BAKHU HOLDINGS, CORP.
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Balance Sheets
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ASSETS
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January 31,
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July 31,
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2019
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2018
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(Unaudited)
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CURRENT ASSETS
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Cash and cash equivalents
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$
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—
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$
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13,138
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Total Current Assets
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—
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13,138
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TOTAL ASSETS
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$
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—
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$
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13,138
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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CURRENT LIABILITIES
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Accounts payable
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$
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—
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$
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13,000
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Accrued interest
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1,371
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702
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Short term borrowings - related parties
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130,692
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8,829
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Total Current Liabilities
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132,063
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22,531
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TOTAL LIABILITIES
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132,063
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22,531
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STOCKHOLDERS' EQUITY (DEFICIT)
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Preferred stock, $0.001 par value; 50,000,000 shares authorized,
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4 and -0- shares issued and outstanding, respectively
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—
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—
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Common stock, $0.001 par value; 500,000,000 shares authorized,
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71,938,184 and 71,938,184 shares issued and outstanding, respectively
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71,938
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71,938
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Additional paid-in capital
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3,884,787
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3,884,787
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Accumulated deficit
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(4,088,788
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)
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(3,966,118
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)
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Total Stockholders' Equity (Deficit)
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(132,063
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)
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(9,393
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)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$
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—
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$
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13,138
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The accompanying notes are an integral part of these financial statements.
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BAKHU HOLDINGS, CORP.
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Statements of Operations
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(Unaudited)
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For the Three Months Ended
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For the Six Months Ended
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January 31,
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January 31,
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2019
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2018
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2019
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2018
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NET REVENUES
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$
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—
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$
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—
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$
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—
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$
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—
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OPERATING EXPENSES
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Professional and consulting fees
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—
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26,170
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83,155
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106,890
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Selling, general and administrative
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—
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2,350
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38,847
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1,726
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Total Operating Expenses
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—
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28,520
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122,002
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108,616
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LOSS FROM OPERATIONS
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—
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(28,520
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)
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(122,002
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)
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(108,616
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)
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OTHER INCOME (EXPENSES)
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Interest expense
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(334
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)
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(6,625
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)
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(668
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)
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(7,890
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)
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Total Other Income (Expenses)
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(334
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)
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(6,625
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)
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(668
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)
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(7,890
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)
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LOSS BEFORE INCOME TAXES
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(334
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)
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(35,145
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)
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(122,670
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)
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(116,506
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PROVISION FOR INCOME TAXES
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—
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—
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—
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—
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NET LOSS
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$
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(334
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)
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$
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(35,145
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)
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$
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(122,670
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)
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$
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(116,506
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)
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BASIC NET LOSS PER SHARE
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$
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(0.00
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)
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$
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(0.14
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$
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(0.00
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$
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(0.45
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WEIGHTED AVERAGE NUMBER OF
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SHARES OUTSTANDING
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71,938,184
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260,037
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71,938,184
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260,037
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The accompanying notes are an integral part of these financial statements.
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BAKHU HOLDINGS, CORP.
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Statements of Cash Flows
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(Unaudited)
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For the Six Months Ended
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January 31,
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2019
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2018
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net loss
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$
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(122,670
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$
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(116,506
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Adjustments to reconcile net loss to net cash
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used by operating activities:
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Amortization of debt discount
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—
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7,140
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Changes in operating assets and liabilities:
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Accounts payable
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(13,000
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)
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85,303
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Accrued liabilities
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669
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750
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Net Cash Used by Operating Activities
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(135,001
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)
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(23,313
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)
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CASH FLOWS FROM INVESTING ACTIVITIES
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—
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—
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from short term borrowings - related parties
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121,863
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—
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Payments on short term financings from Somerset Private Fund, Ltd
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—
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(759
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Proceeds from Receiver notes payable provided by third parties
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—
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25,000
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Net Cash Provided by Financing Activities
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121,863
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24,241
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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(13,138
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)
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928
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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13,138
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98
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$
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—
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$
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1,026
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SUPPLEMENTAL DISCLOSURES:
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Cash paid for interest
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$
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—
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$
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—
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Cash paid for income taxes
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$
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—
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$
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—
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The accompanying notes are an integral part of these financial statements.
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BAKHU HOLDINGS, CORP.
