The following discussion and analysis of financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes included elsewhere in this report. This discussion
contains forward-looking statements that involve risks, uncertainties and
assumptions. See "Note Regarding Forward-Looking Statements." Our actual results
could differ materially from those anticipated in the forward-looking statements
as a result of certain factors discussed in "Risk Factors" and elsewhere in this
report.
Overview
Prior to March 16, 2018, we were engaged in the development of mining assets. We
never generated any revenue from this business and as of April 30, 2018, all of
the assets associated with the mining business were fully reserved against and
have no value. On March 16, 2018, we had a change in management, with the
resignation of our sole director and chief executive officer and our chief
financial officer, and the appointment of a new director and chief executive
officer, who became our sole executive officer. With the change of management,
we changed our business to developing the business of designing and selling
computer equipment which can be used for the mining of cryptocurrency. In April
2019, our sole director and officer resigned and we discontinued the business of
designing and selling computer equipment for the cryptocurrency business, from
which we did not generate any revenue. On August 14, 2019, the then sole officer
and director resigned and Jose Maria Eduardo Gonzalez Romero was elected as our
sole officer and director. At the time, Mr. Romero was our largest creditor,
having invested $500,000 for the purchase of our 5% convertible notes, which
mature on various dates in 2020. We are now in the process of looking for a new
business, either through an acquisition or commencing new business activities.
Although we have had discussions with potential acquisition candidates, as of
the date of this report, we have not signed any agreement, letter of intent or
memorandum of understanding with respect to any potential acquisition, and we
cannot assure you that we will be able to make any acquisition. Because of our
financial condition, the low price and lack of liquidity of our stock, and our
stock being traded on the OTC Pink, it is not likely that we will be able to
acquire any company other than a company without a history of earnings. In such
event, we will need to raise a significant amount of funds. We have no assurance
that financing will be available to us on acceptable, if any, terms. If
financing is not available on satisfactory terms, we may be unable to continue,
develop or expand our operations. Equity financing would result in additional
dilution to existing stockholders.
During the period from March through June 2018, we raised $500,000 from the sale
of our convertible notes in the principal amount of $500,000 to Mr. Romero, who,
at the time, was not a related party. The proceeds of these notes were used to
purchase inventory and for working capital purposes, including expenses relating
to our status as a public company. Pursuant to the loan agreement, we were to
give Mr. Romero a security interest in this equipment. The equipment was never
delivered to us in the United States and we are aggressively pursuing the
manufacturer of the equipment to either deliver the equipment purchased or
refund the purchase including interest and damages. The value of the inventory
was written down to zero. We anticipate that in connection with any acquisition
or financing, we will pay the principal and interest on the notes to Mr. Romero.
The need to make this payment may affect our ability to make an acquisition or,
if we can make an acquisition, the terms of the acquisition.
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Result of operations
Years Ended July 31, 2021 and 2020
We did not generate any revenues during the years ended July 31, 2021 and 2020.
For the year ended July 31, 2021, we incurred operating expenses of $43,795,
primarily professional fees, resulting in a loss from operations of $43,795.
Other expenses consisted of interest and accretion on convertible notes of
$60,000, resulting in a net loss from continuing operations of $103,795, or
($0.00) per share (basic and diluted).
For the year ended July 31, 2020, we incurred operating expenses of $162,429,
primarily stock-based compensation and professional fees, resulting in a loss
from operations of $162,429. Other expenses consisted of interest and accretion
on convertible notes of $197,570, resulting in a net loss from continuing
operations of $359,999, or ($0.00) per share (basic and diluted).
Liquidity and Capital Resources
The following table summarizes our changes in working capital from July 31, 2020
to July 31, 2021:
July 31, July 31,
2021 2020 Change %
Current assets $ 665 $ 1,025 $ (360 ) (35 )%
Current liabilities $ 957,486 $ 854,051 $ 103,435 12 %
Working capital deficiency $ (956,821 ) $ (853,026 ) $ (103,795 ) 12 %
The increase in working capital deficiency is primarily due to an increase in
convertible note - related party due to interest expense.
The following tables summarize our cash flows the years ended July 31, 2021 and
2020.
