| RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS |
NOTE 3 – RESTATEMENT OF PREVIOUSLY
ISSUED FINANCIAL STATEMENTS
Subsequent to the Company’s filing
of its Annual Report on Form 10-K for the fiscal year ended October 31, 2023 and its Quarterly Report on Form 10-Q for the three
and six months ended April 30, 2023, with the Securities and Exchange Commission on June 20, 2023, the Company performed an evaluation
of its accounting policies in relation to the fair value of its common stock. Management determined that the Original Forms 10-K
and 10-Q do not give effect to certain expenses identified. Accordingly, the Company restates its consolidated financial statements
in this Form 10-Q as outlined further below. Upon review of the Company’s previously filed Forms 10-K and 10-Q, the following
errors were discovered and recorded:
| 1. | The amended change in par value per share was adjusted from $0.001 to $0.0001 in December 22, 2022. |
| 2. | Reclassified ‘Common stock to be issued’ to an individual equity line item within the Balance Sheet |
| 3. | Reclassified $100,000 of consulting and development services expense to ‘Due to related party’ |
| 4. | Reclassified $437,373 of long-term investments to intangible assets, net and other assets |
| 5. | Reclassified $100,000 of other current liabilities to accounts payable |
| 6. | Included additional expense already maintained in the Companies system within general and administrative expenses |
| 7. | Reclassified stock-based compensation expense to an individual line within the operating expenses |
| 8. | Updated the initial recognition and subsequent adjustments of the derivative liability to ‘Adjustments to reconcile net
loss to net cash used in operating activities’ within the condensed consolidated statement of cash flows |
| 9. | Classified the issuance of common stock issued upon purchase of intangible assets appropriately as a non-cash investing activity |
| 10. | Classified the $1.5 million in proceeds from notes payables as the sole financing activity in the six months ended April 30,
2023. |
The following table sets forth the effects
of the adjustments on affected items within the Company’s previously reported condensed balance sheet as of October 31, 2023:
| |
|
October 31,
2023 |
|
|
Adjustments |
|
|
|
October 31,
2023 |
|
| |
|
|
(As Filed) |
|
|
|
|
|
|
|
(As Restated) |
|
| ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash |
|
$ |
1,448,769 |
|
|
$ |
— |
|
|
|
$ |
1,448,769 |
|
| Accounts Receivable |
|
|
226,951 |
|
|
|
— |
|
|
|
|
226,951 |
|
| Total current assets |
|
|
1,675,720 |
|
|
|
— |
|
|
|
|
1,675,720 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment, net |
|
|
1,510 |
|
|
|
— |
|
|
|
|
1,510 |
|
| Software development |
|
|
5,033,332 |
|
|
|
— |
|
|
|
|
5,033,332 |
|
| Long-term investments |
|
|
437,372 |
|
|
|
(437,372 |
) |
4 |
|
|
|
— |
|
| Intangible assets, net |
|
|
— |
|
|
|
268,000 |
|
4 |
|
|
|
268,000 |
|
| Other assets |
|
|
— |
|
|
|
169,373 |
|
4 |
|
|
|
169,373 |
|
| TOTAL ASSETS |
|
$ |
7,147,934 |
|
|
$ |
1 |
|
|
|
$ |
7,147,935 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
— |
|
|
$ |
100,000 |
|
5 |
|
|
$ |
100,000 |
|
| Accrued expenses |
|
|
100,378 |
|
|
|
— |
|
|
|
|
100,378 |
|
| Due to related party |
|
|
57,756 |
|
|
|
100,000 |
|
3 |
|
|
|
157,756 |
|