Notes to The Financial Statements
January 31, 2019
(Unaudited)
1. ORGANIZATION AND BUSINESS OPERATIONS
Planet Resources, Corp (“the Company”)
was incorporated under the laws of the State of Nevada, U.S. on April 24, 2008. In May 2009 the Company also began to look for
other types of business to pursue that would benefit the shareholders. In order to pursue businesses that may not be in the mining
industry the name of the Company was changed with the approval of the Directors and Shareholders to Bakhu Holdings, Corp. on May
4, 2009 (“Bakhu, or the “Company”).
The Company has not generated any revenue
to date and consequently its operations are subject to all risks inherent in the establishment of a new business enterprise. For
the period from inception, April 24, 2008 through January 31, 2019 the Company has accumulated losses of $4,088,788.
Reverse Stock Split
On January 12, 2018 the Company effected
a 1 for 200 reverse split of the Company’s issued and outstanding common stock which reduced the outstanding shares from
approximately 45,000,000 shares to 260,037 shares outstanding. In connection with the split, any shareholder who owned shares as
of the record date and would have received less than 100 post-split shares after effecting the split, received 100 post-split shares.
Accordingly, all references to the numbers of common shares and per share data in the accompanying financial statements have been
adjusted to reflect this retroactive split on a retroactive basis, unless indicated otherwise.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a)
Basis of Presentation
The financial statements of the Company
have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented
in US dollars.
b)
Going Concern
The financial statements have been prepared
on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal
course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit
of $4,088,788 as of January 31, 2019 and further losses are anticipated in the development of its business raising substantial
doubt about the Company’s ability to continue as a going concern.
c)
Cash and Cash Equivalents
The Company considers all highly liquid
instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
d)
Use of Estimates and Assumptions
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States 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.
e)
Foreign Currency Translation
The Company’s functional currency
and its reporting currency is the United States dollar.
f)
Financial Instruments
The carrying value of the Company’s
financial instruments approximates their fair value because of the short maturity of these instruments.
BAKHU HOLDINGS, CORP.
Notes to The Financial Statements
January 31, 2019
(Unaudited)
g)
Stock-based Compensation
Stock-based compensation is accounted
for at fair value in accordance with ASC 718. To date, the Company has not adopted a stock option plan and has not granted any
stock options.
h)
Income Taxes
Income taxes are accounted for under
the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect
for the year in which those temporary differences are expected to be recovered or settled.
i)
Basic and Diluted Net Loss
per Share
The Company computes net loss per share
in accordance with ASC 105,”Earnings per Share”. ASC 105 requires presentation of both basic and diluted earnings per
share (EPS) on the face of the income statement.
Basic EPS is computed by dividing net
loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the
period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. Diluted EPS excludes
all potentially dilutive shares if their effect is anti-dilutive.
j) Professional fees
With the exception of accounting fees
and audit fees, substantially all professional fees presented in the financial statements represent hours of work performed by
the Court appointed Receiver and his staff to help the Company emerge from Receivership by obtaining external financing. The fees
are expensed as incurred as a liability of the Company and the reimbursement of these fees incurred by Receiver is dependent on
the amount of financing obtained.
k)
Fiscal Periods
The Company’s fiscal year end
is July 31.
3. PREFERRED AND COMMON STOCK
On August 8, 2018, the Board of Directors of the Company approved
the amendment and restatement of the Company’s Articles of Incorporation. The purpose of the amendment and restatement of
the Articles of Incorporation was to:
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(i)
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Increase the number of authorized shares of Common Stock to 500,000,000;
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(ii)
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Increase the number of authorized shares of Preferred Stock to 50,000,000;
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(iii)
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Grant the Board of Directors the rights to designate classes of preferred stock, and to define the powers, preferences, rights, and restrictions thereof;
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The preferred and common stock has a
par value of $ 0.001 per share.
On August 8, 2018, the Company issued 4 shares of Series A Preferred
Stock to the Company’s controlling shareholder, The Oz Corporation, a California corporation.
BAKHU HOLDINGS, CORP.
Notes to The Financial Statements
January 31, 2019
(Unaudited)
4. INCOME TAXES
As of January 31, 2019, the Company
had net operating loss carry forwards of approximately $428,000 that may be available to reduce future years’ taxable income
through 2029. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements,
as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the
deferred tax asset relating to these tax loss carry-forwards.
5. RELATED PARTY TRANSACTIONS
At various times, the Company’s
Receiver extended short term financing to the Company at an interest rate of 15%. Due to the nature of the Receiver’s business,
sometimes the accrued interest due to the Receiver is not reimbursed. As of January 31, 2019 and July 31, 2018 the Company’s
Receiver had extended $8,829 and $8,829, respectively, in short term borrowings to the Company. These borrowings were incurred
to help the Company pay for certain expenses associated with the Company’s Receivership status.
