
|
|
|
Conversion price
|
|
$
|
0.0008 - 0.001
|
|
|
$
|
0.0009 - 0.0012
|
|
|
Volatility (annual)
|
|
|
176.4% – 178.7.%
|
|
|
|
215.1% - 232.18%
|
|
|
Risk-free rate
|
|
|
0.07% - 0.15%
|
|
|
|
0.07% - 0.08%
|
|
|
Dividend rate
|
|
|
-
|
|
|
|
-
|
|
|
Years to maturity
|
|
|
0.85 – 0.89
|
|
|
|
1
|
|
NOTE 8 –
RELATED PARTY TRANSACTIONS
On March 20, 2020,
the Company issued 100,000,000 shares of common stock to its subsidiary, YIC Acquisition Corp. The shares will be returned to the Company.
During the year
ended October 31, 2021, the officers of the Company advanced the company $30,750 to pay for general operating expenses. As of October
31, 2021, all amounts have been repaid.
During the year
ended October 31, 2021, the Company paid Everett Dickson, CEO, $40,000 for compensation.
During the year
ended October 31, 2021, the Company paid Robert Bohorad, YICA’s Chief Operating Officer, $45,000 for compensation.
NOTE 9 –
COMMON STOCK
On December 10, 2020, the Company amended its
Articles of Incorporation and increased its authorized common stock to 1.5 billion (1,500,000,000) shares. On October 28, 2021, the Company
amended its Articles of Incorporation and increased its authorized common stock to 2 billion (2,000,000,000) shares. On November 5, 2021,
the Company amended its Articles of Incorporation and decreased its authorized common stock to 1.75 billion (1,750,000,000) shares. On
January 21, 2022, the authorized shares of common stock was increased to 2 billion (2,000,000,000).
During the year
ended October 31, 2020, the Company sold 21,527,777 shares of common stock for cash proceeds of
$77,500. 3,472,222 of the shares have not yet been issued by the transfer agent.
During the year
ended October 31, 2020, the Company issued 477,375,000 shares of common stock for conversion of
$100,958 of principal and interest.
During the year
ended October 31, 2021, the Company issued 450,000,000 shares of common stock for conversion of
$45,000 of principal and interest.
During the year
ended October 31, 2021, the Company sold 485,000,000 shares of common stock for total cash proceeds
of $540,000. As of October 31, 2021, 110,000,000 shares have not yet been issued by the transfer agent, as such $165,000 is disclosed
as common stock to be issued.
NOTE 10 –
PREFERRED STOCK
Series A
Preferred
The Company has
designated Ten Million (10,000,000) shares of Preferred Stock the Series A Convertible Preferred Stock with a par and stated value of
$0.001 per share. The holders of the Series A Convertible Preferred Stock are not be entitled to receive any dividends.
Except as otherwise
required by law or by the Articles of Incorporation and except as set forth below, the outstanding shares of Series A Convertible Preferred
Stock shall vote together with the shares of Common Stock and other voting securities of the Corporation as a single class and, regardless
of the number of shares of Series A Convertible Preferred Stock outstanding and as long as at least one of such shares of Series A Convertible
Preferred Stock is outstanding shall represent Sixty Six and Two Thirds Percent (66 2/3%) of all votes entitled to be voted at any annual
or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series
A Convertible Preferred Stock shall represent its proportionate share of the 66 2/3% which is allocated to the outstanding shares of
Series A Convertible Preferred Stock.
The entirety of
the shares of Series A Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof,
at any time and from time to time, and without the payment of additional consideration by the holder thereof, into two thirds of the
after conversion outstanding fully paid and non-assessable shares of Common Stock. Each individual share of Series A Convertible Preferred
Stock shall be convertible into Common Stock at a ratio determined by dividing the number of shares of Series A Convertible Stock to
be converted by the number of shares of outstanding pre-conversion Series A Convertible Preferred Stock. Such initial Conversion Ratio,
and the rate at which shares of Series A Convertible Preferred Stock may be converted into shares of Common Stock. As of October 31,
2021, there are 5,000,000 shares of Series A preferred stock owned by the CEO.
