Cover
Cover - shares | 3 Months Ended | |
Aug. 31, 2023 | Oct. 10, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | KARBON-X CORP. | |
Entity Central Index Key | 0001729637 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Aug. 31, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
Entity Common Stock Shares Outstanding | 78,553,858 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-56288 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 82-2882342 | |
Entity Address Address Line 1 | 910 7th Ave SW | |
Entity Address City Or Town | Calgary | |
Entity Address Country | CA | |
Entity Address Postal Zip Code | T2P 3N8 | |
City Area Code | 778 | |
Local Phone Number | 256-5730 | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) | Aug. 31, 2023 | May 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 974,356 | $ 206,820 |
Sales tax receivable | 20,308 | 45,586 |
Prepaid expenses and other current assets | 61,697 | 59,767 |
Total current assets | 1,056,361 | 312,173 |
Property and equipment | 8,605 | 9,116 |
Internally developed software | 524,871 | 522,771 |
Right of use asset | 63,924 | 68,307 |
Inventory | 139,121 | 80,750 |
Investment in Silviculture | 2,464,203 | 1,514,483 |
Security deposit | 7,545 | 7,515 |
Total assets | 4,264,630 | 2,515,115 |
Current liabilities | ||
Accounts payable | 29,907 | 69,732 |
Current portion of lease liability | 22,376 | 14,688 |
Short term loan | 0 | 100,000 |
Deferred revenue | 195,372 | 0 |
Payroll liabilities | 24,513 | 10,061 |
Total current liabilities | 272,168 | 194,481 |
Noncurrent portion of lease liability | 49,827 | 55,415 |
Total liabilities | 321,995 | 249,896 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity (deficit) | ||
Common stock $0.001 par value, 200,000,000 shares authorized, 78,553,858 and 72,579,000 shares issued and outstanding as of August 31, 2023 and May 31, 2023, respectively. | 78,554 | 72,579 |
Shares to be issued | 1,500,000 | 1,750,000 |
Additional Paid-in capital | 4,913,228 | 2,638,532 |
Accumulated deficit | (2,542,138) | (2,192,106) |
Accumulated other comprehensive gain (loss) | (7,009) | (3,786) |
Total shareholders' equity | 3,942,635 | 2,265,219 |
Total liabilities and shareholders' equity | $ 4,264,630 | $ 2,515,115 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - $ / shares | Aug. 31, 2023 | May 31, 2023 |
STOCKHOLDERS DEFICIT | ||
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 78,553,858 | 72,579,000 |
Common stock, shares outstanding | 78,553,858 | 72,579,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Operations | ||
Total revenue | $ 3,758 | $ 0 |
Cost of revenue | 549 | 0 |
Gross profit | 3,209 | 0 |
Marketing expenses | 21,395 | 10,664 |
Salaries and wages | 172,887 | 0 |
Professional fees | 78,291 | 86,595 |
Other operating expenses | 52,901 | 98,609 |
Total operating expenses | 325,474 | 195,868 |
Loss from Operations | (322,265) | (195,868) |
Other income (expenses) | (27,767) | 0 |
Net loss before income taxes | (350,032) | (195,868) |
Federal income tax expense | 0 | 0 |
Net loss | (350,032) | (195,868) |
Other comprehensive loss | ||
Foreign currency translation gain (loss) | (3,223) | (10,217) |
Total comprehensive loss | $ (353,255) | $ (206,085) |
Earnings Per Share | ||
Weighted average basic and diluted shares outstanding | 75,895,837 | 68,882,637 |
Basic and fully diluted loss per share | $ 0 | $ 0 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Shareholders Equity (Unaudited) - USD ($) | Total | Stock to be issued | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated other comprehensive gain (loss) |
Balance, shares at May. 31, 2022 | 68,320,000 | |||||
Balance, amount at May. 31, 2022 | $ 637,870 | $ 0 | $ 68,320 | $ 786,822 | $ (204,228) | $ (13,044) |
Issuance of shares and warrants for cash, shares | 720,000 | |||||
Issuance of shares and warrants for cash, amount | 180,000 | 0 | $ 720 | 179,280 | 0 | 0 |
Translation gain (loss) | (10,217) | (10,217) | ||||
Net loss | (195,868) | 0 | 0 | 0 | (195,868) | 0 |
Balance, amount at Aug. 31, 2022 | 611,784 | 0 | $ 69,040 | 966,102 | (400,096) | (23,262) |
Balance, shares at Aug 31, 2022 at Aug. 31, 2022 | 69,040,000 | |||||
Balance, shares at May. 31, 2023 | 72,579,000 | |||||
Balance, amount at May. 31, 2023 | 2,265,219 | 1,750,000 | $ 72,579 | 2,638,532 | (2,192,106) | (3,786) |
Issuance of shares and warrants for cash, shares | 3,274,858 | |||||
Issuance of shares and warrants for cash, amount | 1,555,671 | 0 | $ 3,275 | 1,552,396 | 0 | 0 |
Translation gain (loss) | (3,223) | (3,223) | ||||
Net loss | (350,032) | 0 | 0 | 0 | (350,032) | 0 |
