UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10–Q
(Mark
One)
|
☒
|
QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
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For the quarterly period ended April 30,
2020
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the transition period from ____________
to ________________
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Commission file number: 000-55233
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iMine
Corporation
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|
(Exact name
of registrant as specified in its charter)
|
|
Nevada
|
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27-3816969
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|
(State or
other jurisdiction of incorporation or organization)
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|
(I.R.S.
Employer Identification No.)
|
8520 Allison
Point Blvd Ste. 223 #87928
Indianapolis, Indiana 46250
(Address of
principal executive offices)
877-464-6388
(Registrant’s telephone number, including area code)
Indicate by
check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No
¨
Indicate by
check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☒ No ¨
Indicate by
check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
|
Large
accelerated filer
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¨
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Accelerated
filer
|
¨
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Non-accelerated filer
|
x
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Smaller
reporting company
|
x
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| |
Emerging
growth company
|
¨
|
If an
emerging growth company, indicate by a check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act ¨
Indicate by
check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ☒
No ¨
Securities
registered pursuant to Section 12(b) of the Act: None
As of June
10, 2020, there were 79,792,286 shares of the issuer’s common
stock, par value $0.001 per share, outstanding.
iMINE CORPORATION
INDEX
FORWARD LOOKING STATEMENTS
This report
contains forward-looking statements regarding our business,
financial condition, results of operations and prospects. Words
such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates” and similar expressions or variations of such
words are intended to identify forward-looking statements, but are
not deemed to represent an all-inclusive means of identifying
forward-looking statements as denoted in this report. Additionally,
statements concerning future matters are forward-looking
statements.
Although
forward-looking statements in this report reflect the good faith
judgment of our management, such statements can only be based on
facts and factors currently known by us. Consequently,
forward-looking statements are inherently subject to risks and
uncertainties and actual results and outcomes may differ materially
from the results and outcomes discussed in or anticipated by the
forward-looking statements. Factors that could cause or contribute
to such differences in results and outcomes include, without
limitation, those specifically addressed under the headings “Risks
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our annual report on Form
10-K for the year ended July 31, 2019, in “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in
this Form 10-Q and information contained in other reports that we
file with the SEC. You are urged not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this report.
We file
reports with the SEC. The SEC maintains a website (www.sec.gov)
that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
SEC, including us.
We
undertake no obligation to revise or update any forward-looking
statements in order to reflect any event or circumstance that may
arise after the date of this report, except as required by law.
Readers are urged to carefully review and consider the various
disclosures made throughout the entirety of this quarterly report,
which are designed to advise interested parties of the risks and
factors that may affect our business, financial condition, results
of operations and prospects.
All
references in this Form 10-Q to the “Company,” “iMine,” “we,” “us,”
“our” and words of like import relate to are to iMine Corporation
and its subsidiary, which is inactive.
PART I –
FINANCIAL INFORMATION
Item 1.
Financial Statements
iMINE
CORPORATION
Consolidated Balance Sheets
(Unaudited)
|
|
|
April 30,
|
|
|
July
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
ASSETS
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
1,115 |
|
|
$ |
1,850 |
|
|
Total Current Assets
|
|
|
1,115 |
|
|
|
1,850 |
|
|
|
|
|
|
|
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|
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TOTAL ASSETS
|
|
$ |
1,115 |
|
|
$ |
1,850 |
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|
|
|
|
|
|
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|
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current Liabilities
|
|
|
|
|
|
|
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Accounts payable and accrued
liabilities
|
|
$ |
65,976 |
|
|
$ |
59,582 |
|
|
Due to related parties
|
|
|
192,406 |
|
|
|
164,706 |
|
|
Convertible notes payable -
related party
|
|
|
554,163 |
|
|
|
371,089 |
|
|
Liabilities from discontinued
operation
|
|
|
19,500 |
|
|
|
19,500 |
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|
Total Current Liabilities
|
|
|
832,045 |
|
|
|
614,877 |
|
|
|
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|
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|
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TOTAL LIABILITIES
|
|
|
832,045 |
|
|
|
614,877 |
|
|
|
|
|
|
|
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Stockholders' Deficit
|
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|