The Company’s controlling shareholder,
The OZ Corporation, paid for certain expenses associated with the operations of the business. These short term loans to the Company
carry an interest rate of 0%. As of January 31, 2019 and July 31, 2018 The OZ Corporation had extended $121,863 and $-0-, respectively,
in short term borrowings to the Company.
6. NOTES PAYABLE
The following tables set forth the components
of the Company’s short term notes payable at January 31, 2019 and July 31, 2018:
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January 31,
2019
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July 31,
2018
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Principal value of promissory notes
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$
|
—
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$
|
—
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Loan discounts
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—
|
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—
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Total promissory notes, net
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$
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—
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$
|
—
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In order to maintain and preserve the
assets of Bakhu, the Company, pursuant to a filing ’in Nevada’s Eighth Judicial District in Case #A-15-720990-C, the
Company sold a $50,000 face value Promissory Note and received $25,000 in proceeds. Under the terms of the Promissory Note, the
Note will be paid in full upon the sale of the Company or any other transaction that would involve the issuance of more than 50%
of the Company’s securities. This Promissory Note a priority secured lien with conversion into 51% of the Company’s
outstanding securities if a change of control transaction resulting in the $50,000 payout does not occur by October 16, 2018.
The Company recorded the $25,000 difference
between the face value of the Note and the amount that was funded of $25,000 as debt discount and is being amortized as interest
expense over one-year period. The Company did not assign any value to the conversion feature of the Note because the 51% of the
common stock of the Company had a negative book value of as of April 30, 2018 and continues to have a negative book value.
During the year ended July 31, 2018,
the Company recorded $20,360 in interest expense from the amortization of debt discount.
7
. SUBSEQUENT EVENTS
On December 20, 2018, the Company entered into a License
Agreement with Cell Science, Ltd. (CSH”). Pursuant to the License Agreement, the Company is being granted an exclusive license
by CSH with respect to certain patents and intellectual property for the production of phytocannabinoids for use in medical treatments
and in exchange for 210,000,000 shares of common stock of the Company. The stock was not issued until February 2019 and thus the
transaction will be recorded in the financial statements during the quarter ended April 30, 2019.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operation
The following discussion contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the
forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes
that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that
the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed
in this report.
BUSINESS OVERVIEW
We were organized in the
State of Nevada on April 24, 2008 under the name Planet Resources, Corp. The Company’s initial business model was the re-processing
of mine tailings from previous mining operations. To date we have not generated any revenues because we were not successful in
implementing our business plan. Various alternatives were considered to ensure the viability and solvency of the Company; however,
the Company went dormant from April 30, 2011 to June, 2018, and in Case Number A-14-720990-C, Nevada's 8th Judicial District appointed
Robert Stevens as Receiver for the Company on August 20, 2015. Subsequent to Mr. Stevens being released as the court-appointed
receiver in July, 2018, the Company embarked on a new business plan. The Company plans to exploit licenses that it acquires in
the bio-pharmacy (Bio-Pharm) field, specifically in the cell-extraction sector. Such products are usually currently focused on
medical products for pain relief and insomnia. A growing emphasis is being placed on more serious medical issues, such epilepsy,
eye disease, as well as various nerve and vital organ disorders. Also, there is a national imperative to replace the widespread
use (and mis-use) of opioids to treat many common ailments. The plans to test the licensed processes in a scientific laboratory
setting, prove-up the efficiencies of the extraction process, determine the market value of the process and then license the process
for cash consideration and royalty payments.
On December 20, 2018 the
Company entered into a License Agreement (the “License Agreement”) with Cell Science Holding, Ltd. (“CSH”).
Pursuant to the proposed License Agreement, we will be granted by CSH, a North American exclusive license to certain patents and
intellectual property and associated technical information with respect to the production of phytocannabinoids for use in medical
treatments in exchange for 210,000,000 shares of the Company’s common stock. These shares were issued in February 2019.
General and administrative
expenses have been comprised of administrative wages and benefits; occupancy and office expenses; outside legal, accounting and
other professional fees; travel and other miscellaneous office and administrative expenses. Selling and marketing expenses include
selling/marketing wages and benefits, advertising and promotional expenses, as well as travel and other miscellaneous related expenses.
Because we have incurred
losses, income tax expenses are immaterial. No tax benefits have been booked related to operating loss carryforwards, given our
uncertainty of being able to utilize such loss carryforwards in future years. We anticipate incurring additional losses during
the coming year.
