10-K 1 grand_10k-073119.htm ANNUAL REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

x Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended July 31, 2019, or

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange act of 1934

for the transition period from to

Commission File No. 0-55423

GRAND PERFECTA, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada

46-5732930

(State or Other Jurisdiction of

Incorporation or Organization)

(IRS Employer

Identification No.)

123 West Nye Lane, Suite 129

Carson City, NV 89706

(Address of Principal Executive Offices and Zip Code)

Registrant’s Telephone Number: (801)560-6969

Securities registered under Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act: Common Stock, Par Value $0.001

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of voting stock held by non-affiliates on January 31, 2019, based on the average bid and asked prices on that day was $155,893.28. As of December 15, 2019, the Registrant had outstanding 7,977,332 shares of common stock, par value $0.001.

Documents incorporated by reference: None

TABLE OF CONTENTS

ITEM NUMBER AND CAPTION		Page

Part I
1.	Business	1
1A.	Risk Factors	3
1B.	Unresolved Staff Comments	3
2.	Properties	3
3.	Legal Proceedings	3
4.	Mine Safety Disclosures	3

Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4
6.	Selected Financial Data	4
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
7A.	Quantitative and Qualitative Disclosures About Market Risk	9
8.	Financial Statements and Supplementary Data	9
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9
9A.	Controls and Procedures	9
9B.	Other Information	10

Part III
10.	Directors, Executive Officers and Corporate Governance	11
11.	Executive Compensation	12
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	13
13.	Certain Relationships and Related Transactions, and Director Independence	14
14.	Principal Accountant Fees and Services	15
15.	Exhibits and Financial Statement Schedules	15

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K may contain certain “forward-looking” statements as such term is defined by the Securities and Exchange Commission in its rules, regulations and releases, which represent the Company’s expectations or beliefs, including but not limited to, statements concerning the Company’s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intent,” “could,” “estimate,” “might,” “plan,” “predict” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements.

This annual report contains forward-looking statements, many of which relate to, or are based upon, (a) our plans for developing or participating in the development of new markets for our horse racing and sports content, (b) our opportunities for implementing horse racing related fantasy sports offerings, (c) our growth strategies, (d) anticipated trends in our industry, (e) our future financing plans, and (f) our anticipated need for working capital. These statements may be found under Item 1. “Business,” “Item 2. Properties” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this annual report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors and matters described in this annual report. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this annual report will in fact occur.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements.

_______________________

Unless the context otherwise requires or otherwise notes, references in this Annual Report to “Grand Perfecta,” the “Company,” “we,” “our” or “us” means Grand Perfecta, Inc., and our subsidiaries that we owned for a portion of our fiscal year: LinkBit Consulting Co, Ltd. (“LinkBit”), Umajin Hong Kong Ltd. (“Umajin HK”), Sports Perfecta, Inc. (“Sports Perfecta”) and WRN Co., Ltd. (“WRN”). As described elsewhere in this document, the Company still operates through two subsidiaries, Umajin HK, which had little to no operations in this fiscal year, and WRN, which is still operating.

PART I

ITEM 1.

BUSINESS

Company Overview and History

Grand Perfecta, Inc., a Nevada corporation, (the “Company”) is engaged in the business of gathering, publishing and disseminating horse racing information and other content related to horse racing in Japan and the Japanese horse racing industry through its wholly owned subsidiary WRN, a Japanese corporation. Historically, through June 27, 2018, our operations were conducted in Japan through our wholly-owned subsidiary, LinkBit Consulting Co, Ltd. (“LinkBit”). LinkBit historically had six different websites that it owned and operated through its various subsidiaries, which comprised substantially all of the Company’s revenue. In May 2013, we acquired Umajin Hong Kong (“Umajin HK”) in Hong Kong as a wholly-owned subsidiary. Umajin HK delivered information on horse racing and soccer to its users until the end of June 2017, when it terminated its service.

In June 2018, Grand Perfecta completed a disposition of a substantial portion of its assets and operations through two transactions.

On June 26, 2018, the Company transferred 100% of the common stock of Sports Perfecta, Inc., a California corporation and subsidiary of the Company, and a receivable representing a sum owing to the Company by Sports Perfecta in the amount of JPY 185,540,908 to Neo Sports Ltd., a Japanese company (“Neo Sports”), in exchange for (a) 23,600,000 shares of Company common stock, (b) 100,00 shares of Company Series A Convertible Preferred Stock, and (c) an outstanding contract option right to purchase 3,000,000 shares of the common stock of Company at a price of $1.00 per share (the “Sports Perfecta Transaction”). All common and preferred shares delivered to the Company as part of the Sports Perfecta Transaction were immediately cancelled.

All of the Company securities acquired by Neo Sports were immediately transferred to the Company in exchange for 100% of the capital stock of SPI, which was owned by the Company, and a receivable representing a sum owing to the Company by Sports Perfecta in the amount of JPY 185,540,908.

On June 27, 2018, the Company sold 100% of the capital stock of Link Bit Consulting Co, Ltd., a Japanese company and subsidiary of the Company (“LinkBit”), to IS Digital Ltd., a Cayman Islands company (“ISD”) for $420,000 in cash, and a sale to ISD of a receivable representing a sum owing to the Company by LBC in the amount of JPY 8,089,625 for $80,000 in cash (the “LinkBit Transaction”).

After the foregoing transactions, the Company continues to own as subsidiaries Umajin HK and WRN. WRN is engaged in the business of publishing horse racing information, including upcoming races, race results, and detailed profiles of foreign jockeys who race in Japan.

On December 16, 2019, the Company transferred 100% of the common stock of Umajin HK, a Hong Kong corporation and a subsidiary of the Company to a Japanese corporation in exchange for $1. Also on December 16, 2019, the Company transferred 100% of the common stock of WRN, a Japanese corporation and a subsidiary of the Company to a Japanese corporation in exchange for $1 and the forgiveness of a payable to WRN in the amount of $90,956. After these transfers, the Company had no subsidiaries.

Asserting Claims against the Company

Because nearly all of the assets of Grand Perfecta are located in Japan, it would be very difficult to access those assets to satisfy an award entered against Grand Perfecta in a U.S. court.

Horse Racing in Japan

Horse racing in Japan is a popular equestrian sport with approximately 16,000 horse races held each year, which are predominately flat and jump races. Horse racing is organized and managed by the Japan Racing Association (JRA) and National Association of Racing (NAR), both of which are subject to the supervision of the Ministry of Agriculture, Forestry and Fisheries. This system of government supervision and administration of horse racing is unique to Japan and, we believe, one of the main reasons horse racing in Japan is considered by many the best in the world.

The popularity and large fan following for horse racing in Japan, which translates into a large volume of betting, creates a demand by racing enthusiasts for information on breeding, race history of horses, jockeys, and other matters that may be factors in evaluating races and how to bet the horses. Our business focuses on meeting that demand for information.

