10

All conversions and payoffs of these debt instruments are reflected in the financial statements and are detailed in the footnotes.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report includes a numberThe following discussion of forward lookingour financial condition and results of operations contains forward-looking statements that reflectinvolve risks and uncertainties, such as statements of our current views with respectplans, objectives, expectations and intentions. As described at the beginning of this Annual Report on Form 10-K, our actual results could differ materially from those anticipated in these forward-looking statements. Factors that could contribute to future eventssuch differences include those discussed at the beginning of this Report, below in this section and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events.in the section above entitled “Risk Factors.” You should not place undue certaintyreliance on these forward lookingforward-looking statements, which apply only as of the date of this annual report. These forward lookingReport. Except as required by law, we undertake no obligation to update any forward-looking statements are subject to certain risksreflect new information, events or circumstances after the date of this Report, or to reflect the occurrence of unanticipated events. You should read the following discussion and uncertainties that could cause actual results to differ materially from historical results oranalysis in conjunction with our predictions.consolidated financial statements and the accompanying notes thereto included elsewhere in this Report.

CURRENT OPERATIONS

Life On Earth, Inc. (the “Company” or “LFER”, “us”, “we” “our”) was incorporated in April 2013 as HispanicaHispanca International Delights of America, Inc. as a Delaware company and changed its name to Life On Earth, Inc. in February 2018 and is engaged in the distribution of its own proprietary licensed and third party functional beverages throughout the United States.

Life On Earth, Inc. is an innovative brand accelerator and incubator and distribution platformis focused on building and scaling concepts in the all-naturalnatural consumer products category. Our mission is to bring our strategic focus and long-term forward lookingforward-looking vision to consumers in the health, wellness and active lifestyle spaces through superior branding, product quality, targeted acquisitions and retail experience in the functional beverage category.

Our objective is to grow as rapidly as possible (both organically and via strategic alliances and acquisitions) using the public capital markets for access to capital. The companies and assets sought by us will be those that already have market penetration in the following segments: (1) Sales (2) Marketing (3) Established Distribution networkand (4) Manufacturing;Manufacturing infrastructure in place.

Our management team has over 3050 years of combined experience in the food and beverage industry. In July 2016, we acquired Energy Source Distributors to establish a presence on the company’s first Direct Store Delivery (“DSD”)West Coast in an all cash purchase. Since then, we have also acquired the Victoria’s Kitchen brand, the Just Chill brand and The Giant Beverage Company, Inc. givingDuring fiscal 2019, LFER bi-coastal distribution coverage.needed to prioritize its available resources and made the decision to focus on growing the brands in its portfolio. As a result of this, LFER has now engaged withsold the Giant Beverage Company back to the original owners of the company effective March 1, 2019. The results of operations for Giant Beverage Companies from the acquisition throughFebruary 28, 2019 have been reclassified as a management advisor thatdiscontinued operation in the consolidated statements of LFER. Subsequent to year end LFER further decided to discontinue the operations of ESD and is providing direct handsmoving away from the DSD business. This will allow LFER to focus all its resources on management advice, strategic planning, exploring the build outits current and future portfolio of a Digital Marketing Platform to address the explosion in Online, Social and Mobile marketing and other assistance similar to services seen in more advanced companies.brands.

Our principal executive offices are located at 575 Lexington Avenue, 4th Floor, New York NY 10022 and our telephone number is (866) 928-5070.

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Emerging Growth Company

The Company is an “emerging growth company”, as defined in the Jumpstart Our Business Stamps Act of 2012 (“JOBS Act”), and may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of sec on 404(b) of the Sarbanes-Oxley Act, and exemptions from the requirements of Sections 14A(a) and (b) of the Securities Exchange Act of 1934 to hold a nonbinding advisory vote of shareholders on executive compensation and any golden parachute payments not previously approved.

The Company has elected to use the extended transition period for complying with new or revised accounting standards under Sec on 102(b)(1) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

We will remain an “emerging growth company: until the earliest of (1) the last day of the fiscal year during which our revenues exceed $1 billion, (2) the date on which we issue more than $1 billion non-convertible debt in a three year period, (3) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended, or (4) when the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.(646) 844-9897.

GOING CONCERN QUALIFICATION

Several conditions and events cast substantial doubt about the Company’s ability to continue as a going concern. The Company has incurred net losses from inception of $6,271,434,$14,875,376 has limited revenues and requires additional financing in order to finance its business activities on an ongoing basis. The Company has negative working capital of $3,372,765 as of May 31, 2019. The Company’s future capital requirements will depend on numerous factors including, but not limited to, continued progress in finding business opportunities. We have experienced recurring losses from operations and negative cash flows from operating activities. This situation creates uncertainties about our ability to execute our business plan, finance operations, and indicates substantial doubt about our ability to continue as a going concern. We continue to experience negative cash flows from operations, as well as an ongoing requirement for additional capital to support working capital needs. Therefore, currently, based upon our near-term anticipated level of operations and expenditures, management believes that cash on hand, excluding cash available under our line of credit, is not sufficient to enable us to fund operations for 12 months from the date the financial statements included in this Report are issued

At May 31, 2018,2019, we had cash on hand of $189,317$111,503 and an accumulated deficit of $6,271,434.$14,875,376. See “Liquidity“Liquidity and Capital Resources.”