Shares to be issued for investment | 375,000 | 375,000 | $ 0 | 0 | 0 | 0 |
Shares to issued as stock compensation, shares | 2,500,000 | |||||
Shares to issued as stock compensation, amount | 0 | (625,000) | $ 2,500 | 622,500 | 0 | 0 |
Conversion of loan to shares, shares | 200,000 | |||||
Conversion of loan to shares, amount | 100,000 | $ 200 | 99,800 | 0 | 0 | |
Balance, amount at Aug. 31, 2023 | $ 3,942,635 | $ 1,500,000 | $ 78,554 | $ 4,913,228 | $ (2,542,138) | $ (7,009) |
Balance, shares at Aug 31, 2022 at Aug. 31, 2023 | 78,553,858 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flow (Unaudited) - USD ($) | 3 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Cash flows from operating activities | ||
Net (loss) income | $ (350,032) | $ (195,868) |
Adjustments to reconcile net loss to net cash: | ||
Depreciation expense | 556 | 229 |
Loss on investment | 27,687 | 0 |
Amortization of Right of Use Asset | 4,727 | 0 |
Changes in operating assets and liabilities: | ||
Sales tax receivable | 25,278 | (9,732) |
Accounts payable | (39,826) | (27,184) |
Payroll liabilities | 14,452 | 95 |
Deferred revenue | 195,372 | 0 |
Inventory | (58,371) | (86,000) |
Prepaid expenses | (1,930) | (138,198) |
Payments made on operating lease | 1,812 | 0 |
Security deposit | 0 | (735) |
Cash used in operating activities | (180,276) | (184,587) |
Cash flows from investing activities | ||
Acquisition of property and equipment | 0 | (3,242) |
Cash paid for equity method investment | (602,407) | 0 |
Cash used in investing activities | (602,407) | (3,242) |
Cash flows from financing activities | ||
Proceeds from issuance of shares and warrants | 1,555,671 | 180,000 |
Cash provided by financing activities | 1,555,671 | 180,000 |
Effect of translation changes on cash | (5,452) | (10,217) |
Change in cash and cash equivalents | 767,536 | (290,851) |
Cash, beginning of period | 206,820 | 0 |
Cash, end of period | 974,356 | 186,488 |
Non cash operating activities | ||
Depreciation expense | 556 | 229 |
Loss on investment | 27,687 | 0 |
Amortization of Right of Use Asset | 4,727 | 0 |
Non cash investing and financing activities | ||
Shares to be issued for the Silviculture investment | 375,000 | 0 |
Supplemental disclosures | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | $ 0 | $ 0 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Aug. 31, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | Note 1 - Basis of Presentation and Significant Accounting Policies Karbon-X Corp. (“Karbon-X” or the “Company”) was incorporated in the State of Nevada under the name CocoLuv, Inc. on September 13, 2017 and established a fiscal year end of May 31. On February 21, 2022, pursuant to the terms of a Share Exchange Agreement, the Company acquired all of the issued and outstanding shares of common stock of Karbon-X Project Inc. ("Karbon-X Project"), and Karbon-X Project became the wholly owned subsidiary of the Company in a reverse acquisition (the "Reverse Acquisition"). Pursuant to the Reverse Acquisition, all of the issued and outstanding shares of Karbon-X common stock were converted, at an exchange ratio of 20,000-for-1, into an aggregate of 20,000,000 shares of the Company's common stock, resulting in Karbon-X Project becoming a wholly owned subsidiary of the Company and all debt owed to the related party of Cocoluv, Inc. was forgiven. Karbon-X Project Inc. was incorporated in British Columbia on February 11, 2022 and established a fiscal year end of May 31. The accompanying financial statements' share information has been retroactively adjusted to reflect the exchange ratio in the Reverse Acquisition. As part of the Reverse Acquisition, on April 14, 2022 the Company changed its name to Karbon-X Corp. Under generally accepted accounting principles in the United States ("US GAAP"), because the combined entity will be dependent on Karbon-X's senior management, the Reverse Acquisition was accounted for as a recapitalization effected by a share exchange, wherein Karbon-X Project is considered the acquirer for accounting and financial reporting purposes. On the date of the reorganization, the assets and liabilities of Karbon-X Project have been brought forward at their book value and consolidated with Cocoluv, Inc.’s (the Company’s) assets, which comprised of cash and cash equivalents of $134 and liabilities which comprises due to related party of $99,902 (see Note 1 Basis of Presentation below). No goodwill has been recognized. