Notes to Financial Statements
October 31, 2019
(unaudited)
NOTE 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 October 31, 2019 the Company has accumulated losses of $14,652,744.
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.
NOTE 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 $14,652,744 as of
October 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.
BAKHU HOLDINGS CORP.
Notes to Financial Statements
October 31, 2019
(unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f) Financial Instruments
The carrying value of the Company’s financial instruments
approximates their fair value because of the short maturity of these instruments.
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
Substantially all professional fees presented in the financial statements
represent accounting fees, audit fees and legal fees associated with the filing of reports with the Securities and Exchange Commission.
Also included in professional fees are fees paid to the stock transfer agent. The fees are expensed as incurred.
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 October 31, 2019, we are not a lessor or lessee under any lease arrangements.
BAKHU HOLDINGS CORP.
Notes to Financial Statements
October 31, 2019
(unaudited)
NOTE 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.
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.
There were no stock transactions during the three months ended October
31, 2019.
NOTE 4 - INCOME TAXES
As of October 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.
NOTE 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 July 31, 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 July 31, 2019 and July 31, 2018 The OZ Corporation had extended $147,513 and $-0-, respectively, in short term
borrowings to the Company.
BAKHU HOLDINGS CORP.
Notes to Financial Statements
October 31, 2019
(unaudited)
NOTE 6 - NOTES PAYABLE
On August 1, 2019, the Company executed a promissory note in
favor of Company’s controlling shareholder, The OZ Corporation, to evidence monies loan to the Company from December
26, 2018 through July 31, 2019 in the amount of $147,513 (See Note 5), and to evidence any additional amounts that may be
loaned to the Company thereafter. Pursuant to the terms of the promissory note, the principal and accrued and unpaid simple
interest at the rate of 6.0% per annum shall be due and payable on or before December 31, 2019. The principal amount of the
promissory note shall be increased by the amount of any additional advances of funds made by The OZ Corporation to the
Company, from time to time, from the date of such advance. Under the terms of the promissory note, The OZ Corporation, at its
option may, at any time, convert all or any portion of the then unpaid principal balance and any unpaid accrued interest into
shares of the Company’s common stock. The number of shares of common stock to be issued upon such conversion shall be
equal to the quotient obtained by dividing (i) the then unpaid principal balance and any unpaid accrued interest of the
promissory note being converted by (ii) 80% of the average closing price of the common stock of the Company, for the ninety
(90) trading days before the conversion date, rounded up to the nearest whole share. As of October 31, 2019, the principal
amount and accrued interest due on the note was $187,013 and $2,425, respectively.
The Company did not assign any value to the conversion feature of
the Note because the 80% of the common stock of the Company had a negative book value of as of October 31, 2019 and continues to
have a negative book value. Furthermore, the company has not generated any revenue to date.