Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jan. 31, 2020 | Apr. 29, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | BOOMER HOLDINGS, INC. | |
Entity Central Index Key | 0001678746 | |
Entity File Number | 000-215000 | |
Document Type | 10-Q | |
Document Period End Date | Jan. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 | |
Entity Interactive Data Current | No | |
Entity Incorporation, State or Country Code | NV | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 128,513,739 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Current Assets: | ||
Cash | $ 284,854 | $ 152,667 |
Accounts receivables, net of allowance for bad debt of $2,882 amd $0, respectively | 35,700 | |
Accounts receivables - related parties | 3,401 | |
Inventories, net | 526,592 | 53,724 |
Other current assets | 65,582 | 1,934 |
Loans receivables - related parties | 122,792 | 1,600 |
Total current assets | 1,038,921 | 209,925 |
Non-current Assets: | ||
Property and equipment, net | 123,847 | 75,928 |
Lease asset | 1,162,113 | |
Total non-current assets | 1,285,960 | 30,715 |
Total assets | 2,324,881 | 285,853 |
Current Liabilities: | ||
Accounts payable | 633,664 | 159,870 |
Other current liabilities | 210,207 | 16,738 |
Accrued interest | 20,442 | |
Current portion of notes payable - related parties | 2,718 | |
Current portion of operating lease liabilities | 123,923 | |
Total current liabilities | 990,954 | 176,608 |
Lines of credit - related parties | 559,273 | 110,000 |
Operating lease liabilities, less current portion | 1,076,168 | |
Notes payable - related parties | 179,000 | 74,000 |
Total liabilities | $ 2,805,395 | $ 360,608 |
Stockholders' Deficit: | ||
Common stock, no par value; 200,0000,000 shares authorized, 117,963,439 and 247,410,916 shares issued and outstanding, respectively | 3,187,968 | 520,000 |
Accumulated deficit | $ (3,668,482) | $ (594,755) |
Total stockholders' deficit | (480,514) | (74,755) |
Total liabilities and stockholder's equity | $ 2,324,881 | $ 285,853 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivables, net allowance for bad debt | $ 2,882 | $ 0 |
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized | 2,000,000,000 | 2,000,000,000 |
Common stock, issued | 3,187,968 | 520,000 |
Common stock, outstanding | 117,963,439 | 247,410,916 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2020 | Jan. 31, 2019 | Jan. 31, 2020 | Jan. 31, 2019 | |
Income Statement [Abstract] | ||||
Net revenue | $ 253,419 | $ 427,563 | ||
Cost of goods sold | 67,916 | 153,387 | ||
Gross profit | 185,503 | 274,176 | ||
Operating expenses: | ||||
Advertising and marketing | 380,568 | 639,653 | ||
General and administrative | 354,091 | 530,706 | ||
Payroll and payroll taxes | 625,161 | 904,184 | ||
Professional fees | 675,318 | 967,382 | ||
Research and development | 4,030 | 16,485 | ||
Depreciation and amortization | 8,298 | 8,298 | ||
Rent | 76,836 | 198,095 | ||
Total operating expenses | 2,124,302 | 3,264,803 | ||
Loss from operations | (1,938,799) | (2,990,627) | ||
Other income (expense): | ||||
Interest expense | (50,077) | (84,590) | ||
Other income | 1,190 | 1,490 | ||
Total other expense, net | (48,887) | (83,100) | ||
Loss before provision for income taxes | (1,987,686) | (3,073,727) | ||
Income tax provision | ||||
Net loss | $ (1,987,686) | $ (3,073,727) | ||
Earnings (loss) per share: | ||||
Basic and diluted (in dollars per share) | $ (0.01) | $ (0.01) | ||
Weighted average number of common shares outstanding: | ||||
Basic and diluted (in shares) | 240,789,625 | 238,475,188 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (UNAUDITED) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance, beginning at Jun. 06, 2019 | ||||
Balance, beginning (in shares) at Jun. 06, 2019 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of stock | $ 520,000 | 520,000 | ||
Issuance of stock (in shares) | 30,000 | |||
Net loss | (594,755) | (594,755) | ||
Balance, end at Jul. 31, 2019 | $ 520,000 | $ (594,755) | $ (74,755) | |
Balance, end (in shares) at Jul. 31, 2019 | 30,000 | 247,410,916 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of stock | $ 2,667,968 | $ 2,667,968 | ||
Issuance of stock (in shares) | (3,073,727) | (3,073,727) | ||
Net loss | $ (3,073,727) | |||
Balance, end at Jan. 31, 2020 | $ 3,187,968 | $ (3,668,482) | $ (480,514) | |
Balance, end (in shares) at Jan. 31, 2020 | 30,000 | 117,963,439 | ||
Balance, beginning at Oct. 31, 2019 | $ 520,000 | (594,755) | $ (74,755) | |
Balance, beginning (in shares) at Oct. 31, 2019 | 30,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of stock | $ 1,469,400 | 1,469,400 | ||
Net loss | (1,987,686) | (1,987,686) | ||
Balance, end at Jan. 31, 2020 | $ 3,187,968 | $ (3,668,482) | $ (480,514) | |
Balance, end (in shares) at Jan. 31, 2020 | 30,000 | 117,963,439 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 6 Months Ended | |
Jan. 31, 2020 | Jan. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (3,073,727) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 9,251 | |
Noncash lease expense | 37,978 | |
Changes in assets and liabilities: | ||
Accounts receivable | (39,101) | |
Other current assets | (63,648) | |
Inventories, net | (472,868) | |
Accounts payable | 473,793 | |
Accrued interest | 20,442 | |
Other current liabilities | 193,469 | |
Net cash used in operating activities | (2,914,411) | |
Cash flows from investing activities: | ||
Purchases of property and equipment | (57,170) | |
Loans provided on loans receivables - related parties | (530,025) | |
Repayments from payments received on loan receivables - related parties | 408,833 | |
Net cash used in investing activities | (178,362) | |
Cash flows from financing activities: | ||
Repayments on lines of credit - related parties | (363,442) | |
Borrowings under lines of credit - related parties | 812,716 | |
Borrowings from notes payable - related parties | 107,718 | |
Proceeds from issuance of common stock | 2,667,968 | |
Net cash provided by financing activities | 3,224,960 | |
Net increase in cash | 132,187 | |
Cash - beginning of period | 152,667 | |
Cash - end of period | 284,854 | |
Cash paid during the period for: | ||
Interest | 64,148 | |
Income taxes | 800 | |
Interest paid calculation: | ||
Accrued interest at 7/31/19 | 0 | |
Accrued interest at 1/31/20 | (20,442) | |
Interest expense | 84,590 | |
Interest paid - cash | $ 64,148 |
DESCRIPTION OF BUSINESS AND BAS