Our Business

Since June 27, 2018, the Company’s primary business operations occur through our remaining operating subsidiary, WRN, which is engaged in the business of publishing horse racing information, including upcoming races, race results, and detailed profiles of foreign jockeys who race in Japan. Due to changing subscriber preferences for racing information, WRN suspended its website in April 2019 and was in the process of making changes to attract subscribers to its website until WRN was sold on December 16, 2019.

Selling our Services

The process of selling our horse racing information services focuses on attracting users to our websites and offering them free content as an inducement to purchase access for more in-depth content. We solicit users to register themselves as a website or a phone user, free of charge, by advertising in a variety of public media channels, including newspapers, magazines, internet, TV, and direct mail, including advertising in our own media and holding events.

When users take advantage of our free content we are effectively giving them a sample of what we offer for purchase through our websites. This free content also gives us the opportunity to optimize content offerings to our users. When a user signs on to access our free content, we gather information from the user’s usage that enables us to ascertain preferences and interests, which we use to make more focused service offerings directly to the user. This process enables us to perform a continual sales process with our users to convert them to customers. Historically, we have realized a conversion rate of approximately 6% of free content users making a decision to purchase one or more services. Our sales effort focuses on increasing the number of users, improving and enhancing the users’ experience, and improving our conversion rate to paying customers.

We also promote our services to potential users by pursuing a variety of activities that we believe increases public interest in horse racing, develops new horse racing fans, and exposes our websites and information offerings to potential new users.

Our ability to attract users and sell them our fee-based services depends on the content we have to offer. We pursue a number of activities to generate content for our users.

Competition

With the popularity of horse racing in Japan and the high demand for information among enthusiasts, there are a substantial number of publications and other information sources that we compete with. We compete with these other publications and services on the basis of the quality of our content. We believe our focus on cultivating information sources allows us to provide better information than our competitors can provide.

Specifically, we believe our competitive advantage is based upon:

Our information-gathering ability (including the quantity and quality of information we gather);

Our relationships with affiliates and industry personnel on-site;

Our data analysis programs;

The techniques we use to present and distribute information and analysis in a manner that is highly usable by our customers;

The volume and quality of information we provide free of charge; and

Our integrated approach to providing horse racing information on a wide range of elements and factors pertaining to horses, jockeys, tracks, races, and other horse racing matters.

Intellectual Property

We do not possess any trademarks or other intellectual property.

Employees

Grand Perfecta currently has one employee, Steve Ketter, its Chief Executive Officer. WRN, a wholly owned subsidiary until December 16, 2019, had two contract employees in Japan.

Further Information and Reports

We are required to file with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports of certain events on Form 8-K, and proxy and information statements disseminated to stockholders in connection with meetings of stockholders and other stockholder actions. Copies of these and any other materials we file with the Commission may be inspected without charge at the public reference facilities maintained by the Commission in Room 1580 – 100 F Street, N.E., Washington, D.C. 20549. Copies of all or any part of our filings may be obtained from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549, upon payment of the prescribed fees. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company’s filings with the Commission are also available through its web site at http://www.sec.gov.

ITEM 1A.

RISK FACTORS

Disclosure under this item is not required of a smaller reporting company.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Our principal business office is located at 123 West Nye Lane, Suite 129, Carson City, NV 89706. We are using the office space of our Chief Executive Officer, Steve Ketter, who is not charging a fee for our use of the space.

ITEM 3.

LEGAL PROCEEDINGS

We may be the subject of certain legal matters that we consider incidental to our business activities. We are not currently aware of any ongoing litigation that will have a material impact on our financial position, liquidity or results of operations.

ITEM 4.

MINE SAFETY DISCLOSURES

The disclosure required by this Item 4 is not applicable to the Company’s business.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

The common stock of Grand Perfecta trades in the over-the-counter market under the symbol “GPIW.” The following table sets forth for the respective periods indicated the prices of the common stock in the over-the-counter market, as reported and summarized on the OTC Marketplace. Such prices are based on inter-dealer bid and ask prices, without markup, markdown, commissions, or adjustments and may not represent actual transactions.

Calendar Quarter Ended	High Bid ($)	Low Bid ($)

October 31, 2016	$0.56	$0.10
January 31, 2017	$0.11	$0.04
April 30, 2017	$0.08	$0.06
July 31, 2017	$0.07	$0.04

October 31, 2017	$0.07	$0.04
January 31, 2018	$0.07	$0.03
April 30, 2018	$0.06	$0.03
July 31, 2018	$0.06	$0.03

October 31, 2018	$0.04	$0.02
January 31, 2019	$0.04	$0.02
April 30, 2019	$0.05	$0.04
July 31, 2019	$0.10	$0.03

Unregistered Sales of Equity Securities

There are no unregistered sales of securities that have not been reported previously.

Dividends

We did not make any distributions to shareholders in fiscal years 2019 or 2018. Our present intention is to retain any earnings for use in our business activities, so it is not expected that any dividends on the common stock will be declared and paid in the foreseeable future.

Security Holders

At October 31, 2019, there were approximately 592 holders of record of our common stock.

Equity Compensation Plans

As of July 31, 2019, there were no equity securities authorized for issuance under any Company compensation plans.

Repurchases of common stock

There were no repurchases of equity securities by Grand Perfecta in the year ended July 31, 2019.

ITEM 6.

SELECTED FINANCIAL DATA

Disclosure under this item is not required of a smaller reporting company.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

General

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

Critical Accounting Policies

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

Basis of Presentation

Financial Statement Reclassification

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

Going Concern

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

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

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

Revenue Recognition

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

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

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

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

Foreign Exchange

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

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

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

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

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

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

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

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

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

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

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

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

Net income (loss) before provision for income taxes		447,170			1,428,959			(981,789	)
Provision for (benefit from) income taxes		-			–			-
Net income (loss) from continuing operations		447,170			1,428,959			(981,789	)
Net income (loss) from discontinued operations		7,984			1,899,222			(1,891,238	)
Provision for (benefit from) income taxes for discontinued operations		(630)			(774,666	)		774,036
Net loss attributable to GPI stockholders	$	454,524		$	2,553,515		$	(2,098,991	)

Net Sales

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

Operating Expenses

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

Other Income/ (Expenses)

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

Liquidity and Capital Resources

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

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

	Year Ended
	7/31/2019			7/31/2018
Cash flows provided by (used in) operating activities	$	(59,651	)	$	545,668
Cash flows used in investing activities	$	–		$	604,938
Cash flows provided by financing activities	$	10,900		$	(1,201,994	)

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

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

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

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosure under this item is not required of a smaller reporting company.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Grand Perfecta’s financial statements appear at the end of this report beginning with the Index to Financial Statements on page F-1.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) of the Exchange Act, the Company's management, under the supervision of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based upon such evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective at July 31, 2019.

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal control over financial reporting during the year ended July 31, 2019.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act). The Company's internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Owing to its inherent limitations, any system of internal control over financial reporting, no matter how well designed and operated, can provide only reasonable assurance with respect to financial statement preparation and presentation. Accordingly, the Company's internal controls over financial reporting was designed to provide reasonable assurance to its management and board of directors regarding the preparation and fair presentation of the Company's published financial statements.