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|
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Common stock: 300,000,000
authorized; $0.001 par value 79,792,286 shares issued and
outstanding at April 30, 2020 and July 31, 2019
|
|
|
79,792 |
|
|
|
79,792 |
|
|
Additional paid in capital
|
|
|
11,660,263 |
|
|
|
11,660,263 |
|
|
Accumulated deficit
|
|
|
(12,570,985 |
) |
|
|
(12,353,082 |
) |
|
Total Stockholders' Deficit
|
|
|
(830,930
|
) |
|
|
(613,027 |
) |
|
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
$ |
1,115 |
|
|
$ |
1,850 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
iMINE
CORPORATION
Consolidated Statements of Operations
(Unaudited)
|
|
|
Three Months Ended
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Nine
Months Ended
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April 30,
|
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April 30,
|
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2020
|
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|
2019
|
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|
2020
|
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|
2019
|
|
|
|
|
|
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|
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Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
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|
|
|
|
|
|
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|
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Operating
expenses
|
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|
|
|
|
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General and administrative
|
|
|
285 |
|
|
|
185 |
|
|
|
935 |
|
|
|
871 |
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Professional fees
|
|
|
25,956 |
|
|
|
7,350 |
|
|
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33,894 |
|
|
|
51,397 |
|
|
Total operating
expenses
|
|
|
26,241 |
|
|
|
7,535 |
|
|
|
34,829 |
|
|
|
52,268 |
|
|
|
|
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|
|
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|
|
|
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Loss from operations
|
|
|
(26,241 |
) |
|
|
(7,535 |
) |
|
|
(34,829 |
) |
|
|
(52,268 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other income and
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Interest and accretion on
convertible notes
|
|
|
(41,847 |
) |
|
|
(68,311 |
) |
|
|
(183,074 |
) |
|
|
(209,538 |
) |
|
Total other expense
|
|
|
(41,847 |
) |
|
|
(68,311 |
) |
|
|
(183,074 |
) |
|
|
(209,538 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Loss before income
taxes
|
|
|
(68,088 |
) |
|
|
(75,846 |
) |
|
|
(217,903 |
) |
|
|
(261,806 |
) |
|
Provision for income taxes
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net loss from continuing
operations
|
|
|
(68,088 |
) |
|
|
(75,846 |
) |
|
|
(217,903 |
) |
|
|
(261,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations, net of tax
|
|
|
- |
|
|
|
(181,125 |
) |
|
|
- |
|
|
|
(659,870 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$ |
(68,088 |
) |
|
$ |
(256,971 |
) |
|
$ |
(217,903 |
) |
|
$ |
(921,676 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Basic and diluted loss per share
of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
Discontinued operations
|
|
|
- |
|
|
|
(0.00 |
) |
|
|
- |
|
|
|
(0.01 |
) |
|
Net loss
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
Basic weighted average number of
common shares outstanding
|
|
|
79,792,286 |
|
|
|
79,792,286 |
|
|
|
79,792,286 |
|
|
|
79,659,502 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
iMINE
CORPORATION
Consolidated Statements of Changes in Stockholders’ Equity
(Deficit)
(Unaudited)
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
|
Number of
Shares
|
|
|
Amount
|
|
|
Paid
in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders'
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - July 31,
2019
|
|
|
79,792,286 |
|
|
$ |
79,792 |
|
|
$ |
11,660,263 |
|
|
$ |
(12,353,082 |
) |
|
$ |
(613,027 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(74,826 |
) |
|
|
(74,826 |
) |
|
Balance - October 31,
2019
|
|
|
79,792,286 |
|
|
|
79,792 |
|
|
|
11,660,263 |
|
|
|
(12,427,908 |
) |
|
|
(687,853 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(74,989 |
) |
|
|
(74,989 |
) |
|
Balance - January 31,
2020
|
|
|
79,792,286 |
|
|
|
79,792 |
|
|
|
11,660,263 |
|
|
|
(12,502,897 |
) |
|
|
(762,842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(68,088 |
) |
|
|
(68,088 |
) |
|
Balance - April 30,
2020
|
|
|
79,792,286 |
|
|
$ |
79,792 |
|
|
$ |
11,660,263 |
|
|
$ |
(12,570,985 |
) |
|
$ |
(830,930
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Stockholders'
|
|
|
|
|
Number of
Shares
|
|
|
Amount
|
|
|
Paid
in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Equity
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - July 31,
2018
|
|
|
78,542,286 |
|
|
$ |
78,542 |
|
|
$ |
11,365,925 |
|
|
$ |
(11,335,439 |
) |
|
$ |
109,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
1,250,000 |
|
|
|
1,250 |
|
|
|
223,750 |
|
|
|
- |
|
|
|
225,000 |
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(124,500 |
) |
|
|
(124,500 |
) |
|
Balance - October 31,
2018
|
|
|
79,792,286 |
|
|
|
79,792 |
|
|
|
11,589,675 |
|
|
|
(11,459,939 |
) |
|
|
209,528 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(540,205 |
) |
|
|
(540,205 |
) |
|
Balance - January 31,
2019
|
|
|
79,792,286 |
|
|
|
79,792 |
|
|
|
11,589,675 |
|
|
|
(12,000,144 |
) |
|
|
(330,677 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(256,971 |
) |
|
|
(256,971 |
) |
|
Balance - April 30,
2019
|
|
|
79,792,286 |
|
|
$ |
79,792 |
|
|
$ |
11,589,675 |
|
|
$ |
(12,257,115 |
) |
|
$ |
(587,648 |
) |
The
accompanying notes are an integral part of these consolidated
financial statements.