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 6 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Organization Boomer Holdings, Inc. (the “Company”), through its wholly owned subsidiary, Boomer Naturals, Inc., engages in the development and sale of the proprietary CB5 wellness formula in the United States of America and internationally. All of the Company’s sales relate to CB5 and its related products. Boomer Naturals, Inc. was incorporated in June 2019 and is headquartered in Las Vegas, Nevada. Share Exchange Between Boomer Natural Holdings and Boomer Naturals, Inc. Boomer Naturals, Inc. (“Naturals”) was incorporated as a Nevada corporation on June 7, 2019. Boomer Natural Holdings, Inc. (“Boomer”) was incorporated as a Nevada corporation on January 7, 2020 and was a non-operating company. On or about the same day, Naturals completed its share exchange with Boomer, whereby, the shareholders of Naturals became shareholders of Boomer and all of common stock shares of Boomer Naturals, Inc. was exchanged to Boomer by the shareholder of Boomer Naturals, Inc. for newly-issued shares of Boomer common stock resulting in Boomer Naturals, Inc. becoming a wholly-owned subsidiary of Boomer. The transaction is accounted for as a “reverse merger” and recapitalization since the stockholder of Boomer Naturals, Inc. owned a majority of the outstanding shares of the common stock of Boomer immediately following the completion of the transaction, the stockholders of Boomer Naturals, Inc. will have the significant influence and the ability to elect or appoint or to remove a majority of the members of the governing body of Boomer, and Boomer Naturals, Inc.’s senior management will dominate the management of Boomer immediately following the completion of the transaction. Accordingly, Boomer Naturals, Inc. will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of Boomer. Share Exchange Between Remaro Group Corp and Boomer Naturals Holdings On December 12, 2019, Marina Funt, the former principal shareholder, Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary and Director of Remaro Group Corp. (the “Company”), consummated the sale of Ms. Funt’s 24,000,000 shares (the “Shares”) of the Registrant’s common stock, par value $0.001 per share (the “Common Stock”) to Boomer Natural Wellness, Inc. (“BNW”). The acquisition of the Shares, which represent approximately 76% of the Company’s shares of outstanding Common Stock, resulted in a change in control of the Registrant. In connection with the sale of the Shares, Ms. Funt waived, forgave and discharged any indebtedness of any kind owed to her by the Company. On January 7, 2020, the Company, then named Remaro Group Corp., executed and consummated an Agreement of Merger and Plan of Share Exchange (the “Exchange Agreement”), with Boomer Natural Wellness, Inc. (“BNW”), Boomer Naturals Holdings, Inc., a Nevada corporation (“Boomer”), Boomer Naturals, and the shareholders of Boomer (the “Exchange”). Upon consummation of the transactions set forth in the Exchange Agreement (the “Closing”), the Company adopted the business plan of Boomer Naturals. Pursuant to the terms of the Exchange Agreement, the Company agreed to acquire all of the outstanding shares of Boomer in exchange for the issuance of an aggregate 120,980,739 shares (the “Exchange Shares”) of the Company’s Common Stock and BNW agreed to retire 24,000,000 shares of the Company’s Common Stock. As a result of the Exchange, Boomer became a wholly-owned subsidiary of the Company and the Company adopted the business plan of Boomer Naturals. Following the consummation of the Exchange, the Boomer Shareholders beneficially owned approximately Ninety-Four (94%) of the issued and outstanding Common Stock of the Company. TCompanyCompanyCompanyCompanyCompanyCompanyCompanyCompany On January 7, 2020, the Company approved an amendment to its Articles of Incorporation (the “Amendment”) to: change the name of the Company to Boomer Holdings Inc.; effect a forward stock split on the basis of three-to-one (3:1); and to increase the number of authorized shares of capital stock to 210,000,000 of which 200,000,000 shares shall be Common Stock and 10,000,000 shares will be blank-check preferred stock, par value $0.001 per share. The transaction above will be accounted for as a “reverse merger” and recapitalization since the stockholder of Boomer will own a majority of the outstanding shares of the common stock of Company immediately following the completion of the transaction, the stockholders of Boomer will have the significant influence and the ability to elect or appoint or to remove a majority of the members of the governing body of the combined entity, and Boomer’s senior management will dominate the management of the combined entity immediately following the completion of the transaction. Accordingly, Boomer will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of the Company. Accordingly, the assets and liabilities and the historical operations that are reflected in the financial statements are those of the Boomer and are recorded at the historical cost basis of the Company. As a result, Boomer is the surviving company and the financial statements presented are historical financial accounts of Boomer Holdings, Inc. and its wholly owned subsidiary, Boomer Naturals, Inc. Financial Reporting As a result of share exchanges occurred amongst Company, Boomer, Boomer Naturals, Inc., and shareholders of the amongst companies, the consolidated financial statements include historical financial information of Boomer Holdings, Inc. and its wholly owned subsidiary, Boomer Naturals Inc. (combined companies referred as the “Company”) since June 7, 2019. Products Boomer Naturals Holdings Inc., through its wholly-owned subsidiary Boomer Naturals, Inc., a Nevada corporation, provides wellness solutions to multiple target markets through multiple sales channels, including retail locations, e-commerce, and wholesale distribution networks. Boomer sells health and wellness products and services geared toward alleviating pain, anxiety and improving general wellness through our proprietary lines of CB5 products. CB5 formula is the first FDA-compliant alternative that fully supports the body’s endocannabinoid system (ECS). This revolutionary breakthrough combines five natural and powerful ingredients that target the ECS. The CB5 products were developed by neurosurgeon, Dr. Mark Chwajol https://boomernaturalwellness.com/larry-mccleary-md/. The Boomer CB5 products contain a powerful combination of terpenes that interact with three known cannabinoid receptors and possibly a fourth, while the standard products in the industry interact only with one. The product contains all-natural ingredients which are all listed on the Generally Recognized as Safe list of the Food and Drug Administration and was developed by a practicing brain surgeon who is an expert in natural ingredients and CB receptors. Boomer focuses on wellness solutions for the 50 and older age demographic through the development of products using the Boomer proprietary CB5 formula. The CB5 formula includes a variety of terpenes that are compliant with FDA guidelines as all ingredients are listed on the Generally Recognized as Safe list. The solutions include products to alleviate pain, reduce anxiety, increase sleep quality, as well as offer cosmetic benefits. In addition, Boomer offers a full line of products to benefit the health of pets, including those suffering from seizures. Unaudited Interim Financial Information These unaudited interim financial statements have been prepared in accordance with GAAP for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending July 31, 2020. The balance sheets and certain comparative information as of July 31, 2019 are derived from the audited financial statements and related notes for the year ended July 31, 2019. