You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should know that there are many factors, both within and outside our control, that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.





General

Grand Perfecta was engaged in the business of gathering, transmitting and providing horse racing information via various types of media, including a website owned and operated by the wholly owned subsidiary WRN until it was sold on December 16, 2019.

Critical Accounting Policies

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require that we make certain assumptions and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. On an ongoing basis, management evaluates its estimates, including those related to collection of receivables, impairment of goodwill, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in material differences from the estimated amounts in the financial statements. Our significant accounting policies are more fully described in the notes to our consolidated financial statements.





Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with principles generally accepted in the United States of America ("GAAP") and include the accounts of Grand Perfecta and its wholly owned subsidiaries, Umajin HK, and WRN.

Financial Statement Reclassification

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications. The prior year amounts have also been modified in these financial statements to properly report amounts under current operations and discontinued operations (see note 7).





Going Concern

Based on operating losses and negative cash from operations and the discontinued operations of most of the Company's operations, substantial doubt exists about the Company's ability to continue as a going concern. Management's plan in this regard is to find new operations to enter into and focus on building profitable operations. To finance operations while it finds new operations, the Company will continue financing activity such as taking loans and issuing new shares of the Company's common stock.

As of July 31, 2019, we had cash of $751, of which $235 was from continuing operations and $516 was from discontinued operations, and a working capital deficit of $33,587. As of July 31, 2018, we had cash of $52,716, of which $49,857 was from continuing operations and $2,859 was from discontinued operations, and a working capital deficit of $574,780.











  5

We continue to have a significant working capital deficit that adversely affects our business by limiting the resources we have available to pursue the promotion of our information services and develop new service opportunities for potential customers. Historically, we have relied on extensions of note payment due dates and new debt financing to repay note obligations as they came due in order to continue operations. Going forward we will continue to use extensions and new debt financing to address note obligations that come due, endeavor to gradually reduce obligations with cash flow provided by operations, and pursue over the next 12 months equity financing that we can apply to debt reduction and business development. Nevertheless, the shortage of working capital adversely affects our ability to develop, sponsor, or participate in activities that promote our information services to prospective customers and to develop new content, because a substantial portion of cash flow goes to reduce debt rather than to advance operating activities. There is no assurance that our plans for addressing our working capital shortages will be successful, and our failure to be reasonably successful should be expected to result in a significant contraction of our operations and potentially a failure of the business.





Revenue Recognition

Effective August 1, 2018 we adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Subtopic 606-10, Revenue from Contracts with Customers ("ASC 606-10"). The adoption of ASC 606-10 had no impact on prior year or previously disclosed amounts. In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer and recognized when we satisfy the performance obligation specified in each contract.

The Company's revenue consists primarily of sales of comprehensive horse racing information through multiple websites focusing on all aspects of the horse racing industry in Japan. Publication of horse racing digital magazines, and participating in other public events and media programs related to the horse racing industry do not generate significant revenue directly. These activities are undertaken for the purpose of increasing the number of horse racing fans and driving potential customers to our websites so as to hopefully eventually convert them to paying customers. The Company had no revenue from continuing operations during the year ended July 31, 2019 and 2018.

The majority of the Company's revenue is generated by per-item sales. For certain users, payment is received at the time of purchase and for others it is received after purchase. In either case, our performance obligation is to provide the requested information to users. Therefore, we recognize revenue for per-item sales when the requested information is supplied to the user or for information packages that span a period of time, ratably over the subscription period. Revenues are presented net of refunds, credits and known and estimated credit card chargebacks. The Company reports revenue net of any required taxes collected from customers and remitted to government authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Rights to information purchased by customers in advance of the information being provided are recorded as deferred.

As of July 31, 2019, the Company had $0 in deferred revenues. The Company will amortize these deferred revenues based on the monthly subscriptions and record revenue in line with the amortization of these advance payments.





Foreign Exchange

The Company's primary operations are conducted in Japan and performed by its wholly owned subsidiary WRN. WRN terminated their website services in April 2019 and was sold on December 16, 2019. A wholly owned subsidiary, Umajin HK, had been delivering information on horse racing to its users through its website similar to LinkBit, however it terminated its service at the end of June 2017 and was sold on December 16, 2019. The Company also conducted business through wholly owned subsidiaries LinkBit and Sports Perfecta, and its Malaysian subsidiary SPT until they were sold in June 2018. WRN and LinkBit's functional currency is the Japanese Yen and Umajin HK's functional currency is the Hong Kong Dollar. SPT's functional currency is the Malaysian Ringgit.

The financial statements of each entity are prepared using the applicable functional currencies, and have been translated into U.S. dollars ("USD"). Assets and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders' equity is translated using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in the Company's stockholders' equity.











  6

The following rates were used to translate the accounts of Umajin HK and WRN into USD at the following balance sheet dates.





                                               Balance Sheet Dates
                                        July 31, 2019       July 31, 2018
            Japanese Yen to USD                 0.0092              0.0090
            Hong Kong Dollars to USD            0.1278              0.1274

The following rates were used to translate the accounts of LinkBit, Umajin HK, SPT and WRN into USD for the following operating periods.