iMINE
CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Nine
Months Ended
|
|
|
|
|
April 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(217,903 |
) |
|
$ |
(921,676 |
) |
|
Net loss from discontinued
operations
|
|
|
- |
|
|
|
(659,870 |
) |
|
Net loss from continuing
operations
|
|
|
(217,903 |
) |
|
|
(261,806 |
) |
|
Adjustments to reconcile net
loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Accrued interest and accretion
on convertible notes
|
|
|
183,074 |
|
|
|
190,839 |
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
- |
|
|
|
(4,350 |
) |
|
Accounts payable and accrued
liabilities
|
|
|
6,394 |
|
|
|
34,471 |
|
|
Due to related parties
|
|
|
27,700 |
|
|
|
- |
|
|
Net cash used in operating
activities - continuing operations
|
|
|
(735 |
) |
|
|
(40,846 |
) |
|
Net cash used in operating
activities - discontinued operations
|
|
|
- |
|
|
|
(11,020 |
) |
|
Net cash used in operating
activities
|
|
|
(735 |
) |
|
|
(51,866 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
|
|
(735 |
) |
|
|
(51,866 |
) |
|
Cash and cash equivalents,
beginning of period
|
|
|
1,850 |
|
|
|
53,971 |
|
|
Cash and cash equivalents, end of
period
|
|
$ |
1,115 |
|
|
$ |
2,105 |
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow
information
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
|
Cash paid for taxes
|
|
$ |
- |
|
|
$ |
- |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
iMINE
CORPORATION
Notes to Unaudited Consolidated Financial
Statements
NOTE 1 - ORGANIZATION AND BUSINESS OPERATIONS
iMine
Corporation (the “Company”) is a Nevada corporation incorporated on
October 26, 2010 under the name Oconn Industries. The Company’s
name was changed to Oconn Industries Corp. on February 16, 2012, to
Diamante Minerals, Inc. on April 1, 2014, and to iMine Corporation
on March 20, 2018. The change of name to iMine Corporation was
effected through the merger of the Company’s wholly-owned
subsidiary, iMine Corporation, a Nevada corporation, into the
Company. The Company has one subsidiary, iMine Corporation, an
Indiana corporation, which is inactive.
During
2018, the Company was engaged in the development of the business of
selling computer equipment which can be used for the mining of
cryptocurrency. As a result of the decline in the price of
cryptocurrency, which made the purchase of the Company’s equipment
uneconomical, the Company has discontinued that business, which is
reflected as a discontinued operation, and the value of the prepaid
inventory, which was the only asset of the discontinued operation
at July 31, 2019, was fully reserved against. The Company is not
engaged in any business activities and is looking to engage in
another business, either through an acquisition of an existing
business or by engaging a management team to develop a new
business. The Company does not have any agreement to acquire any
company or to bring on a management team to commence new business
activities. The Company cannot give assurance that it will be
successful in attracting either an acquisition candidate or a new
management team. Any business the Company may acquire may be an
operating business or a business with no history of earnings that
is seeking to develop its business. Because of the Company’s
financial condition and the market for and market price of its
common stock, the Company does not believe that it would be an
attractive candidate for a profitable business that is looking to
go public through a reverse acquisition.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Presentation of Interim Information
The
accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles in the United States of America (“US GAAP”) for interim
financial information and with Rule 8-03 of Regulation S-X.
Accordingly, the financial statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. Notes to the
unaudited interim consolidated financial statements that would
substantially duplicate the disclosures contained in the audited
financial statements for the year ended July 31, 2019 have been
omitted. These financial statements should be read in conjunction
with the audited financial statements and the footnotes thereto for
the fiscal year ended July 31, 2019 included within the Company’s
Annual Report on Form 10-K.
In the
opinion of management, all adjustments consisting of normal
recurring entries necessary for a fair statement of the periods
presented for: (a) the financial position; (b) the result of
operations; and (c) cash flows, have been made in order to make the
financial statements presented not misleading. The results of
operations for such interim periods are not necessarily indicative
of operations for a full year.