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representation of the company’s management who are responsible for the integrity and objectivity of the financial statements. These accounting policies confirm to accounting principles generally accepted in the United State of America and have been consistently applied in the preparation of the financial statements. Basis of Presentation and Consolidation These accounting policies conform to generally accepted accounting principles in the United States of America (“GAAP”) and have been consistently applied in the preparing the Firm’s financial statements. The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America, which is based on the accrual method of accounting. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include, but are not limited to, the estimated useful lives of property and equipment, patent and trademark, the ultimate collection of accounts receivable and accrued expenses. Actual results could materially differ from those estimates. Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, the price is fixed or determinable, and collectability is reasonably assured, and delivery has occurred or services have been rendered. The Company offers the CB5 proprietary formula various channels, e-commerce, and brick and mortar retail The Company includes shipping and handling costs in cost of sales. Amounts billed for shipping and handling are included with revenues in the statement of operation. The Company recognizes an allowance for estimated future sales returns in the period revenue is recorded, based on pending returns and historical return data, among other factors. Management did not believe any allowance for sales returns was required at January 31, 2020. Advertising Expense Advertising costs are expensed as incurred. Advertising expense amounted to $639,653 and $380,568 for the six and three months ended January 31, 2020, respectively. Accounts Receivable Accounts receivable are carried at original invoice amount less the allowance for doubtful accounts based on a review of all outstanding amounts at year end. Management determines the allowance for doubtful accounts based on a combination of write-off history, aging analysis, and any specific known troubled accounts. Trade receivables are written off when deemed uncollectible. Inventories Inventories primarily consist of finished goods and are stated at the lower of cost (first-in-first-out) or market. The Company maintains an allowance for potentially excess and obsolete inventories and inventories that are carried at costs that are higher than their estimated net realizable values. Property and Equipment Property and equipment consist of leasehold improvements, furniture and fixtures, machinery and equipment are stated at cost. Property and equipment are recorded at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets, generally 5-7 year. Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term, including renewal periods that are reasonably assured. Impairment of Long-lived Assets In accordance with ASC 360, “Property, Plant, and Equipment,” the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. Fair Value of Financial Instruments The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: · Level 1 – Quoted prices in active markets for identical assets or liabilities. · Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 – Inputs include management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of January 31, 2020, the Company believes that the carrying value of cash, account receivables, accounts payable, accrued expenses, and other current assets and liabilities approximate fair value due to the short maturity of theses financial instruments. The financial statements do not include any financial instruments at fair value on a recurring or non-recurring basis. Income Taxes The Company has elected to be taxed as an S-corporation. Accordingly, except for a minimal state tax, the Company is not taxed at the corporate level; rather, the tax on corporate income is paid and the benefits of losses are recognized at the stockholder level. Therefore, no provision or credit for federal income taxes has been included in the financial statements. Certain transactions of the Company are subject to accounting methods for income tax purposes which differ from the accounting methods used in preparing the financial statements. Accordingly, the net income of the Company reported for federal income tax purposes may differ from the net income reported in these financial statements. The major differences relate to accounting for depreciation on property and equipment, stock compensation, and research credits. The Company has adopted ASC 740-10-25, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25 for the three months ended January 31, 2020. The Company is no longer subject to federal and state income tax examination by tax authorities for year ended before 2019, respectively. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and other receivables arising from its normal business activities. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectable accounts and, as a consequence, believes that its accounts receivable related credit risk exposure beyond such allowance is limited. All of the Company’s revenues are derived from the sale of the proprietary CB5 formula and related products. E-commerce accounted for 48% of revenues for the six months ended January 31, 2020, respectively and brick and mortar retail accounted for 52% of revenues for the six months ended January 31, 2020, respectively. The Company’s principal market in 2019 was the United States, but the Company plans to expand internationally in 2020. The Company maintains its cash and cash equivalents with various credit institutions. