The accompanying notes are an integral part of these financial
statements.
The accompanying notes are an integral part
of these financial statements.
Notes to The Financial Statements
April 30, 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 April 30, 2019 the Company has accumulated losses of $14,598,834.
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 $10,598,834 as of April 30, 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
April 30, 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.
l)
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued Accounting
Standards Update ("ASU") No. 2016-02, Leases (Topic 842), which amended the existing accounting standards for lease accounting
to increase transparency and comparability among organizations by requiring the recognition of right-of-use assets and lease liabilities
on the balance sheet.
We adopted the standard effective January 1,
2019 and have elected to use January 1, 2019 as our date of initial application. Consequently, financial information will not be
updated, and disclosures required under the new standard will not be provided for periods presented before January 1, 2019 as these
prior periods conform to the Accounting Standards Codification 840. We elected the package of practical expedients permitted under
the transition guidance within the new standard. By adopting these practical expedients, we were not required to reassess (1) whether
an existing contract meets the definition of a lease; (2) the lease classification for existing leases; or (3) costs previously
capitalized as initial direct costs. As of March 31, 2019 we are not a lessor or lessee under any lease arrangements.
BAKHU HOLDINGS, CORP.
Notes to The Financial Statements
April 30, 2019
(Unaudited)
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:
|
(i)
|
Increase the number of authorized shares of Common Stock to 500,000,000;
|
|
(ii)
|
Increase the number of authorized shares of Preferred Stock to 50,000,000;
|
|
(iii)
|
Grant the Board of Directors the rights to designate classes of preferred stock, and to define the powers, preferences, rights, and restrictions thereof;
|
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.
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. On February 14, 2019 the stock was issued and recorded as
consulting fees valued at $10,500,000.
On April 7, 2019 the Company issued 7,000,000 shares of common
stock for the conversion of convertible notes payable and accrued interest in the amount of $10,199.
BAKHU HOLDINGS, CORP.
Notes to The Financial Statements
April 30, 2019
(Unaudited)
4. INCOME TAXES
As of April 30, 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.
6. 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 April 30, 2019 and July 31, 2018 the Company’s
Receiver had extended $-0- 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. During the three months ended
April 30, 2019, the principal amount of $8,829 and accrued interest of $1,370 was replaced by convertible promissory notes and
immediately converted into 7,000,000 shares of common stock.
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 April 30, 2019 and July 31, 2018 The OZ Corporation had extended $133,263 and $-0-, respectively,
in short term borrowings to the Company.
7. NOTES PAYABLE
There were zero notes payable outstanding at
April 30, 2019 and July 31, 2018.
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. The Note has 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 Note was
paid in full on May 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.