Management assessed the effectiveness of the Company's internal control over financial reporting as of July 31, 2019, using the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, management concluded that the Company's internal control over financial reporting was not effective as of July 31, 2019.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As a result of management’s evaluation described above, it concluded that the Company had a significant control deficiency as of July 31, 2019 that constituted a material weakness in our internal control over financial reporting. Management has determined that the Company lacks the processes and procedures to ensure all financial events and transactions are recorded in accordance with US GAAP. More specifically, the Company engages third party service providers to assist with the preparation of its financial statements in accordance with US GAAP and to assist with the preparation of its US income taxes, however, the Company lacks in-house personnel capable of reviewing and overseeing this effort.

This Annual Report on form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the rules of the SEC that permit the company to provide only management's report in this Annual Report.

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and officers

Set forth in the table below are the names, ages and positions of our current directors and executive officers. None of our directors or executive officers has any family relationship to any other director or executive officer.

Name	Age	Position

Steve Ketter	53	Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer

All executive officers are elected by the board and hold office until their successors are duly elected and qualified. Each director is elected by the stockholders and serves until resignation or election of a successor by the stockholders.

Biographies

The following is information on the business experience of each of the officers and directors.

Steve Ketter, Chairman of the Board of Directors of the Company, Chief Executive Officer, Chief Financial Officer. Steve Ketter, age 52, has been self-employed for the past five years as an advisor on business development, operations management, and strategic forecasting. The majority of his career has been spent in corporate risk management. He has handled fraud matters, investigations, executive protection and threat assessments. He received his Bachelor of Science degree in Business Management from Towson State University in 1991.

Audit Committee; Financial Expert

The Board of directors has not established an audit committee, so the entire Board of Directors performs the functions associated with an audit committee, including, evaluating financial reporting matters, monitoring internal controls, compliance with internal financial policies, and engaging the registered independent accounting firm to audit the financial statements of Grand Perfecta. At present Grand Perfecta does not have a financial expert serving on the Board within the meaning of Item 407(d)(5)(ii) of Regulation S-K. The Board of Directors believes a financial expert would be advantageous and expects it will pursue a process for recruiting a financial expert to serve on the Board.

Director Nominations

The Board of Directors has not made any changes to the procedures by which security holders may recommend nominee’s to our Board of Directors.

Board Leadership Structure

Our Chairman of the Board also performs the functions and duties normally associated with a principal executive officer. The Board of Directors does not have a lead independent director. In light of the Company’s level of operations at present and its status as a smaller reporting company, the Board believes the Company’s current leadership structure is appropriate. All of our Board members are engaged directly and regularly in the operations of the Company, so we believe the Board is exposed to, or has the opportunity to discover and evaluate, all areas of meaningful risk pertaining to the Company’s operations and to manage those risks at acceptable levels for the Company.

Code of Ethics

We adopted a Code of Ethics and Business Conduct (the “Code of Conduct”) that applies to all of our officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Conduct establishes standards and guidelines to assist our directors, officers, and employees in complying with both the Company’s corporate policies and with the law.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors, and persons who beneficially own more than 10% of Grand Perfecta’s common stock, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Executive officers, directors and greater than 10% beneficial owners are required by Securities and Exchange Commission regulations to furnish Grand Perfecta with copies of all Section 16(a) forms they file. Based solely on Grand Perfecta’s review of copies of such reports and representations from Grand Perfecta’s executive officers and directors, and greater than ten-percent beneficial owners, Grand Perfecta’s believes that its executive officers and directors complied with all Section 16(a) filing requirements during the fiscal year ended July 31, 2019.

ITEM 11.

EXECUTIVE COMPENSATION

Executive Compensation

The following table sets forth the cash and other compensation paid by the Company to our named executive officers for the years ended July 31, 2019 and 2018.

Name and Principal Position	Year	Salary ($)	Total ($)
Steve Ketter Chief Executive Officer	2019 2018	36,000 6,000	36,000 6,000

Shuya Watanabe Former Chief Executive Officer	2019 2018	0 129,675	0 129,675

Takashi Ozawa Former Chief Operations Officer	2019 2018	0 129,675	0 129,675

Masashi Takegaki Former Chief Financial Officer	2019 2018	0 100,100	0 100,100

Narrative Discussion of Compensation Table

The Board of Directors determines directors’ and officers’ salaries annually or as circumstances may otherwise warrant, usually in the month of October each year. Compensation decisions are based on a number of considerations. Some of the relevant factors considered in any given year may include:

Risk associated with serving as an officer or director;

The budget for the next year and the portion of the budget allocated to compensation;

Performance of the Company in the prior year, and the contribution of an officer to Company success;

Company goals for the coming year and incentivizing officers with compensation; and

The level of compensation customary in Japan for executives performing similar functions in companies of similar size or in the same industry.

Employee Benefit and Incentive Plans

We do not have any benefit or incentive plans for our executive officers.

Director Compensation

The following table sets forth the cash and other compensation paid by the Company to our former non-employee Directors for the years ended July 31, 2019 and 2018, prior to their respective resignations from the Board.

Name	Year	Cash Fees ($)	Total ($)

Motonori Okai	2019 2018	0 0	0 0

Hideaki Takahashi	2019 2018	0 100,100	0 100,100

Akira Tanabe	2019 2018	0 0	0 0

Enrique Marchese	2019 2018	0 10,000	0 10,000

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Management

The following table sets forth as of October 31, 2019, the number and percentage of the outstanding shares of common stock which, according to the information supplied to Grand Perfecta, were beneficially owned by (i) each person who is currently a director, (ii) each executive officer, (iii) all current directors and executive officers as a group, and (iv) each person who, to our knowledge, is the beneficial owner of more than 5% of the outstanding common stock. As of that date the Company had 7,977,332 shares of its common stock and 0 shares of its Series A Preferred Stock issued and outstanding.

5% Beneficial Owners (excluding officers and directors)	Number of Shares Beneficially Owned ⁽¹⁾	Percent of Class ⁽¹⁾

Capital Advisors, LLC P.O. Box 901658 Sandy, Utah 84090-1658	1,080,000	13.5%

Directors and Officers

Steve Ketter	3,000,000	37.6%

All directors and named executive officers as a group (1 person)	4,080,000	51.1%

(1) The Company believes that each stockholder has sole voting and investment power with respect to the shares of common stock listed, except as otherwise noted. The number of shares beneficially owned by each stockholder is determined under rules of the SEC, and the information is not necessarily indicative of ownership for any other purpose. Under these rules, beneficial ownership includes (i) any shares as to which the person has sole or shared voting power or investment power, and (ii) any shares that the individual has the right to acquire within 60 days through the exercise of any stock option, warrant, conversion of preferred stock or other right, but such shares are deemed to be outstanding only for the purposes of computing the percentage ownership of the person that beneficially owns such shares and not for any other person shown in the table. The inclusion herein of any shares of common stock deemed beneficially owned does not constitute an admission by such stockholder of beneficial ownership of those shares of common stock. All percentage calculations are based on 7,977,332 shares of common stock issued and outstanding on October 31, 2019.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Certain Relationships and Related Transactions

In June 2018, the Company entered into a consulting agreement with its new CEO and sole director. The Company agreed to pay him $3,000 per month for his services in running the Company and making sure that the required audit and filings get completed. As of July 31, 2019 the Company had $9,000 in accrued liabilities for this agreement.