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, deposits of up to $250,000 at FDIC-insured institutions are covered by FDIC insurance. At times, deposits may be in excess of the FDIC insurance limit; however, management does not believe the Company is exposed to any significant related credit risk. Leases Prior to December 31, 2019, the Company accounted for leases under Accounting Standards Codification (ASC) 840, Accounting for Leases. Effective from December 31, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC 842 requires that lessees recognize right of use assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. Recent accounting pronouncement ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases. For operating leases, we calculated right of use assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the IBR as of that date. The adoption of ASC 842 resulted in recording an adjustment to operating lease right of use assets and operating lease liabilities of $$1,162,113 million and $1,200,091, respectively as of January 31, 2020. The difference between the operating lease ROU assets and operating lease liabilities at transition represented tenant improvements, and indirect costs that was derecognized. The adoption of ASC 842 did not materially impact our results of operations, cash flows, or presentation thereof. FASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting but without explicit bright lines. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for the fiscal year beginning after December 15, 2019, including interim periods within those fiscal year beginning after December 15, 2020. The Company adopted ASC 842 (ASU 2016-02). The adoption of ASC 842 resulted in recording an adjustment to operating lease right of use assets and operating lease liabilities of $1,162,113 million and $1,200,091 million, respectively as of January 31, 2020. The difference between the operating lease ROU assets and operating lease liabilities at transition represented tenant improvements, and indirect costs that were derecognized. The adoption of ASC 842 did not materially impact the Company’s results of operations, cash flows, or presentation thereof FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – In August 2016, the FASB issued 2016-15. Stakeholders indicated that there is a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues to reduce the existing diversity in practice. This ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal year beginning after December 15, 2019. Early adoption is permitted. Adoption of this ASU will not have a significant impact on the Company’s statement of cash flows. FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” – In May 2016, the FASB issued 2016-12. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications. This ASU is effective for quarterly reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019. The Company is currently assessing the potential impact this standard will have on the Company’s financial statements and related disclosures. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jan. 31, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 3. INVENTORIES Inventories primarily consisted of finished goods in the amount of $526,592 and $53,724 as of January 31, 2020 and July 31, 2019, respectively. |
NOTES RECEIVABLES - RELATED PAR
NOTES RECEIVABLES - RELATED PARTIES | 6 Months Ended |
Jan. 31, 2020 | |
Receivables [Abstract] | |
NOTES RECEIVABLES - RELATED PARTIES | 4. NOTES RECEIVABLES – RELATED PARTIES Notes receivables from related parties consisted of the following: January 31, July 31, 2020 2019 Loan receivable bearing no interest with unpaid principal balance due on demand. $ 119,585 $ — Loan receivable bearing no interest with unpaid principal balance due on demand. 3,207 1,600 Total notes receivables $ 122,792 $ 1,600 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jan. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: Depreciation and amortization expense on property and equipment amounted to $9,251 and $0 for the six and three months ended January 31, 2020, respectively. January 31, 2020 July 31, 2019 Furniture and Equipment $ 14,381 $ 35,838 Leasehold Improvement 102,666 $ — Computer 16,051 40,090 Total property and equipment 133,098 75,928 Less-accumulated depreciation and amortization (9,251 ) — Total property and equipment, net $ 123,847 $ 75,928 |
LINES OF CREDIT - RELATED PARTI
LINES OF CREDIT - RELATED PARTIES | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
LINES OF CREDIT - RELATED PARTIES | 6. LINES OF CREDIT – RELATED PARTIES Lines of credit related parties consisted of the following: January 31, July 31, 2020 2019 July 2019 ($300,000 line of credit) - Line of credit with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. $ 30,306 $ — July 2019 ($89,000 line of credit) - Line of credit with maturity date of July 1, 2029 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 64,400 — July 2019 ($300,000 line of credit) - Line of credit with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 378,827 50,000 July 2019 ($150,000 line of credit) - Line of credit with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 68,440 — July 2019 ($60,000 line of credit) - Line of credit with maturity date of July 29, 2029 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 17,300 60,000 Total lines of credit 559,273 110,000 Less: Short-term portion — — Total lines of credit - long portion $ 559,273 $ 110,000 July 2019 - $300,000 line of credit On July 1, 2019, the Company entered into a line of credit agreement in the amount of $300,000 with maturity date of June 30, 2021. The line of credit bears interest at 6% per annum and interest and unpaid principal balance is payable on the maturity date. The Company had unused line of credit of $269,694 as of January 31, 2020. July 2019 - $89,000 line of credit On July 1, 2019, the Company entered into a line of credit agreement in the amount of $89,000 with maturity date of June 30, 2021. The line of credit bears interest at 6% per annum and interest and unpaid principal balance is payable on the maturity date. The Company had unused line of credit of $24,600 as of January 31, 2020. July 2019 - $300,000 line of credit On July 1, 2019, the Company entered into a line of credit agreement in the amount of $300,000 with maturity date of June 30, 2021. The line of credit bears interest at 6% per annum and interest and unpaid principal balance is payable on the maturity date. The Company had unused line of credit of $0 as of January 31, 2020. July 2019 - $150,000 line of credit On July 1, 2019, the Company entered into a line of credit agreement in the amount of $150,000 with maturity date of June 30, 2021. The line of credit bears interest at 6% per annum and interest and unpaid principal balance is payable on the maturity date. The Company had unused line of credit of $81,560 as of January 31, 2020. July 2019 - $60,000 line of credit On July 1, 2019, the Company entered into a line of credit agreement in the amount of $60,000 with maturity date of July 29, 2029. The line of credit bears interest at 6% per annum and interest and unpaid principal balance is payable on the maturity date. The Company had unused line of credit of $42,700 as of January 31, 2020. |
NOTES PAYABLE - RELATED PARTIES
