NOTES TO (UNAUDITED) FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Fuss Brands Corp, f/k/a China Botanic Pharmaceutical Inc. (“the Company,” “we” “us”) was incorporated in the State of Nevada on August 18, 1988, originally under the corporate name of Solutions, Incorporated. It was inactive until August 16, 1996, when it changed its corporate name to Suarro Communications, Inc, and engaged in the business of providing internet-based business services. This line of business was discontinued in 2006, and the Company became a non-operating public company. The Company underwent a number of corporate name changes as follows:
June 1997 |
|
ComTech Consolidation Group, Inc |
February 1999 |
|
E-Net Corporation |
May 1999 |
|
E-Net Financial Corporation |
January 2000 |
|
E-Net.Com Corporation |
February 2000 |
|
E-Net Financial.Com Corporation |
January 2002 |
|
Anza Capital, Inc (“Anza”) |
June 2006 |
|
Renhuang Pharmaceuticals, Inc. |
October 2010 |
|
China Botanic Pharmaceutical Inc. |
The Company had been inactive since September 2012.
On February 4, 2021, as a result of a custodianship in Clark County, Nevada, Case Number: A-20-827231-B Custodian Ventures LLC (“Custodian”) was appointed custodian of the Company. On the same date, Custodian appointed David Lazar as the Company’s Chief Executive Officer, President, Secretary, Chief Financial Officer, Chief Executive Officer, and Chairman of the Board of Directors.
On August 24, 2021, as a result of a private transaction, 1,000,000 shares of Series A-1 Preferred Stock, $0.001 par value per share (the “Shares”) of the Company, were transferred from Custodian Ventures, LLC to Issamar Ginzberg, Israel Moshe Levy, Shmuel Rotbard, and Benjamin Levin (collectively, the “Purchasers”). As a result, the Purchasers became holders of approximately 96% of the voting rights of the issued and outstanding share capital of the Company on a fully diluted basis of the Company and became the controlling shareholder. The consideration paid for the Shares was $250,000. The source of the cash consideration for the Shares was personal funds. In connection with the transaction, David Lazar released the Company from all debts owed to him and/or Custodian Ventures, LLC.
On August 24, 2021, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary, and Director. At the effective date of the transfer, Issamar Ginzberg consented to act as the new Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary, and a Director of the Company,
On July 14, 2022, China Botanic Pharmaceuticals Inc. amended its articles of incorporation to change its name to Fuss Brands Corp. (the “Name Change”). The change was made in anticipation of entering into a new line of business operations.
On July 13, 2022, the Company amended its articles of incorporation to reverse split its common stock at a rate of 1 for 26 (the “Reverse”).
On July 22, 2022, FINRA declared the Name Change and the Reverse effective. Also on July 28, 2022, the Company was informed by FINRA that the Company’s ticker symbol would be changed to FBDS in twenty business days.
The Company’s year-end is October 31.
On
January 26, 2023 the Company received a purchase order from a leading luggage retailer for two types of luggage amounting to a
total of $925,000.
The Company is in the process of working with a manufacturer to produce the luggage. As a result of this purchase order, as of
January 26, 2023 the Company is no longer in shell status.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with accepted accounting principles (“GAAP”) in the United States.
Management’s Representation of Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto on October 31, 2022, as presented in the Company’s Annual Report on Form 10-K.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these financial statements. As of April 30, 2023, the Company had negative working capital of $190,302 and an accumulated deficit of $12,421,505.
Because
the Company does not expect that the existing operational cash flow will be sufficient to fund presently anticipated operations,
this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to
raise additional funds and is currently exploring alternative sources of financing. Recently the Company has been funded by related
party shareholders and officers. Historically, the Company raised capital through private placements, to finance working capital
needs and may attempt to raise capital through the sale of common stock or other securities and obtaining some short-term loans. The
Company will be required to continue to do so until its operations become profitable. Also, the Company has, in the past, paid for
consulting services with its common stock to maximize working capital, and intends to continue this practice where
feasible.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amount of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Reverse Stock Split
On July 26, 2022, the Company effected a 1 for 26 reverse stock split of its common stock. All common stock amounts and references have been retroactively adjusted for all figures present to reflect this split unless specifically stated otherwise.
Cash and cash equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. As of April 30, 2023, and October 31, 2022, the Company had $11,411 and $35,539 in cash on hand, respectively.
Income taxes
The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. 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. Under FASB ASC 740, 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. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.
Net Loss per Share
Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.
Recent Accounting Pronouncements
There
are no recent accounting pronouncements that has an impact the Company’s operations.
NOTE 3 – RELATED PARTY TRANSACTIONS
During the fiscal year ended October 31, 2021, the Custodian extended to the Company an interest-free demand loan of $43,650 to help fund the Company’s expenses. On August 24, 2021, as part of the transaction in which Custodian Ventures sold its 1,000,000 shares of Series A Preferred Stock described in Note 1. “Organization and Description of Business “, Custodian agreed to forgive any amounts due to Custodian. As a result, the $43,650 due to Custodian was reclassified as a capital contribution through Equity and had no impact on the Company’s Statement of Operations for the period ended October 31, 2021.