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements are those of Karbon-X and are recorded at the historical cost basis of Karbon-X Project. Going concern To date the Company has generated minimal revenues from its business operations and has incurred operating losses since inception of $2,542,138. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. Basis of Presentation The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements present the consolidated balance sheets, statements of operations, stockholders’ equity and cash flows of the Company. These consolidated financial statements are presented in the United States dollar and have been prepared in accordance with accounting principles generally accepted in the United States. Use of Estimates and Assumptions Preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. Sales Tax Receivable Sales tax receivable consists of the accumulated reclaimable GST paid by the Company on purchases made in Canada. Property and Equipment Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets which are between three to seven years. Costs of major additions and improvements are capitalized while expenditures for maintenance and repairs, which do not extend the life of the asset, are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is credited or charged to income. Long-lived assets held and used by us are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Inventory Inventories are valued at the lower of cost or net realizable value. The Company’s inventories are valued under the first in, first out (FIFO) method. Net realizable value is estimated based on current selling prices. Estimated provisions are established for slow-moving and obsolete inventory. As of June 1, 2023, the Company changed its inventory policy from weighted average to FIFO, this had no significant impact on the current or prior consolidated financial statements. Investments The Company accounts for investments with a 20% to 50% ownership and a significant, but not controlling influence as equity method investments. Investments with a greater than 50% ownership and a controlling influence are accounted for using the consolidation method. The Company assesses the potential impairment of equity method investments when indicators such as a history of operating losses, negative earnings and cash flow outlook, and the financial condition and prospects for the investee’s business segment might indicate a loss in value. The Company has accounted for its investment in Silviculture Systems using the equity method and its investment in its subsidiary Karbon-X Project, Inc using the consolidation method. Fair Value of Financial Instruments he Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The carrying amount of the Company’s financial assets and liabilities approximate their fair values due to their short-term maturities. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control 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. Under ASC 606, the Company recognizes revenue from the commercial sales of carbon credits and consulting services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. Rates for consulting services are typically per day, per hour, or a similar basis. Consulting revenue is recognized over the period in which the service is provided. Revenue for sales of carbon credits is recognized at a point in time when control of the credit transfers to the buyer. The Company acts as a principal in all revenue transactions. For transactions in which the Company has received compensation for services or carbon credits and the performance obligations have not yet been met, the Company records the compensation as deferred revenue. Foreign Currency Translation The functional currency of the Company is the Canadian Dollar (“CAD”). For financial statement purposes, the reporting currency is the United States Dollar (“USD”). For financial reporting purposes, the consolidated financial statements are translated into the Company’s reporting currency, USD. Asset and liabilities are translated using the closing exchange rate in effect at the balance sheet date with the resulting translation adjustments included as a separate component of shareholder’s equity through other comprehensive income (loss) in the consolidated statement of operations. Income and expenses are translated at the average yearly rates of exchange. The Company includes realized gains and losses from foreign currency transactions in other income (expense), net in the consolidated statement of operations. Warrants There is estimation uncertainty with respect to selecting inputs to the Black-Sholes model used to determine the fair value of the warrants (Note 6). These inputs include the stock price ranging from $0.50 - $0.25, exercise price ranging from $0.75 - $0.50, time to maturity of two years, annual risk-free interest rate ranging from 2.66% - 4.92%, and annualized volatility ranging from 637.12 % - 25.93 %. The above estimates and assumptions are reviewed regularly. