The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
The accompanying notes are an integral part of these unaudited condensed financial statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
February 28, 2023
(UNAUDITED)
Note 1 –Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K, on September 20, 2022. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2022 as reported in Form 10-K, have been omitted.
Use of Estimates
The preparation of financial statements 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. A change in managements’ estimates or assumptions could have a material impact on Nate’s Food Co.’s financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. Nate’s Food Co.’s financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all short-term marketable securities purchased with original maturities of three months or less to be cash equivalents.
Digital Currencies
We currently account for all digital currencies held as a result of these transactions as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. We have ownership of and control over our digital currencies and we may use third-party custodial services to secure it. The digital currencies are initially recorded at cost and are subsequently remeasured on the balance sheet date at cost, net of any impairment losses incurred since acquisition.
We determine the fair value of our digital currencies on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that our digital currencies are impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital currency quoted on the active exchange since acquiring the digital currency. If the then current carrying value of a digital currency exceeds the fair value so determined, an impairment loss has occurred with respect to those digital currencies in the amount equal to the difference between their carrying values and the price determined.
Impairment losses are recognized within other income (expense) on the statements of operations in the period in which the impairment is identified. The impaired digital currencies are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets held within other income (expense). In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
As of February 28, 2023, the market value of digital currencies was lower than the Company’s cost basis by $5,791, which amount is recorded as impairment loss on digital currency for the nine months then ended. During the nine months ended February 28, 2022, the Company recorded an impairment loss on digital currency of $4,621. During the nine months ended February 28, 2023, the Company recorded loss on sale of digital currency of $2,717.
Fair Value of Financial Instruments
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets, liabilities in active markets.
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active.
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The following table summarizes fair value measurements by level at February 28, 2023 and May 31, 2022, measured at fair value on a recurring basis:
February 28, 2023 | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Assets | | | | | | | | | | | | |
Digital currency | | $ | 4,793 | | | | - | | | | - | | | $ | 4,793 | |
Liabilities | | | | | | | | | | | | | | | | |
Derivative liabilities | | | - | | | | - | | | $ | 150,812 | | | $ | 150,812 | |
| | | | | | | | | | | | | | | | |
May 31, 2022 | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Assets | | | | | | | | | | | | | | | | |
Digital currency | | $ | 21,465 | | | | - | | | | - | | | $ | 21,465 | |
Liabilities | | | | | | | | | | | | | | | | |
Derivative liabilities | | | - | | | | - | | | $ | 163,615 | | | $ | 163,615 | |
Earnings per Share
The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method for outstanding warrants and options and using the if-converted method for convertible debt and convertible preferred stock. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
For the nine months ended February 28, 2023 and 2022, respectively, the following convertible notes and convertible preferred stock were potentially dilutive.
| | Nine Months Ended | |
| | February 28, | |
| | 2023 | | | 2022 | |
| | (Shares) | | | (Shares) | |
Convertible notes payable | | | 1,037,431,000 | | | | 210,533,321 | |
Series B convertible preferred stock | | | 150,000,000 | | | | 150,000,000 | |
Series C convertible preferred stock | | | 16,500,000 | | | | 16,500,000 | |
Series D convertible preferred stock | | | 90,000,000 | | | | 90,000,000 | |
Series E convertible preferred stock | | | 149,895,000 | | | | 149,895,000 | |
| | | 1,443,826,000 | | | | 616,928,321 | |
For the nine months ended February 28, 2023, and the three months ended February 28, 2022, the convertible instruments are anti-dilutive and therefore, have been excluded from earnings (loss) per share.
