NOTES
TO THE FINANCIAL STATEMENTS
FOR
THE TWELVE MONTHS ENDED OCTOBER 31, 2015 AND 2014
NOTE 1 – ORGANIZATION
AND NATURE OF BUSINESS
Arax
Holdings Corp. (the “Company”, “we”, “our” or “us”) was incorporated under the
laws of the State of Nevada on February 23, 2012 with a business plan to sell hot dogs from mobile hot dog stands throughout the
major cities in Mexico. As of the filing of the 10K for last year, the Company stated that it was re-evaluating its business plan.
It was
further indicated as possible that a new business model could be related to a new business sector other than the food sector,
and that any new business model could entail a capital restructuring of the Company in order to provide new capital and a broader
base of shareholders. Such a capital restructuring of the Company could involve a merger or acquisition of assets through various
techniques, including a possible reverse-merger. At October 31, 2015, and as of the date of this filing, Management believes that
the best business model for our investors is to pursue business activity in the Life Sciences sector of the United States and
possibly internationally. We will continue to assess these opportunities and structures as well as the various pre-requisite actions
needed to finalize and implement any new business model.
The Company
is a majority-owned subsidiary of Thru Pharma, LLC, and these financials are presented on a stand-alone basis. All transactions
with Thru Pharma have been identified in Note 4: Stockholders’ deficit and Note 5: Related party transactions.
Pursuant
to a revision to a certain Consulting Agreement dated as of October 8, 2013, by and between Thru Pharma and Strategic Universal
Advisors, LLC (“Strategic”), as amended effective January 17, 2014, on or about February 9, 2015, and most recently
on October 20, 2015, with full effect as of April 1, 2015 (the “Consulting Agreement”), Thru Pharma and Strategic
agreed that the intent of the Consulting Agreement ab initio was to provide Strategic with a 3% equity ownership of Thru Pharma
n the event that a PUBCO M&A transaction di not occur prior to the end of the Consulting Agreement. Thru Pharma and Strategic
agreed and stipulated that 753,504 shares of Arax Holdings would equal 3% of Thru Pharma as the equity payment under the Consulting
Agreement, with transfer subject to the further provisions stated below. As Thru Pharma was the sole beneficiary of the services
provided by Strategic under the Consulting Agreement, no part of the value of the consideration for services provided under the
Consulting Agreement has been recognized as an expense by the Company.
In connection
with earlier amendments to the Consulting Agreement, Strategic granted to Mr. Keough, a control person of the Company and Thru
Pharma, an irrevocable proxy (the “Irrevocable Proxy”), to vote all of the common stock in the Company under certain
conditions. That proxy no longer exists under the terms of the most recent amendment.
As part
of the currently amended Consulting Agreement, Thru Pharma agreed to transfer 753,504 Company shares to Strategic upon the closing
of a merger or acquisition (an “M&A Transaction”) of a public entity, resulting in Thru Pharma being the controlling
owner of the entity that was the subject of the M&A Transaction, and Thru Pharma would cause such entity to also issue to
Strategic a stock warrant to purchase 600,000 (six hundred thousand) shares of common stock of the entity that was the subject
of the M&A Transaction. Such warrant will be of five-year duration, exercisable at $0.10 per share, and shall vest in four
equal amounts of 150,000 shares with the first annual vesting to occur 60 (sixty) days following the completion of the PUBCO M&A
Transaction, as well as other routine terms.
Notwithstanding
anything to the contrary provided in the Consulting Agreement or elsewhere, in no event would Thru Pharma be directly and/or indirectly
obligated to enter into or complete any particular M&A Transaction, including, but not limited to, any M&A Transaction
with the Company.
Effective July
1, 2015, Arax and Catalyst Funding, LLC, entered into an Original Issue Discount Revolving Secured Convertible Promissory
Note (the “Catalyst Note”) and a Securities Purchase Agreement (the “Catalyst SPA”). The transaction is
secured by a grant of security interest to 100% of the Company stock held by or for Thru Pharma. The Catalyst Note and Catalyst
SPA are intended to facilitate funding essential work relating to multi-year auditing of Thru Pharma financials. The total potentially
available funds are $200,000, and the Company has only drawn $75,000, and for which the Company is the obligor.