                                               For the Year Ended
                                        July 31, 2019       July 31, 2018
            Japanese Yen to USD                 0.0090              0.0091
            Hong Kong Dollars to USD            0.1276              0.1278
            Malaysian Ringgit to USD               N/A              0.2470

Results of Operations for the Year Ended July 31, 2019 and 2018

The following are the results of our operations for the year ended July 31, 2019 as compared to the year ended July 31, 2018:





                                                     For the Year Ended
                                                 7/31/2019       7/31/2018        $ Change
Net sales                                        $        -     $         -     $          -
Total revenue                                             -               -                -

Operating Expenses
Cost of sales                                             -               -                -
Other general and administrative expenses           191,230         816,531         (625,301 )
Total operating expenses                            191,230         816,531         (625,301 )

Loss from operations                               (191,230 )      (816,531 )        625,301

Other income (expense)
Other income (loss)                                 713,000               -          713,000
Loss on extinguishment of related party debt        (74,600 )             -          (74,600 )
Gain on discontinued operations                           -       2,245,490       (2,245,490 )
Total other income (expense)                        638,400       2,245,490       (1,607,090 )

Net income (loss) before provision for income
taxes                                               447,170       1,428,959         (981,789 )
Provision for (benefit from) income taxes                 -               -                -

Net income (loss) from continuing operations 447,170 1,428,959 (981,789 ) Net income (loss) from discontinued operations 7,984 1,899,222 (1,891,238 ) Provision for (benefit from) income taxes for discontinued operations

                               (630)        (774,666 )        774,036

Net loss attributable to GPI stockholders $ 454,524 $ 2,553,515 $ (2,098,991 )








  7






Net Sales

Due to the sale of WRN and UHK on December 16, 2019, we did not have any sales from continuing operations for the years ended July 31, 2019 or July 31, 2018.





Operating Expenses

Total operating expenses for the year ended July 31, 2019 were $191,230, which represented a decrease of $625,301 as compared to the year in 2018. The lower operating expenses are due to the discontinued operations.





Other Income/ (Expenses)

Total other income/expense for the year ended July 31, 2019 amounted to a gain of $638,400, which decreased by $1,607,090 as compared to the year in 2018. The decrease in other expenses is primarily due to the gain on discontinued operations for the disposal of LinkBit and SPI during the prior year offset by the other income from the abatement of the tax penalty, a refund of legal fees and a loss on extinguishment of related part debt in the current year.

Liquidity and Capital Resources

Based on operating losses and negative cash from operations and the discontinued operations of the majority of the Company's operations, substantial doubt exists about the Company's ability to continue as a going concern. Management's plan in this regard is to find new operations to bring in to the Company. To finance operations the Company will continue financing activity such as taking loans and issuing new shares of the Company's common stock.

As of July 31, 2019, we had cash of $751, of which $235 was from continuing operations and $516 was from discontinued operations, and a working capital deficit of $33,587. As of July 31, 2018, we had cash of $52,716, of which $49,857 was from continuing operations and $2,859 was from discontinued operations, and a working capital deficit of $574,780.

We continue to have a significant working capital deficit that adversely affects our business by limiting the resources we have available to pursue the promotion of our information services and develop new service opportunities for potential customers. Historically, we have relied on extensions of note payment due dates and new debt financing to repay note obligations as they came due in order to continue operations. Going forward we will continue to use extensions and new debt financing to address note obligations that come due, endeavor to gradually reduce obligations with cash flow provided by operations, and pursue over the next 12 months equity financing that we can apply to debt reduction and business development. Nevertheless, the shortage of working capital adversely affects our ability to develop, sponsor, or participate in activities that promote our information services to prospective customers and to develop new content, because a substantial portion of cash flow goes to reduce debt rather than to advance operating activities. There is no assurance that our plans for addressing our working capital shortages will be successful, and our failure to be reasonably successful should be expected to result in a significant contraction of our operations and potentially a failure of the business.

The following is a summary of our cash flows from operating, investing and financing activities for the years ended July 31, 2019 and 2018.





                                                                 Year Ended
                                                         7/31/2019       7/31/2018

Cash flows provided by (used in) operating activities $ (59,651 ) $ 545,668


 Cash flows used in investing activities                 $        -     $    604,938
 Cash flows provided by financing activities             $   10,900     $ (1,201,994 )










  8

Net cash flows used in operating activities for the year ended July 31, 2019 amounted to $59,651, compared to net cash provided by of $545,668 for the year ended July 31, 2018. Net cash flows provided by operating activities were higher during the year ended July 31, 2018 due to profitable operations during the year compared with net cash flows used by operations during the year ended July 31, 2019.

Net cash provided by investing activities amounted to $0 for the year ended July 31, 2019, compared with net cash provided by investing activities amounted to $604,938 for the year ended July 31, 2018. There were no investing activities during the year ended July 31, 2019. The cash flows provided by investing activities during the year ended July 31, 2018 was due primarily to the proceeds from the disposal of the subsidiaries of $427,673 and investing activities of discontinued operations of $177,265 which was a result of proceeds from the collection of notes receivable lending of $511,570 offset with payments for notes receivable lending of $330,046 and the purchase of property and equipment of $4,259.

Net cash provided by financing activities for the year ended July 31, 2019 amounted to $10,900, as compared to net cash used in financing activities for the year ended July 31, 2018 amounting to $1,201,994. During the year ended July 31, 2019, the cash provided by financing activities was the result of net borrowings of $10,900 from a related party. Our cash used in financing activities during the year ended July 31, 2018 of $1,201,994 was the result of financing activities of discontinued operations which included $2,093,000 in proceeds from notes payable offset by payments made on outstanding notes payable of $3,130,400 and payments made on outstanding notes payable to related parties of $164,594.

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