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported in our financial statements and accompanying notes. We baseThe discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and judgmentsbased on historical experience and on various other assumptions that we believe areto be reasonable under the circumstances. However, future events are subject to change, andcircumstances, the best estimates andresults of which form our basis for making judgments routinely require adjustment. The amountsabout the carrying values of assets and liabilities reported in our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods,that are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory and income taxes.readily apparent from other sources. Actual results couldmay differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. The followingMany of our estimates or judgments are based on anticipated future events or performance, and as such are forward-looking in nature, and are subject to many risks and uncertainties, including those discussed below and elsewhere in this Report. We do not undertake any obligation to update or revise this discussion to reflect any future events or circumstances. There are certain critical accounting policies are significantly affected by judgments, assumptions and estimates usedthat we believe require significant judgment in the preparation of our consolidated financial statements. We have identified below our accounting policies that we use in arriving at key estimates that we consider critical to our business operations and the understanding of our results of operations. This is not a complete list of all of our accounting policies, and there may be other accounting policies that are significant to us. For a detailed discussion on the application of these and our other accounting policies, see Note 1 to Consolidated Financial Statements of this Report.

Revenue Recognition

The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model (as described in Note 1 to the Consolidated Financial Statements of this Report) to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer.

Revenue consists of the gross sales price, less allowances for which provisions are made at the time of sale, and less certain other discounts, allowances, and rebates that are accounted for as a reduction from gross revenue. Costs incurred by the Company for shipping and handling charges are included in cost of goods sold.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill and other intangibles are reviewed for impairment annually or more frequently when events or circumstances indicates that the carrying value of a reporting unit more likely than not exceeds its fair value. The goodwill impairment test is applied by performing a qualitative assessment before calculating the fair value of the asset. If, on the basis of qualitative factors, it is considered more likely than not that the fair value of the asset is greater than the carrying amount, further testing of goodwill for impairment is not required. If the carrying amount of the asset exceeds the asset’s fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that asset. Identifiable intangible assets acquired in business combinations are recorded at the estimated acquisition date fair value. Finite lived intangible assets are amortized over the shorter of the contractual life or their estimated useful life using the straight-line method, which is determined by identifying the period over which the cash flows from the asset are expected to be generated. As part of the Company’s annual review of goodwill and intangibles we performed a detail analysis of the intangibles recorded as they relate to the acquisitions of JC and VK. Based on this analysis, the Company recorded an impairment charge of $725,000 related to the JC acquisition as of May 31, 2019. The Company also wrote off the goodwill recorded in the GBC acquisition, in the amount of $726,890, as part of the resale of the GBC business. The balance of goodwill as of May 31, 2019 is $195,000.

Trade Spend and Promotion Expenses

Throughout the year, we run trade spend and promotional programs with distributors and retailers to help promote on- shelf discounts to our consumers. Additionally, in more limited instances, we enter into customer marketing agreements or various other slotting arrangements. The provisions for discounts, slotting fees and promotion allowances is recorded as an offset to sales and shown net on the consolidated statement of operations. Estimates are made to accrue for amounts that have not yet been invoiced in the month that the program occurs, or in the case of slotting, when the commitment is made.

Inventory

Our inventory consists of raw materials and finished goods inventories, which are manufactured and procured based on our sales forecasts. We value inventory at the lower of cost or net realizable value and include adjustments for estimated obsolete or excess inventory, on a first in-first out basis. We regularly review inventory detail to determine whether a write-down is necessary. We consider various factors in making this determination, including recent sales history, market conditions and remaining shelf life of materials and finished goods. The amount and timing of write-downs for any period could change if we make different judgments or use different estimates. We also determine whether a provision for obsolete or excess inventory is required on products that are over 12 months from production date or any changes.

Off-Balance Sheet Arrangements

We have no significant 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 stockholders.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

LIQUIDITY AND CAPITAL RESOURCES

During the yearsyear ended May 31, 2018 and 2017, the Company did not receive cash proceeds from the sale of the Company’s common stock.

During the years ended May 31, 2018 and 2017,2019, the Company received $1,250,000 and $1,453,000, respectively,$176,000 from the issuance of convertible promissory notes.notes payable as compared to $858,000 which the Company received from the issuance of convertible notes payable during the year ended May 31, 2018. During the year ended May 31, 2019, the Company made a $5,000 principal payment to a convertible note holder compared to payments of $605,000 for the year ended May 31, 2018. Also, during the year ended May 31, 2019, the Company received approximately $531,000 from the issuance of notes payable compared to $420,176 for the year ended May 31, 2108. On June 28, 2018, the Company and a note holder mutually agreed to settle the outstanding debt for a total amount of $560,000, of which $410,000 was paid in cash and $150,000 was paid with shares of the Company’s common stock. The Company also paid an additional $117,000 of payments for notes payable during the year ended May 31, 2019. During the year ended May 31, 2018 the Company made payments for notes payable of approximately $513,000. The Company also made payments for loans payable of approximately $222,000 during the year ended May 31, 2019.