Years Ended
July 31,
2021 2020 Change
Cash used in operating activities $ (360 ) $ (825 ) $ 465
Cash used in investing activities $ - $ - $ -
Cash provided by financing activities $ - $ - $ -
Cash on hand
$ 665 $ 1,025 $ (360 )
The cash flow used in operating activities for year ended July 31, 2021 reflects
the net loss of $103,795, increased by accrued interest of $60,000 and an
increase in accounts payable and accrued liabilities of $2,399 and due to
related parties of $41,036.
The cash flow used in operating activities for the year ended July 31, 2020
reflects our net loss of $359,999, increased by stock-based compensation of
$120,000 and accrued interest and accretion on convertible notes of $197,570,
and increases in accounts payable and accrued liabilities of $12,994 and due to
related parties of $28,610.
For the years ended July 31, 2021 and 2020, we did not have any cash flow from
investing or financing activities or non-cash transactions.
Going Concern
Our financial statements include a going-concern paragraph. Our consolidated
financial statements have been prepared assuming that we will continue as a
going concern, which contemplates the realization of assets and the liquidation
of liabilities in the normal course of business. During the year ended July 31,
2021, we incurred a net loss of $103,795. As of July 31, 2021, we had an
accumulated deficit of $12,816,876 and we have earned no revenues since
inception and were not engaged in an active business with the result that our
accumulated deficit has increased since July 31, 2021. We intend to seek to
either acquire a business or enter into a new business. However, until we engage
in an active business or make an acquisition we are likely to not be able to
raise any significant debt or equity financing or any funds that we may raise
are likely to be on very unfavorable terms. We do not presently have the funds
to pay the convertible notes which mature at various dates in 2020. Our ability
to begin operations in its new business model is dependent upon, among other
things, obtaining financing to commence operations and develop a business plan
or making an acquisition. We cannot give any assurance as to our ability to
develop or acquire a business or to operate profitably. These factors, among
others, raise substantial doubt about our ability to continue as a going
concern. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
Use of Estimates: The preparation of the accompanying consolidated financial
statements in conformity with GAAP requires management to make certain estimates
and assumptions that directly affect the results of reported assets,
liabilities, revenue, and expenses, including the valuation of non-cash
transactions. Actual results may differ from these estimates.
Revenue Recognition:
We recognize revenues in accordance with Topic 606, which requires us to
recognize revenues when control of the promised goods or services is transferred
to customers at an amount that reflects the consideration to which we expect to
be entitled to in exchange for those goods or services. We Company recognize
revenue based on the five criteria for revenue recognition established under
Topic 606: 1) identify the contract, 2) identify separate performance
obligations, 3) determine the transaction price, 4) allocate the transaction
price among the performance obligations, and 5) recognize revenue as the
performance obligations are satisfied. We have not realized any revenues from
operations, and are not currently engaged in any active business.
Share-based expenses
In accordance with ASC 718 "Compensation - Stock Compensation" we account for
stock-based compensation arrangements with employees, nonemployee directors and
consultants using a fair value method, which requires the recognition of
compensation expense for costs related to all stock-based payments, including
stock options, on a straight-line basis over the requisite service period in the
Company's consolidated statements of operations. The fair value method requires
the Company to estimate the fair value of stock-based payment awards on the date
of grant.
Concentrations of Credit Risk
Our financial instruments that are exposed to concentrations of credit risk
primarily consist of its cash and related party payables it will likely incur in
the near future. We place our cash with financial institutions of high credit
worthiness. At times, our cash balance with a particular financial institution
may exceed any applicable government insurance limits. Our management plans to
assess the financial strength and credit worthiness of any parties to which it
extends funds, and as such, it believes that any associated credit risk
exposures are limited.
Net Loss per Share of Common Stock
We calculate net loss per share in accordance with ASC Topic 260, "Earnings per
Share". Basic loss per share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during the period.
Diluted loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common stock equivalents had
been issued and if the additional common shares were dilutive. Diluted earnings
per share excludes all dilutive potential shares if their effect is
anti-dilutive.
Recent Accounting Pronouncements
We have implemented all new pronouncements that are in effect and that may
impact our consolidated financial statements and we do not believe that there
are any other new accounting pronouncements that have been issued that might
have a material impact on our consolidated financial statements or results of
operations.
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