Principles of Consolidation
The
accompanying consolidated financial statements, including the
accounts of the Company and its wholly-owned subsidiary, iMine
Corporation, an Indiana corporation. All material intercompany
accounts, transactions, and profits have been eliminated in
consolidation.
Use of
Estimates
The
preparation of the accompanying consolidated financial statements
in conformity with US GAAP requires management to make certain
estimates and assumptions that directly affect the results of
reported assets, liabilities, revenue, and expenses, including the
valuation of non-cash transactions. Actual results may differ from
these estimates.
Reclassification
Certain
reclassifications have been made to the prior year financial
statements to conform to the current period presentation. The
reclassification had no impact on previously reported net loss or
accumulated deficit.
Fair
Value of Financial Instruments
As defined
in ASC 820” Fair Value Measurements,” fair value
is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). The Company
utilizes market data or assumptions that market participants would
use in pricing the asset or liability, including assumptions about
risk and the risks inherent in the inputs to the valuation
technique. These inputs can be readily observable, market
corroborated, or generally unobservable. The Company classifies
fair value balances based on the observability of those inputs. ASC
820 establishes a fair value hierarchy that prioritizes the inputs
used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for
identical assets or liabilities (level 1 measurement) and the
lowest priority to unobservable inputs (level 3 measurement).
The
following table summarizes fair value measurements by level at
April 30, 2020, measured at fair value on a recurring basis:
|
|
|
April 30,
2020
|
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable Inputs
(Level3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
1,115 |
|
|
$ |
1,115 |
|
|
$ |
- |
|
|
$ |
- |
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes payable
|
|
|
554,163 |
|
|
|
- |
|
|
|
554,163 |
|
|
|
- |
|
Revenue
Recognition
The Company
recognizes revenue in accordance with Topic 606, which requires the
Company to recognize revenues when control of the promised goods or
services is transferred to customers at an amount that reflects the
consideration to which the Company expects to be entitled to in
exchange for those goods or services. The Company recognizes
revenue based on the five criteria for revenue recognition
established under Topic 606: 1) identify the contract, 2) identify
separate performance obligations, 3) determine the transaction
price, 4) allocate the transaction price among the performance
obligations, and 5) recognize revenue as the performance
obligations are satisfied. The Company has not realized any
revenues from operations, and is not currently engaged in any
active business.
Stock-based expenses
The Company
accounts for stock-based compensation arrangements with employees,
nonemployee directors and consultants using a fair value method,
which requires the recognition of compensation expense for costs
related to all stock-based payments, including stock options, on a
straight-line basis over the requisite service period in the
Company’s consolidated statements of operations. The fair value
method requires the Company to estimate the fair value of
stock-based payment awards on the date of grant.
Income
Taxes
The Company
provides for income taxes under ASC 740, Accounting for Income
Taxes. ASC 740 requires the use of an asset and liability approach
in accounting for income taxes. Deferred tax assets and liabilities
are recorded based on the differences between the financial
statement and tax bases of assets and liabilities and the tax rates
in effect when these differences are expected to reverse.
ASC 740
requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more
likely than not that some or all of the deferred tax assets will
not be realized.
Concentrations of Credit Risk
The
Company’s financial instruments that are exposed to concentrations
of credit risk primarily consist of its cash and related party
payables it will likely incur in the near future. The Company
places its cash with financial institutions of high credit
worthiness. At times, its cash balance with a particular financial
institution may exceed any applicable government insurance limits.
The Company’s management plans to assess the financial strength and
credit worthiness of any parties to which it extends funds, and as
such, it believes that any associated credit risk exposures are
limited.
Net Loss
per Share of Common Stock
The Company
calculates net loss per share in accordance with ASC Topic 260,
“Earnings per Share.” Basic loss per share is computed by dividing
the net loss by the weighted average number of shares of common
stock outstanding during the period. Diluted earnings per share is
computed by dividing net earnings by the weighted average number of
shares and potential shares outstanding during the period.
Potential shares of common stock consist of shares issuable upon
the conversion of outstanding convertible debt. As of April 30,
2020, there were 27,708,150common stock equivalents that were not
included in the calculation of dilutive earnings per share as their
effect would be anti-dilutive.
Recent
Accounting Pronouncements
The Company
has implemented all new pronouncements that are in effect and that
may impact its consolidated financial statements and does not
believe that there are any other new accounting pronouncements that
have been issued that might have a material impact on its
consolidated financial statements or results of operations.