A Commitment Fee of Company stock in the amount of 35,294 shares was authorized for issue to Catalyst as part of the transaction.
In the event that the Company is unable to timely make payments under this Agreement, Catalyst has the option of gaining
control of the Thru Pharma shares in the Company.
The Company’s
status as a “shell company” as of the date of this report remains unchanged.
NOTE
2 – GOING CONCERN
The accompanying
financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation
of the Company as a going concern. However, the Company has not generated any revenues as of October 31, 2015. The Company has
incurred losses since Inception (February 23, 2012) resulting in an accumulated deficit of $433,562 as of October 31, 2015
and further losses are anticipated in the development of its business. The Company currently has no cash balance, a working capital
deficit and stockholders’ deficit of $114,417 and has not completed its efforts to establish a stabilized source
of revenues sufficient to cover operating costs over an extended period of time.
The Company
is dependent on additional investment capital to fund operating expenses. The Company intends to position itself so that it can
be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances
that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The financial
statements of the Company have been prepared in accordance with generally accepted accounting principles in United States of America
and are presented in US dollars. The Company has adopted an October 31 fiscal year end.
Develo
p
ment
Sta
g
e Com
p
an
y
The Company
is in the development stage as defined under the then current Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 915-205 “Development-Stage Entities” and among the additional disclosures
required as a development stage company are that its financial statements were identified as those of a development stage company,
and that the statements of operations, stockholders’ deficit and cash flows disclosed activity since the date of its Inception
(February 23, 2012) as a development stage company. Effective June 10, 2014 FASB changed its regulations with respect to Development
Stage Entities and these additional disclosures are no longer required.
Use
of Estimates
The preparation
of financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Cash
and Cash Equivalents
The Company
considers all highly liquid investments with the original maturities of three months or less to be cash equivalents.
Fair
Value of Financial Instruments
The Company
measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair
value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability,
as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that
market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes
a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation
techniques, are assigned a hierarchical level.
The following
are the hierarchical levels of inputs to measure fair value:
|
•
|
Level
1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
|
|
•
|
Level
2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar
assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities;
or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
|
•
|
Level
3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value.
These assumptions are required to be consistent with market participant assumptions that are reasonably available.
|
The carrying
amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts
payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because
of the short maturity of these instruments.
The Company
accounts for its derivative liabilities, at fair value, on a recurring basis under level 2.
Embedded
Conversion Features
The Company
evaluates embedded conversion features within convertible debt under ASC 815 “Derivatives and Hedging” to determine
whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at
fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under
ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of
any beneficial conversion feature.
Debt Issue
Costs and Debt Discount
The Company
may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may
be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the
debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Original
Issue Discount
For certain
convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount
would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of
the debt.
Income
Taxes
Deferred
tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and
liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation
allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized.
The Company
accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 740, “
Accounting for Income Taxes
”. It prescribes a recognition threshold
and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. As a result, the Company has applied a more-likely-than-not recognition threshold for all tax uncertainties.
The guidance only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon
examination by the various taxing authorities. The Company is subject to taxation in the United States. All of the Company’s
tax years are subject to examination by Federal and state jurisdictions.
The Company
classifies penalties and interest related to income taxes as income tax expense in the Statements of Operations.
Basic
Income (Loss) Per Share
Basic income
(loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average
number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the Company’s
net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt
or equity. There were no such common stock equivalents outstanding during the years ending October 31, 2015 and 2014.
Recent
Accountin
g
Pronouncements
The Company
has reviewed all the recent accounting pronouncements issued to date of the issuance of these financial statements, and does not
believe any of these pronouncements will have a material impact on the company.
NOTE
4 – STOCKHOLDERS’ DEFICIT
Common
Stock
The Company
is authorized to issue 75,000,000 shares of common stock with a par value of $0.001 per share.
The
Company had 10,300,000 shares of common stock issued and outstanding as of October 31, 2015.
Additional
Paid in Capital
During
the year ended October 31, 2015, the Company issued 37,500
stock purchase options
for a value of $16,217, issued 600,000 stock purchase warrants for a value of $216,799.