Subsequent to August 24, 2021, the funding for the Company has been provided by Issamar Ginzberg, Shmuel Rotbard, and Israel Moshe Levy in the form of interest-free demand loans. As of April 30, 2023 and October 31, 2022, the balance of related parties loans was $98,381 and $98,381 respectively.
NOTE 4 – EQUITY
Common Stock
The Company has authorized 1,000,000,000 shares of $0.001 par value, common stock.
On July 26, 2022, the Company effected a 1 for 26 reverse stock split of its common stock. All common stock amounts and references have been retroactively adjusted for all figures present to reflect this split unless specifically stated otherwise.
During the three months ended July 31, 2022, the Company raised $50,593 in gross proceeds from the sale of 4,864,668 shares of common stock. Since these shares were sold at $0.0004 prior to the reverse split which was below the par value of $0.001, the Company recorded a discount on common stock of $75,889, which reduced the Company’s equity.
As of April 30, 2023, and October 31, 2022, there were 15,445,078 and 14,883,665 shares of common stock issued and outstanding, respectively.
During the three months ended January 31, 2023
the Company sold 391,412 shares in private placements and raised $23,525 in gross proceeds. Additionally during the three months ended
April 30, 2023, the company issued 170,000 shares to a service provider. These shares were valued at $0.5701 which was the Company’s
closing trading price on the date of issuance, or a total of $96,917 which was categorized as stock based compensation included in general
and administrative expenses for the three months ended April 30, 2023.
Preferred Stock
The Company has 2,500,000 shares of Series A Preferred Stock, $0.001 par value, authorized.
During the three months ended April 30, 2022 split, 162,101 shares of Series A Preferred Stock were converted on a 1,000 to 1 ratio into 6,234,654 shares of common stock.
On
June 23, 2021, the Company amended its Articles of Incorporation and designated 2,500,000
Preferred A-1 shares. On July 2, 2021, the Company awarded Custodian Ventures/David Lazar 1,000,000
Series A-1 Preferred Stock for services performed as Custodian. Each share of Series
A-1 Preferred stock is convertible to 1,000 shares of common stock. Based on this conversion rate, the Custodian would control
approximately 96% of the Company. As a result, since this share issuance represented substantially all of the
Company’s value, the shares were valued at the purchase price of the Preferred Shares of $250,000
on August 24, 2021. The $250,000
was recognized as stock-based compensation, related party in the Company’s Statement of Operations for the period ended
October 31, 2021.
The attributes of the Series A Preferred Stock are as follows:
Dividend Provisions.
Subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of shares of Series A-1 Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, upon any payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the Corporation) on the Common Stock of the Corporation, as and if declared by the Board of Directors, as if the Series A-1 Preferred Stock had been converted into Common Stock.
Liquidation Preference.
In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, the holders of the Series A-1 Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock, or any other series or class of common stock of the Corporation, whether now in existence or hereafter created by amendment to the articles of incorporation of the Corporation or by a certificate of designation, by reason of their ownership thereof, and senior, prior, and in preference to any other series or class of preferred stock of the Corporation, whether now in existence or hereafter created by amendment to the articles of incorporation of the Corporation or by a certificate of designation, an amount per share equal to the price per share actually paid to the Corporation upon the initial issuance of the Series A-1 Preferred Stock (each, the “the Original Issue Price”) for each share of Series A-1 Preferred Stock then held by them, plus declared but unpaid dividends. Unless the Corporation can establish a different Original Issue Price in connection with a particular sale of Series A-1 Preferred Stock, the Original Issue Price shall be $0.001 per share for the Series A-1 Preferred Stock. If, upon the occurrence of any liquidation, dissolution, or winding up of the Corporation, the assets and funds thus distributed among the holders of the Series A-1 Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, the entire assets and funds of the corporation legally available for distribution shall be distributed first to the Series A-1 Preferred Stock, and then ratably among the holders of each other series of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive.
Redemption.
The Series A-1 Preferred Stock shares are non-redeemable other than upon the mutual agreement of the Corporation and the holder of shares to be redeemed and even in such case only to the extent permitted by this Certificate of Designation, the Corporation’s Articles of Incorporation, and applicable law.
Conversion.
The holders of the Series A-1 Preferred Stock, shall have conversion rights as follows (the “Conversion Rights”):
Right to Convert.
Subject to Section 4(c), each share of Series A-1 Preferred Stock shall be convertible, at the option of the holder(s) thereof only, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into one thousand (1,000) fully paid and nonassessable shares of Common Stock (the “Series A-1 Conversion Ratio”).
During the three months ended April 30, 2022, 162,101 shares of Series A Preferred Stock were converted on a 1,000 to 1 ratio into 162,101,000 shares of Common Stock
As of April 30, 2023, and October 31, 2022, there 837,899 and 837,899 shares of Series A Preferred Stock were issued and outstanding, respectively.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
The Company did not have any contractual commitments as of April 30, 2023, and October 31, 2022.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10, Subsequent Events, the Company has analyzed its operations subsequent to April 30, 2023, to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.