NOTE 3 - GOING CONCERN AND LIQUIDITY
CONSIDERATIONS
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which
contemplates the realization of assets and the liquidation of
liabilities in the normal course of business. During the nine
months ended April 30, 2020, the Company incurred a net loss of
$217,903. As of April 30, 2020, the Company had an accumulated
deficit of $12,570,985 and has earned no revenues since inception
and was not engaged in an active business. In order to continue as
a going concern, the Company will need, among other things,
additional capital resources. In addition, convertible notes in the
principal amount of $500,000, which are held by the Company’s sole
director and officer have matured as to $350,000 at April 30, 2020
and the balance is due on various dates through June 1, 2020.
The Company does not presently have the funds to pay these
notes. Although management plans to seek to raise necessary
funding through equity financing arrangements, any such financing
may be insufficient to fund its capital expenditures, working
capital and other cash requirements for the year ended July 31,
2020. However, until the Company engages in an active business or
makes an acquisition the Company is not likely to be able to raise
any significant debt or equity financing.
The ability
of the Company to begin operations in any new business is dependent
upon, among other things, obtaining financing to commence
operations and develop a business plan or making an acquisition.
The Company cannot give any assurance as to its ability to develop
or acquire a business or to operate profitably.
These
factors, among others, raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
NOTE 4 – DISCONTINUED OPERATION
The change
of the business qualified as a discontinued operation of the
Company (Note 1). In conjunction with the discontinued operations,
the Company has excluded results of discontinued operations from
its consolidated statements of operations to classify that business
as discontinued operations in all periods presented. The
liabilities of the discontinued operations were presented
separately under the captions “Liabilities from discontinued
operation” in the accompanying consolidated balance sheets at April
30, 2020 and July 31, 2019.
The
following table shows the results of operations which are included
in the loss from discontinued operations:
|
|
|
Three Months Ended
|
|
|
Nine
Months Ended
|
|
|
|
|
April 30,
|
|
|
April 30,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
Revenue
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
Cost of revenue
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Inventory
valuation reserve
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(404,350 |
) |
|
Gross profit
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(404,350 |
) |
|
General and
administrative
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(27,520 |
) |
|
Stock based
compensation
|
|
|
- |
|
|
|
(181,125 |
) |
|
|
- |
|
|
|
(228,000 |
) |
|
Operating loss
|
|
|
- |
|
|
|
(181,125 |
) |
|
|
- |
|
|
|
(659,870 |
) |
|
Income tax provision
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Loss from discontinued
operations, net of tax
|
|
$ |
- |
|
|
$ |
(181,125 |
) |
|
$ |
- |
|
|
$ |
(659,870 |
) |
The
following table summarizes the carrying amounts of the net
liabilities from discontinued operations as of April 30, 2020 and
July 31, 2019, respectively.
|
|
|
April 30,
|
|
|
July
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Liabilities
from discontinued operations
|
|
|
|
|
|
|
|
Advance
from customer
|
|
$ |
19,500 |
|
|
$ |
19,500 |
|
NOTE 5 - RELATED PARTY TRANSACTIONS
On March
19, 2018, the Company entered into a one-year employment agreement
with the former chief executive officer, who was also the sole
director, pursuant to which the Company issued to him 17,500,000
shares of common stock, valued at $980,000, and agreed to pay him
$164,706 to cover the federal income tax on the value of the stock
and the tax payment. The shares are fully vested. As of April 30,
2020 and July 31, 2019, $164,706 was reflected as an amount due to
related parties.
In 2018,
the Company issued convertible notes in the principal amount of
$500,000 to an unrelated party who, in August 2019, became the
Company’s sole officer and director (see Note 6). As a result of
the investor becoming the Company’s sole officer and director,
these notes were reclassified as convertible notes – related
party.
During the
nine months ended April 30, 2020, the Company’s shareholder paid
operating expenses of $27,700 on behalf of the Company.
NOTE 6 - CONVERTIBLE NOTES – RELATED
PARTY
At April
30, 2020 and July 31, 2019, convertible note consisted of the
following:
|
|
|
April 30,
|
|
|
July
31,
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Convertible
promissory notes issued
|
|
$ |
500,000 |
|
|
$ |
500,000 |
|
|
Less
discount
|
|
|
- |
|
|
|
(162,179 |
) |
|
Total
convertible note
|
|
|
500,000 |
|
|
|
337,821 |
|
|
Accrued
interest
|
|
|
54,163
|
|
|
|
33,268 |
|
|
Liability
component
|
|
$ |
554,163
|
|
|
$ |
371,089 |
|
Pursuant to
a note purchase agreement dated March 20, 2018 between the Company
and a then non-affiliated lender, the lender made loans to the
Company in the total amount of $500,000, for which the Company
issued two-year 5% convertible notes. The notes are convertible
into common stock of the Company at $0.02 per share. The Company
agreed to grant the lender a security interest in equipment which
was purchased from the proceeds of the notes. The equipment was not
been delivered to the Company. The Company is in default of its
obligation to grant the lender a security interest in the inventory
and the Company did not obtain physical possession of the
inventory. The lender was appointed as a director, chief executive
officer, chief financial officer, president and secretary of the
Company on August 14, 2019 upon the resignation of the Company’s
previous sole director and officer.