During the year ended July 31, 2019 and prior to May 5, 2019, the Company received $26,849 in advances from its CEO of which they paid $15,949 back. On May 5, 2019, the Company issued 3,000,000 shares of common stock to its CEO and sole director as payment of the remaining $10,900 in advances and also $4,500 in consulting services accrued at that time for the agreement listed above and recognized a loss on extinguishment of related party debt of $74,600.

The following related party transactions were all related to the Company’s previous management and the discontinued operations. These related party transactions all were eliminated with the discontinuation of LBC and SPI:

Shuya Watanabe, the Company’s former CEO and Chairman, made advances to LinkBit in prior periods that totaled JPY110,055,904 (approximately US$1,002,000) at July 31, 2017. During the year ended July 31, 2018, Mr. Watanabe did not make additional advances and received repayments of advances of JPY5,687,286 (approximately $52,000). There is no stated interest on the advances and no stated maturity date. This advance was part of the discontinued operations and was transferred with the disposal transactions in June 2018. As of July 31, 2019 and 2018, the total outstanding advances due by the Company was $0.

Motonori Okai, a former director of the Company, is the responsible director and sole owner of Umajin Japan. Grand Perfecta and Umajin Japan have an agreement pursuant to which Umajin Japan provides to Grand Perfecta horserace information for a fee of 16 million yen per month (inclusive of consumption tax) and horseracing related email magazine and web page content for a fee of 7 million yen per month (inclusive of consumption tax) for a total of 23 million Yen per month. The Company and Umajn Japan agreed to reduce the monthly fees from 23 million Yen to 11 million Yen subsequent to October 2016. Subsequent to February 2017, the Company and Umajin Japan agreed to reduce the fee to 8 million Yen per month through July 2018. Payments to Umajin Japan were JPY80,740,747 (approximately US$735,000), including consumption tax payments of JPY6,459,253 (approximately US$59,000) in fiscal year 2018. This agreement was also included in the discontinued operations and was transferred with the disposal transactions in June 2018.

Akira Tanabe, a former director of the Company, is the representative director of Clara Ltd., which has made advances to LinkBit that totaled JPY180,000,000 (approximately US$1,638,000) at July 31, 2017. The interest rate on the advances is 1% per annum, and is due upon demand. Interest payments to Clara Ltd. for fiscal year 2018 totaled JPY479,178 (approximately US$4,400). This advance was part of the discontinued operations and was transferred with the disposal transactions in June 2018. As of July 31, 2019 and 2018, the total outstanding advances due by the Company was $0.

Additionally, LinkBit is a party to a services agreement with Cheval Attache Co., Ltd. (of which Mr. Tanabe (a former director of the Company) is a representative director) dated August 2014. Cheval Attache delivers services relating to content and application development. LinkBit pays a monthly fee of JPY1,000,000 (approximately US$9,000) to Cheval Attache. During fiscal year 2018 a total of JPY11,880,000 (approximately US$108,000) in service fees was paid to Cheval Attache. This agreement was also included in the discontinued operations and was transferred with the disposal transactions in June 2018.

Cheval Attache also made advances totaling JPY68,000,000 (approximately USD$618,800) at July 31, 2017. There is no stated interest on the advances and they are due on demand. This advance was part of the discontinued operations and was transferred with the disposal transactions in June 2018. As of July 31, 2019 and 2018, the total outstanding advances due by the Company was $0.

Director Independence

Our common stock is not quoted or listed on any national exchange or interdealer quotation system with a requirement that a majority of our board of directors be independent and therefore, the Company is not subject to any director independence requirements. Under NASDAQ Rule 5605(a)(2)(A), a director is not considered to be independent if he or she also is an executive officer or employee of the corporation or if there have been certain transactions between the Company and the director or another company with which the director is affiliated. Under these standards, there is no director that the Board of Directors has determined is an independent director.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees billed to the Company by its principal accountants for the years ended July 31, 2019 and 2018, for professional fees are as follows:

	2019		2018

Audit fees	$	21,000	$	140,000
Audit related fees		–		–
Total audit and related fees		21,000		140,000

Other consulting fees		–		–
Tax fees		–		–
Total fees	$	21,000	$	140,000

Audit Fees and audit related fees are amounts billed for professional services that our independent public accounting firm provided for the audit of our annual financial statements, review of the financial statements included in our reports on 10-Q, and other services typically provided by an accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K:

Exhibit No.		Title of Document

3.1		Articles of Incorporation of Grand Perfecta, Inc. (formerly known as STI Holdings, Inc.) (1)

3.2		Bylaws of Grand Perfecta, Inc. (1)

3.3		Certificate of Amendment to Articles of Incorporation dated January 9, 2008, designating preferred stock as Series A Convertible Preferred Stock (1)

3.4		Certificate of Amendment to Articles of Incorporation dated June 21, 2011, for Designation of Rights, Privileges, and Preferences of Series A Convertible Preferred Stock of Grand Perfecta, Inc. (formerly known as STI Holdings, Inc.) (1)

3.5		Certificate of Amendment to Articles of Incorporation dated March 29, 2013, for name change of STI Holdings, Inc. to Grand Perfecta, Inc. (1)

4.1		Convertible Debenture dated March 5, 2015 with respect to JPY200,000,000 principal amount of convertible notes bearing interest at 1.0% per annum (1)

4.2		First Amendment dated March 2, 2016, to the Convertible Debenture dated March 5, 2015 (2)

10.1		Service Agreement dated August 1, 2014 between Link Bit Consulting Co., Ltd. and Cheval Attache Co., Ltd. (1)

10.2		Loan Agreement dated March 26, 2012 between Clara Ltd., as lender, and Link Bit Consulting Co., Ltd., as borrower (1)

10.3		Revised Loan Agreement dated January 29, 2013 between Clara Ltd., as lender, and Link Bit Co., Ltd., as borrower (1)

10.4		Offshore Securities Purchase Agreement dated as of March 5, 2015 between Grand Perfecta, Inc. and Europlus International Ltd. (1)

10.5		Link Bit Co., Ltd. office lease with Tokyo Teleport Center Co., Ltd. dated August 31, 2014 (1)

10.6		Stock Purchase Agreement dated June 11, 2014 between Grand Perfecta, Inc. and Kuzuaki Goto (1)

10.7		Lease (license) between Umajin Hong Kong Ltd and Apex Business Centre Limited dated as of June 25, 2014 (1)

10.8		Offer Letter between Grand Perfecta, Inc. and Enrique Marchese dated May 8, 2014 (1)

10.9		Note Payment and Satisfaction Agreement between Link Bit Consulting Co., Ltd., and Umajin Co. Ltd., dated October 28, 2015 (3)

10.10		Services Agreement between Link Bit Consulting Co., Ltd., and Umajin Co. Ltd., dated November 1, 2015 (3)

10.11		Money Loan Agreement between Link Bit Consulting Co., Ltd., and Fuji Kigyo Co., Ltd., dated December 18, 2015 (4)

10.12		Loan Agreement dated June 15, 2016, between Link Bit Consulting Co., Ltd., and Toshiro Ohshimo (6)

10.13		Offshore Securities Purchase Agreement dated August 23, 2016, between Grand Perfecta, Inc., and Sakura Corporation (6)

10.14		Offshore Securities Purchase Agreement dated March 31, 2017, between Grand Perfecta, Inc., and Heart Corporation (7)

14.1		Code of Ethics (5)

21.1		List of Subsidiaries

31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

(1) These exhibits are incorporated herein by this reference to our registration statement on Form 10, filed with the Securities and Exchange Commission on April 15, 2015.