Stock
Subscription Payable
During
the year ended October 31, 2015, the Company owed 35,294 of the Company’s common stock as incentive to enter into a convertible
note with a value of $11,881 and 110,000 shares of the Company’s common stock as compensation for Thru Pharma related
party expense valued at $38,400 for a total stock subscription payable of $50,281.
NOTE 5 –
RELATED PARTY TRANSACTIONS
In support
of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company
can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no
formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction
of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
The Company
owed its majority shareholder, Thru Pharma, a total of $37,682 as of October 31, 2015, in the form of a related party payable.
It is due on demand and is non-interest bearing.
NOTE
6 – 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.
As of October
31, 2015, the Company had a net operating loss carry-forward of approximately $433,562 that may be used to offset future
taxable income and begins to expire in 2031.
Because of the change in ownership that
occurred on January 16, 2014, net operating loss carry forwards could be limited as to use in future years.
NOTE
7 – COMMITMENTS AND CONTINGENCIES
Legal
On June 4, 2014,
we were named as a defendant in a lawsuit filed by AMERIFINANCIAL, INC. (“AMERIFINANCIAL”), of Houston, Texas. The
action related primarily to a contract dispute between AMERIFINANCIAL and our majority shareholder, Thru Pharma, LLC. The
dispute did not allege any actions or inactions by our officers or representatives acting on our behalf. Counsel for Thru Pharma,
LLC, requested that we be dismissed from this lawsuit, as we were not party to the disputed contract, and there was no legal basis
for the Company being a part of the lawsuit. Accordingly, the Company did not recognize a liability in connection with
the suit.
On August 31,
2015, the Judge in this Harris County, Texas, case ruled that the only remaining Defendant was Thru Pharma, LLC. Subsequent
to our year end, on January 8, 2016, Thru Pharma and AMERIFINANCIAL, INC. reached settlement of the dispute.
NOTE
8 – SUBSEQUENT EVENTS
In accordance
with ASC 855-10, “
Subsequent Events
” the Company has analyzed its operations subsequent to October 31, 2015
to the date these financial statements were issued. Subsequent to the year ending October 31, 2015, 35,294 shares
of common stock were issued on February 5, 2016. The shares were issued as part of an incentive to enter into convertible notes
that were owed as of October 31, 2015, with a relative fair value of $11,881.
NOTE
9 – CONVERTIBLE DEBT AND DERIVATIVE LIABILITIES
The
Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting
related to a revolving convertible note in which the Company can borrow up to $200,000,
which includes a 10% OID. The Company issued the first tranche of the convertible note totaling $75,000, of which $65,000 was
paid in cash, $2,500 was paid for legal fees, and a OID of $7,500, which included a ratchet provision in the conversion price
of $.95 or a price equal to 60% of the last equity transaction completed by the Company as part of a subscription agreement
.
The note has a maturity date of nine months after funding and also includes a fifty percent premium which is added
on 90 days after funding. The note is to be paid off in installments of $19,453 for six months after the ninety day period. Embedded
derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s
balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated
fair value in results of operations during the period of change. The Company has estimated the fair value of these embedded derivatives
for convertible debentures using a multinomial lattice model as of July 31, 2015 and October 31, 2015.
The
fair values of the derivative instruments are measured each quarter, which resulted in a gain of $19,934 and derivative
expense of $25,434 during the year ended October 31, 2015. As of October 31, 2015, the fair market value of the derivatives
aggregated $5,500 using the following assumptions: estimated 0.42 to 0.75-year term, estimated volatility of 133.49% to
243.69%, and a discount rate of 0.21% to 0.23%.
NOTE 10 –
FAIR VALUE MEASUREMENT
The Company
uses the
multinomial lattice
model to calculate the fair value of the derivative
liability.