Interest of
5% is payable annually until the settlement date. The note is
currently in default and default interest rate is 12 % per annum.
No interest was paid during the nine months ended April 30,
2020.
NOTE 7 - COMMON STOCK
Issuance
of Common Stock
During the
nine months ended April 30, 2020, there were no issuance of common
stock. During the nine months ended April 30, 2019, the Company
issued 1,250,000 shares, to a consultant for consulting services of
$225,000, based on the market price on the date of issuance.
As of April
30, 2020 and July 31, 2019, the Company had no options and warrants
outstanding.
At April
30, 2020, the principal and accrued interest on the convertible
notes described in Note 6 were convertible into 27,708,150 shares
of common stock.
NOTE 8 – SUBSEQUENT EVENT
Subsequent to April 30,
2020, convertible notes in the principal amount of $150,000
matured, and, at June 1, 2020, the total principal amount of
convertible notes described in Note 6 had matured.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
Overview
Prior to
March 16, 2018, we were engaged in the development of mining
assets. We never generated any revenue from this business and,, as
of April 30, 2018, all of the assets associated with the mining
business were fully reserved against and have no value. On March
16, 2018, we had a change in management, with the resignation of
our sole director and chief executive officer and our chief
financial officer, and the appointment of a new director and chief
executive officer, who became our sole executive officer. With the
change of management, we changed our business to developing the
business of designing and selling computer equipment which can be
used for the mining of cryptocurrency. In April 2019, our sole
director and officer resigned and we discontinued the business of
designing and selling computer equipment for the cryptocurrency
business, from which we did not generate any revenue. On August 14,
2019, the then sole officer and director resigned and Jose Maria
Eduardo Gonzalez Romero was appointed as our sole officer and
director. At the time, Mr. Romero was our largest creditor, having
purchased, for $500,000, our 5% convertible notes in the principal
amount of $500,000, of which $350,000 had matured as of April 30,
2020 and the full $500,000 had matured as of June 1, 2020. We
are now in the process of looking for a new business, either
through an acquisition or commencing new business activities with a
new management team. Although we have had discussions with
potential acquisition candidates, as of the date of this report, we
have not signed any agreement, letter of intent or memorandum of
understanding with respect to any potential acquisition or
management group, and we cannot assure you that we will be able to
make any acquisition. Because of our financial condition, the low
price and lack of liquidity of our stock, and our stock being
traded on the OTC Pink, and the outstanding convertible debt, it is
not likely that we will be able to acquire any company other than a
company without a history of earnings. In such event, we will need
to raise a significant amount of funds. We have no assurance that
financing will be available to us on acceptable, if any, terms. If
financing is not available on satisfactory terms, we may be unable
to continue, develop or expand our operations. The terms of any
acquisition or any equity financing is likely to result in
substantial dilution to existing stockholders.
During the
period from March through June 2018, we raised $500,000 from the
sale of our convertible notes in the principal amount of $500,000
to Mr. Romero, who, at the time, was not a related party. The
proceeds of these notes were used to purchase inventory for our
cryptocurrency mining equipment business and for working capital
purposes, including expenses relating to our status as a public
company. Pursuant to the loan agreement, we were to give Mr. Romero
a security interest in this equipment. The equipment was never
delivered to us in the United States and we did not grant Mr.
Romero a security interest in the inventory, which was a beach of
our agreement. The value of the inventory was written down to zero.
We anticipate that in connection with any acquisition or financing,
it may be necessary for us to pay the principal and interest on the
notes to Mr. Romero. The need to make this payment or renegotiate
the terms of the notes may affect our ability to make an
acquisition or, if we can make an acquisition, the terms of the
acquisition. As a result of our failure to pay the notes on
the maturity date, the interest rate, from and after the maturity
date, accrued at 12% per annum.