(2) This exhibit is incorporated herein by this reference to our report on Form 10-Q for the period ended April 30, 2016, filed with the Securities and Exchange Commission on June 14, 2016.

(3) These exhibits are incorporated herein by this reference to our report on Form 10-Q for the period ended October 31, 2015, filed with the Securities and Exchange Commission on December 15, 2015.

(4) This exhibit is incorporated herein by this reference to our report on Form 10-Q for the period ended January 31, 2016, filed with the Securities and Exchange Commission on March 16, 2016.

(5) These exhibits are incorporated herein by this reference to our report on Form 10-K for the period ended July 31, 2015, filed with the Securities and Exchange Commission on November 13, 2015.

(6) These exhibits are incorporated herein by this reference to our report on Form 10-K for the period ended July 31, 2016, filed with the Securities and Exchange Commission on November 8, 2016.

(7) These exhibits are incorporated herein by this reference to our report on Form 10-K for the period ended July 31, 2017, filed with the Securities and Exchange Commission on November 2, 2017.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GRAND PERFECTA, INC.


Date: December 18, 2019	By	/s/ Steve Ketter
		Steve Ketter, Chief Executive Officer
		(Principal Executive Officer)


Date: December 18, 2019	By	/s/ Steve Ketter
		Steve Ketter, Chief Financial Officer
		(Principal Financial and Accounting Officer)

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

Date: December 18, 2019	/s/ Steve Ketter
	Steve Ketter, Director

INDEX TO FINANCIAL STATEMENTS

Consolidated Financial Statements

Grand Perfecta, Inc.

	Page
Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations and Comprehensive Income	F-4
Consolidated Statements of Stockholders’ Equity (Deficit)	F-5
Consolidated Statements of Cash Flows	F-6
Notes to the Consolidated Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Grand Perfecta, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Grand Perfecta, Inc. and its subsidiaries (the Company) as of July 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit) and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations negative cash flows from operations, and has discontinued substantially all of its operations. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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

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

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

/s/ Mac Accounting Group, LLP

We have served as the Company's auditor since 2016.

Midvale, Utah

December 18, 2019

F-2

GRAND PERFECTA, INC.

CONSOLIDATED BALANCE SHEETS

	July 31, 2019			July 31, 2018
Assets
Current assets
Cash	$	235		$	49,857
Current assets of discontinued operations		516			11,491
Total current assets		751			61,348
Total assets	$	751		$	61,348

Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable and accrued expenses	$	26,392		$	613,183
Current liabilities of discontinued operations		7,946			22,945
Total current liabilities		34,338			636,128
Total liabilities		34,338			636,128

Commitments and contingencies		–			–

Stockholders' deficit
Preferred stock, $0.001 par value, 100,000,000 shares authorized, zero shares issued and outstanding		–			–
Common stock, $0.001 par value, 500,000,000 shares authorized, 7,977,332 and 4,977,332 shares issued and outstanding as of July 31, 2019 and 2018, respectively		7,977			4,977
Additional paid-in capital		4,681,285			4,594,285
Accumulated deficit		(4,697,648	)		(5,152,172	)
Accumulated other comprehensive income		(25,201	)		(21,870	)
Total stockholders' deficit		(33,587	)		(574,780	)
Total liabilities and stockholders' deficit	$	751		$	61,348

See accompanying notes to consolidated financial statements

F-3

GRAND PERFECTA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

	For the Year Ended
	July 31, 2019			July 31, 2018
Net sales	$	–		$	–
Total revenues		–			–
Operating expenses:
General and administrative expenses		191,230			816,531
Total operating expenses		191,230			816,531

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

Other income (expense):
Other income (expense)		713,000			–
Loss on extinguishment of related party debt		(74,600	)		–
Gain on discontinued operations		–			2,245,490
Total other income (expense)		638,400			2,245,490

Net income (loss) before provision for income taxes		447,170			1,428,959
Provision for (benefit from) income taxes		–			–
Net loss from continuing operations		447,170			1,428,959
Income (loss) from operations of discontinued operations		7,984			1,899,222
(Provision for) income taxes for discontinued operations		(630	)		(774,666	)
Net income (loss) from discontinued operations		7,354			1,124,556
Net income (loss)	$	454,524		$	2,553,515

Net income (loss) per share from continuing operations, basic and diluted	$	0.08		$	0.05
Net income (loss) per share from discontinued operations, basic and diluted	$	0.00		$	0.04
Net income (loss) per share, basic and diluted	$	0.08		$	0.09
Weighted average number of common shares outstanding, basic and diluted		5,675,962			29,369,231

Other comprehensive income (loss)
Foreign currency translation adjustments		(3,331	)		(347,734	)
Comprehensive income (loss)		451,193			2,205,781
Comprehensive income (loss) attributable to non-controlling interest		–			(204,750	)
Comprehensive income (loss) attributable to GPI stockholders	$	451,193		$	2,001,031

See accompanying notes to consolidated financial statements

F-4

GRAND PERFECTA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

	Preferred Stock						Common Stock						Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Non-controlling
	Shares			Amount			Shares			Amount			Capital			Deficit			Income			Interest			Total
Balance, July 31, 2017		100,000		$	100			31,800,000		$	31,800		$	5,752,362		$	(7,705,687	)	$	325,864		$	204,750		$	(1,390,811	)
Shares received in exchange for interest in subsidiary		(100,000	)		(100	)		(26,822,668	)		(26,823	)		(1,158,077	)		–			–			(204,750	)		(1,389,750	)
Foreign currency translation adjustment		–			–			–			–			–			–			(347,734	)		–			(347,734	)
Net income		–			–			–			–			–			2,553,515			–			–			2,553,515
Balance, July 31, 2018		–			–			4,977,332			4,977			4,594,285			(5,152,172	)		(21,870	)		–			(574,780	)
Stock issued for services		–			–			876,623			877			25,422			–			–			–			26,299
Settlement of related party advances through exchange of stock		–			–			2,123,377			2,123			61,578			–			–			–			63,701
Foreign currency translation adjustment		–			–			–			–			–			–			(3,331	)		–			(3,331	)
Net income		–			–			–			–			–			454,524			–			–			454,524
Balance, July 31, 2019		–		$	–			7,977,332		$	7,977		$	4,681,285		$	(4,697,648	)	$	(25,201	)	$	–		$	(33,587	)