NOTES PAYABLE - RELATED PARTIES | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE - RELATED PARTIES | 5. NOTES PAYABLE – RELATED PARTIES Notes payable to related parties consisted of the following: January 31, July 31, 2020 2019 July 2019 ($300,000 notes payable) - Notes payable with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. $ 100,000 $ — July 2019 ($89,000 notes payable) - Notes payable with maturity date of July 1, 2029 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 5,000 — July 2019 ($150,000 notes payable) - Notes payable with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 74,000 74,000 July 2019 ($5,980 notes payable) - Notes payable with maturity date of June 30, 2021 with 8.25% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 2,718 — Total notes payable 181,718 74,000 Less: Short-term portion (2,718 ) — Total notes payable - long portion $ 179,000 $ 74,000 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jan. 31, 2020 | |
Earnings (loss) per share: | |
EARNINGS PER SHARE | 6. EARNINGS PER SHARE The Company calculates earnings per share in accordance with ASC 260, “Earnings Per Share,” which requires a dual presentation of basic and diluted earnings per share. Basic earnings per share are computed using the weighted average number of shares outstanding during the fiscal year. Dilutive earnings per share is computed on the basis of the weighted average number of shares plus potentially dilutive common shares which would consist of stock options outstanding (using the treasury method), which was none since the Company had net losses and any additional potential shares would be antidilutive. |
INCOME TAX PROVISION
INCOME TAX PROVISION | 6 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX PROVISION | 7. INCOME TAX PROVISION The Company did not have material income tax provision (benefit) because of net loss and valuation allowances against deferred income tax provision for the three months ended October 31, 2019. A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows: Description January 31, 2020 July 31, 2019 Statutory federal rate 21 % 21 % State income taxes net of federal income tax benefit and others 0 % 0 % Permanent differences for tax purposes and others 0 % 0 % Change in valuation allowance -21 % -21 % Effective tax rate 0 % 0 % The income tax benefit differs from the amount computed by applying the U.S. federal statutory tax rate of 21%, primarily due to the change in the valuation allowance and state income tax benefit, offset by nondeductible expenses. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred tax assets and liabilities are as follows: Deferred tax assets January 31, 2020 July 31, 2019 Deferred tax assets: Net operating loss $ (965,448 ) $ (47,894 ) Other temporary differences — — Total deferred tax assets (965,448 ) (47,894 ) Less - valuation allowance 965,448 47,894 Total deferred tax assets — — At January 31, 2020, the Company had available net operating loss carryovers of approximately $965,448 Per the Tax Cuts and Jobs Act (TCJA) implemented in 2018, the two-year carryback provision was removed and now allows for an indefinite carryforward period. The carryforwards are limited to 80% of each subsequent year's net income. As a result, net operating loss may be applied against future taxable income and expires at various dates subject to certain limitations. The Company has a deferred tax asset arising substantially from the benefits of such net operating loss deduction and has recorded a valuation allowance for the full amount of this deferred tax asset since it is more likely than not that some or all of the deferred tax asset may not be realized. The Company files income tax returns in the U.S. federal jurisdiction and Nevada and is subject to income tax examinations by federal tax authorities for tax year ended 2019 and later and by not subject to Nevada authorities for tax year ended 2019 and later. The Company currently is not under examination by any tax authority. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of October 31, 2019, the Company has no accrued interest or penalties related to uncertain tax positions. At the six months ended January 31, 2020, the Company had cumulative net operating loss carryforwards for federal tax purposes of approximately $965,448. In addition, the Company had state tax net operating loss carryforwards of approximately $0. The carryforwards may be applied against future taxable income and expires at various dates subject to certain limitations. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jan. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 8. RELATED PARTY TRANSACTIONS The Company had the following related party transactions: · Outside Services · Outside Services · Notes Receivables · Line of Credit · Line of Credit · Line of Credit · Line of Credit · Line of Credit · Notes Payable (related parties) |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Operating Leases The Company entered into the following operating facility lases: · Cheyenne Fairways · Cheyenne Technology Center – The two facility leases for two separate locations dated on July 25, 2019 and September 16, 2019. Rent expense paid under the lease agreements for the six months ended January 31, 2020 was $199,996. For operating leases, we calculated right of use assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the incremental borrowing rate. The adoption of ASC 842 resulted in recording an adjustment to operating lease right of use assets and operating lease liabilities of $1,162,113 million and $1,200,091 million as of January 31, 2020. The difference between the operating lease ROU assets and operating lease liabilities at transition represented existing deferred rent expenses and tenant improvements, and indirect costs that was derecognized. The adoption of ASC 842 did not materially impact our results of operations, cash flows, or presentation thereof. In accordance with ASC 842, the components of lease expense were as follows: For the six months ended Fairways Technology Center Total Operating lease expense $ 34,374 $ 3,604 $ 37,978 Total lease expense $ 34,374 $ 3,604 $ 37,978 In accordance with ASC 842, maturities and operating lease liabilities as of January 31, 2020 were as follows: Year ended December 31, Fairways Technology Center Total Undiscounted cash flows: 2020 $ 223,906 $ 26,964 $ 250,870 2021 231,695 30,564 262,259 2022 238,252 26,332 264,584 2023 244,810 — 244,810 2024 251,367 — 251,367 Thereafter 434,974 — 434,974 Total undiscounted cash flows 1,625,004 83,860 1,708,864 Discounted cash flows: Lease liabilities - current 103,245 20,678 123,923 Lease liabilities - long-term 1,021,447 54,721 1,076,168 Total discounted cash flows 1,124,692 75,399 1,200,091 Difference between undiscounted and discounted cash flows $ 500,312 $ 8,461 $ 508,773 In accordance with ASC 842, future minimum lease payments as of January 31, 2020 were as follows: Year ending Fairways Technology Center Total Minimum lease payments 2020 $ 203,042 $ 25,023 $ 228,065 2021 187,112 25,784 212,896 2022 170,753 20,277 191,030 2023 155,707 - 155,707 2024 141,885 - 141,885 Thereafter 209,511 - 209,511 Present values of minimum lease payments $ 1,068,010 $ 71,084 $ 1,139,094 Contingencies The Company is subject to various legal proceedings from time to time as part of its business. As of January 31, 2020, the Company was not currently party to any legal proceedings or threatened legal proceedings, the adverse outcome of which, individually or in the aggregate, it believes would have a material adverse effect on its business, financial condition and results of operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jan. