UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For
the quarterly period ended
For the transition period from ________ to ________
Commission
file number
(Exact name of small business issuer as specified in its charter)
| 7370 | ||||
State or other jurisdiction of incorporation or organization |
Primary Standard Industrial Classification Number |
IRS Employer Identification Number |
Tel:
+1
(Address and telephone number of principal executive offices)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
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 ☐
As of March 29, 2022 there were common shares issued and outstanding.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information included in this Quarterly Report on Form 10-Q and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation, and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time.
In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements. The Registrant is under no duty to update any of the forward-looking statements contained herein after the date of this Quarterly Report on Form 10-Q.
BOATIM INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
i
PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim consolidated financial statements of BOATIM Inc. (“the Company”, “we”, “us” or “our”), have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted principles have been condensed or omitted pursuant to such rules and regulations.
The interim consolidated financial statements should be read in conjunction with the company’s latest annual financial statements.
In the opinion of management, the financial statements contain all material adjustments, consisting only of normal adjustments considered necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
1
BOATIM INC.
CONSOLIDATED BALANCE SHEETS
| February 28, | August 31 | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| VAT receivable | ||||||||
| Total current assets | ||||||||
| Deposits | ||||||||
| Fixed assets, net | ||||||||
| Capitalized software costs | ||||||||
| Right of use asset – operating lease | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Related party loan | ||||||||
| Loan payable | ||||||||
| Convertible notes, net of unamortized discount and deferred financing fees | ||||||||
| Current portion - operating lease obligation | ||||||||
| Total current liabilities | ||||||||
| Non-current Liabilities: | ||||||||
| Operating lease obligation, net of current portion | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Common stock: authorized ; $ par value; and shares issued and outstanding as of February 28, 2022 and August 31, 2021, respectively | ||||||||
| Additional Paid in Capital | ||||||||
| Common stock issuable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
BOATIM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| For
Three Months Ended | For
Six Months Ended | |||||||||||||||
| February 28, | February 28, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Change in fair value of derivative liability | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (Loss) on foreign exchange | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before income tax provision | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss: | - | |||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ( | ) | ( | ) | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
BOATIM INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2022 AND February 28, 2021
(Unaudited)
| Common Stock | Common Stock | Additional | Common | Accumulated Other Comprehensive | ||||||||||||||||||||||||
| Number
of Shares | Par Value | Paid
in Capital | Stock Issuable | Income (Loss) | Accumulated Deficit | Totals | ||||||||||||||||||||||
| Balance - August 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance - November 30, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock based compensation – stock options | - | |||||||||||||||||||||||||||
| Stock based compensation – warrants | - | |||||||||||||||||||||||||||
| Commitment shares issued in connection with convertible debt | ||||||||||||||||||||||||||||
| Beneficial conversion feature in connection with convertible debt | - | |||||||||||||||||||||||||||
| Warrants issued in connection with convertible debt | - | |||||||||||||||||||||||||||
| Stock subscriptions payable | - | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance - February 28, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Common Stock | Common Stock | Additional | Common | Accumulated Other Comprehensive | ||||||||||||||||||||||||
| Number
of Shares | Par Value | Paid
in Capital | Stock Payable | Income (Loss) | Accumulated Deficit | Totals | ||||||||||||||||||||||
| Balance - August 31, 2020 | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| - | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance - November 30, 2020 | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||
| Conversion of notes payable to common stock | ||||||||||||||||||||||||||||
| Resolution of derivative liability | ||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance - February 28, 2021 | $ | $ | - | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements
4
BOATIM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For
the February 28, | ||||||||
| 2022 | 2021 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Shares issued for services | ||||||||