See accompanying notes to consolidated financial statements

F-5

GRAND PERFECTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended
	July 31, 2019			July 31, 2018
Cash flows from operating activities
Net income (loss)	$	454,524		$	2,553,515
Less net income from discontinued operations		(7,354	)		(1,124,556	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on discontinued operations		–			(2,245,490	)
Abatement of IRS Penalty		(600,000	)		–
Loss on extinguishment of related party debt		74,600			–
Common stock issued for services		4,500			–
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		13,208			(5,536	)
Operating cash flows from discontinued operations		871			1,367,735
Net cash provided by (used in) operating activities		(59,651	)		545,668

Cash flows from investing activities
Proceeds from sale of interest in subsidiary, net		–			427,673
Investing activities of discontinued operations		–			177,265
Net cash provided by investing activities		–			604,938

Cash flows from financing activities
Net proceeds from related party advances		10,900			–
Financing activities of discontinued operations		–			(1,201,994	)
Net cash provided by (used in) financing activities		10,900			(1,201,994	)
Effect of exchange rate fluctuations on cash		(3,214	)		1,150

Net change in cash		(51,965	)		(50,238	)
Cash of continuing operations, beginning of period		49,857			665
Cash of discontinued operations, beginning of period		2,859			102,289
Cash, beginning of the period		52,716			102,954
Cash, end of the period		751			52,716
Less cash of discontinued operations, end of period		(516	)		(2,859	)
Cash of continuing operations, end of the period	$	235		$	49,857

Supplemental disclosure of cash flow information:
Interest paid	$	–		$	674,975
Income taxes paid	$	–		$	23,078

Supplemental disclosure of non-cash investing and financing information:
Assumption of payable balance to subsidiary	$	–		$	(90,956	)
Assumption of receivable balance from subsidiary	$	–		$	344,531
Shares returned and cancelled for sale of SPI	$	–		$	1,185,000
Shares returned and cancelled for no consideration	$	–		$	3,223
Shares issued for repayment of related party advances	$	10,900		$	–

See accompanying notes to consolidated financial statements

F-6

GRAND PERFECTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

Organization

Grand Perfecta, Inc. (“Grand Perfecta”) was incorporated in the State of Nevada on March 25, 2002, as STI Holdings, Inc. (“STI”). On May 12, 2012, Grand Perfecta completed an Agreement and Plan of Reorganization whereby it acquired 100% of the issued and outstanding shares of Link Bit Consulting Co, Ltd. (“LinkBit”), a Japanese corporation, for 25,000,000 common shares in a transaction accounted for as a recapitalization of LinkBit. Effective March 29, 2013, STI amended its Articles of Incorporation to change its name to Grand Perfecta, Inc. On May 27, 2013, Grand Perfecta issued 272,668 shares in exchange for 100% of the issued and outstanding shares of Umajin Hong Kong Ltd. (“Umajin HK”), a Hong Kong corporation. In August 2015, Grand Perfecta formed Sports Perfecta, Inc. (“Sports Perfecta”), as a California subsidiary to pursue development of a fantasy sports offering to horse racing fans. The operations of Grand Perfecta, LinkBit, Umajin HK, and Sports Perfecta are collectively referred to as the “Company.”

On December 16, 2015, LinkBit acquired 100% of the outstanding shares of Basougu Shokuninkai Co., Ltd. (“Basougu”), a Japanese corporation. On January 7, 2016, Sports Perfecta acquired 100% of the outstanding stock of Just Mobile Sdn. Bhd. (“Just Mobile”), a Malaysian company. On January 20, 2016, Just Mobile changed its name to Sports Perfecta Technologies Sdn Bhd (“SPT”). The operations of Just Mobile are referred to as SPT after the acquisition date of January 7, 2016.

On June 26, 2018, the Company discontinued operations of its subsidiary Sports Perfecta, Inc. (“SPI”) along with its wholly owned subsidiary, Sports Perfecta Technologies Sdn Bhd (“SPT”). Ownership of these two entities were transferred to Neo Sports Ltd., a Japanese company, in exchange for 23,600,000 shares of the Company’s common stock, 100,000 shares of the Company’s Series A convertible preferred stock and the contract option right to purchase 3,000,000 shares of the Company’s common stock. See note 7.

On June 27, 2018, the Company discontinued operations of its subsidiary Link Bit Consulting Co., Ltd. (“LBC”) and all of its subsidiaries, except for WRN Co., Ltd. (“WRN”). The Company continued operations of WRN. On this date, the Company sold LBC and its subsidiaries and assets to IS Digital Ltd., a Cayman Island company, in exchange for $500,000. See note 7.

Nature of Business

The Company was engaged in the business of transmitting and providing horse racing information via various types of media, including multiple websites owned and operated by the wholly owned subsidiaries of LinkBit, WRN and Umajin HK. LinkBit operated 6 websites through its various subsidiaries, which generated substantially all of the Company’s revenue. Umajin HK had been delivering information on horse racing to its users through its website, however it terminated its service at the end of June 2017 and was sold on December 16, 2019. The Company was also pursuing development of a fantasy sports offering through Sports Perfecta, which has not yet generated any significant revenue. In June 2018, the Company discontinued the operations of its subsidiaries, LinkBit and SPI. WRN operated one of these websites through April 2019 and was sold on December 16, 2019.

F-7

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with principles generally accepted in the United States of America (“GAAP”) and include the accounts of Grand Perfecta and its wholly-owned subsidiaries LinkBit, Umajin HK, WRN and Sports Perfecta. The Company discontinued the operations of its wholly-owned subsidiaries LinkBit and SPI in June 2018. The accounts for these subsidiaries have been presented in the discontinued operations in the accompanying consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. The Company has determined that three affiliated entities, Space Cultivation Mobile, Japan Horse Circle and Basougu Shokuninkai, which LinkBit conducts business with were variable interest entities and that the Company was the primary beneficiary of each entity. As a result, the Company has consolidated the accounts of these variable interest entities into the accompanying consolidated financial statements. As the Company does not have any ownership interest in these variable interest entities, the Company has allocated the contributed capital in these variable interest entities as a component of non-controlling interest. These three variable interest entities did business with LinkBit. Therefore, these three entities have also been presented in the discontinued operations in the accompanying consolidated financial statements. After the discontinued operations, the Company consists of Grand Perfecta and its two remaining wholly-owned subsidiaries, Umajin HK and WRN. There are no variable interest entities since the Company discontinued operations in June 2018.

Financial Statement Reclassification

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 revenues and expenses during the reported periods. Amounts could materially change in the future.

Going Concern

F-8

Foreign Exchange

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

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

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

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

Cash and Cash Equivalents

The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents as of July 31, 2019 and 2018.

Accounts Receivable

Accounts receivable are carried at net realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of all outstanding amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering each customer's financial condition and credit history, as well as current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. The Company had no allowance for doubtful accounts as of July 31, 2019 or 2018.