The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation for the nine months ended February 28, 2022:
| | Net Income (Loss) (Numerator) | | | Shares (Denominator) | | | Per Share Amount | |
Basic EPS | | $ | 62,221 | | | | 541,216,924 | | | $ | 0.00 | |
Effect of dilutive securities: | | | | | | | | | | | | |
Warrants | | | - | | | | - | | | | - | |
Convertible notes payable | | | (274,620 | ) | | | 73,033,321 | | | | (0.00 | ) |
Preferred stock | | | - | | | | - | | | | - | |
Diluted EPS | | $ | (212,399 | ) | | | 614,033,321 | | | $ | (0.00 | ) |
The following represents a reconciliation of the numerators and denominators of the basic and diluted earnings per share computation for the three months ended February 28, 2023:
| | Net Income (Loss) (Numerator) | | | Shares (Denominator) | | | Per Share Amount | |
Basic EPS | | $ | 4,348 | | | | 1,547,246,838 | | | $ | 0.00 | |
Effect of dilutive securities: | | | | | | | | | | | | |
Warrants | | | - | | | | - | | | | - | |
Convertible notes payable | | | 29,883 | | | | 1,037,431,000 | | | | 0.00 | |
Preferred stock | | | - | | | | - | | | | - | |
Diluted EPS | | $ | 34,231 | | | | 2,584,677,838 | | | $ | 0.00 | |
Potential dilution from the convertible preferred stock was not included in the calculation of the dilutive earnings per share calculation for the nine months ended February 28, 2023, and three months ended February 28, 2022, as the effect is anti-dilutive.
Equipment
Bitcoin mining equipment is stated at cost less accumulated amortization. Amortization is computed on the straight-line method over the useful life of four years and is included in the cost of revenue.
Lease
The Company leases bitcoin equipment (Note 3), for the mining of Bitcoin.
In accordance with ASC 842, “Leases,” we determine if an arrangement is a lease at inception.
The equipment lease meets the definition of a short-term lease because the lease term is 12 months or less. Consequently, consistent with Company’s accounting policy election, the Company does not recognize the right-of-use asset and the lease liability arising from this lease.
Revenue Recognition
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.
Our revenues currently consist of cryptocurrency mining revenues, which we began generating in September 2021. The Company earns its cryptocurrency mining revenues by providing transaction verification services within the digital currency networks of cryptocurrencies, for Bitcoin. The Company satisfies its performance obligation at the point in time that the Company is awarded a unit of digital currency through its participation in the applicable network and network participants benefit from the Company’s verification service. In consideration for these services, the Company receives Bitcoin, net of applicable network fees, which are recorded as revenue using the closing U.S. dollar price of Bitcoin on the date of receipt. Expenses associated with running the cryptocurrency mining operations, which are currently utilities, equipment lease and monitoring services are recorded as cost of revenues. During the nine months ended February 28, 2023 and 2022, the Company generated Bitcoin mining revenue of $12,609 and $48,397, respectively, with cost of revenue of $34,646 and $130,871, respectively.
There is currently no specific definitive guidance in GAAP or alternative accounting frameworks for the accounting for the production and mining of digital currencies and management has exercised significant judgment in determining appropriate accounting treatment for the recognition of revenue for mining of digital currencies. Management has examined various factors surrounding the substance of the Company’s operations and the guidance in ASC 606, including identifying the transaction price, when performance obligations are satisfied, and collectability is reasonably assured being the completion and addition of a block to a blockchain and the award of a unit of digital currency to the Company. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies which could result in a change in the Company’s financial statements.
Recently Issued Accounting Pronouncements
The Company has determined that there are no applicable recently issued accounting pronouncements that are expected to have a material impact on these financial statements.
Note 2 – Going Concern
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has negative working capital, recurring losses, and does not have an established source of revenues sufficient to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the succeeding paragraphs and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
In the coming year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with operations and business developments. The Company may experience a cash shortfall and be required to raise additional capital.
Historically, it has mostly relied upon internally generated funds such as shareholder loans and advances to finance its operations and growth. Management may raise additional capital by retaining net earnings or through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.
Note 3 – Prepaid Expenses
On September 30, 2021 and October 22, 2021, the Company entered into two agreements to lease Bitcoin equipment for a term of 270 days and 200 days, respectively. During the nine months ended February 28,2023 and 2022, the Company recognized $9,900 and $115,739 lease expenses, respectively.
As of February 28, 2023 and May 31, 2022, prepaid expenses were $725 and $9,900, respectively.