| Stock-based compensation | ||||||||
| Change in fair value of derivative liability | ||||||||
| Depreciation expense | ||||||||
| Amortization of debt discount and deferred financing fees | ||||||||
| Amortization of right of use assets | ||||||||
| Amortization of capitalized software costs | ||||||||
| Gain on foreign exchange | ( | ) | ||||||
| Change in operating assets and liabilities, | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| VAT receivable | ( | ) | ) | |||||
| Accounts payable and accrued expenses | ||||||||
| Operating lease obligation | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Fixed asset purchases | ( | ) | ||||||
| Right of use assets | ( | ) | ||||||
| Software development costs | ( | ) | ||||||
| NET CASH USED IN INVESTIING ACTIVITIES | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Proceeds from related party loan | ||||||||
| Proceeds from loan payable | ||||||||
| Proceeds from stock subscriptions | ||||||||
| Proceeds from convertible note | ||||||||
| Repayment of loan | ( | ) | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | ||||||||
| NET INCREASE/(DECREASE) IN CASH | ( | ) | ||||||
| CASH – BEGINNING OF PERIOD | ||||||||
| CASH – END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASHFLOW INFORMATION: | ||||||||
| Cash paid for: | ||||||||
| Income tax | $ | $ | ||||||
| Interest | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Debt discount from beneficial conversion feature from convertible notes | $ | |||||||
| Warrants from convertible | ||||||||
| Commitment shares from convertible debt | ||||||||
| Original issue discount | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
BOATIM INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
February 28, 2021
(Unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Boatim Inc.. (“we”, “our, “Boatim”, the “Company”) is a for profit corporation established under the corporate laws of the State of Nevada on August 15, 2014. Its fiscal year end is August 31.
Boatim, Inc. established Boatim Europe S.L. (“Boatim Europe”) as a private limited company pursuant to the laws of Spain on December 18, 2019, with the Company having indirect control of one hundred percent of the issued and outstanding membership interests of Boatim Europe. Boatim Europe commenced operations in February 2020 and is engaged in the business of providing software development, marketing, and selling services for Boatim Inc.
We acquired and further developed the Boatim software platform which is an online boat trading marketplace that combines data-driven technology and our digital marketing capabilities to offer a rolling subscription for service model of access to the platform for the extensive market of global boat dealers.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary. All intercompany accounts, balances and transactions have been eliminated in the consolidation as at February 28, 2022.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended February 28, 2022 are not necessarily indicative of the results that may be expected for the year ending August 31, 2022.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fixed Assets
Fixed
assets are stated at historical cost less accumulated depreciation. The historical cost of acquiring an item of fixed assets includes
the costs necessarily incurred to bring it to the condition and location necessary for its intended use. Costs associated with
repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful
lives of the assets, which are
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
6
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2022 and August 31, 2021.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accounts payable, convertible notes and notes payable. Fair values were assumed to approximate carrying values for these financial instruments due to their short term maturities.
Foreign Currency
Assets and liabilities of Boatim Europe are translated into U.S. dollars at the respective rates of exchange prevailing at the end of the reporting period. Income and expense accounts are translated at average exchange rates prevailing during the reporting period. Translation adjustments resulting from this process are recorded directly in equity as accumulated other comprehensive income (loss) (“AOCI”) and will be included as income or expense only upon sale or liquidation of the underlying entity. Boatim Europe considers its local currency (EURO) as its functional currency.
In accordance with ASC Topic 830-30, “Translation of Financial Statements”, monetary asset and liability accounts are translated into the Company’s reporting currency, the US dollar, using the closing exchange rate in effect at the balance sheet date, nonmonetary accounts are translated using historical exchange rates and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.
Translation of amounts from the local currency of Boatim Europe into US$ has been made at the following exchange rates:
February 28, 2022 | August 31, 2021 | |||||||
| Current EUR: US$ exchange rate | ||||||||
| Average EUR: US$ exchange rate | ||||||||
Capitalized Software Development Costs
Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other–Internal Use Software, in which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as incurred.
