NOTES
TO THE FINANCIAL STATEMENTS
MARCH 31, 2020
NOTE
1 – ORGANIZATION AND NATURE OF BUSINESS
Earth
Life Sciences Inc. (the “Company”) was incorporated in the state of Nevada on November 2, 2001. Originally the corporate
name was Altus Explorations, Inc. On June 2, 2014 the Company changed its name to Earth Life Sciences Inc.
On
October 1, 2010, the Company entered into a Share Exchange Agreement (the “Agreement”) with UWD Unitas World Development
Inc. (“UWD”), a privately held Canadian incorporated company. Pursuant to the Agreement, the Company issued 80,000,000
shares of common stock for the acquisition 100% of the issued shares of Canadian Tactical Training Academy Inc (“CTTA”).
The Company operations consisted of the training of law enforcement, security, investigation and protection for officers and individuals.
During the year ended December 31, 2015 the Company discontinued the operations of CTTA and returned the shares of CTTA.
On
June 12, 2015, the Company, through an option agreement, issued 225,000,000 shares to Mr. Song Bo, to earn the mineral rights
for the White Channel mineral claims located in British Columbia. . The Company embarked on mineral exploration programs until
October 2017. As of December 31, 2017, the Company terminated exploration and development of the White Channel property. The Company
never received any payments as contemplated in the option agreement. In 2020 the Company returned the 225,000,000 shares to the
Company’s transfer agent for cancellation.
The
Company has entered into the transportation software market (Note 3).
These
financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets
and discharge its liabilities in the normal course of business. The Company is unlikely to pay dividends or generate significant
earnings in the immediate or foreseeable future. The continuation of the Company as a going concern and the ability of the Company
to emerge from the Development stage are dependent upon management’s successful efforts to raise additional equity financing to
continue operations and generate sustainable significant revenues.
These
financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company will require significant
additional financial resources and will be dependent on future financings to fund its ongoing operations as well as other working
capital requirements. There is no guarantee that management will be able to raise adequate equity financings or generate profits
from operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
Management
of the Company has undertaken steps as part of a plan with the goal of sustaining Company operations for the next twelve months
and beyond. These steps include: (a) continuing efforts to raise additional capital and/or other forms of financing; and (b) controlling
overhead and expenses. Management is aware that material uncertainties exist, related to current economic conditions, which could
cast a doubt about the Company’s ability to continue to finance its activities. It is to be expected that the Company may incur
further losses in the Development of its business and there can be no assurance that any of these efforts will be successful.
NOTE
2 - SUMMARY OF ACCOUNTING POLICIES
Basis
of Presentation
The
financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United
States of America (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.
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 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 periods. Actual results could materially differ
from those estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination
of impairment of long-lived assets, expected tax rates for future income tax recoveries and determining the fair values of financial
instruments.
Equipment
Equipment
is recorded at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses
on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated
useful lives of the assets.
Impairment
of Assets
The
Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that
the historical carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value
cost of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If
the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference
between the asset’s carrying value and fair value.
Other
Comprehensive Income
The
Company reports and displays comprehensive income and its components in the financial statements. During the periods ended March
31, 2019 and 2018, the Company recorded unrealized foreign exchange gains of $nil and $nil respectfully.
Income
Taxes
The
Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income tax assets and
liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements
carrying amounts of 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.
The
Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would
more likely than not sustain the position following an audit. For tax positions meeting this standard, the amount recognized in
the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate
settlement with the relevant tax authority.
Basic
and Diluted Loss per Share
Basic
loss per share is computed using the weighted average number of common shares outstanding during the year. Diluted earnings per
share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common
stock. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method
and the effect of convertible securities by the “if converted” method. For the years presented, diluted loss per share
is equal to basic loss per share as the effect of the computations are anti-dilutive.
Financial
Instruments
The
Company’s balance sheet includes financial instruments, specifically accounts payable, accrued expenses, and payables to
related parties. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively
short period of time between the origination of these instruments and their expected realization.
ASC
820, Fair Value Measurements and Disclosures, defines fair value 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 820 also establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources
(observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the
best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels,
which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and
the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level
1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets
or liabilities
Level
2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar
assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability
(e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation
or other means.
Level
3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair
value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as
of March 31, 2019. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values
due to the short-term nature of these instruments.
Revenue
Recognition
The
Company follows ASC 605, Revenue Recognition -The Company recognizes revenue when it is realized or realizable and earned. The
Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence
of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales
price is fixed or determinable, and (iv) collectability is reasonably assured. The Company provides services to companies on a
time and materials basis and recognizes revenues upon billing of time and materials at which all services have been completed
and there is no warranty or returns on services.
Deferred
Income Taxes and Valuation Analysis
The
Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements
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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not
that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized
as of March 31, 2019 or December 31, 2018.
Net
Income (loss) per Common Share
Net
income (loss) per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number
of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per
share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential
common shares are additional common shares assumed to be exercised.
Basic
net income (loss) per common share is based on the weighted average number of shares of common stock outstanding at March 31,
2019 and 2018.
Share
Based Compensation
ASC
718, Compensation – Stock Compensation, prescribes accounting and reporting standards for all share-based payment
transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue
shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based
payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements
based on their fair values. That expense is recognized over the period during which an employee is required to provide services
in exchange for the award, known as the requisite service period (usually the vesting period).
The
Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC
505-50, Equity – Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees
is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments
issued.
Share-based
expense for the periods ended March 31, 2020 and 2019 totaled $1,787,500 and $nil, respectively.
NOTE
3 – SOFTWARE TECHNOLOGY
The
Company entered into an agreement with the Software Group in January of 2020. The Company issued 32,000,000 restricted common
shares to the four members of the Software Group as general consideration. The Company also issued 325,000,000 million common
shares to an escrow agent. Pursuant to the terms of the agreement the escrow agent will transfer 125,000 million shares to the
Software Group upon the Company receiving a working version of the software and necessary support documentation, after testing,
acceptance, and license transfer of the software. Further transfer of 100 million shares held by the escrow agent will be based
on gross sales of $1 million being reached in a consecutive twelve-month period within 3 years, and a further 100 million shares
after gross sales of $5 million being reached in a consecutive twelve-month period within 5 years. All shares issued were restricted.
NOTE
4 – CONVERTIBLE NOTE PAYABLE
As
at March 31, 2020, the Company had a convertible note payable totaling $32,720 (December 31, 2019 - $32,720). The convertible
note was issued in 2011 and has no interest rate and no fixed terms of repayment. The Note is convertible into common shares at
$0.001 per share. Currently, the note could be converted to 32,720,000 shares.
NOTE
5 – COMMON STOCK
As
at March 31, 2020, the Company had 500,000,000 shares of $0.001 par value common shares authorized.
NOTE
6 – INCOME TAXES
The
Company is subject to United States federal and state income taxes at an approximate rate of 35%. The amount taken into income
as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to
be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income
tax loss carry forwards, regardless of their time of expiry.
No
provision for income taxes has been provided in these financial statements due to the net loss for the periods ended March 31,
2019 and 2018. The potential tax benefit of these losses may be limited due to certain change in ownership provisions under Section
382 of the Internal Revenue Code and similar state provisions.