Results
of Operations
Three
and nine months Ended April 30, 2020 and 2019
For the three months
ended April 30, 2020, we incurred operating expenses of $26,241,
primarily professional fees, resulting in a loss from operations of
$26,241. Other expenses consisted of interest and accretion on
convertible notes of $41,847, resulting in a net loss from
continuing operations and a net loss of $68,088, or ($0.00) per
share (basic and diluted). We did not have any loss from
discontinued operations for the three months ended April 30, 2020.
For the three months ended April 30, 2019, we incurred operating
expenses of $7,535, primarily professional fees, resulting in a
loss from operations of $7,535. Other expenses consisted of
interest and accretion on convertible notes of $68,311, resulting
in a net loss from continuing operations of $75,846 or ($0.00) per
share (basic and diluted). Our loss from discontinued operations
was $181,125, or ($0.00) per share (basic and diluted). Our net
loss was $256,971, or ($0.00) per share (basic and diluted).
For the
nine months ended April 30, 2020, we incurred operating expenses of
$34,829, primarily professional fees, resulting in a loss from
operations of $34,829. Other expenses consisted of interest
and accretion on convertible notes of $183,074, resulting in a net
loss from continuing operations and a net loss of $217,903, or
($0.00) per share (basic and diluted). We did not have any loss
from discontinued operations for the nine months ended April 30,
2020. For the nine months ended April 30, 2019, we incurred
operating expenses of $52,268, primarily professional fees,
resulting in a loss from operations of $52,268. Other expenses
consisted of interest and accretion on convertible notes of
$209,538, resulting in a net loss from continuing operations of
$261,806, or ($0.00) per share (basic and diluted). Our loss
from discontinued operations was $659,870, or ($0.01) per share
(basic and diluted). Our loss from discontinued operations resulted
primarily from the writeoff of inventory associated with our former
business. Our net loss was $921,676, or ($0.01) per share
(basic and diluted).
Liquidity and Capital Resources
The
following summarizes our change in working capital from July 31,
2019 to April 30, 2020:
|
|
|
April 30,
2020
|
|
|
July
31,
2019
|
|
|
Change
|
|
|
%
Change
|
|
|
Current
assets
|
|
$ |
1,115 |
|
|
$ |
1,850 |
|
|
$ |
(735 |
) |
|
|
(39.7 |
%) |
|
Current
liabilities
|
|
|
832,045 |
|
|
|
614,877 |
|
|
|
217,168 |
|
|
|
35.3
|
%
|
|
Working
capital (deficiency)
|
|
$ |
(830,930 |
) |
|
$ |
(613,027 |
) |
|
|
(217,903 |
) |
|
|
(35.6
|
%)
|
The
following table summarizes our cash flow for the nine months ended
April 30, 2020 and 2019:
|
|
|
Nine months
ended
April
30,
|
|
|
|
|
2010
|
|
|
2019
|
|
|
Cash flow
used in operating activities
|
|
$ |
(735 |
) |
|
$ |
(51,866 |
) |
|
Net changes
in cash
|
|
|
(735 |
) |
|
|
(51,866 |
) |
The cash flow used in
operating activities for the nine months ended April 30, 2020
reflects our net loss of $217,903, increased by accrued interest
and accretion on convertible notes of $183,074, and increases in
accounts payable and accrued liabilities of $6,394 and due to
related parties of $27,700. The cash flow used in operating
activities for the nine months ended April 30, 2019 reflects the
net loss from continuing operations of $261,806, increased by
accrued interest and accretion on convertible notes of $190,839 and
an increases in accounts payable and accrued liabilities of
$34,471and decreased by an increase in prepaid expenses of
$4,350.
For the
nine months ended April 30, 2020 and 2019, we did not have any cash
flow from investing or financing activities or non-cash
transactions.
Going
Concern
Our financial
statements have been prepared assuming that we will continue as a
going concern, which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business. During
the nine months ended April 30, 2020, we incurred a net loss of
$217,903. As of April 30, 2020, we had an accumulated deficit of
$12,570,985, we had earned no revenues since inception and we were
not engaged in an active business. In order to continue as a going
concern, we will need, among other things, additional capital
resources. In addition, convertible notes in the principal amount
of $500,000, which are held by our sole director and officer, have
matured as to $350,000 at April 30, 2020 and the balance was due
June 1, 2020. We do not presently have the funds to pay these
notes. Although we plan to seek to raise funding through equity
financing arrangements, any such financing may be insufficient to
fund our capital expenditures, working capital and other cash
requirements for the year ended July 31, 2020. However, until we
engage in an active business or make an acquisition, we are not
likely to be able to raise any significant debt or equity
financing.