Costs
capitalized during the application development stage include external direct costs of materials and services consumed in developing
or obtaining internal-use software. During the six months ended February 28, 2022 and for the fiscal year ended to August 31,
2021, a total of $
7
Impairment of Long-Lived Assets
The
Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances
indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability
of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the
carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An
impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Long-lived
assets were evaluated for impairment and the Company recorded impairment loss on Capitalized software development costs of $
Leases
As of September 1, 2019, the Company adopted the provisions of “Accounting Standards Codification Topic 842 Leases (ASC 842)” using the modified retrospective basis for all agreements
The Company recognizes a right-of-use asset and lease liability for all financing and operating leases with terms greater than twelve months. The lease liability is measured based on the present value of the lease payments not yet paid. The right-of-use asset is measured based on the initial measurement of the lease liability adjusted for any direct costs incurred upon commencement of the lease. The right-of-use assets are amortized on a straight-line basis over the lease term, and are tested for impairment in a manner consistent with the other long-lived assets held by the Company.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on information available when the financial statements are prepared. Actual results could differ from those estimates.
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of February 28, 2022 and August 31, 2021 were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive:
| February 28, | August 31, | |||||||
| 2022 | 2021 | |||||||
| Stock warrants | ||||||||
| Convertible debt | ||||||||
| Stock options | ||||||||
| Total | ||||||||
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors and non-employees (effective September 1, 2019), the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.
8
Recent Accounting Pronouncements
On December 18, 2019, the FASB issued ASU 2019-12, which modifies ASC 740 to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users. This ASU was adopted by the Company on September 1, 2021. The Company evaluated and concluded that the adoption did not have a material impact on the Company’s financial position, results of operations or cash flows.
In May 2021, the FASB issued ASU 2021-04 in response EITF consensus. This ASU addresses how the issuer should account for modifications or exchanges of Freestanding Equity Classified Written Call Options. Freestanding written call options (such as warrants) are sometimes issued to enhance the marketability of a company’s debt or common stock offering. Some of these warrants are classified as equity in the issuer’s financial statements but are not accounted for as either stock compensation or derivatives. US GAAP does not address how the issuer should account for modifications of these instruments. The FASB has approved an EITF consensus to fill that void. Under the new guidance, if the modification does not change the instrument’s classification as equity, the company that issued the warrants accounts for the modification as an exchange of the original instrument for a new instrument. In general, if the fair value of the ‘new’ instrument is greater than the fair value of the ‘original’ instrument, the excess is recognized based on the substance of the transaction, as if the issuer had paid cash. The new rule is effective for fiscal years beginning after December 15, 2021 for both public and private companies. Transition is prospective. Early adoption is permitted, as discussed further below. The Company is evaluating whether this will have any impact of on its consolidated financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 – GOING CONCERN
The
accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. However, the Company had
Management anticipates that the Company will be dependent, for the near future, on borrowings from related party to fund operating expenses. In light of management’s efforts, there are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
NOTE 4 – RELATED PARTY TRANSACTIONS
During
the fiscal year ended August 31, 2021, Cayo Ventures GmbH (“Cayo”), a related party, advanced a total of $
On
June 1, 2020, the Company entered into services agreement with Mr. Wolfgang Tippner, as Chief Executive Officer. The agreement
calls for a sign-on bonus of $, payable within 6 months from the date of the agreement and a cash compensation for his services
of $
9
On
July 1, 2020, the Company entered into a service agreement with Mr. Patrick Burkert, as Chief Marketing Officer. The agreement
calls for a sign on bonus of 500,000 shares of restricted common stock, of which
On
January 1, 2021, the Company entered into a service agreement with Mr. Benjamin Salter, as Director and Chief Financial Officer.