| Derivative liabilities |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
| Other current liabilities |
|
|
100,000 |
|
|
|
(100,000 |
) |
5 |
|
|
|
— |
|
| Notes payable |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
| Total current liabilities |
|
|
258,134 |
|
|
|
100,000 |
|
|
|
|
358,134 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES |
|
|
258,134 |
|
|
|
100,000 |
|
|
|
|
358,134 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS’ DEFICIT: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred Stock Series A, par value $0.001, 10,000,000 shares authorized, 10,000,000 and 10,000,000 shares issued and outstanding as of April 30, 2024 and October 31, 2023, respectively |
|
|
10,000 |
|
|
|
— |
|
|
|
|
10,000 |
|
| Common stock, par value $0.001, 950,000,000 shares authorized, 127,753,215 and 126,160,534 issued and outstanding as of April 30, 2024 and October 31, 2023 |
|
|
126,160 |
|
|
|
(113,544 |
) |
1 |
|
|
|
12,616 |
|
| Common stock to be issued |
|
|
— |
|
|
|
1,440,000 |
|
2 |
|
|
|
1,440,000 |
|
| Additional paid-in-capital |
|
|
26,176,224 |
|
|
|
1,744,774 |
|
1,2 |
|
|
|
27,920,998 |
|
| Accumulated deficit |
|
|
(19,422,584 |
) |
|
|
(3,171,229 |
) |
3,6 |
|
|
|
(22,593,813 |
) |
| TOTAL STOCKHOLDERS DEFICIT |
|
|
6,889,800 |
|
|
|
(99,999 |
) |
|
|
|
|
6,789,801 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
$ |
7,147,934 |
|
|
$ |
— |
|
|
|
|
$ |
7,147,935 |
|
The following table sets forth the effects
of the adjustments on affected items within the Company’s previously reported condensed consolidated statement of operations
for the three and six months ended April 30, 2023:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
For the Three Months Ended |
|
For the Six Months Ended |
| |
|
April 30,
2023 |
|
|
Adjustments |
|
|
April 30,
2023 |
|
|
April 30,
2023 |
|
|
Adjustments |
|
|
April 30,
2023 |
|
| |
|
(As Filed) |
|
|
|
|
(As Restated) |
|
|
(As Filed) |
|
|
|
|
(As Restated) |
|
| Revenues |
|
$ |
226,886 |
|
|
$ |
— |
|
|
$ |
226,886 |
|
|
$ |
453,772 |
|
|
$ |
— |
|
|
$ |
453,772 |
|
| Cost of sales |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Gross profit (loss) |
|
|
226,886 |
|
|
|
— |
|
|
|
226,886 |
|
|
|
453,772 |
|
|
|
— |
|
|
|
453,772 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| General and administrative expenses |
|
|
1,208,323 |
|
|
|
(436,093 |
) |
4,5 |
|
|
743,341 |
|
|
|
1,420,663 |
|
|
|
(432,200 |
) |
6,7 |
|
|
988,463 |
|
| Stock based compensation |
|
|
— |
|
|
|
1,959,107 |
|
5 |
|
|
1,959,107 |
|
|
|
— |
|
|
|
1,959,107 |
|
7 |
|
|
1,959,107 |
|
| Total operating expenses |
|
|
1,208,323 |
|
|
|
1,494,125 |
|
|
|
2,702,448 |
|
|
|
1,420,663 |
|
|
|
1,526,907 |
|
|
|
2,947,570 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from operations |
|
|
(981,437 |
) |
|
|
(1,494,125 |
) |
|
|
(2,475,562 |
) |
|
|
(966,891 |
) |
|
|
(1,555,797 |
) |
|
|
(2,522,688 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
|
|
— |
|
|
|
(28,890 |
) |
|
|
(28,890 |
) |
|
|
— |
|
|
|
(28,890 |
) |
|
|
(28,890 |
) |
| Other income (expense) |
|
|
713,136 |
|
|
|
— |
|
|
|
713,136 |
|
|
|
(335,493 |
) |
|
|
— |
|
|
|
(335,493 |
) |
| Total other income (expense) |
|
|
713,136 |
|
|
|
(28,890 |
) |
|
|
684,246 |
|
|
|
(335,493 |
) |
|
|
(28,890 |
) |
|
|
(364,383 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax provision (benefit) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Net loss |