Our ability to begin
operations in any new business is dependent upon, among other
things, obtaining financing to commence operations and develop a
business plan or making an acquisition. We cannot give any
assurance as to our ability to develop or acquire a business or to
operate profitably. These factors, among others, raise substantial
doubt about our ability to continue as a going concern. The
accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Off-Balance Sheet Arrangements
We do not have any
off-balance sheet arrangements.
Critical
Accounting Policies
Use of
Estimates: The preparation of the accompanying
consolidated financial statements in conformity with GAAP requires
management to make certain estimates and assumptions that directly
affect the results of reported assets, liabilities, revenue, and
expenses, including the valuation of non-cash transactions. Actual
results may differ from these estimates.
Revenue
Recognition:
We recognize revenues
in accordance with Topic 606, which requires us to recognize
revenues when control of the promised goods or services is
transferred to customers at an amount that reflects the
consideration to which we expect to be entitled to in exchange for
those goods or services. We recognize revenue based on the five
criteria for revenue recognition established under Topic 606: 1)
identify the contract, 2) identify separate performance
obligations, 3) determine the transaction price, 4) allocate the
transaction price among the performance obligations, and 5)
recognize revenue as the performance obligations are satisfied. We
have not realized any revenues from operations, and are not
currently engaged in any active business.
Share-based
expenses
In accordance with ASC
718 “Compensation – Stock Compensation” we account for stock-based
compensation arrangements with employees, nonemployee directors and
consultants using a fair value method, which requires the
recognition of compensation expense for costs related to all
stock-based payments, including stock options, on a straight-line
basis over the requisite service period in the Company’s
consolidated statements of operations. The fair value method
requires the Company to estimate the fair value of stock-based
payment awards on the date of grant.
Net Loss per Share
of Common Stock
We calculate net loss
per share in accordance with ASC Topic 260, “Earnings per Share.”
Basic loss per share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding
during the period. Diluted loss per share is computed similar to
basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common stock equivalents had been
issued and if the additional shares of common stock were dilutive.
Diluted earnings per share excludes all dilutive potential shares
if their effect is anti-dilutive.
Recent Accounting
Pronouncements
We have implemented all
new pronouncements that are in effect and that may impact our
consolidated financial statements and we do not believe that there
are any other new accounting pronouncements that have been issued
that might have a material impact on our consolidated financial
statements or results of operations.
Item 3. Quantitative and Qualitative
Disclosures About Market Risk.
Not Applicable.
Item 4.
Controls and Procedures.
Evaluation of Disclosure Controls and
Procedures
We
conducted an evaluation of the effectiveness of our “disclosure
controls and procedures” (“Disclosure Controls”), as defined by
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as of April 30, 2020, the
end of the period covered by this quarterly report on Form 10-Q.
The Disclosure Controls evaluation was done under the supervision
and with the participation of management, including our chief
executive officer and chief financial officer, which positions are
held by the same person who assumed such positions on August 14,
2019 and who is our only employee and who does not work for us on a
full-time basis. There are inherent limitations to the
effectiveness of any system of disclosure controls and procedures.
Accordingly, even effective disclosure controls and procedures can
only provide reasonable assurance of achieving their control
objectives. Based upon this evaluation, our chief executive officer
and chief financial officer, concluded that, due to the inadequacy
of our internal controls over financial reporting, our sole
employee being our chief executive and financial officer and sole
director and our limited internal audit function, our disclosure
controls were not effective as of April 30, 2020, such that the
information required to be disclosed by us in reports filed under
the Securities Exchange Act of 1934 is (i) recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms and (ii) accumulated and communicated to the
president and treasurer, as appropriate to allow timely decisions
regarding disclosure.
Changes in Internal Control over Financial
Reporting
As reported
in our annual report on Form 10-K for the year ended July 31, 2019,
management has determined that our internal controls contain
material weaknesses due to the absence of segregation of duties, as
well as lack of qualified accounting personnel and excessive
reliance on third party consultants for accounting, financial
reporting and related activities. The lack of any separation of
duties, with the same person, who is our only employee who serves
as both chief executive officer and chief financial officer, who is
our sole director and who does not have an accounting background
and serves on a part-time basis, makes it unlikely that we will be
able to implement effective internal controls over financial
reporting in the near future.
During the
period ended April 30, 2020, there was no change in our internal
control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) that has materially affected, or
is reasonably likely to materially affect, our internal control
over financial reporting.
PART II –
OTHER INFORMATION
Item 6.
Exhibits.
Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
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IMINE CORPORATION
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Dated:
June 15, 2020
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/s/
Jose Maria Eduardo Gonzalez Romero
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Jose Maria
Eduardo Gonzalez Romero
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Chief
Executive Officer and Chief Financial Officer
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