The agreement calls for a sign on bonus of options for shares of common stock at a strike price of $
On
April 1, 2021,
On
March 19, 2021, the Company entered into a service agreement with Mr. Mario Beckles, as Director and Chief Financial Officer,
commencing on April 1, 2021. The agreement calls for cash compensation in the amount of $
On
June 22, 2021, the Company entered into an employment agreement with Mr. Joseph Johnson, as a member of the Board of Directors
and as Chief Executive Officer. The agreement provides for a base salary of $
10
NOTE 5 – LEASES
On February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The ASU introduces a new leasing model for both lessees and lessors. Topic 842 provides guidance in how to identify whether a lease arrangement exists. Management has evaluated its leasing arrangements and has classified these as operating leases. Additionally, the lease terms of each of our office leases are short term in nature, however, the Company elected to apply ASC Topic 842 to these leases, because we intend to renew each lease for terms longer than 12 months. As a result of the adoption of ASC Topic 842, the Company recognized a right-of-use asset and operating lease liabilities based on the present value of the minimum rental payments.
Operating Lease Obligations
On
August 1, 2019, the Company entered into an office lease for a six person office space located at Marina Port Vell Carrer de l’Escar,
26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €
On
April 20, 2020, the Company entered into an office lease for a six-person office space located at Marina Port Vell Carrer de l’Escar,
26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €
On
December 1, 2019, the Company entered into an office lease for a nine person office space located at Marina Port Vell Carrer de
l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €
On October 06, 2021, the Company entered into an office lease for a one-person office space located at 100 Bayview Circle, Suite 100, New Port Beach, CA 92660 with INDUSTRIOUS NPB 100 BAYVIEW CIRCLE LLC. The lease calls for rent payments of $579 in monthly payments. The lease begins October 07, 2021 is month to month with a six month permanency clause, of which management intends to renew after at least two years.
On
November 17, 2021, the Company entered into an office lease for a nine-person office space located at Marina Port Vell Carrer
de l’Escar, 20, ES 08039 Barcelona Spain with Monday by Urbania. The lease calls for rent payments of €
The
Company has recorded operating lease expense in the amount of $
11
Future minimum operating lease payments at February 22, 2022 consist of:
| 2022 | $ | 31,485 | ||
| 2023 | 63,549 | |||
| 2024 | 14,583 | |||
| Total minimum lease payments | 109,617 | |||
| Less: present value discount | (1,089 | ) | ||
| Present value of minimum lease payments | 108,527 | |||
| Current portion of operating lease obligation | 93,944 | |||
| Operating Lease obligation, less current portion | $ | 14,583 |
NOTE 6 – LOAN PAYABLE
On
February 11, 2021, the Company received a short-term loan from an unrelated third party in the amount of $
NOTE 7 – CONVERTIBLE NOTES
On
July 21, 2020, the Company issued convertible notes in the amount of $
On
September 22, 2020, the Board approved the issuance of up to $
Due to these provisions, the embedded conversion option of the notes issued under the September 22, 2020 issuances do not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging.
On
January 10, 2021 the holder of the note in the amount of $
On
January 10, 2021 the holder of the note in the amount of $
On
April 23, 2021 the holder of the note in the amount of $
On
June 7, 2021 and June 8, 2021, the Company issued convertible notes in the amount of $
12
On January 4, 2022, the Company received $ in exchange for a December 20, 2021 secured convertible note in the amount of $ from an unrelated third party, This note, was issued with a $ original issue discount, a $ one time interest charge and a $ charge for legal fees. The note matures 12 months after the issuance date and bears a % interest rate. The note is convertible at any time at a fixed price of $ or the finalized price in a Reg A offering and in the event of default notice a conversion price of $ per share. Due to these provisions, this convertible notes not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging. In addition the Company issued to the note holder common stock as commitment shares as well as warrants shares to purchase common stock at a exercise price of $ per share. The Company also recorded a discount totaling $ consisting of the fair value of the warrants($), the commitment shares($) and a beneficial conversion feature($).