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant Estimates Significant estimates applied in the preparation of these financial statements include the estimated useful lives of property and equipment, share volatility and estimated life of options and warrants in determining their fair value as well as the expected potential for the realization of deferred tax assets in determining the amount of the valuation allowance thereto. Earnings per Common Share The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of August 31, 2023, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per share. Reclassifications Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position, or cash flows. |
Prepaid Expenses
Prepaid Expenses | 3 Months Ended |
Aug. 31, 2023 | |
Prepaid Expenses | |
Prepaid Expenses | Note 2 – Prepaid Expenses As of August 31, 2023 and May 31, 2023, prepaid expenses consisted of the following: Description August 31, 2023 May 31, 2023 Prepaid transfer agent fees $ 1,690 $ - Prepaid inventory 60,007 59,767 Total $ 61,697 $ 59,767 |
Inventory
Inventory | 3 Months Ended |
Aug. 31, 2023 | |
Inventory | |
Inventory | Note 3 – Inventory Inventory as of August 31, 2023 and May 31, 2023, consisted of the following: Description August 31, 2023 May 31, 2023 Carbon Credit Inventory $ 139,121 $ 80,750 Total $ 139,121 $ 80,750 Carbon credit inventory represents carbon credits currently valued at the lower of cost or net realizable value. The Company’s inventories are valued under the first in, first out (FIFO) method. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Aug. 31, 2023 | |
Property and Equipment | |
Property and Equipment | Note 4 - Property and Equipment The amount of property and equipment as of August 31, 2023 and May 31, 2023, consisted of the following: Description August 31, 2023 May 31, 2023 Furniture and fixtures $ 6,633 $ 6,607 Computer and equipment 3,720 3,705 Total property cost $ 10,353 $ 10,312 Accumulated depreciation (1,748 ) (1,196 ) Property and equipment, net $ 8,605 $ 9,116 The Company made no purchases during the three months ended August 31, 2023 and purchased office chairs and desks during the year ended May 31, 2023 for $6,607 The Company also purchased computers during the year ended May 31, 2023 for $3,705. Depreciation expense for the three months ended August 31, 2023 and 2022 was $556 and $229, respectively. |
Shareholders Equity
Shareholders Equity | 3 Months Ended |
Aug. 31, 2023 | |
Shareholders Equity | |
Shareholders' Equity | Note 5 – Shareholders’ Equity During the three months ended August 31, 2022, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 720,000 units at $0.25 per unit for total proceeds of $180,000. Each unit consisted of share of common stock and warrant to purchase a share of common stock for $0.75 per share for a period of two years. During the year ended May 31, 2023, the Company executed an agreement to issue shares of Karbon-X Corp for the purchase of up to 80% of Silviculture Systems to be issued in tranches based on completion of milestones. During the three months ended August 31, 2023, the Company issued 1,500,000 shares of Karbon-X Corp for the purchase of an additional 8% of Silviculture Systems shown as shares to be issued at a value of $375,000. As of August 31, 2023, the Company has purchased 32% of Silviculture Systems for 6,000,000 shares of Karbon-X Corp shown as shares to be issued for a value of $1,500,000. During the three months ended August 31, 2023, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 3,274,858 shares of common stock at $0.50 per share for gross proceeds of $ 1,637,429, net of expenses related to issuances of $83,993. During the three months ended August 31, 2023, the Company converted a loan for $100,000 into 200,000 shares at price of $0.50 per share. |
Warrants
Warrants | 3 Months Ended |
Aug. 31, 2023 | |
Warrants | |
Warrants | Note 6 – Warrants During the three months ended August 31, 2023, the Company issued 10,400 warrants in connection with one private placement. Each warrant entitles the holder to acquire one common share of the Corporation at an exercise price of $0.50 with a two year term. The 10,400 units of warrants and shares were issued as a commission fee valued at $2,236. A detail of warrant activity for the three months ended August 31, 2023 is as follows: Description Number Weighted average exercise price Weighted average remaining contractual life (in years) Outstanding May 31, 2023 4,140,000 $ 0.75 0.58 Exercised - - - Granted 10,400 0.50 1.92 Expired - - - Cancelled - - - Outstanding August 31, 2023 4,150,400 $ 0.75 0.68 |