|
$ |
(268,301 |
) |
|
$ |
(1,523,015 |
) |
|
$ |
(1,791,316 |
) |
|
$ |
(1,302,384 |
) |
|
$ |
(1,555,797 |
) |
|
$ |
(2,858,181 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per share, basic and diluted |
|
$ |
(0.00 |
) |
|
$ |
|
|
|
$ |
(0.07 |
) |
|
$ |
(0.01 |
) |
|
$ |
|
|
|
$ |
(0.17 |
) |
| Weighted average shares outstanding, basic and diluted |
|
|
109,459,182 |
|
|
|
|
|
|
|
24,564,538 |
|
|
|
109,459,182 |
|
|
|
|
|
|
|
17,291,813 |
|
The following table sets forth the effects of the adjustments
on affected items within the Company’s previously reported consolidated statements of cash flows for the six months ended
April 30, 2023:
| |
|
For
the six
months ended
April 30,
2023 |
|
|
Adjustments |
|
|
For
the six
months ended
April 30,
2023 |
|
| |
|
(As
Filed) |
|
|
|
|
|
|
(As
Restated) |
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(1,302,385 |
) |
|
|
(1,555,796 |
) |
|
$ |
(2,858,181 |
) |
| Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity
based compensation expense - stock |
|
|
— |
|
|
|
1,959,107 |
|
8 |
|
|
1,959,107 |
|
| Loss on change in
fair value of derivative liability |
|
|
— |
|
|
|
(713,136 |
) |
8 |
|
|
(713,136 |
) |
| Amortization of debt
discount related to derivatives |
|
|
— |
|
|
|
1,047,879 |
|
8 |
|
|
1,047,879 |
|
| Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Decrease (Increase)
in accounts receivable |
|
|
(453,772 |
) |
|
|
— |
|
|
|
(453,772 |
) |
| Increase (Decrease)
in accounts payable and accrued liabilities |
|
|
(52,701 |
) |
|
|
66,136 |
|
3,5 |
|
|
13,435 |
|
| Increase (Decrease)
in derivative liabilities |
|
|
340,713 |
|
|
|
(340,713 |
) |
7 |
|
|
— |
|
| Change in derivative
interest |
|
|
(5,969 |
) |
|
|
5,969 |
|
8 |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash used
in operating activities |
|
$ |
(1,474,114 |
) |
|
|
469,447 |
|
|
$ |
(1,004,667 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| Long
term investments |
|
|
(18,550,285 |
) |
|
|
18,550,285 |
|
9 |
|
|
— |
|
| Net cash used
in investing activities |
|
$ |
(18,550,285 |
) |
|
|
18,550,285 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from notes
payable |
|
|
518,500 |
|
|
|
1,020,510 |
|
10 |
|
|
1,539,010 |
|
| Additional
paid-in capital |
|
|
20,081,273 |
|
|
|
(20,081,273 |
) |
10 |
|
|
— |
|
| Net cash provided
by financing activities |
|
$ |
20,599,773 |
|
|
|
(19,060,763 |
) |
|
$ |
1,539,010 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net decrease in cash and cash equivalents |
|
|
575,374 |
|
|
|
(41,031 |
) |
|
|
534,343 |
|
| Cash and cash equivalents,
beginning of the year |
|
|
(32,453 |
) |
|
|
32,453 |
|
|
|
— |
|
| Cash and cash
equivalents, end of the year |
|
$ |
542,921 |
|
|
|
(8,578 |
) |
|
$ |
534,343 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental
disclosures for cash flow information: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash
paid during the year for interest |
|
$ |
— |
|
|
|
|
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Supplemental
disclosure of noncash financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
| Conversion
of convertible notes payable to shareholders’ equity |
|
$ |
— |
|
|
|
|
|
|
$ |
1,091,164 |
|
| Issuance
of common stock issued upon purchase of intangible assets |
|
$ |
— |
|
|
|
|
|
|
$ |
18,550,285 |
|
|