Property and Equipment

Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives once the individual assets are placed in service. Estimated useful lives for the assets are as follows.

Buildings and fixtures		8 - 43 years
Autos and trucks		2 - 6 years
Tools and equipment		4 - 10 years
Computer software		5 years

The Company did not have any property and equipment as of July 31, 2019 and 2018.

F-9

Long-Lived Assets

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company performed this analysis at July 31, 2019 and 2018. There was no impairment of long-lived assets identified during the years ended July 31, 2019 and 2018.

Fair Value of Financial Instruments

In accordance with ASC 820, the carrying value of cash and cash equivalents and accounts payable approximates fair value due to the short-term maturity of these instruments. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3- Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The Company has determined that the book value of its outstanding financial instruments as of July 31, 2019 and 2018 approximates the fair value.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk include cash, accounts receivable, notes receivable, and amounts due from related parties. The Company maintains its cash in banks located in Japan, Hong Kong, and the United States in financial institutions with high credit ratings. Substantially all of the Company’s revenues are generated from customers in Japan. The Company conducts periodic reviews of the financial condition and payment practices of its customers and note receivable holders. The Company had no losses related to the write off of notes receivable during the year ended July 31, 2019 or July 31, 2018.

Revenue Recognition

F-10

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs incurred amounted to $0 and $94,997 from discontinued operations for the years ended July 31, 2019 and 2018, respectively.

Basic and Diluted Earnings Per Share

In accordance with ASC 260, Earnings Per Share, the basic income per common share is computed by dividing the net income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. No dilutive potential common shares were included in the computation of diluted net income per share because their impact was anti-dilutive. As a result, the basic and diluted earnings per share were the same for each of the periods presented.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

3. STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue up to 100,000,000 shares of preferred stock with a par value of $0.001, with 100,000 shares designated as Series A Preferred Stock. The Series A Preferred Stock receive a 10 to 1 voting preference over common stock. Accordingly, for every share of Series A Preferred Stock held, the holder receives the voting rights equal to 10 shares of common stock. As such, the holders of the Series A Preferred Stock have the equivalent voting capability of 1,000,000 shares of common stock. The Series A Preferred Stock also has a $0.05 per share liquidation preference over common stock, and can be redeemed by the Company at any time, upon thirty days’ notice, for $0.05 per share.

On June 26, 2018, as part of the transfer agreement of SPI, the Company received the outstanding 100,000 shares of Series A Preferred Stock and immediately cancelled these shares (see note 7).

The Company had 0 shares of Series A Preferred Stock issued and outstanding as of July 31, 2019 and 2018.

F-11

Common Stock Transactions

On June 26, 2018, as part of the transfer agreement of SPI, the Company received 23,600,000 shares of Common Stock and immediately cancelled these shares (see note 7).

On July 9, 2018, the Company cancelled 3,222,668 shares of common stock that had been returned to the Company by the stock holders for no compensation.

On May 27, 2019, the Company issued 3,000,000 shares of common stock to its sole director and officer for $10,900 in advances payable and $4,500 in services rendered to the Company. This stock was valued at $0.03 per share for a total of $90,000. The Company recognized a loss on the extinguishment of related party debt of $74,600.

The Company had 7,977,332 and 4,977,332 shares of common stock issued and outstanding as of July 31, 2019 and 2018, respectively.

Stock Options

On June 26, 2018, as part of the transfer agreement of SPI, the Company received the contract option right to purchase 3,000,000 shares of Common Stock and immediately cancelled this contract option (see note 7). There were no options outstanding as of July 31, 2019 and 2018.

4. INCOME TAXES

The Company records its deferred taxes under the liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are determined based on multi-national, multi-jurisdictional nature of the Company’s operations. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets from continuing operations consisted of the following as of July 31, 2019 and 2018.

	July 31, 2019			July 31, 2018
Deferred tax assets:
Loss carryforwards	$	472,294		$	569,710

Valuation allowance		(472,294	)		(569,710	)
Net deferred tax assets	$	–		$	–

The income tax provision differs from the amount of income tax determined by applying the applicable income tax rate to pretax income from continuing operations for the years ended July 31, 2019 and 2018 due to the following.

	July 31, 2019			July 31, 2018
Income tax expense (benefit) based on book income at the statutory rate	$	93,906		$	536,238
IRS tax penalty abatement		(126,000	)		–
Permanent book to tax differences		16,611			(471,553	)
Valuation allowance		15,483			(64,685	)
Total income tax provision	$	–		$	–

The Company classifies income tax penalties and interest, if any, as part of other general and administrative expenses in the accompanying consolidated statements of operations. The Company had accrued penalties of $600,000 as of July 31, 2018 resulting from the failure to timely file required returns in the US from 2013 through 2016. This penalty was officially abated during the year ended July 31, 2019.

F-12

At July 31, 2019, the Company had net operating loss carryforwards of approximately $2,249,000, of which approximately $2,175,00 may be offset against future taxable income from the year 2020 through 2039. The remainder will carry forward indefinitely. No tax benefit has been reported in the July 31, 2019 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. The Company's tax years for its Federal and State US jurisdictions which are currently open for examination are the years of 2015 - 2018. The Company’s tax years in Japanese jurisdictions that are open for examination are the years of 2014 – 2018.

5. COMMITMENTS AND CONTINGENCIES

Operating Leases

Prior to June 27, 2018, the Company was leasing its corporate headquarters and administrative offices in Tokyo, Japan, as well as the administrative offices of SPT in Kuala Lumpur, Malaysia under non-cancelable operating leases extending through April 15, 2019. These leases were transferred with the discontinued operations. The lease of the Umajin HK office ended on July 21, 2017. The Company also leases other office space as needed on a month-to-month basis.

The Company incurred rent expense of $0 for the year ended July 31, 2019 and for continuing operations of $0 and for discontinued operations of $363,976 for the year ended July 31, 2018.

Litigation

In the ordinary course of business, the Company may be or has been involved in legal proceedings from time to time. As of the date of this annual report, there have been no material legal proceedings relating to the Company.

6. RELATED PARTY TRANSACTIONS

Umajin Co., Ltd. (“Umajin Japan”), was a related party entity owned by one of the former directors of the Company. The Company and Umajin Japan entered into a service agreement which was modified on November 1, 2015 to set the monthly fee payable by the Company to Umajin Japan for providing horserace information at 16 million Yen per month (inclusive of consumption tax), and to set the monthly fee payable for providing a horseracing related email magazine and web page content at 7 million Yen per month (inclusive of consumption tax) for a total of 23 million Yen per month. The Company and Umajin Japan agreed to reduce the monthly fees from 23 million Yen to 11 million Yen subsequent to October 2016. Subsequent to February 2017, the Company and Umajin Japan agreed to reduce the fee to 8 million Yen per month through July 2018.

Total fees paid to Umajin Japan for the year ended July 31, 2019 and 2018 amounted to $0 and $793,520, respectively. The fees paid to Umajin Japan are included in income (loss) from operations of discontinued operations in the accompanying consolidated statements of operations. As of July 31, 2019 and 2018 the Company had $0 due to Umajin Japan due to the sale of LBC (see note 7).