Investments
Investments | 3 Months Ended |
Aug. 31, 2023 | |
Investments | |
Investments | Note 7 – Investments On May 31, 2023, the Company executed an amended share exchange agreement to buy up to 80% of Silviculture Systems in exchange for cash and shares of Karbon-X Corp valued at $7,250,000. $3,250,000 paid for in shares and the remaining $3,500,000 paid for in cash over the next three years. The issuance of shares will occur in tranches upon the completion of milestones. As of August 31, 2023, the Company has paid $999,783 in cash, has a 32% ownership in Silviculture Systems and has a significant, but not controlling interest in Silviculture Systems. The shares related to the 32% ownership are shown as shares to be issued and have been valued at the most recent stock purchase price, at the time of signing, of $0.25 per share. This investment has been accounted for as an equity method investment and its respective gain/loss for the period has been recorded in the statement of operations. For the three months ended August 31, 2023, the Company recorded a loss on equity method investment of $27,687. |
Internally Developed Software
Internally Developed Software | 3 Months Ended |
Aug. 31, 2023 | |
Internally Developed Software | |
Internally Developed Software | Note 8 – Internally Developed Software In accordance with ASC 350-40, the Company has capitalized internally developed software for its development of a mobile application. The software is currently in its application development stage and all related costs are being capitalized as incurred. Once the software is ready for implementation, the Company will begin amortizing the software over its estimated useful life. As of August 31, 2023 and May 31, 2023, the Company has capitalized internally developed software of $524,871 and $522,771, respectively. |
Short Term Note
Short Term Note | 3 Months Ended |
Aug. 31, 2023 | |
Short Term Note | |
Short Term Note | Note 9 – Short Term Note On January 13, 2023, the Company obtained a short term loan of $100,000 from a third party. This loan had an interest rate of 8% per annum and was due in full on July 10, 2023. The note was converted into 200,000 shares at a price of $0.50 per share on June 6, 2023. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Operating Leases The Company leases office space from a third party under an operating lease agreement over 40 months which expires in July 2026. The lease also includes the payment of executory costs. Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, if applicable. When lease terms include an option to extend the lease, we have not assumed the options will be exercised. Lease expense for operating leases generally consist of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include agreed-upon changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognized total lease expense of approximately $6,583 and $4,809 for the three months ended August 31, 2023 and 2022, primarily related to operating lease costs paid to lessors from operating cash flows. We entered into our operating lease in April 2023 with a term of three years. Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at August 31, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES Total Year Ended May 31, 2024 $ 21,558 2025 28,745 2026 28,745 2027 4,791 Thereafter - Total lease payment 83,839 Less: Imputed interest (11,636 ) Operating lease liabilities 72,203 Operating lease liability - current 22,376 Operating lease liability - non-current $ 49,827 SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE Weighted average discount rate 10.25 % Weighted average remaining lease term (years) 2.92 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Aug. 31, 2023 | |
Subsequent Events | |
Subsequent Events | Note 11 – Subsequent Events Subsequent events have been evaluated through October 23, 2023, the date these financial statements were available to be released and noted no other events requiring disclosure. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Aug. 31, 2023 | |
Basis of Presentation and Significant Accounting Policies | |
Going Concern | To date the Company has generated minimal revenues from its business operations and has incurred operating losses since inception of $2,542,138. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. |