On January 7, 2022, the Company received $ in exchange for a December 22, 2021 secured convertible note in the amount of $ from an unrelated third party, This note, was issued with a $ original issue discount, $3,333 one commission charge and a $ charge for legal fees. The note matures eight months from the date of issuance and bears a % interest rate. The note is convertible at any time at a fixed price of $ or the finalized price in a Reg A offering and in the event of default notice a conversion price of $ per share. Due to these provisions, the embedded conversion option does not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging. In addition the Company issued to the note holder 1,810,145 common stock as commitment shares as well as 724,058 warrants shares to purchase common stock at a exercise price of $ per share. The Company also recorded a discount totaling $ consisting of the fair value of the warrants($), the commitment shares($) and a beneficial conversion feature($).
A summary of value changes to the notes for the six months ended February 28, 2022 is as follows:
| Carrying value of Convertible Notes at August 31, 2021 | $ | |||
| New principal | ||||
| Total principal | ||||
| Less: conversion of principal | ||||
| Less: discount related to fair value of the beneficial conversion feature | ||||
| Less: discount related to original issue discount | ||||
| Less: deferred financing fees | ||||
| Add: amortization of discount and deferred financing fees | ||||
| Carrying value of Convertible Notes at February 28, 2022 | $ |
As
of February 28, 2022, the was a total unamortized discount remaining in the amount of $
Warrants
One
January 20, 2022, The Company entered in common stock purchase warrant agreement with an unrelated party to purchase up to
warrant shares with an exercise price of $ per share and valued at $. These warrants may also be exercised, in whole
or in part, at such time by means of a cashless exercise in which the holder shall be entitled to receive a number of warrant
shares equal to the VWAP on the trading day immediately preceding the date of the applicable Notice of exercise and the exercise
price of this warrant and the number of warrant shares that would be exercised by means of cash. The warrants expire
One January 20, 2022, The Company entered in common stock purchase warrant agreement with an unrelated party to purchase up to 1,750,000 warrant shares with an exercise price of $0.001 per share and valued at $317,641. These warrants may also be exercised, in whole or in part, at such time by means of a cashless exercise in which the holder shall be entitled to receive a number of warrant shares equal to the VWAP on the trading day immediately preceding the date of the applicable Notice of exercise and the exercise price of this warrant and the number of warrant shares that would be exercised by means of cash. The warrants expire January 20, 2023.
As
of February 28, 2022, the if converted number of common shares of these warrants totaled
13
NOTE 8 – COMMON STOCK
On October 26, 2021, the Company issued common shares to an unrelated third party vendor for marketing services valued at $ per share for a total $.
On November 12, 2021, the Company issued common shares to an unrelated third party vendor for marketing services valued at $ per share for a total $.
On January 4, 2022, the Company received $ in exchange for a December 20, 2021 secured convertible note in the amount of $ from an unrelated third party, As part of the note agreement, the Company is required to issue to the note holder common stock as commitment shares.
On January 7, 2022, the Company received $ in exchange for a December 22, 2021 secured convertible note in the amount of $ from an unrelated third party, As part of the note agreement, the Company is required to issue to the note holder common stock as commitment shares as well as warrants shares to purchase common stock at a exercise price of $ per share.
On
February 15, 2022, the Company filed a Reg 1A offering statement with the Securities and Exchange Commission (SEC) offering up
to
As of February 28, 2022, and August 31, 2020, a total of and shares of common stock were issued and outstanding, respectively.
Stock Options
During the six months ended February 28, 2022, the Company granted options for the purchase of the Company’s common stock to certain employees and consultants as consideration for services rendered. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options generally vest upon the one-year anniversary date of the grant and have a maximum term of fifteen months.
The following summarizes the stock option activity for the six months ended February 28, 2022:
Options Outstanding | Weighted-Average Exercise Price | ||||||||
| Balance as of August 31, 2021 | $ | ||||||||
| Grants | |||||||||
| Exercised | |||||||||
| Forfeited | |||||||||
| Balance as of February 28, 2022 | $ | ||||||||
The
total share-based compensation expense in connection with issuance of stock options recognized during the six months ended February
28, 2022 was $
| Expected term (years) | years | |||
| Expected stock price volatility | - | % | ||
| Weighted-average risk-free rate | - | % | ||
| Expected dividend |
14
Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option. The expected lives of the stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term.