F-13

During the years ended July 31, 2019 and 2018, the Company received consulting services from Cheval Attache, a related party entity owned by one of the Company’s former directors, (including amounts for consumption tax) of $0 and $108,108, respectively, which are included in income (loss) from operations of discontinued operations in the accompanying consolidated statements of operations.

G-Liberta, a subsidiary of Cheval Attache, performed certain advertising and research services for the Company. Total expenses related to G-Liberta during the year ended July 31, 2019 and 2018 amounted to $0 and $2,800, respectively, and are reflected as part of income (loss) from operations of discontinued operations in the accompanying consolidated statements of operations. As of July 31, 2019 and 2018 the Company had $0 due to G-Liberta due to the sale of LBC (see note 7).

7. DISCONTINUED OPERATIONS

During the year ended July 31, 2018 the Company decided to discontinue most of its operating activities. This was done by way of the following two transactions:

On June 26, 2018, the Company exchanged all the issued and outstanding shares of common stock of its wholly owned subsidiary, Sports Perfecta, Inc. (“SPI”) to Neo Sports, Ltd, a Japanese company, for 100,000 shares of the Company’s series A preferred stock, 23,600,000 shares of the Company’s common stock and an option contract right for 3,000,000 shares of the Company’s common stock. This transaction included SPI’s wholly owned subsidiary, Sports Perfecta Technologies Sdn Bhd.

On June 27, 2018, the Company exchanged all the issued and outstanding shares of common stock of its wholly owned subsidiary, Link Bit Consulting Co. Ltd. (“LBC”) to IS Digital Ltd., a Cayman Island company for $420,000 in cash and 100% of the account receivable balance owed to the Company by LBC for $80,000 in cash. This transaction included all of LBC’s subsidiaries, except for WRN Co. Ltd. (“WRN”). WRN’s issued and outstanding common stock was transferred to the Company from LBC on this date.

In December 2019, the Company decided to discontinue its remaining operations. This was done by the way of two transactions.

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of July 31, 2019 and July 31, 2018, and consist of the following:

	July 31, 2019		July 31, 2018
CURRENT ASSETS OF DISCONTINUED OPERATIONS:
Cash	$	516	$	2,859
Accounts receivable, net		–		8,632
TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS	$	516	$	11,491

CURRENT LIABILITIES OF DISCONTINUED OPERATIONS
Accounts payable and accrued expenses	$	6,581	$	14,483
Deferred revenues		–		8,462
Taxes payable		1,365		–
TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS	$	7,946	$	22,945

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations and comprehensive income (loss). The results of operations from discontinued operations for the years ended July 31, 2019 and 2018 have been reflected as discontinued operations in the consolidated statements of operations and comprehensive income (loss) for the years ended July 31, 2019 and 2018, and consist of the following.

F-14

	Year Ended
	July 31, 2019			July 31, 2018
REVENUES OF DISCONTINUED OPERATIONS	$	96,657		$	11,400,259

OPERATING EXPENSES OF DISCONTINUED OPERATIONS:
Cost of sales		79,938			2,714,727
Depreciation and amortization expense		–			25,867
Advertising expense		–			94,997
Rent Expense		–			363,976
Salaries and wages expense		–			2,938,904
Other general and administrative expenses		8,736			2,672,042
		88,674			8,810,513
OPERATING INCOME (LOSS) OF DISCONTINUED OPERATIONS		7,983			2,589,746

OTHER (INCOME) EXPENSE OF DISCONTINUED OPERATIONS
Other (income) expense		–			(714	)
(Gain) loss on foreign exchange		–			(18,040	)
Interest income		(1	)		(5,854	)
Interest expense		–			715,132
		(1	)		690,524

INCOME (LOSS) BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS		7,984			1,899,222
Provision for income taxes of discontinued operations ¹		630			774,666
NET INCOME (LOSS) OF DISCONTINUED OPERATIONS	$	7,354		$	1,124,556

_______________

¹ The income tax provision differs from the amount of income tax determined by applying the applicable income tax rate to pretax income from discontinued operations for the year ended July 31, 2019 and 2018 due to the following:

	July 31, 2019		July 31, 2018
Income tax expense (benefit) based on book income at Japanese statutory rate	$	630	$	748,934
Entertainment expense		–		65,333
Additional taxes		–		3,966
Tax rate difference between current tax and deferred tax assets		–		3,539
Others		–		(47,106	)
Total income tax provision	$	630	$	774,666

In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the consolidated statements of cash flows. The cash flow activity from discontinued operations for the year ended July 31, 2019 and 2018 have been reflected as discontinued operations in the consolidated statements of cash flows for the years ended July 31, 2019 and 2018, and consist of the following.

F-15

	Year Ended
	July 31, 2019			July 31, 2018
DISCONTINUED OPERATING ACTIVITIES
Net income (loss)	$	7,354		$	1,124,556
Depreciation and amortization		–			25,867
Amortization of debt discount		–			16,515
Provision for (benefit from) deferred taxes		–			73,810
Changes in operating assets and liabilities:
Accounts receivable		8,632			(506,051	)
Accounts receivable - related party		–			18,200
Prepaid expenses and other current assets		–			18,175
Other assets		–			(11,475	)
Accounts payable and accrued expenses		(7,988	)		(139,631	)
Accounts payable and accrued expenses to related party		–			39,511
Deferred revenue		(8,462	)		(110,029	)
Taxes payable		1,365			818,287
Net cash provided by operating activities of discontinued operations	$	871		$	1,367,735

INVESTING ACTIVITIES OF DISCONTINUED OPERATIONS
Purchase of property and equipment	$	–		$	(4,259	)
Proceeds from collection of notes receivables		–			511,570
Payments for notes receivable lending		–			(330,046	)
Net cash provided by (used in) investing activities of discontinued operations	$	–		$	177,265

FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS
Proceeds from notes payable	$	–		$	2,093,000
Payments on note payable		–			(3,130,400	)
Payments on notes payable - related parties		–			(164,594	)
Net cash used in financing activities of discontinued operations	$	–		$	(1,201,994	)

8. SUBSEQUENT EVENTS

Management has evaluated subsequent events, in accordance with FASB ASC Topic 855, “Subsequent Events,” through December 18, 2019, the date which the consolidated financial statements were available to be issued and there are no material subsequent events; except as noted below:

On December 16, 2019, the Company executed two stock purchase agreements to sell its two operating subsidiaries of the Company. The Company sold 100% of the shares issued and outstanding of its subsidiary, Umajin HK (UHK), for $1.00 to a Japanese corporation. The Company also sold 100% of the shares issued and outstanding of its subsidiary, WRN, for $1.00 to a Japanese corporation. Additionally, in conjunction with these agreements, the payable in the amount of $90,956 of the Company to WRN will be forgiven and a payable in the amount of approximately $15,541 of its subsidiary UHK to WRN will also be forgiven.

F-16