Basis of Presentation | The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements present the consolidated balance sheets, statements of operations, stockholders’ equity and cash flows of the Company. These consolidated financial statements are presented in the United States dollar and have been prepared in accordance with accounting principles generally accepted in the United States. |
Use of Estimates and Assumptions | Preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. |
Cash and Cash Equivalents | For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. |
Sales Tax Receivable | Sales tax receivable consists of the accumulated reclaimable GST paid by the Company on purchases made in Canada. |
Property and Equipment | Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets which are between three to seven years. Costs of major additions and improvements are capitalized while expenditures for maintenance and repairs, which do not extend the life of the asset, are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is credited or charged to income. Long-lived assets held and used by us are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. |
Inventory | Inventories are valued at the lower of cost or net realizable value. The Company’s inventories are valued under the first in, first out (FIFO) method. Net realizable value is estimated based on current selling prices. Estimated provisions are established for slow-moving and obsolete inventory. As of June 1, 2023, the Company changed its inventory policy from weighted average to FIFO, this had no significant impact on the current or prior consolidated financial statements. |
Investments | The Company accounts for investments with a 20% to 50% ownership and a significant, but not controlling influence as equity method investments. Investments with a greater than 50% ownership and a controlling influence are accounted for using the consolidation method. The Company assesses the potential impairment of equity method investments when indicators such as a history of operating losses, negative earnings and cash flow outlook, and the financial condition and prospects for the investee’s business segment might indicate a loss in value. The Company has accounted for its investment in Silviculture Systems using the equity method and its investment in its subsidiary Karbon-X Project, Inc using the consolidation method. |
Fair Value of Financial Instruments | he Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: ● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; ● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and ● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The carrying amount of the Company’s financial assets and liabilities approximate their fair values due to their short-term maturities. |
Revenue Recognition | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control 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. Under ASC 606, the Company recognizes revenue from the commercial sales of carbon credits and consulting services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. Rates for consulting services are typically per day, per hour, or a similar basis. Consulting revenue is recognized over the period in which the service is provided. Revenue for sales of carbon credits is recognized at a point in time when control of the credit transfers to the buyer. The Company acts as a principal in all revenue transactions. For transactions in which the Company has received compensation for services or carbon credits and the performance obligations have not yet been met, the Company records the compensation as deferred revenue. |
Foreign Currency Translation | The functional currency of the Company is the Canadian Dollar (“CAD”). For financial statement purposes, the reporting currency is the United States Dollar (“USD”). For financial reporting purposes, the consolidated financial statements are translated into the Company’s reporting currency, USD. Asset and liabilities are translated using the closing exchange rate in effect at the balance sheet date with the resulting translation adjustments included as a separate component of shareholder’s equity through other comprehensive income (loss) in the consolidated statement of operations. Income and expenses are translated at the average yearly rates of exchange. The Company includes realized gains and losses from foreign currency transactions in other income (expense), net in the consolidated statement of operations. |