Our financial
assets and (liabilities) carried at fair value measured on a recurring basis as of October 31, 2015 and 2014 consisted of the
following:
|
|
Fair Value Measurements Using
|
|
Description
|
|
Total Fair
Value at
October 31,
2015
|
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Derivative liability
|
|
$
|
5,500
|
|
|
$
|
—
|
|
|
$
|
5,500
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
Description
|
|
Total Fair
Value at
October 31,
2014
|
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
None
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE
11 - STOCK PURCHASE OPTIONS AND WARRANTS
During
the year ended October 31, 2015, the Company issued options to purchase a total of 37,500 shares of the Company’s
Common Stock. The Company issued 37,500 options in conjunction with a consulting agreement entered into in
February 2015. According to the consulting agreement, the company is to issue either 5,000 common shares or 7,500
options per month during the duration of their agreements. The options were valued using the multinomial lattice
pricing model under the assumptions noted below.
Stock
Purchase Options
During
the year ended October 31, 2015, the Company issued 37,500 stock purchase options for a value of $16,217.
During
the year ended October 31, 2014, the Company did not issue any stock purchase options.
The
following table presents the assumptions used to estimate the fair values of the stock warrants and options granted:
|
|
2015
|
|
|
2014
|
|
Expected volatility
|
|
|
202-213
|
%
|
|
|
N/A
|
|
Expected dividends
|
|
|
0
|
%
|
|
|
N/A
|
|
Expected term
|
|
|
3
Years
|
|
|
|
N/A
|
|
Risk-free interest rate
|
|
|
0.80-1.09
|
%
|
|
|
N/A
|
|
The
following table summarizes the changes in options outstanding of the Company during the year ended October 31, 2015.
Date Issued
|
|
Number
of
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
|
Expiration
Date (yrs)
|
|
|
Value if
Exercised
|
|
Balance as of October 31, 2014
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
37,500
|
|
|
|
0.80
|
|
|
|
0.41
|
|
|
|
2.64
|
|
|
|
30,000
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled/Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding as of October 31, 2015
|
|
|
37,500
|
|
|
$
|
0.80
|
|
|
$
|
0.41
|
|
|
|
2.47
|
|
|
$
|
30,000
|
|
Stock
Purchase Warrants
During
the year ended October 31, 2015, the Company issued warrants to purchase a total of 600,000. The Company issued 600,000 warrants
in conjunction with a consulting agreement entered into in July 2015. The warrants were valued using the multinomial lattice
pricing model under the assumptions noted below.
During
the year ended October 31, 2015, the Company issued 600,000 stock purchase warrants for a value of $216,799.
During
the year ended October 31, 2014, the Company did not issue any stock purchase warrants.
The
following table presents the assumptions used to estimate the fair values of the stock warrants and options granted:
|
|
2015
|
|
|
2014
|
|
Expected volatility
|
|
|
212
|
%
|
|
|
N/A
|
|
Expected dividends
|
|
|
0
|
%
|
|
|
N/A
|
|
Expected term
|
|
|
3 Years
|
|
|
|
N/A
|
|
Risk-free interest rate
|
|
|
1.08
|
%
|
|
|
N/A
|
|
The
following table summarizes the changes in warrants outstanding issued to employees and non-employees of the Company during the
year ended October 31, 2015.
|
|
Number
of
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
|
Expiration
Date (yrs)
|
|
|
Value if
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of October 31, 2014
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
600,000
|
|
|
|
0.80
|
|
|
|
0.36
|
|
|
|
2.73
|
|
|
|
480,000
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled/Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding as of October 31, 2015
|
|
|
600,000
|
|
|
$
|
0.80
|
|
|
$
|
0.36
|
|
|
|
2.73
|
|
|
$
|
480,000
|
|
NOTE
12 – RESTATEMENT OF FINANCIAL STATEMENTS
This
Amendment No. 1 corrects our previously issued financial statements for the year ended October 31, 2015, to record related
party payable due to two consultants relating to consulting agreements to be paid with 7,500 options for the first
consultant on a monthly basis convertible at $.80 per share entered into in February 2015 and the other to be paid in 10,000
common shares as stock payable. The Company issued 600,000 warrants on September 22, 2015 as payment for legal expenses that
had not been recorded. The Company also entered into a convertible note agreement that previously had not been recorded that is
considered a derivative or contains embedded features subject to derivative accounting related to a revolving convertible note
where the Company can borrow up to $200,000, which includes a 10% OID. The Company issued the first tranche of the convertible
note totaling $75,000, of which $65,000 was paid in cash, $2,500 was paid for legal fees, and a OID of $7,500, which included
a ratchet provision in the conversion price of $.95 or a price equal to 60% of the last equity transaction completed by
the Company as part of a subscription agreement. The note has a maturity date of nine months after funding and also includes
a fifty percent premium totaling $37,500 which is added on 90 days after funding. The fair values of the derivative instruments
are measured each quarter, which resulted in a gain of $19,934 and derivative expense of $25,434 during the year
ended October 31, 2015. As of October 31, 2015, the fair market value of the derivatives aggregated $5,500 using the following
assumptions: estimated 0.42 to 0.75-year term, estimated volatility of 133.49% to 243.69%, and a discount rate of 0.21%
to 0.23%. Subsequent to the year ending October 31, 2015, 35,294 shares
of common stock were issued on February 5, 2016. The shares were issued as part of an incentive to enter into convertible notes
that were owed as of October 31, 2015, with a relative fair value of $11,881.