CASH FLOWThe Company received approximately $402,000 from the sale of common stock during the year ended May 31, 2019 compared to $0 for the year ended May 31, 2018.

In addition, during the year ended May 31, 2019, the Company received proceeds from  various lines of credit in a n aggregate total of approximately $271,000 and repaid approximately $221,000. During the year ended May 31, 2018, the Company received proceeds from  various lines of credit in a n aggregate total of approximately $86,000 and repaid approximately $74,000.

We have experienced recurring losses from operations and negative cash flows from operating activities. This situation creates uncertainties about our ability to execute our business plan, finance operations, and indicates substantial doubt about our ability to continue as a going concern. We continue to experience negative cash flows from operations, as well as an ongoing requirement for additional capital to support working capital needs. Therefore, currently, based upon our near-term anticipated level of operations and expenditures, management believes that cash on hand is not sufficient to enable us to fund operations for 12 months from the date the financial statements included in this Report are issued. In view of these conditions, our ability to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on our ability to obtain necessary financing to fund ongoing operations. The consolidated financial statements included in this Report do not give effect to any adjustments which will be necessary should we be unable to continue as a going concern and therefore be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements. As of May 31, 2019, the Company had negative working capital of $3,372,765.

We willrequire additional financing to support our working capital needs in the future. The amount of additional capital we will require, the timing of our capital needs and the availability of financing to fund those needs will depend on a number of factors, including our strategic initiatives and operating plans, the performance of our business and the market conditions for available debt or equity financing. Additionally, the amount of capital required will depend on our ability to meet our sales goals and otherwise successfully execute our operating plan. We believe it is important that we meet these sales objectives in order to lessen our reliance on external financing in the future. We intend to continually monitor and adjust our operating plan as necessary to respond to developments in our business, our markets and the broader economy. Although we believe various debt and equity financing alternatives will be available to us to support our working capital needs, financing arrangements on acceptable terms may not be available to us when needed. Additionally, these alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing shareholders. Any such financing alternatives may not provide us with sufficient funds to meet our long-term capital requirements. If necessary, we may explore strategic transactions that we consider to be in the best interest of our company and our shareholders, which may include, without limitation, public or private offerings of debt or equity securities, a rights offering, and other strategic alternatives; however, these options may not ultimately be available or feasible when needed.

CASH FLOW

Our primary sources of liquidity have been cash from sales of products, sales of shares, the issuance of a convertible promissory notes and linefrom lines of credit.

WORKING CAPITAL

As of May 31, 2019, the Company had total current assets of $698,315 and total current liabilities of $4,071,080 resultingin negative working capital of $3,372,765. As of May 31, 2018, the Company had total current assets of $812,031 and total current liabilities of $3,464,476$3,606,038 resulting in negative working capital of $2,652,445. As of May 31, 2017, the Company had total current assets of $671,111 and total current liabilities of $1,795,764 resulting$2,794,007. The increase in negative working capital of $1,124,653.$578,758 for the year ended May 31, 2019 related to a variety of factors . There was a decrease in current assets in 2019 compared to 2018 of $113,716 primarily related to a decrease in accounts receivables of $86,700 and a decrease in prepaid expenses of $102,000. In addition, there was a reduction in accounts receivable of $138,072, a reduction in inventory of $107,114 and a reduction in prepaid expenses of $102,166. There was also an increase in accounts payable and accrued expenses in 2019 of $916,428 compared to 2018.

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RESULTS OF OPERATIONS

FOR THE YEAR ENDED MAY 31, 20182019 COMPARED TO MAY 31, 2017.2018.

Sales

Sales for the period ended May 31, 2019 were $1,009,394 as compared to $2,930,758 for the year ended May 31, 2018. The acquisitions of ESD during 2017 and VK and GBC during 2018 have allowed us to expand distribution thereby increasingdecrease in sales by $797,642$1,921,364 was primarily related to reduced sales for ESD and the sale of the Gran Nevada Horchata product line during 2019. ESD’s sales were $1,477,419 lower during 2019 than in 2018. The reduction in sales was due to an inability to properly fund their operations and maintain the proper inventory levels required to meet their sales targets. The sales related to Gran Nevada Horchata for 2019 were $432,989 lower than in 2018. This decrease related to the lack of available inventory due to limited access to copacking for the Horchata product as well as a total amountlack of $3,255,679capitalduring 2019. Subsequent to year end the Company made the decision to shut down the operations of ESD. This will have an impact on the sales of the Company during 2020 until the Company can replace these sales with additional product sales from its existing product lines or they are able to add additional products to the portfolio.

Cost of Goods Sold and GrossProfit

Gross profit for the year ended May 31, 2019 was $135,982 as compared to $670,399 for the year ended May 31, 2018. The reduction is gross profit was primarily related to the reduction in sales for fiscal 2019 and write-offs of inventory which increased cost of goods soldduring 2019. For the year ended May 31, 2019, gross margin decreased to 13.5% from 22.9% for the year ended May 31, 2018 as compareddue primarily to $2,458,037write offs of obsolete inventoryof approximately $133,000 which increased cost of goods sold for the year ended May 31,2019.