As of October 31,
2021 and 2020, the Company has preferred stock to be issued in the amount of $437,850
and $269,250,
respectively. As of October 31, 2021, the preferred Series A can be converted at $0.0008 per share, into 547,312,500 shares of common
stock. As of the balance sheet date and the date of this report, these shares have not been issued
to the Purchaser. S99-3A(2) ASR 268 requires preferred securities that are redeemable for cash or other assets to be classified
outside of permanent equity if they are redeemable (1) at a fixed or determinable price on a fixed or determinable date, (2) at the option
of the holder, or (3) upon the occurrence of an event that is not solely within the control of the issuer. Given that there is an unknown
amount of preferred shares to be issued, cash has been repaid and the preferred shares are convertible at the option of the holder, the
Company determined that mezzanine treatment appears appropriate. As such, the Company feels these securities should be classified
as Mezzanine equity until they are fully issued.
Series B
Preferred
The Series B preferred
stock is convertible into shares of common stock at the option of the holder at a 35% discount to the lowest closing price for the thirty
days prior to conversion.
On August 21, 2020,
the Company entered into a Stock Purchased Agreement with Kanno Group Holdings II Ltd.(“KGH”), in which KGH purchased $3,000
of Series B Preferred Stock. The Company rescinded its agreement with KGH, agreeing to return the
$3,000 it had received for the preferred stock.
NOTE 11 - INCOME TAX
Deferred taxes
are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss
and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not
be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company is using the U.S. federal income tax rate of 21% and 5% estimated state tax.
The provision for Federal income tax
consists of the following October 31:
|
Schedule of federal income tax
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
|
|
|
Book income
|
|
$
|
(126,500
|
)
|
|
$
|
(17,500
|
)
|
|
Other nondeductible expenses
|
|
|
–
|
|
|
|
(59,400
|
)
|
|
Less: valuation allowance
|
|
|
126,500
|
|
|
|
76,900
|
|
|
Net provision for Federal income
taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
The cumulative tax effect at the expected
rate of 21% of significant items comprising our net deferred tax amount is as follows:
|
Schedule of deferred tax amount net
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
(371,200
|
)
|
|
$
|
(244,700
|
)
|
|
Less: valuation allowance
|
|
|
371,200
|
|
|
|
244,700
|
|
|
Net deferred tax asset
|
|
$
|
–
|
|
|
$
|
–
|
|
At October 31,
2021, the Company had net operating loss carry forwards of approximately $371,200 that maybe offset against future taxable income. No
tax benefit has been reported in the October 31, 2021 or 2020 financial statements since the potential tax benefit is offset by a valuation
allowance of the same amount.
On December 22,
2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”).
The Tax Act establishes new tax laws that affects 2018 and future years, including a reduction in the U.S. federal corporate income tax
rate to 21% effective January 1, 2018.
Due to the change
in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in
future years.
ASC Topic 740 provides
guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. Topic 740 requires a
company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical
merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount
to recognize in the financial statements.
The Company includes
interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes.
As of October 31, 2021, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income
tax returns in the U.S. federal jurisdiction, Nevada.
NOTE 12 – SUBSEQUENT EVENTS
In
accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial
statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial
statements other than the following.
Subsequent
to October 31, 2021, the Company issued the 110,000,000 shares of common stock that was due as of
October 31, 2021.
Subsequent
to October 31, 2021, the Company sold 120,000,000 shares of common stock at $0.0008, for total cash
proceeds of $96,000.
On January 21,
2022, the Company increased its authorized common stock from 1,750,000,000 (1.75 billion) to 2,000,000,000 (2 billion) shares.
On January 20, 2022, the Company entered into
a Service Agreement with Desmond Partners, LLC for consulting services to be provided. The agreement is effective on February 1, 2022
for an initial term of three months. Per the terms of the agreement the consulting will receive a fee of $10,000 per month and 5% equity
in the Company.