Notes to Financial Statements
November 30, 2021
(Unaudited)
NOTE 1 – ORGANIZATION AND OPERATIONS
Jubilant Flame International, Ltd. (the “Company”), was formed on September 29, 2009 under the name Liberty Vision, Inc. The Company provided web development and marketing services for clients. On December 5, 2012 the Company disposed of its subsidiary corporation to a shareholder for a nominal sum, as well as other management operations. On August 18, 2015, the Company changed its name to Jubilant Flame International, Ltd.
From the fourth quarter of the fiscal year ended February 28, 2018, the Company started to market and sell cosmetics products imported from Asia -Acropass Series products – in the United States market. The Company purchased the inventory from a related party company in China. The Company contracted with a third party to operate the online shopping platform and marketing campaign in the United States until January 2020 when it ceased this business.
From the third quarter of the year ended February 29, 2020, the company began providing technical support services for development of new nutrition food products to sell to customers in the United States.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Interim Financial Information
Interim financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) as promulgated in Item 210 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position as of November 30, 2021, results of operations, changes in stockholders’ equity (deficit) and cash flows for the nine month periods ended November 30, 2021 and 2020, as applicable, have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Form 10-K.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
The Company’s significant estimates include income tax provisions and valuation allowances of deferred tax assets; the fair value of financial instruments and the assumption that the company will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Recent Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years beginning after 15 December 2021, and interim periods within those fiscal years, beginning after December 15, 2022 on a prospective basis, with early adoption permitted. We will adopt the new standard effective March 1, 2022 and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
Net Income Per Common Share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.
Since the company has incurred losses for all periods except the second quarter ended at August 31, 2021, the impact of the common stock equivalents would be anti- dilutive and therefore are not included in the calculation in those periods.
NOTE 3 – 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. As of November 30, 2021 the Company had current assets of $41,011, and current liabilities total $1,187,567 resulting in a working capital deficit of $1,146,556. The Company currently only has small scale operation activities and has an accumulated deficit of $3,633,337 as of November 30, 2021. This raises substantial doubt about the Company’s ability to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or related parties. By doing so, the Company hopes to generate sufficient capital to execute its business plan in the nutrition product technology support sector on an ongoing basis. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. There is no guarantee the Company will be successful in achieving these objectives.
NOTE 4 – ACCOUNTS RECEIVABLE
As of November 30, 2021 the Company had an accounts receivable balance of $9,384 compared with $9,384, February 28, 2021.
NOTE 5 – PREPAID EXPENSE
The Company is paying an annual fee for its OTC Markets service. The current service period is from December 1, 2020 to November 30, 2021. The service charge is recorded as a prepaid expense and amortized using straight line amortization over the service period. In November,2021, the company renewed and paid the service fee for the period from December 1, 2021 to November 30, 2022. The prepaid expense balance is $14,000 as of November 30, 2021 compared to $9,000 as of February 28, 2021.
NOTE 6 – RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it must rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its common stock or traditional debt financing. There is no formal written commitment for continued support by shareholders. The advances are considered temporary in nature and have not been formalized by a promissory note.
As of November 30, 2021, the Company had a $583,879 loan outstanding with its CEO, Ms. Yan Li. This compares with the outstanding balance of $551,124 for Ms. Yan Li at February 28, 2021. The loans are non-interest bearing, due upon demand and unsecured.
A related party is providing accounting service to the company at an estimated annual service fee of $19,000.
From November 2017, the Company started to purchase cosmetic products from a related party controlled by our CEO. The Company purchased a total of $47,643 of inventory from two related parties which was sold during the year ended February 29, 2020, the accounts payable balance of which is outstanding as of November 30, 2021 and February 28, 2021.
NOTE 7 – ACCRUED OFFICER COMPENSATION AND STOCK COMPENSATION
On December 15, 2015, the Company entered into an employment agreement with its president, Ms. Yan Li. The agreement was retroactively effective as of December 4, 2015, for a term of 36 months (measured from December 4, 2015). Pursuant to the agreement, both Ms. Yan shall receive an annual salary of $100,500 and 100,000 shares of the Company’s common stock.
On January 15, 2019, the board of the company approved new compensation to its five officers including two new appointed directors. The five directors waived their salary and receive a total of 500,000 shares each year for a term of three years.
As of November 30, 2021, a total of $535,500 had been accrued as salary compensation payable compared to $535,500 at February 28, 2021 to the president only.
During the three months ended November 30, 2021, a total of $4,500 stock compensation had been recorded to the five senior officers compared to $4,500 for the same period in the prior year to five directors.
NOTE 8 – STOCKHOLDERS’ EQUITY
For the quarter ended November 30, 2021, a total of 125,000 equivalent shares valued at $4,500 was recorded as stock compensation expense to be issued at a future date to the president and other four senior officers for their services. It is offset by a same amount of Additional in Capital entry in equity.
For the nine months ended November 30, 2021, a total of 375,000 equivalent shares valued at $13,500 was recorded as stock compensation expense to be issued at a future date to the president and other four senior officers for their services. It is offset by a same amount of Additional in Capital entry in equity.
NOTE 9 – SUBSEQUENT EVENTS
In accordance with ASC 855-10 “Subsequent Events”, the company has analyzed its operations subsequent to November 30, 2021, to January 7, 2022, the date when the financial statements were issued. The Management of the Company determined that there were no reportable events that occurred during that subsequent period to be disclosed or recorded.