Note 4 – Related Party Transactions
Notes Payable – Related Party
As at February 28, 2023 and May 31, 2022, the total amount owed to an officer was $397,935 and $388,687, respectively. As of the February 28, 2023 amount, $57,000 of the loan is at 10% interest and was to be repaid by June 28, 2017, and currently is in default, and as at February 28, 2023 and May 31, 2022, accrued interest of $38,042 and $33,779, respectively, in interest has been recorded with respect to this loan. There is no additional interest charged to the note as a result of the default. Additionally, $71,902 of the loan is at 10% interest and due on December 31, 2015, and currently in default and as at February 28, 2023 and May 31, 2022, accrued interest of $60,763 and $55,385, respectively, in interest has been recorded with respect to this loan. There is no additional interest charged to the note as a result of the default. Additionally, the loan includes $175,571 that was reclassified from accounts payable as at February 28, 2023. This amount is at 0% interest and is due on demand. During the nine months ended February 28, 2023 and 2022, the Company received advances of $17,338 and $2,000, repaid advances of $15,685 and $0 and paid operating expenses of $7,595 and $0, respectively.
Management Fees
During the nine months ended February 28, 2023 and 2022, the Company recognized $27,000 and $0 management fees for the Company’s officer and paid management fees of $3,000 and $0, respectively. As of February 28, 2023, and May 31, 2022, the Company owed to the Company’s officer for amount of $24,000 and $0, respectively.
Issuance of Common Stock
On December 19, 2022, the Company’s Board of Director approved the issuance of 1,000,000,000 shares of common stock to two its officers in exchange for 25,000 shares of Series A Preferred Stock.
Note 5 – Convertible Notes
The Company had the following convertible notes payable outstanding as of February 23, 2023 and May 31, 2022:
On October 13, 2016, the Company received financing from an unrelated party in the amount of $85,500 with $5,000 original issue discount and incurred $8,000 in financing costs. On December 29, 2017, the principal balance along with the related default penalties, accrued and unpaid interest, and the conversion rights were sold to another unrelated party. The original issue discount and financing costs were amortized over the original life of the note using the effective interest method. The $85,500 note bears 10% interest and matured on July 13, 2017. The note is currently in default and bears 18% interest rate while in default on the outstanding balance of $36,818 after $48,682 of conversions in prior years. The holder shall be entitled to convert any portion of the outstanding and unpaid conversion amount into fully paid and non-assessable shares of common stock. The conversion price is the 45% discount to the lowest traded price during the previous 20 trading days to the date of a conversion notice. The Company may redeem the note at rates ranging from 125% to 150% depending on the redemption date. The note derivative is revalued at each period end with gains or losses included in the statement of operations (see Note 6 for details). During the nine months ended February 28, 2023, and 2022, the Company recognized interest expense of $4,957 and $4,957, respectively. As of February 28, 2023 and May 31, 2022, the Company had accrued interest of $46,129 and $41,172, respectively. As of February 28, 2023, and May 31, 2022, the principal balance was $36,818, respectively.
On October 14, 2021, the Company received financing from an unrelated party in the amount of $275,000 with $25,000 original issue discount and $9,500 in financing costs, for net proceeds to the Company of $240,500. The original issue discount and financing costs are being amortized over the original life of the note using the effective interest method. The $275,000 bears 10% interest and matures on October 14, 2022. The note is currently in default and bears 20% interest rate. The conversion price was initially set at $0.002 per share (Fixed Conversion Price) at any time after 180 days from the issue date, if an event of default, the conversion price shall be $0.001 per share. On October 14, 2021, the Company agreed, in connection with the authorization and issuance of convertible note of $275,000, to issue an additional 10,000,000 shares of common stock in accordance with the securities purchase agreement dated October 14, 2021, to the convertible note holder. The Company determined the fair value of 10,000,000 shares of common stock of $92,000 (according to market price on October 14, 2021) and shall amortize this cost over the life of the convertible note. On February 8, 2022, the Company issued 10,000,000 shares of common stock to note holder. During the nine months ended February 28, 2023, the Company converted the principal of $33,250 into 700,000,000 shares at $0.00025 and $0.000025 per share based on contract stock price re-set requirements.
On December 19, 2022, the Company’s Board of Directors approved the modification of current conversion price of $0.00025 to $0.000025 per share.
During the nine months ended February 28, 2023 and 2022, the Company recognized interest expenses of $29,393 and $10,322, amortization of debt discount of $47,134 and $47,481, respectively. As of February 28, 2023, and May 31, 2022, the Company had accrued interest of $46,616 and $17,253 and unamortized debt discount of $0 and $47,134, respectively. As of February 28, 2023 and May 31, 2022, the principal balance was $241,750 and $227,866, respectively.