Warrants | There is estimation uncertainty with respect to selecting inputs to the Black-Sholes model used to determine the fair value of the warrants (Note 6). These inputs include the stock price ranging from $0.50 - $0.25, exercise price ranging from $0.75 - $0.50, time to maturity of two years, annual risk-free interest rate ranging from 2.66% - 4.92%, and annualized volatility ranging from 637.12 % - 25.93 %. The above estimates and assumptions are reviewed regularly. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. |
Significant Estimates | Significant estimates applied in the preparation of these financial statements include the estimated useful lives of property and equipment, share volatility and estimated life of options and warrants in determining their fair value as well as the expected potential for the realization of deferred tax assets in determining the amount of the valuation allowance thereto. |
Earnings per Common Share | The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of August 31, 2023, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per share. |
Reclassifications | Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position, or cash flows. |
Prepaid Expenses (Table)
Prepaid Expenses (Table) | 3 Months Ended |
Aug. 31, 2023 | |
Prepaid Expenses | |
Schedule of Prepaid Expenses | Description August 31, 2023 May 31, 2023 Prepaid transfer agent fees $ 1,690 $ - Prepaid inventory 60,007 59,767 Total $ 61,697 $ 59,767 |
Inventory (Table)
Inventory (Table) | 3 Months Ended |
Aug. 31, 2023 | |
Inventory | |
Schedule of Inventory | Description August 31, 2023 May 31, 2023 Carbon Credit Inventory $ 139,121 $ 80,750 Total $ 139,121 $ 80,750 |
Property and Equipment (Table)
Property and Equipment (Table) | 3 Months Ended |
Aug. 31, 2023 | |
Property and Equipment | |
Schedule of Property and Equipment | Description August 31, 2023 May 31, 2023 Furniture and fixtures $ 6,633 $ 6,607 Computer and equipment 3,720 3,705 Total property cost $ 10,353 $ 10,312 Accumulated depreciation (1,748 ) (1,196 ) Property and equipment, net $ 8,605 $ 9,116 |
Warrants (Table)
Warrants (Table) | 3 Months Ended |
Aug. 31, 2023 | |
Warrants | |
Schedule of Warrants | Description Number Weighted average exercise price Weighted average remaining contractual life (in years) Outstanding May 31, 2023 4,140,000 $ 0.75 0.58 Exercised - - - Granted 10,400 0.50 1.92 Expired - - - Cancelled - - - Outstanding August 31, 2023 4,150,400 $ 0.75 0.68 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Aug. 31, 2023 | |
Commitments and Contingencies | |
Schedule of lease payments | SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES Total Year Ended May 31, 2024 $ 21,558 2025 28,745 2026 28,745 2027 4,791 Thereafter - Total lease payment 83,839 Less: Imputed interest (11,636 ) Operating lease liabilities 72,203 Operating lease liability - current 22,376 Operating lease liability - non-current $ 49,827 |
Schedule of other supplemental information under operating lease | SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE Weighted average discount rate 10.25 % Weighted average remaining lease term (years) 2.92 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details Narrative) | 3 Months Ended |
Aug. 31, 2023 USD ($) $ / shares shares | |
Cash and cash equivalents | $ | $ 134 |
Related party due | $ | $ 99,902 |
Common stock, shares authorized | shares | 20,000,000 |
Issued and outstanding shares of common stock converted, exchange ratio | 20,000-for-1 |
Operating losses | $ | $ 2,542,138 |
Stock price | $ 0.50 |
Exercise price | $ 0.50 |
Minimum [Member] | |
Ownership percentage | 20% |
Minimum [Member] | Warrant [Member] | |
Stock price | $ 0.25 |
Exercise price | $ 0.50 |
Risk-free interest rate | 2.66% |
Volatility rate | 25.93% |
Maximum [Member] | |
Ownership percentage | 50% |
Maximum [Member] | Warrant [Member] | |
Stock price | $ 0.50 |
Exercise price | $ 0.75 |
Risk-free interest rate | 4.92% |
Volatility rate | 637.12% |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) | Aug. 31, 2023 | May 31, 2023 |
Prepaid Expenses | ||
Prepaid transfer agent fees | $ 1,690 | $ 0 |
Prepaid inventory | 60,007 | 59,767 |
Total | $ 61,697 | $ 59,767 |
Inventory (Details)
Inventory (Details) - USD ($) | Aug. 31, 2023 | May 31, 2023 |
Inventory | ||
Carbon Credit Inventory | $ 139,121 | $ 80,750 |
Total Inventory | $ 139,121 | $ 80,750 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Aug. 31, 2023 | May 31, 2023 |
Computer and equipment | $ 524,871 | $ 522,771 |
Property and equipment, net | 8,605 | 9,116 |
Property And Equipment [Member] | ||
Furniture and fixtures | 6,633 | 6,607 |
Accumulated depreciation | (1,748) | (1,196) |