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after January 31, 2020 up through the date the financial statements were available to be issued. During this period, the Company did not have any material recognizable subsequent events required to be disclosed as of and for the year ended January 31, 2020. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation These accounting policies conform to generally accepted accounting principles in the United States of America (“GAAP”) and have been consistently applied in the preparing the Firm’s financial statements. The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America, which is based on the accrual method of accounting. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include, but are not limited to, the estimated useful lives of property and equipment, patent and trademark, the ultimate collection of accounts receivable and accrued expenses. Actual results could materially differ from those estimates. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, the price is fixed or determinable, and collectability is reasonably assured, and delivery has occurred or services have been rendered. The Company offers the CB5 proprietary formula various channels, e-commerce, and brick and mortar retail The Company includes shipping and handling costs in cost of sales. Amounts billed for shipping and handling are included with revenues in the statement of operation. The Company recognizes an allowance for estimated future sales returns in the period revenue is recorded, based on pending returns and historical return data, among other factors. Management did not believe any allowance for sales returns was required at January 31, 2020. |
Advertising Expense | Advertising Expense Advertising costs are expensed as incurred. Advertising expense amounted to $639,653 and $380,568 for the six and three months ended January 31, 2020, respectively. |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at original invoice amount less the allowance for doubtful accounts based on a review of all outstanding amounts at year end. Management determines the allowance for doubtful accounts based on a combination of write-off history, aging analysis, and any specific known troubled accounts. Trade receivables are written off when deemed uncollectible. |
Inventories | Inventories Inventories primarily consist of finished goods and are stated at the lower of cost (first-in-first-out) or market. The Company maintains an allowance for potentially excess and obsolete inventories and inventories that are carried at costs that are higher than their estimated net realizable values. |
Property and Equipment | Property and Equipment Property and equipment consist of leasehold improvements, furniture and fixtures, machinery and equipment are stated at cost. Property and equipment are recorded at cost. Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the assets, generally 5-7 year. Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the lease term, including renewal periods that are reasonably assured. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets In accordance with ASC 360, “Property, Plant, and Equipment,” the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: · Level 1 – Quoted prices in active markets for identical assets or liabilities. · Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3 – Inputs include management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. As of January 31, 2020, the Company believes that the carrying value of cash, account receivables, accounts payable, accrued expenses, and other current assets and liabilities approximate fair value due to the short maturity of theses financial instruments. The financial statements do not include any financial instruments at fair value on a recurring or non-recurring basis. |
Income Taxes | Income Taxes The Company has elected to be taxed as an S-corporation. Accordingly, except for a minimal state tax, the Company is not taxed at the corporate level; rather, the tax on corporate income is paid and the benefits of losses are recognized at the stockholder level. Therefore, no provision or credit for federal income taxes has been included in the financial statements. Certain transactions of the Company are subject to accounting methods for income tax purposes which differ from the accounting methods used in preparing the financial statements. Accordingly, the net income of the Company reported for federal income tax purposes may differ from the net income reported in these financial statements. The major differences relate to accounting for depreciation on property and equipment, stock compensation, and research credits. The Company has adopted ASC 740-10-25, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize additional liabilities for uncertain tax positions as a result of the implementation of ASC 740-10-25 for the three months ended January 31, 2020. The Company is no longer subject to federal and state income tax examination by tax authorities for year ended before 2019, respectively. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and other receivables arising from its normal business activities. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectable accounts and, as a consequence, believes that its accounts receivable related credit risk exposure beyond such allowance is limited. All of the Company’s revenues are derived from the sale of the proprietary CB5 formula and related products. E-commerce accounted for 48% of revenues for the six months ended January 31, 2020, respectively and brick and mortar retail accounted for 52% of revenues for the six months ended January 31, 2020, respectively. The Company’s principal market in 2019 was the United States, but the Company plans to expand internationally in 2020. The Company maintains its cash and cash equivalents with various credit institutions. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, deposits of up to $250,000 at FDIC-insured institutions are covered by FDIC insurance. At times, deposits may be in excess of the FDIC insurance limit; however, management does not believe the Company is exposed to any significant related credit risk. |