Operating Expenses

Operating expenses were $4,973,107 for the year ended May 31, 2017.

Gross Profit

The acquisitions have also allowed us2019 as compared to achieve a positive gross operating margin$1,659,342 for each individual subsidiary as stand-alone operations

Operating Expenses

Operating expenses decreased by $585,032 during the year ended May 31, 2018 mainly due2018. The increase in operating expenses was related to decreasesa variety of factors. During 2019 we write-off $725,000 of intangible assets related to the acquisition of the Chill Group. In addition, we also recorded an impairment of intangible assets of $265,615 related to the shutdown of the ESD operation. The largest increase in consultancy - share basedoperating expenses related to and an increase in share-based compensation of $818,905$2,223,770 during fiscal year ended 2019 over the fiscal year ended 2018. The increase in share-based compensation during 2019 was impacted by several factors. The Company incurred additional share-based compensation from individuals and entities who performed services for the Company. During 2019 the Company also compensated threeBoard of Directors with share-based compensation for their services to the Company. Several members of the management team were issued shares during 2019 for service rendered and risk incurred to personally guarantee credit lines.While the Company expects to continue to issue share-based compensation they do not expect recurring expenses to be as significant in future years. These increases were offset in part by increasesreductions in salary costsand benefit expenses of $91,442. Salaries are expected to increase as our business expands.$172,316.

Other Expense

During the year ended May 31, 2018,2019, the Company recorded interest and finance costs of $1,450,523,$1,953,829, as compared to $1,418,496$2,112,418 during the year ended May 31, 2017.2018. The interest and finance costs incurred by the Company reflect the cost of the debt incurred by the Company to finance operations.

operations. During the year ended May 31, 2019, the Company recorded the change in fair value of contingent consideration of $382,582 related to the acquisition of Just Chill. This charge related to contingent consideration arising from the measurement of LFER stock on the 12-month anniversary of the acquisition In addition during the year ended May 31, 2019, the Company recorded a loss on discontinued operations of $169,942 and a loss of $733,557 related to the resale of the GBC business.

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Net Loss

Net loss for the year ended May 31, 2019 increased to $8,077,035 from a net loss of $3,003,761 for the year ended May 31, 2018. The increase in net loss was primarily a result of the factors mentioned above related to the reduction in sales, the write off of goodwill, the impairment of intangibles, the increase in share-based compensation as well as the loss attributable to the discontinuance of the GBC operation. During 2019, the Company incurred a charge of $169,942 related to the discontinuance and a loss of $733,557 on the sale of GBC.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a “Smaller Reporting Company”, the Company is not required to provide this information.

ITEM 8. FINANCIAL STATEMENTS

The audited financial statements are included beginning immediately following the signature page to this report. See Item 15 for a list of the financial statements included herein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.None

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain a system of disclosure controls and procedures that are designed to ensure thethat information required to be disclosed by is in ourthe reports filed pursuant towe file or submit under the Exchange Act is recorded, processed, summarized, and reported within the metime periods specified in the Securities and Exchange CommissionCommission’s rules and forms, and to ensure that such information is accumulated and communicated to our principal executive officermanagement, including our Chief Executive Officer and principal financial officer,our Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) (“Disclosure Controls”) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls will be modified as systems change and conditions warrant.

As of May 31, 2018,2019, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer of the effectiveness of the design and opera on of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

The determination that our disclosure controls and procedures were not effective as of May 31, 20182019 is a result of inadequate staffing and supervision within the accounting operations of our Company. The Company plans to expand its accounting operations as the business of the Company expands.expands. 

MANAGEMENT’S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There have been no changes in our internal controls over financial reporting during the quarter ended May 31, 2018 2019that have materially affected, or are reasonably likely to materially affect our internal controls.

ITEM 9B. OTHER INFORMATION

Not applicable.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers and Directors

Below are the names and certain information regarding our current executive officers and directors:

Randy Berholtz

57

Director

January 6, 2017

Roy H. DiBenerdini

54

Director

May 1, 2018

Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Biographical information of each current officer and director is set forth below.

The Chairman and Chief Executive Officer, Mr.Fernando “Oswaldo” Leonzo, is a founder of, and has been employed by LFER since its inception in April of 2013. Mr. “Oswaldo” Leonzo has over 13 years’ experience in the Food and Beverage industry both from the distribution side as well as the brand side. He has also been working with contract manufacturers and suppliers as well as logistics companies for transshipments both in the U.S. and overseas for both Export and Imports- primarily in Latin America. For the past 1415 years Fernando Oswaldo Leonzo has worked for the following companies: Deep River Snacks (NYC Regional Sales Manager from February to December, 2011), Reeds, Inc. (New York Metropolitan Area Sales Manager from January to December, 2010), Cheeseworks, Inc. (Sales Director from December 2008 to December 2009), Presto Food & Beverage, Inc. (President & CEO from July 2001 to December 2008).; Gran Nevada Beverage, Inc. (President from November 2011 to present). He served on the board of directors and founded Presto Food & Beverage, Inc. in 2001. Presto’s LFER beverage brand, SolMaya, grew from zero to over $2 million in sales. This is primarily why he was selected as a director of LFER. Previously, he worked for almost a decade in the financial industry, initially as a sales executive with regional financial firms and later for a major clearinghouse on Wall Street. Prior to his financial service industry experience, he successfully operated a business that distributed recorded music to retailers in the U.S., Mexico and Colombia. He received his undergraduate degree (B.A.) in International Studies from New York University (NYU). He currently serves on the board of directors of LFER.