Computer and equipment | 3,720 | 3,705 |
Total property cost | 10,353 | 10,312 |
Property and equipment, net | $ 8,605 | $ 9,116 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | May 31, 2023 | |
Property and Equipment | |||
Office chairs and desks purchase | $ 6,607 | ||
Computer purchase | $ 3,705 | ||
Depreciation expense | $ 556 | $ 229 |
Shareholders Equity (Details Na
Shareholders Equity (Details Narrative) - USD ($) | 3 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Price per share | $ 0.50 | |
Description related to agreementof issue share | the Company executed an agreement to issue shares of Karbon-X Corp for the purchase of up to 80% of Silviculture Systems to be issued in tranches based on completion of milestones. During the three months ended August 31, 2023, the Company issued 1,500,000 shares of Karbon-X Corp for the purchase of an additional 8% of Silviculture Systems shown as shares to be issued at a value of $375,000. As of August 31, 2023, the Company has purchased 32% of Silviculture Systems for 6,000,000 shares of Karbon-X Corp shown as shares to be issued for a value of $1,500,000 | |
Minimum [Member] | ||
Converted loan | $ 100,000 | |
Maximum [Member] | ||
Converted loan | $ 200,000 | |
Private Placement [Member] | ||
Price per share | $ 0.25 | |
Share sold during period | 720,000 | |
Proceeds from share sold | $ 180,000 | |
Share of common stock in warrant Desription | Each unit consisted of share of common stock and warrant to purchase a share of common stock for $0.75 per share for a period of two years | |
Private Placement One [Member] | ||
Price per share | $ 0.50 | |
Share sold during period | 3,274,858 | |
Proceeds from share sold | $ 1,637,429 | |
Net of expenses related to issuances | $ 83,993 |
Warrants (Details)
Warrants (Details) | 3 Months Ended |
Aug. 31, 2023 $ / shares shares | |
Warrants | |
Outstanding, beginning balance | shares | 4,140,000 |
Granted | shares | 10,400 |
Outstanding, ending balance | shares | 4,150,400 |
Weighted average exercise price, beginning balance | $ 0.75 |
Weighted average exercise price, Exercised | 0 |
Weighted average exercise price, Granted | 0.50 |
Weighted average exercise price, expired | 0 |
Weighted average exercise price, Cancelled | 0 |
Weighted average exercise price, ending balance | $ 0.75 |
Weighted average remaining contractual life (in years), beginning balance | 6 months 29 days |
Weighted average remaining contractual life (in years), granted | 1 year 11 months 1 day |
Weighted average remaining contractual life (in years), ending balance | 8 months 4 days |
Warrants (Details Narratives)
Warrants (Details Narratives) | 3 Months Ended |
Aug. 31, 2023 USD ($) $ / shares shares | |
Warrants | |
Warrants | shares | 10,400 |
Warrant exercise price | $ / shares | $ 0.50 |
Warrant value | $ | $ 2,236 |
Investments (Details Narratives
Investments (Details Narratives) - USD ($) | 3 Months Ended | |
Aug. 31, 2023 | May 31, 2023 | |
Share executed exchange of share | 80% | |
Share executed exchange of share amount value | $ 7,250,000 | |
Silviculture System [Member] | ||
Stock purchase price per share | $ 0.25 | |
Cash | $ 999,783 | |
Owenship | 32% | |
Joint Venture [Member] | ||
share exchange agreement | $3,250,000 paid for in shares and the remaining $3,500,000 paid for in cash over the next three years | |
Contributed amount to joint venture | $ 27,687 |
Internally Developed Software (
Internally Developed Software (Details Narrative) - USD ($) | Aug. 31, 2023 | May 31, 2022 |
Internally Developed Software | ||
Software development cost | $ 524,871 | $ 522,771 |
Short Term Note (Details Narrat
Short Term Note (Details Narrative) - USD ($) | 3 Months Ended | |
Jun. 06, 2023 | Aug. 31, 2023 | |
Short Term Note | ||
Interest rate | 8% | |
Short term loan | $ 100,000 | |
Debt Conversion | 200,000 | |
Conversion Price | $ 0.50 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | |
Aug. 31, 2023 | May 31, 2023 | |
Commitments and Contingencies | ||
Weighted average discount rate | 10.25% | |
Weighted average remaining lease term (years) | 2 years 11 months 1 day | |
2024 | $ 21,558 | |
2025 | 28,745 | |
2026 | 28,745 | |
2027 | 4,791 | |
Thereafter | 0 | |
Total lease payment | 83,839 | |
Less: Imputed interest | (11,636) | |
Operating lease liabilities | 72,203 | |
Operating lease liability - current | 22,376 | $ 14,688 |
Operating lease liability - non-current | $ 49,827 | $ 55,415 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Aug. 31, 2023 | Aug. 31, 2022 | |
Commitments and Contingencies | ||
Total lease expense | $ 6,583 | $ 4,809 |