Leases | Leases Prior to December 31, 2019, the Company accounted for leases under Accounting Standards Codification (ASC) 840, Accounting for Leases. Effective from December 31, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases On February 25, 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. ASC 842 requires that lessees recognize right of use assets and lease liabilities calculated based on the present value of lease payments for all lease agreements with terms that are greater than twelve months. ASC 842 distinguishes leases as either a finance lease or an operating lease that affects how the leases are measured and presented in the statement of operations and statement of cash flows. |
Recent accounting pronouncement | Recent accounting pronouncement ASC 842 supersedes nearly all existing lease accounting guidance under GAAP issued by the Financial Accounting Standards Board (“FASB”) including ASC Topic 840, Leases. For operating leases, we calculated right of use assets and lease liabilities based on the present value of the remaining lease payments as of the date of adoption using the IBR as of that date. The adoption of ASC 842 resulted in recording an adjustment to operating lease right of use assets and operating lease liabilities of $$1,162,113 million and $1,200,091, respectively as of January 31, 2020. The difference between the operating lease ROU assets and operating lease liabilities at transition represented tenant improvements, and indirect costs that was derecognized. The adoption of ASC 842 did not materially impact our results of operations, cash flows, or presentation thereof. FASB ASU 2016-02 “Leases (Topic 842)” – In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting but without explicit bright lines. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for the fiscal year beginning after December 15, 2019, including interim periods within those fiscal year beginning after December 15, 2020. The Company adopted ASC 842 (ASU 2016-02). The adoption of ASC 842 resulted in recording an adjustment to operating lease right of use assets and operating lease liabilities of $1,162,113 million and $1,200,091 million, respectively as of January 31, 2020. The difference between the operating lease ROU assets and operating lease liabilities at transition represented tenant improvements, and indirect costs that were derecognized. The adoption of ASC 842 did not materially impact the Company’s results of operations, cash flows, or presentation thereof FASB ASU 2016-15 “Statement of Cash Flows (Topic 230)” – In August 2016, the FASB issued 2016-15. Stakeholders indicated that there is a diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues to reduce the existing diversity in practice. This ASU is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal year beginning after December 15, 2019. Early adoption is permitted. Adoption of this ASU will not have a significant impact on the Company’s statement of cash flows. FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606)” – In May 2016, the FASB issued 2016-12. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-12 provides clarification on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications. This ASU is effective for quarterly reporting periods beginning after December 15, 2018, and interim periods beginning after December 15, 2019. The Company is currently assessing the potential impact this standard will have on the Company’s financial statements and related disclosures. |
NOTES RECEIVABLES - RELATED P_2
NOTES RECEIVABLES - RELATED PARTIES (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Receivables [Abstract] | |
Schedule of notes receivables from related parties | Notes receivables from related parties consisted of the following: January 31, July 31, 2020 2019 Loan receivable bearing no interest with unpaid principal balance due on demand. $ 119,585 $ — Loan receivable bearing no interest with unpaid principal balance due on demand. 3,207 1,600 Total notes receivables $ 122,792 $ 1,600 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following: January 31, 2020 July 31, 2019 Furniture and Equipment $ 14,381 $ 35,838 Leasehold Improvement 102,666 $ — Computer 16,051 40,090 Total property and equipment 133,098 75,928 Less-accumulated depreciation and amortization (9,251 ) — Total property and equipment, net $ 123,847 $ 75,928 |
LINES OF CREDIT - RELATED PAR_2
LINES OF CREDIT - RELATED PARTIES (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of lines of credit related parties | Lines of credit related parties consisted of the following: January 31, July 31, 2020 2019 July 2019 ($300,000 line of credit) - Line of credit with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. $ 30,306 $ — July 2019 ($89,000 line of credit) - Line of credit with maturity date of July 1, 2029 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 64,400 — July 2019 ($300,000 line of credit) - Line of credit with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 378,827 50,000 July 2019 ($150,000 line of credit) - Line of credit with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 68,440 — July 2019 ($60,000 line of credit) - Line of credit with maturity date of July 29, 2029 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 17,300 60,000 Total lines of credit 559,273 110,000 Less: Short-term portion — — Total lines of credit - long portion $ 559,273 $ 110,000 |
NOTES PAYABLE - RELATED PARTI_2
NOTES PAYABLE - RELATED PARTIES (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable to related parties | Notes payable to related parties consisted of the following: January 31, July 31, 2020 2019 July 2019 ($300,000 notes payable) - Notes payable with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. $ 100,000 $ — July 2019 ($89,000 notes payable) - Notes payable with maturity date of July 1, 2029 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 5,000 — July 2019 ($150,000 notes payable) - Notes payable with maturity date of June 30, 2021 with 6% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 74,000 74,000 July 2019 ($5,980 notes payable) - Notes payable with maturity date of June 30, 2021 with 8.25% interest per annum with unpaid principal balance and accrued interest payable on the maturity date. 2,718 — Total notes payable 181,718 74,000 Less: Short-term portion (2,718 ) — Total notes payable - long portion $ 179,000 $ 74,000 |
INCOME TAX PROVISION (Tables)
INCOME TAX PROVISION (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective tax rate to the statutory federal rate | A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows: Description January 31, 2020 July 31, 2019 Statutory federal rate 21 % 21 % State income taxes net of federal income tax benefit and others 0 % 0 % Permanent differences for tax purposes and others 0 % 0 % Change in valuation allowance -21 % -21 % Effective tax rate 0 % 0 % |