RESULTS OF OPERATION
Following is management’s
discussion of the relevant items affecting results of operations for the three and six months ended January 31, 2019 and 2018.
Revenues
. The Company
generated no net revenues during the six months ended January 31, 2019 and 2018. We expect revenues to increase as we continue
to pursue funding through investment and the application for lines of credit with financial institutions.
Professional
and Consulting Fees.
Professional and consulting fees were $-0- and $26,170 for the three months ended January 31, 2019 and
2018, respectively. Professional and consulting fees were $83,155 and $106,890 for the six months ended January 31, 2019 and 2018,
respectively. With the exception of accounting fees and audit fees, substantially all professional fees presented in the financial
statements represent hours of work performed by the Court appointed Receiver and his staff to help the Company emerge from Receivership
by obtaining external financing. The fees are expensed as incurred. The Company expects professional fees to increase in the future
due to the fees associated with the Company filings with the Securities and Exchange Commission.
Selling, General and
Administrative Expenses
. Selling, general and administrative expenses were $-0- and $2,350 for the three months ended January
31, 2019 and 2018, respectively. Selling, general and administrative expenses were $38,847 and $1,726 for the six months ended
January 31, 2019 and 2018, respectively. The Company expects SG&A expenses will increase commensurate with an increase in our
operations and as a result of the License Agreement with Cell Science Holding.
Other Income (Expenses).
The Company had net other expenses of $334 for the three months ended January 31, 2019 compared to net other expense of $6,625
for the three months ended January 31, 2018. The Company had net other expenses of $668 for the six months ended January 31, 2019
compared to net other expense of $7,890 for the six months ended January 31, 2018. Other expenses incurred were comprised of interest
expenses related to short term borrowings of the Company.
Net Loss.
The Company
had a net loss of $334 for the three months ended January 31, 2019 compared to $35,145 for the three months ended January 31, 2018.
The Company had a net loss of $122,670 for the six months ended January 31, 2019 compared to $116,506 for the six months ended
January 31, 2018. The increase in net loss was mainly due to the increased general and administrative expenses associated with
the License Agreement.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 2019,
our primary source of liquidity consisted of $-0- in cash and cash equivalents. Since inception, we have financed our operations
through a combination of short and long-term loans, and through the private placement of our common stock.
We do not believe
that the Company’s current capital resources will be sufficient to fund its operating activity and other capital resource
demands during the next year. Our ability to continue as a going concern is contingent upon our ability to obtain capital through
the sale of equity or issuance of debt, and ultimately attaining profitable operations. We expect that any financing we receive
will be similar to what we have heretofore received over the previous two years to enable us to operate, which financing consists
of long-term loans at negotiated rates of interest. We cannot assure you that we will be able to successfully complete any of these
activities.
We are presently seeking additional debt
and equity financing to provide sufficient funds for payment of obligations incurred and to fund our ongoing business plan. We
expect to generate revenue pursuant to our new business plan. We cannot assure you, however, that any such financings will be available
or will otherwise be made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.
For the six months
ended January 31, 2019, cash decreased $13,138 from $13,138 at July 31, 2018 to $-0- at January 31, 2019.
Net cash used in
operating activities was $135,001 during the six months ended January 31, 2019, with a net loss of $122,670, which was offset by
a decrease in accounts payable of $13,000 and an increase in accrued liabilities of $669.
During the six months
ended January 31, 2019, the Company had no net cash flows from investing activities.
During the six months
ended January 31, 2019, the Company had $121,863 in net cash provided by financing activities which consisted solely of proceeds
from short term borrowings – related parties.
CRITICAL ACCOUNTING PRONOUNCEMENTS
Our financial statements
and related public financial information are based on the application of generally accepted accounting principles in the United
States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting
principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also
affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial
condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively
applied. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ
materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made
during the preparation of our financial statements.
Our significant
accounting policies are summarized in Note 2 of our financial statements included in our July 31, 2018 Form 10-K. While all of
these significant accounting policies impact our financial condition and results of operations, we view certain of these policies
as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements
and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management
believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies
would cause a material effect on our results of operations, financial position or liquidity for the periods presented in this
report.
RECENT ACCOUNTING PRONOUNCEMENTS
We have reviewed
accounting pronouncements issued during the past two years and have adopted any that are applicable to the Company. We have determined
that none had a material impact on our financial position, results of operations, or cash flows for the periods presented in this
report.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any
off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as
“special purpose entities” (“SPE”s).