16

The Chief Operations Officer, Treasurer and Director, Robert Gunther is a founder of LFER since its inception in April of 2013. He has 2526 years’ experience in manufacturing. For the past five years, he has managed his own sales business under his own name specializing in products for apparel and construction. From December 1988 to December 2008 he was a Sr. Account Executive with Georgia Narrow Fabrics / Premier Narrow Fabrics in New York City. As the one of the firm's producing Account Executives, he generated sales to major accounts including Jockey, Fruit of the Loom, Warner, and VF. The product line included a broad range of knit and woven elastic products. In the mid-80s, he helped develop new apparel customers and manufacturing facilities for Hewlett Manufacturing. From July 1971 to April 1986, he was vice president at Gunther & Sharfman, a family-owned apparel manufacturing business. He participated in design, merchandising, sales, purchasing and manufacturing. His background includes 25 years of experience managing in purchasing and negotiation contracts for materials. Gunther has a BS from Long Island University. Mr. Gunther’s extensive business experience combined with his personal interest in the business is expected to provide the Board with insight and guidance in matters of corporate finance, business development and industry strategy.

President and Director, John Romagosa, is currently the managing director and founder of Latin Sales & Marketing, LLC. (“LSM“), founded in 2012. LSM is a leading brokerage/marketing/consulting firm innovating the retail, foodservice and private label sector of the Hispanic consumer packed goods industry. LSM facilitates the emergence of major Latin manufacturers and

US manufacturers for the steadily growing Hispanic market in the USA. Mr. Romagosa's extensive experience and relationships, within the Hispanic and Ethnic Food industry, will benefit the Board of LFER as it positions the company, its management, its products, and its distribution channels in becoming a leading edgeleading-edge company in the fastest growing segment of the food industry.

Mr. Romagosa was the managing director and partner of Falcon International Distributors, LLC, a leading ethnic foods distributor on the east coast, holding a chief procurement role for over ten years. Mr. Romagosa helped build that company from $9 million in revenues to over $100 million in revenues during his tenure before successfully selling the business in 2011. He has received Chamber of Commerce awards in New York and New Jersey, and has been responsible for the contribution of over a million pounds of donated products to food banks in the Northeast of the US. Mr. Romagosa is an Alumni of Saint John's University where he studied Finance, Business Administration, and Marketing.

Randy BerholtzThe Chief Financial Officer, Peter Dacey has 25 years of experience as a Senior Executive providing financial, operational and managerial expertise to organizations in both the private and public sectors.  Peter was a founder and Chief Executive Officer of The Miami Bay Beverage Company, LLC, which successfully developed and launched the Trimino line of protein infused waters.  He led the development of the beverage formulation and established the manufacturing and supply chain. Peter negotiated partnerships with key distributors and sold the brand to more than 15,000 retail outlets.   In addition, he managed all finance, accounting, human resources and logistics operations for the operation.

Prior to founding Miami Bay Beverage Company, LLC, he was one of the founders and CFO of 454 Life Sciences Corporation, a leader in next generation sequencing technology.  He was directly responsible for building an organization that successfully developed and commercialized innovative technologies. He also served as the Chief Financial Officer for publicly traded biotechnology companies Stem Cells Inc. and CytoTherapeutics Inc.  

Peter was associated with Ernst & Young LLP specializing in the entrepreneurial and technology sectors. He received his B.S. in Business Administration and Finance from the University of Rhode Island, graduating with honors.

William Hayde – Independent Director

Mr. Randy BerholtzBill serves and an independent Board Member of LFER.  He has been the Managing Director of the Interim Opportunity Fund LLC and its advisor, Waterside Capital Advisors, Inc. since March 2018. During 2013, Bill Co-Founded and is ourcurrently the Executive Vice President Corporate Developmentof Intercontinental Beverage Capital, Inc.(IBC). IBC is a New York based merchant bank focused specifically on the beverage and General Counsel. He isconsumer packaged goods industries.  Since January 2011 thru March 2018, he has been serving as Registered Vice President of Investment Banking Network 1 Financial Securities, Inc. and currently holds the following securities licenses: 6, 7, 24, 63, 79.  From 2002-2009, he was co-owner of Waterville Investment Research which also operated the SecretaryHedge Fund Waterville Investment Partners LLP.  Bill maintains seats on the advisory boards of multiple public and private companies in the Consumer and Medical industries.

From January 1997 through May of 2010, he was Head of Investment Banking for Brockington Securities and directed the firm’s underwriting activities, private placements, and initiation of trading of newly listed securities.  Bill received his B.A. degree from Stony Brook University.