Note 6 – Derivative Liability
The Company analyzed the variable discounted conversion options on its convertible note (Note 5) for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the embedded conversion option should be classified as a liability due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants (Note 7) as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.
The following table summarizes the derivative liabilities included in the balance sheets at February 28, 2023 and May 31, 2022:
Balance - May 31, 2021 | | $ | 537,540 | |
| | | | |
Gain on change in fair value of the derivative | | | (373,925 | ) |
Balance - May 31, 2022 | | $ | 163,615 | |
| | | | |
Gain on change in fair value of the derivative | | | (12,803 | ) |
Balance - February 28, 2023 | | $ | 150,812 | |
The Company also recorded a gain on change in fair value of the derivative of $12,803 and $274,620 during the nine months ended February 28, 2023 and 2022, respectively. The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability, as well as the determined value of the option liability at each measurement date:
| | February 28, | | | May 31, | |
| | 2023 | | | 2022 | |
Expected term | | | - | | | 0.37 – 1.00 years | |
Expected average volatility | | | - | | | 131%-293 | % |
Expected dividend yield | | | - | | | | - | |
Risk-free interest rate | | | - | | | | 0.08 | % |
Warrants
On July 8, 2022, the Company issued warrants in connection with a License Agreement (Note 10). The warrants were valued using the Black-Scholes pricing model. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.
The estimated fair values of the warrants were measured on the July 8, 2022 (license agreement execution date) using the following inputs:
Stock price | | $ | 0.0014 | |
Exercise price | | $ | 0.00025 | |
Expected term | | 20 years | |
Expected average volatility | | | 279 | % |
Expected dividend yield | | | 0 | |
Risk-free interest rate | | | 3.31 | % |
On January 2,2023, the Company entered into a termination agreement with the warrant’s holder and both parties mutually terminated and cancelled the License Agreement date July 8, 2022 and released each other from any and all claims, causes of action, demands and liabilities and obligations.
A summary of activity during the nine months ended February 28, 2023, is as follows:
| | Warrants Outstanding | |
| | | | | | | | Weighted Average Remaining | |
| | Number of warrants | | | Weighted Average Exercise Price | | | Contractual life (in years) | |
Outstanding, May 31, 2022 | | | - | | | $ | - | | | | - | |
Granted | | | 27,000,000 | | | | 0.00025 | | | | 20.00 | |
Reset feature | | | - | | | | - | | | | - | |
Exercised | | | - | | | | - | | | | - | |
Forfeited/canceled | | | (27,000,000 | ) | | | - | | | | - | |
Outstanding, February 28, 2023 | | | - | | | $ | - | | | | - | |
| | | | | | | | | | | | |
Exercisable, February 28 2023 | | | - | | | $ | - | | | | - | |
Note 7 – Bitcoin Intangible Assets
During the nine months ended February 28, 2023, the Company mined Bitcoin with a total aggregate value of $12,609. The Company has accounted for these coins as indefinite life intangible assets. The Company recorded the mining of the coins as revenue from digital currency mining in its result of operations, along with cost of sales (electricity and other hosting fees) remitted to the co-location host in Bitcoin, and equipment lease costs. After impairment loss of $5,791 and loss on sales of digital currency of $2,717, the Company’s digital currency asset consists of the following at February 28, 2023 and 2022:
| | Three Months Ended | | | Nine Months Ended | |
| | February 28, | | | February 28, | |
Bitcoin Held | | 2023 | | | 2023 | |
Opening balance | | $ | 2,961 | | | $ | 21,465 | |
Additions earned | | | 4,525 | | | | 12,609 | |
Sales | | | (2,551 | ) | | | (12,861 | ) |
Remittance as cost of operating expenses | | | (142 | ) | | | (10,229 | ) |
Impairment | | | - | | | | (6,191 | ) |
Balance, February 28,2023 | | $ | 4,793 | | | $ | 4,793 | |
| | Three Months Ended | | | Nine Months Ended | |
| | February 28, | | | February 28, | |
Bitcoin Held | | 2022 | | | 2022 | |
Opening balance | | $ | 16,187 | | | $ | - | |
Additions earned | | | 27,193 | | | | 48,397 | |
Remittance as cost of operating expenses | | | (11,091 | ) | | | (15,132 | ) |