The
effects of these corrections on the financial statements are as follows:
Arax Holdings Corp.
|
Balance Sheets
|
October 31, 2015
|
|
|
|
As Reported
|
|
|
Correction
|
|
|
As Restated
|
|
Loans from related party
|
|
$
|
75,232
|
|
|
$
|
(37,550
|
)
|
|
$
|
37,682
|
|
Convertible Notes payable, net of $43,188 debt discount
|
|
|
—
|
|
|
|
69,312
|
|
|
|
69,312
|
|
Accrued Interest Payable
|
|
|
—
|
|
|
|
1,923
|
|
|
|
1,923
|
|
Derivative Liability
|
|
|
—
|
|
|
|
5,500
|
|
|
|
5,500
|
|
Total current liabilities
|
|
|
75,232
|
|
|
|
39,185
|
|
|
|
114,417
|
|
Total liabilities
|
|
|
75,232
|
|
|
|
39,185
|
|
|
|
114,417
|
|
Stock Subscription Payable
|
|
|
—
|
|
|
|
50,281
|
|
|
|
50,281
|
|
Accumulated deficit
|
|
|
(111,080
|
)
|
|
|
(322,482
|
)
|
|
|
(433,562
|
)
|
Total stockholders’ deficit
|
|
$
|
(111,080
|
)
|
|
$
|
(3,337
|
)
|
|
$
|
(114,417
|
)
|
Arax Holdings Corp.
|
Statements of Operations
|
Year Ended October 31, 2015
|
|
|
|
As Reported
|
|
|
Correction
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Professional Fees
|
|
$
|
29,774
|
|
|
$
|
298,866
|
|
|
$
|
328,640
|
|
TOTAL OPERATING EXPENSES
|
|
|
29,774
|
|
|
|
298,866
|
|
|
|
328,640
|
|
NET LOSS FROM OPERATIONS
|
|
|
(29,774
|
)
|
|
|
(298,866
|
)
|
|
|
(328,640
|
)
|
Interest Expense
|
|
|
—
|
|
|
|
(18,116
|
)
|
|
|
(18,116
|
)
|
Derivative Expense
|
|
|
—
|
|
|
|
(25,434
|
)
|
|
|
(25,434
|
)
|
Change in Fair Value of Derivative
|
|
|
—
|
|
|
|
19,934
|
|
|
|
19,934
|
|
TOTAL OTHER INCOME
|
|
|
—
|
|
|
|
(23,616
|
)
|
|
|
(23,616
|
)
|
NET LOSS BEFORE INCOME TAXES
|
|
|
(29,774
|
)
|
|
|
(322,482
|
)
|
|
|
(352,256
|
)
|
NET LOSS
|
|
|
(29,774
|
)
|
|
|
(322,482
|
)
|
|
|
(352,256
|
)
|
NET LOSS PER SHARE: BASIC AND DILUTED
|
|
$
|
(0.00
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
Arax Holdings Corp.