Schedule of deferred tax assets and liabilities | The components of deferred tax assets and liabilities are as follows: Deferred tax assets January 31, 2020 July 31, 2019 Deferred tax assets: Net operating loss $ (965,448 ) $ (47,894 ) Other temporary differences — — Total deferred tax assets (965,448 ) (47,894 ) Less - valuation allowance 965,448 47,894 Total deferred tax assets — — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jan. 31, 2020 | |
Commitments And Contingencies | |
Schedule of operating Leases | In accordance with ASC 842, the components of lease expense were as follows: For the six months ended Fairways Technology Center Total Operating lease expense $ 34,374 $ 3,604 $ 37,978 Total lease expense $ 34,374 $ 3,604 $ 37,978 |
Schedule of operating lease liabilities | In accordance with ASC 842, maturities and operating lease liabilities as of January 31, 2020 were as follows: Year ended December 31, Fairways Technology Center Total Undiscounted cash flows: 2020 $ 223,906 $ 26,964 $ 250,870 2021 231,695 30,564 262,259 2022 238,252 26,332 264,584 2023 244,810 — 244,810 2024 251,367 — 251,367 Thereafter 434,974 — 434,974 Total undiscounted cash flows 1,625,004 83,860 1,708,864 Discounted cash flows: Lease liabilities - current 103,245 20,678 123,923 Lease liabilities - long-term 1,021,447 54,721 1,076,168 Total discounted cash flows 1,124,692 75,399 1,200,091 Difference between undiscounted and discounted cash flows $ 500,312 $ 8,461 $ 508,773 |
Schedule of future minimum lease payments | In accordance with ASC 842, future minimum lease payments as of January 31, 2020 were as follows: Year ending Fairways Technology Center Total Minimum lease payments 2020 $ 203,042 $ 25,023 $ 228,065 2021 187,112 25,784 212,896 2022 170,753 20,277 191,030 2023 155,707 - 155,707 2024 141,885 - 141,885 Thereafter 209,511 - 209,511 Present values of minimum lease payments $ 1,068,010 $ 71,084 $ 1,139,094 |
NOTES RECEIVABLES - RELATED P_3
NOTES RECEIVABLES - RELATED PARTIES (Details) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Total notes receivables | $ 122,792 | $ 1,600 |
Loan Receivable [Member] | ||
Total notes receivables | 119,585 | |
Loan Receivable [Member] | ||
Total notes receivables | $ 3,207 | $ 1,600 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 133,098 | $ 75,928 |
Less-accumulated depreciation and amortization | (9,251) | |
Total property and equipment, net | 123,847 | 75,928 |
Furniture and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 14,381 | 35,838 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 102,666 | |
Computer [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 16,051 | $ 40,090 |
LINES OF CREDIT - RELATED PAR_3
LINES OF CREDIT - RELATED PARTIES (Details) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Total lines of credit | $ 559,273 | $ 110,000 |
Less: Short-term portion | ||
Total lines of credit - long portion | 559,273 | 110,000 |
Lines of Credit Related Parties [Member] | ||
Total lines of credit | 30,306 | |
Lines of Credit Related Parties [Member] | ||
Total lines of credit | 64,400 | |
Lines of Credit Related Parties [Member] | ||
Total lines of credit | 378,827 | 50,000 |
Lines of Credit Related Parties [Member] | ||
Total lines of credit | 68,440 | |
Lines of Credit Related Parties [Member] | ||
Total lines of credit | $ 17,300 | $ 60,000 |
NOTES PAYABLE - RELATED PARTI_3
NOTES PAYABLE - RELATED PARTIES (Details) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Total notes payable | $ 181,718 | $ 74,000 |
Less: Short-term portion | (2,718) | |
Total notes payable - long portion | 179,000 | 74,000 |
July 2019 ($300,000 Notes Payable) [Member] | ||
Total notes payable | 100,000 | |
July 2019 ($89,000 Notes Payable) [Member] | ||
Total notes payable | 5,000 | |
July 2019 ($150,000 Notes Payable) [Member] | ||
Total notes payable | 74,000 | 74,000 |
July 2019 ($5,980 Notes Payable) [Member] | ||
Total notes payable | $ 2,718 |
INCOME TAX PROVISION (Details)
INCOME TAX PROVISION (Details) | 6 Months Ended | |
Jan. 31, 2020 | Jul. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal rate | 21.00% | 21.00% |
State income taxes net of federal income tax benefit and others | 0.00% | 0.00% |
Permanent differences for tax purposes and others | 0.00% | 0.00% |
Change in valuation allowance | (21.00%) | (21.00%) |
Effective tax rate | 0.00% | 0.00% |
INCOME TAX PROVISION (Details 1
INCOME TAX PROVISION (Details 1) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Deferred Tax Assets | ||
Net operating loss | $ (965,448) | $ (47,894) |
Other temporary differences | ||
Total deferred tax assets | (965,448) | (47,894) |
Less - valuation allowance | 965,448 | 47,894 |
Total deferred tax assets |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 6 Months Ended |
Jan. 31, 2020USD ($) | |
Operating lease expense | $ 37,978 |
Total lease expense | 37,978 |
Fairways [Member] | |
Operating lease expense | 34,374 |
Total lease expense | 34,374 |
Technology Center [Member] | |
Operating lease expense | 3,604 |
Total lease expense | $ 3,604 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details 1) - USD ($) | Jan. 31, 2020 | Jul. 31, 2019 |
Undiscounted cash flows: | ||
2020 | $ 250,870 | |
2021 | 262,259 | |
2022 | 264,584 | |
2023 | 244,810 | |
2024 | 251,367 | |
Thereafter | 434,974 | |
Total undiscounted cash flows | 1,708,864 | |
Discounted cash flows: | ||
Lease liabilities - current | 123,923 | |
Lease liabilities - long-term | 1,076,168 | |
Total discounted cash flows | 1,200,091 | |
Difference between undiscounted and discounted cash flows | 508,773 | |
Fairways [Member] | ||
Undiscounted cash flows: | ||
2020 | 223,906 | |
2021 | 231,695 | |
2022 | 238,252 | |
2023 | 244,810 | |
2024 | 251,367 | |
Thereafter | 434,974 | |
Total undiscounted cash flows | 1,625,004 | |
Discounted cash flows: | ||
Lease liabilities - current | 103,245 | |
Lease liabilities - long-term | 1,021,447 | |
Total discounted cash flows | 1,124,692 | |
Difference between undiscounted and discounted cash flows | 500,312 | |
Technology Center [Member] | ||
Undiscounted cash flows: | ||
2020 | 26,964 | |
2021 | 30,564 | |
2022 | 26,332 | |
2023 | ||
2024 | ||
Thereafter | ||
Total undiscounted cash flows | 83,860 | |
Discounted cash flows: | ||
Lease liabilities - current | 20,678 | |
Lease liabilities - long-term | 54,721 | |
Total discounted cash flows | 75,399 | |
Difference between undiscounted and discounted cash flows | $ 8,461 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details 2) | Jan. 31, 2020USD ($) |
Minimum lease payments | |
2020 | $ 228,065 |
2021 | 212,896 |
2022 | 191,030 |
2023 | 155,707 |
2024 | 141,885 |
Thereafter | 209,511 |
Present values of minimum lease payments | 1,139,094 |
Fairways [Member] | |
Minimum lease payments | |
2020 | 203,042 |
2021 | 187,112 |
2022 | 170,753 |
2023 | 155,707 |
2024 | 141,885 |
Thereafter | 209,511 |
Present values of minimum lease payments | 1,068,010 |
Technology Center [Member] | |
Minimum lease payments | |
2020 | 25,023 |
2021 | 25,784 |
2022 | 20,277 |
2023 | |
2024 | |
Thereafter | |
Present values of minimum lease payments | $ 71,084 |