Impairment | | | (3,645 | ) | | | (4,621 | ) |
Balance, February 28,2022 | | $ | 28,644 | | | $ | 28,644 | |
Note 8 – Promissory Notes
The components of promissory notes payable as of February 28, 2023 were as follows:
Issuance date | | Principal Amount | | | Maturity date | | Interest rate | | | February 28, 2023 | |
January 17,2023 | | $ | 5,000 | | | January 17.2025 | | | 2 | % | | $ | 5,000 | |
January 23,2023 | | | 5,500 | | | January 23,2025 | | | 2 | % | | | 5,500 | |
January 23,2023 | | | 125,000 | | | January 23,2025 | | | 2 | % | | | 125,000 | |
February 14,2023 | | | 10,000 | | | January 23,2025 | | | 2 | % | | | 10,000 | |
| | | | | | | | | | | | | | |
Total notes payable | | | | | | | | | | | | | 145,500 | |
Current portion | | | | | | | | | | | | | - | |
Long-term portion | | | | | | | | | | | | $ | 145,500 | |
During the nine months ended February 28, 2023, the Company entered into promissory notes agreement with lenders for $20,500 cash received and settlement of $125,000 due related to purchase of digital equipment. According to terms and condition of agreements, on event of default the interest rate shall increase to 5% and lenders have the right a to convert the unpaid principal and interest into common stock at conversion rate of $0.000025 per share.
During the nine months ended February 28, 2023, the Company recognized interest expense of $278. As of February 28, 2023, the outstanding balances of promissory notes and accrued interest was $145,500 and $278, respectively.
Note 9 – Loans Payable
During the nine months ended February 28, 2023, the Company obtained $1,885 loan, due on demand, free interest and unsecured. As of February 28, 2023, the outstanding balance of the loan was $1,885.
Note 10 – Equity
Series A Preferred Stock
The Company is authorized to issue 2,000,000 shares of series A Preferred Stock at a par value of $0.0001. The Series A Preferred Stock shall have no liquidation preference over any other class of stock and there will be no dividends due or payable on the Series A Preferred Stock. The Series A Preferred Stock initially had voting rights equal to 1,000 votes for each 1 share of common stock owned. On December 18, 2022, the Company’s Board of Directors approved an increase to the Series A voting rights equal to 20,000 votes for each 1 share of common stock owned, and resolved that each Series A Preferred Stock cannot convert into Common Stock unless it is approved by the Board of Directors
There were no issuances of the Series A Preferred Stock during the nine months ended February 28, 2023 and 2022.
On December 19, 2022, the Company’s Board of Director approved the issuance of 1,000,000,000 shares of common stock to two its officers in exchange for 25,000 shares of Series A Preferred Stock.
As of February 28, 2023 and May 31, 2022, 1,915,153 and 1,940,153 shares of series A Preferred Stock were issued and outstanding, respectively.
Series B Convertible Preferred Stock
The Company is authorized to issue 150,000 shares of Series B Convertible Preferred Stock at a par value of $0.0001. The Series B Convertible Preferred Stock shall have no liquidation preference over any other class of stock and there will be no dividends due or payable on the Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock converts into common stock at a ratio of 1:1,000. However, the Series B Convertible Preferred Stock may not be converted for a period of 12 months from the date of issue.
There were no issuances of the Series B Convertible Preferred Stock during the nine months ended February 28, 2023 and 2022.
As of February 28, 2023 and May 31, 2022, 150,000 shares of Series B Convertible Preferred Stock were issued and outstanding.
Series C Convertible Preferred Stock
The Company is authorized to issue 250,000 shares of Series C Convertible Preferred Stock at a par value of $1. The Series C Convertible Preferred Stock shall have no liquidation preference over any other class of stock and there will be no dividends due or payable on the Series C Convertible Preferred Stock. The Series C Convertible Preferred Stock can be converted to common stock, at a conversion rate of 66 common shares for each preferred stock.
There were no issuances of the Series C Convertible Preferred Stock during the nine months ended February 28, 2023 and 2022.