|
Statements of Changes in Stockholders’ Deficit
|
For the year ended October 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
Paid In
|
|
|
Stock
Subscription
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
As Reported
|
|
Capital
|
|
|
Payable
|
|
|
Deficit
|
|
|
Deficit
|
|
Stock as Incentive for Convertible Note
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Stock for Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Options Granted for Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Warrants Issued for Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
(29,774
|
)
|
|
|
(29,774
|
)
|
Balances, October 31, 2015
|
|
$
|
25,548
|
|
|
|
—
|
|
|
$
|
(111,080
|
)
|
|
$
|
(75,232
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Correction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock as Incentive for Convertible Note
|
|
$
|
—
|
|
|
$
|
11,881
|
|
|
$
|
—
|
|
|
$
|
11,881
|
|
Stock for Compensation
|
|
|
—
|
|
|
|
38,400
|
|
|
|
—
|
|
|
|
38,400
|
|
Options Granted for Compensation
|
|
|
16,217
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,217
|
|
Warrants Issued for Compensation
|
|
|
216,799
|
|
|
|
—
|
|
|
|
—
|
|
|
|
216,799
|
|
Net loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
(322,482
|
)
|
|
|
(322,482
|
)
|
Balances, October 31, 2015
|
|
$
|
233,016
|
|
|
$
|
50,281
|
|
|
$
|
(322,482
|
)
|
|
$
|
(39,185
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Corrected
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock as Incentive for Convertible Note
|
|
$
|
—
|
|
|
$
|
11,881
|
|
|
$
|
—
|
|
|
$
|
11,881
|
|
Stock for Compensation
|
|
|
—
|
|
|
|
38,400
|
|
|
|
—
|
|
|
|
38,400
|
|
Options Granted for Compensation
|
|
|
16,217
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16,217
|
|
Warrants Issued for Compensation
|
|
|
216,799
|
|
|
|
—
|
|
|
|
—
|
|
|
|
216,799
|
|
Net loss for the period
|
|
|
—
|
|
|
|
—
|
|
|
|
(352,256
|
)
|
|
|
(352,256
|
)
|
Balances, October 31, 2015
|
|
$
|
258,564
|
|
|
$
|
50,281
|
|
|
$
|
(433,562
|
)
|
|
$
|
(114,417
|
)
|
Arax Holdings Corp.
|
Statements of Cash Flows
|
Year Ended October 31, 2015
|
|
|
|
As Reported
|
|
|
Correction
|
|
|
As Restated
|
|
Net loss for the period
|
|
$
|
(29,774
|
)
|
|
$
|
(322,482
|
)
|
|
$
|
(352,256
|
)
|
Stock For Compensation
|
|
|
—
|
|
|
|
38,400
|
|
|
|
38,400
|
|
Derivative Liability addition
|
|
|
—
|
|
|
|
25,434
|
|
|
|
25,434
|
|
Related party payable for services
|
|
|
—
|
|
|
|
27,450
|
|
|
|
27,450
|
|
Options granted for compensation
|
|
|
—
|
|
|
|
16,217
|
|
|
|
16,217
|
|
Warrants issued for professional fees
|
|
|
—
|
|
|
|
216,799
|
|
|
|
216,799
|
|
Change in Fair Value of Derivative
|
|
|
—
|
|
|
|
(19,934
|
)
|
|
|
(19,934
|
)
|
Amortization of debt discount
|
|
|
—
|
|
|
|
16,193
|
|
|
|
16,193
|
|
Accrued Interest Payable
|
|
|
—
|
|
|
|
1,923
|
|
|
|
1,923
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(29,774
|
)
|
|
|
—
|
|
|
|
(29,774
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from Convertible Note
|
|
|
29,774
|
|
|
|
—
|
|
|
|
29,774
|
|
Proceeds from Convertible Note
|
|
|
—
|
|
|
|
65,000
|
|
|
|
65,000
|
|
Payments to related party
|
|
|
—
|
|
|
|
(65,000
|
)
|
|
|
(65,000
|
)
|
NET CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
29,774
|
|
|
|
—
|
|
|
|
29,774
|
|
Original Issue Discount
|
|
$
|
—
|
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
Stock as Incentive for Convertible Note
|
|
$
|
—
|
|
|
$
|
11,881
|
|
|
$
|
11,881
|
|
TOTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
$
|
—
|
|
|
$
|
21,881
|
|
|
$
|
21,881
|
|