Michael Bloom – Independent Director

Effective June 17, 2019 the Company elected Michael Bloom as an independent member of the Company. He wasBoard of Directors. Mr. Bloom has over 38 years of retail experience including drug, value and drug/value combos. Mr. Bloom is currently the founding partnerExecutive Vice-President, Chief Merchandising and Marketing officer at GPM Investments LLC, the largest privately held company in the convenience store channel of business. Former President, Chief Operating Officer, CEO and member of the Sorrento Valley Law GroupBoard of Directors at Fred’s Inc. in Memphis TN. Former President and is the formerChief Operating Officer at Family Dollar. Former Executive Vice President General Counselof Merchandising, Marketing and SecretarySupply Chain at CVS.  Mr. Bloom is a seasoned executive leader with a vast array of Apricus Biosciences, Inc. (NASDAQ: APRI),experiences including Merchandising, Marketing, Supply Chain, Customer Relationship Marketing, Acquisitions, Pricing, Private Brands, Direct Importing and developing strong teams and supplier relationships. Mr. Bloom holds an AA degree from Broward Community College. 

Jeffrey Guzy – Independent Director

Effective July 18, 2019, the Board of Directors appointed Jeffrey J. Guzy as a specialty pharmaceutical company. Priormember of the Board of Directors.From 2007 to present, Jeffrey Guzy has been a Director of Leatt Corporation, a personal protective equipment company that time, he wasis quoted on the Vice President, General Counsel and SecretaryOTCQB. From 2008 to present, Jeffrey Guzy has been a Director of ACON Laboratories,Capstone Companies, an LED lighting product company that is quoted on the OTCQB. From 2018 to present, Jeffrey Guzy has been a Director of YayYo, Inc., a group of Chinesecompany that develops, markets, and US life sciences companies.leases hi-tech enabled automobiles for ride-sharing. He has also been the Chief Operating Officer and General Counsel35 years of IngleWood Ventures, L.P., a life sciences venture capital company and the Interim General Counsel and Secretary of Nanogen, Inc. (NASDAQ: NGEN), a genomics tools company. He has also been an attorney with the law firms of Heller Ehrman, LLP, Cooley Godward, LLP, Kirkpatrick & Lockhart, LLP (now K&L Gates) and Cravath, Swaine & Moore. He has a Bachelor of Arts degree from Cornell University, a Master of Arts degree from Oxford University, where he was a Rhodes Scholar, and a Juris Doctor degree from Yale Law School where he was a Senior Editor of The Yale Law Journal andexecutive experience in various industries. Jeffrey Guzy received an MBA from the Wharton School/University of San Diego SchoolPennsylvania, and a MS in Systems Engineering and BS in Electrical Engineering, both from the University of Business.Pennsylvania.

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Roy H. DiBenerdini -- Independent Director

Roy is an accomplished Entrepreneur, Senior Executive, and CEO with more than 30 years of success across the investment, technology, analytics, and marketing industries. Throughout his executive career, Mr. DiBenerdini has held leadership positions at companies including iiON Corporation, AOL Digital Marketing Services, Computer and Information Sciences, Inc. and American Airlines / AMR Corporation. He is the CEO and Managing Partner at Green Room Fund, LLC and Managing Director at College Hill Ventures, PBC. He implemented the very first online customer loyalty program – AOL Rewards, which resulted in significant growth from 10M subscribing customers to more than 34M. He has also seen tremendous success as a CEO and an entrepreneur, raising more than $22M in funding for his companies. He raised $10M of funding for iiON Corporation whose clients included AOL, Disney, ESPN, Microsoft, Fast Company, Red Herring, Inc. Magazine, and Sony. He is a former Airline Advisory Board member to the United States Travel & Tourism Administration (U.S. Dept. of Commerce) and currently serves on the board of several early stage companies. Mr. DiBenerdini has a B.S. in Aerospace Engineering from The University of Texas at Arlington.

Board Committees

The Company has not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations. Our three directors perform all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.

Shareholder Communications

Currently, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, no security holders have made any such recommendations.

Code of Ethics

We have adopted a written code of ethics (the “Code of Ethics”) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We believe that the Code of Ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. To request a copy of the Code of Ethics, please make written request to our Company at 575 Lexington Ave., 4^th Floor, New York, NY 10022.

Compliance with Section 16(a) of the Exchange Act

Our Common Stock is not registered pursuant to Section 12 of the Exchange Act. On July 7^th 2015, our common stock became registered pursuant to section 12g of the exchange act. Accordingly, our officers, directors and principal shareholders are subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.

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ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth information concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules) for the fiscal year ended May 31, 2018.2019. 