As of February 28, 2023 and May 31, 2022, 250,000 shares of Series C Convertible Preferred Stock were issued and outstanding.
Series D Convertible Preferred Stock
The Company is authorized to issue 10,000,000 shares of Series D Convertible Preferred Stock at a par value of $0.0001. The Series D Convertible Preferred Stock is convertible at a rate of 1 share of Series D Convertible Preferred Stock for 15 shares of common stock.
During the nine months ended February 28, 2022, 350,000 shares of Series D Convertible Preferred Stock were converted into 5,250,000 shares of common stock.
There were no issuances of the Series D Convertible Preferred Stock during the nine months ended February 28, 2023 and 2022.
As of February 28, 2023 and May 31, 2022, 6,000,000 shares of Series D Convertible Preferred Stock were issued and outstanding.
Series E Convertible Preferred Stock
The Company is authorized to issue 15,000,000 shares of series E Convertible Preferred Stock at a par value of $0.0001. The Series E Convertible Preferred Stock shall have no liquidation preference over any other class of stock and there will be no dividends due or payable on the Series E Convertible Preferred Stock. Beginning October 1, 2016, each share of Series E Convertible Preferred Stock is convertible into ten (10) shares of common stock. From October 1, 2016 to October 1, 2018, holders of Series E Convertible Preferred Stock may at any time convert to shares of common stock, thereafter, the Company may elect to convert any outstanding stock at any time without notice to the shareholders.
There were no issuances of the Series E Convertible Preferred Stock during the nine months ended February 28, 2023 and 2022.
As of February 28, 2023 and May 31, 2022, 14,989,500 shares of Series E Convertible Preferred Stock were issued and outstanding.
Common Stock
The Company is authorized to issue 6,500,000,000 shares of common stock at a par value of $0.001.
During the nine months ended February 28, 2022, the Company issued 5,250,000 shares on conversion of 350,000 shares of Series D Preferred Stock.
On December 19, 2022, the Company’s Board of Director approved the issuance of 1,000,000,000 shares of common stock to two its officers in exchange for 25,000 shares of Series A Preferred Stock.
During the nine months ended February 28, 2023, the Company issued 700,000,000 shares on conversion of $33,250 of principal of a convertible note.
As of February 28, 2023 and May 31, 2022, 2,253,024,616 and 553,024,616 shares of common stock were issued and outstanding, respectively.
Note 11 – Commitments
On July 8, 2022, the Company entered into an Exclusive Intellectual Property License Agreement (“License Agreement”) with Kenny B, LLC. (“Licensor”) for a period of 20 years and that may be extended for an additional 20 years at the mutual consent of both parties.
The Licensor is the exclusive owner of all the rights, title and interest in and to (i) the trademark of Sh’mallow (Serial Number 5302806), (ii) all rights in and to the name of Sh’mallow, and (iii) designs of Sh’mallow marshmallow topping product, and (iv) all common law and statuary rights in the foregoing (collectively, the “Property”). The Company obtained an exclusive license to use such Intellectual Property.
In conjunction with the License Agreement, the Company granted warrants to Licensor to acquire 27,000,000 shares of common stock of the Company at a price of $0.00025 per share for total value of $37,800 to be amortized over the life of the agreement on a straight-line basis, recorded in license and additional paid in capital (Note 6). The Licensor had a right to exercise the warrants six months after the August 15, 2022, effective date of the License Agreement.
During the nine months ended February 28, 2023, the Company amortized $553 of license.
On January 2,2023, the Company entered into a termination agreement with Licensor and both parties mutually terminated and cancelled the License Agreement date July 8,2022 and released each other from any and all claims, causes of action, demands and liabilities and obligations effective the 30th December ,2022.
Pursuant to termination agreement, the Company reverse and cancelled warrants of 27,000,000 shares of common stock, licenses of $37,800, royalty payable of $17,500 and $553 amortization of License.
Note 12 – Subsequent Events
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure, except as follows:
On March 7, 2023, the Company’s Board of Directors approved a quarterly dividend payment to its shareholders equal to $0.0000025 from the Company’s Bitcoin mining. The record date is March 31, 2023, which had an expected payment date of April 15, 2023. The dividend payment is subject to the Company’s corporate action being processed by FINRA and as of the date of this filing has not been paid.