Summary Compensation Table for Fiscal Year Ended May 31, 20182019

								All other
Name and principal position		Year		Salary				Compensation
Fernando Oswaldo Leonzo (1)		2018		$	44,800			$	24,000
Chief Executive Officer & Chairman of the Board
Robert Gunther (1) (2)		2018		$	—			$	30,750
Chief Operations Officer, Treasurer and Secretary
John Romagosa (1)		2018		$	—			$	24,000
President

_____________ 

(1)	During 20182019 Mr. Leonzo, Mr. Gunther and Mr. Romagosa received a travel reimbursement allowance of $24,000.
(2)	During 2019 Mr. Leonzo was granted a stock award of $150,000 in consideration of personally guaranteeing debt. These shares are accrued for as of May 31, 2019 and will be issued subsequent to year end.
(2)(3)	During 2019 Mr. Gunther was granted a stock award of $100,000 in consideration of personally guaranteeing debt. These shares are accrued for as of May 31, 2019 and will be issued subsequent to year end.
(4)	During 2018, rent2019 Mr. Romagosa was granted a stock award of $6,750 was earned by Mr. Gunther$85,000 for achievement of bonus targets and is listed$10,000 in the table aboveconsideration of loan exposure. These shares are accrued for as “All Other Compensation.” The forms of payment are described in Note 7.May 31, 2019 and will be issued subsequent to year end.

The Summary Compensation Table omits columns for Bonus, Stock Awards, Option Awards, Non-Equity Incentive Plan Compensation as no such amounts were paid to the named executive officers during the fiscal year ended May 31, 2018.

The following table sets forth information concerning the total compensation paid or earned by each of our named executive officers (as defined under SEC rules) for the fiscal year ended May 31, 2017.2019.

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Summary compensation Table for Fiscal Year Ended May 31, 2018

___________

(1)	During 20172018 Mr. Leonzo, Mr. Gunther and Mr. Romagosa received a travel reimbursement allowance of $18,000.$24,000.
(2)	Rent of $9,000$6,750 earned by Mr. Gunther is listed in the table above as “All Other Compensation.” The forms of payment are described in Note 7.

  The Company has no other plans in place and has never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.

Employment Agreements

As a result of our acquisition of ESD, we retained Mr. Jose Castaneda, one of the selling founders, as Sales Manager for a term of twelve (12) months at an annual salary of $58,000, pursuant to an employment agreement to manage operations at the ESD facility in Gilroy, California. The agreement expired in July 2017.

As a result of our acquisition of GBC during 2018, we retained Mr. Frank Iemmitti, one of the selling founders, as Sales Manager for a term of twenty-four (24) months at an annual salary of $75,000, pursuant to an employment agreement to manage operations at the GBC facility in Staten Island, New York. With the sale of GBC,the employment agreement was terminated.

There are no other employment agreements; however, the Company anticipates entering into more employment agreements with key management positions as the Company grows. The Company does not have a standing compensation committee, audit committee, nomination committee, or committees performing similar functions. We anticipate that we will form such committees of the Board of Directors once we have a full Board of Directors.

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Outstanding Equity Awards at Fiscal Year-End

As of May 31, 20182019, and 2017,2018, there were no outstanding options or warrants to purchase, or other instruments convertible into, common equity of the Company, related to equity awards.

Director Compensation

The Company is currently creating an Independent Compensation committee, reporting to the Board, with a compensation schedule for both Independent Board members as well as Executives of the Company which is intended to be retroactive to June 1, 2018.2019.

Effective May 31, 2019, a Separation and Mutual Release Agreement was entered into between Life On Earth, Inc, (“LFER”) and Roy DiBenerdini, a member of LFER’s Board of Director’s (“Director”). The Director and LFER entered into the mutual agreement with respect to the Director’s resignationfrom his position as a director on the Board of LFER. LFER and the Director agree that the Company issued to the Director 967,218 restrictedshares of the Company’s common stock (the “Restricted Shares”) to compensate him for his services performed as a director on the Company’s Board through the Resignation Date. LFER and the Director agree that the Company paid the Director the amount of $10,000 which is the cash fee for Director’s service as an independent director on the Company’s Board of Directors. 

Effective May 31, 2019, Separation and Mutual Release Agreement was entered into between Life On Earth, Inc, (“LFER”) and Randy Berholtz,, a member of LFER’s Board of Director’s (“Director”). The Director and LFER entered into the mutual agreement with respect to the Director’s resignation from his position as a director on the Board of LFER. LFER and the Director agree that the Company issued to the Director 1,870,852restricted shares of the Company’s common stock (the “Restricted Shares”) to compensate him for his services performed as a director on the Company’s Board through the Resignation Date. LFER and the Director agree that the Company paid the Director the amount of $10,000which is the cash fee for Director’s service as an independent director on the Company’s Board of Directors. 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial ownership of our Common Stock known by us as of August 24, 2018September 11, 2019 by:

Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock owned by them, except to the extent such power may be shared with a spouse.spouse.

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The percent of class is based on 26,393,94242,200,384 shares of common stock issued and outstanding as of August 24, 2018September 11, 2019 plus 6,493,7185,714,769 shares beneficially owned from the conversion of debt and the execution of warrants.

Preferred shares outstanding

Preferred shares do not have liquidation preferences but have 50-1 preferred voting rights.

Warrants outstanding

Securities Authorized For Issuance Under Equity Compensation Plans

We have not adopted any Equity Compensation Plans as of May 31, 2018.2019.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Our CEO, Fernando “Oswaldo” Leonzo, owns no shares in Gran Nevada, however he serves as Gran Nevada’scurrent President. Robert Gunther, our Chief Operating Officer owns 12% of the common stock of Gran Nevada.

The

During 2018, the Company leased its offices on a month to month basis from Mr. Robert Gunther for $750 per month. The current officers and directors of the Company are involved in other business activities and may, in the future, become involved in additional business opportunities. Currently there is an employment agreement between LFER and its Chief Financial Officer. There are no other employment contracts options, warrants, rights, licensingwith the remaining members of the management team. In addition, there are currently agreements employment agreements or any other agreementsin place with the independent members of any kind between LFER and anythe Board of its current officers and directors.Directors. If a specific business opportunity becomes available, such person may face a conflict in selecting between our business interest and their other business interests. The policy of the Board is that any personal business or corporate opportunity incurred by an officer or director of LFER must be examined by the Board and turned down by the Board in a timely basis before an officer or director can engage or take advantage of a business opportunity which could result in a conflict of interest.

Our CEO has also guaranteed certain operating business loans to support the operations. Currently he has guaranteed business loans with Blue Vine and Kabbage.

Our COO, Robert Gunther, has guaranteed a credit line with Wells Fargo for $50,000.

The founder's Common Shares as disclosed herein were sold to our officers and directors in April 2013. The Company believes that the issuance of these shares waswere exempt from registration pursuant to Section (2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering. The Founders, Fernando “Oswaldo” Leonzo (Chairman & CEO), Robert Gunther (Treasurer, Secretary, Director & Chief Operations Officer), and Jerry Gruenbaum were issued the following Preferred Shares as founders for services rendered as Officers and Directors as of April 30, 2013, 600,000 Preferred Shares, 300,000 Preferred Shares, and 100,000 Preferred Shares respectively. Jerry Gruenbaum resigned as a director on April 16, 2015. None of the following parties has, since the date of incorporation, had any material interest, direct or indirect, in any transaction with the Company or in any presently proposed transaction that has or will materially affect us:

	·	The Officer and Director;
	·	Any person proposed as a nominee for election as a director;
	·	Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to the outstanding shares of common stock;
	·	Any relative or spouse of any of the foregoing persons who have the same home as such person.

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Director Independence

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to (and we do not) have our Board of Directors comprised of a majority of “Independent Directors.”

Our Board of Directors has considered the independence of its directors in reference to the definition of “independent director” established by the NASDAQ Marketplace Rule 5605(a)(2). In doing so, the Board of Directors has reviewed all commercial and other relationships of each director in making its determination as to the independence of its directors.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

In July 2015, the Company engaged Raich Ende Malter & Co. LLP as its independent registered public accounting firm. Effective as of January 23, 2019, Raich Ende Malter & Co. LLP, Melville, New York (“Raich”) was dismissed as the independent registered public accounting firm for the Company.  The Dismissal was approved by our Board of Directors effective as of January 23, 2019. The Dismissal was not due to any disagreements with Raich regarding any matter of accounting principles or practices, financial statement disclosures, audit scope, or audit procedure.

Effective January 24, 2019, our Board of Directors appointed Friedman LLP, (“Friedman”) as our independent registered public accounting firm, to audit our financial statements for the year ended May 31, 2019.

The aggregate fees billed to the Company for services rendered in connection with the years ended May 31, 20182019 and 20172018 are set forth in the table below:

___________ 

Audit Committee’s Pre-Approval Practice

We currently do not have an audit committee. Our board of directors has approved the services described above.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules

The financial statements of Life On Earth, Inc. are listed on the Index to Financial Statements on this annual report on Form 10-K beginning on page F-1.

Exhibits

The following Exhibits are being filed with this Annual Report on Form 10-K:

__________ 

(*) Filed herewith

(a) Incorporated by reference to the Registrant’s Registration Statement on Form S-1/A filed October 15, 2013

(b) Incorporated by reference to the Registrant’s Reports in Form 8-K filed November 4, 2015 and July 8, 2016.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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/s/ John Romagosa		President and Director		September 20, 2019
John Romagosa
/s/ Peter Dacey		Chief Financial Officer		September 20, 2019
Peter Dacey
/s/ William Hayde		Director		September 20, 2019
William Hayde

PART IV - FINANCIAL INFORMATION

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Life On Earth, Inc.Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Life On Earth, Inc. and its Subsidiaries (the “Company”) as of May 31, 2018, and 2017, and the related consolidated statements of operations, changes in stockholders’ deficiency, and cash flowsflow for each of the years in the two-year periodyear then ended, May 31, 2018, and the related notes, collectively referred to as the consolidated financial statements. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year periodthen year ended, May 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our auditsaudit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1920 to the consolidated financial statements, the Company has incurred losses from operations since its inception, has negative working capital, and a stockholders’ deficitdeficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 19.20. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders of Life on Earth, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Life on Earth, Inc. and its Subsidiaries (the “Company”) as of May 31, 2019, and the related consolidated statements of operations, stockholders’ deficiency, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has an accumulated deficit of $14.9 million as of May 31, 2019, has recurring losses and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. If the Company is unable to obtain financing, there could be a material adverse effect on the Company.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

F-2