The following summarizes certain information about stock options vested and expected to vest as of February 28, 2022:
Number of Options | Weighted-Average Remaining Contractual Life (in Years) | Weighted-Average Exercise Price | ||||||||||
| Outstanding | $ | |||||||||||
| Exercisable | $ | |||||||||||
| Expected to vest | $ | |||||||||||
Restricted Stock Awards
The following summarizes the restricted stock activity for the six months ended February 28, 2022:
| Weighted-Average | |||||||||
| Shares | Exercise Price | ||||||||
| Balance as of August 31, 2021 | $ | ||||||||
| Shares of restricted stock granted | |||||||||
| Exercised | |||||||||
| Cancelled | |||||||||
| Balance as of February 28, 2022 | $ | ||||||||
| February 28, | August 31, | |||||||
| Number of Restricted Stock Awards | 2022 | 2021 | ||||||
| Vested | ||||||||
| Non-vested | ||||||||
As of February 28, 2022 and August 31, 2021, there was unrecognized compensation cost of $, related to non-vested share-based compensation, respectively, which is expected to be recognized over the next year. In addition, none of the restricted share awards presented above has been issued or outstanding as of February 28, 2022.
Warrants
One
January 20, 2022, The Company entered into two separate common stock purchase warrant agreement with an two unrelated third parties
to purchase up to warrant shares each with an exercise price of $ per share. The warrants totaling
15
NOTE 10 – SUBSEQUENT EVENTS
On
March 23, 2022, a third party investor exercise their warrants and the company received $
On
March 21, 2022, the Company entered into an employment agreement with Ms. Taylor Gripentrog, as an Assistant Director of Brand
Development. The agreement provides for a base salary of $
16
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward looking statement notice
Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Financial information contained in this quarterly report and in our unaudited interim financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
General
Boatim Inc.. (“we”, “our, “Boatim”, the “Company”) is a for profit corporation established under the corporate laws of the State of Nevada on August 15, 2014. Its fiscal year end is August 31.
Boatim, Inc. established Boatim Europe S.L. (“Boatim Europe”) as a private limited company pursuant to the laws of Spain on December 18, 2019, with the Company having indirect control of one hundred percent of the issued and outstanding membership interests of Boatim Europe. Boatim Europe commenced operations in February 2020 and is engaged in the business of providing software development, marketing, and selling services for Boatim Inc.
All membership interests of Boatim Europe are currently held in trust by the Company´s CEO for practical reasons and only until the formal transfer into the name of Company has been completed according to the requirements of applicable Spanish law. In December 2020, the Company finalized the process of collecting and submitting all required paperwork to the Spanish authorities to enter Boatim Inc. as direct owner on public records in Spain, making Boatim Europe a wholly owned subsidiary of the Company.
Originally in the business of producing and distributing furniture, the business was changed to online food blogging as a promotion channel for restaurants, bars and fine dining. Subsequently, following the acquisition of the Boatim software platform, the Company expanded into the boating industry by further developing the software platform. The Boatim software platform is an online boat trading marketplace, combining data-driven technology and our digital marketing capabilities to offer a rolling subscription for service model of access to the platform for the extensive market of global boat dealers.
Results of operations
The following comparative analysis on results of operations was based primarily on the comparative financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report.
Results of Operations for the Three Months Ended February 28, 2022 and February 28, 2021
Operating expenses
Operating expenses comprised of general and administrative expenses were $1,082,427 for the three months ended February 28, 2022, compared to $1,330,596 for the three months ended February 28, 2021, a decrease of $248,169. The decrease is due to a reduction in selling and marketing staff in the European office because of restructuring.
17
Net Loss
Net loss for the three months ended February 28, 2022 was $1,206,180 compared to $1,506,244 for the three months ended February 28, 2021, an decrease of $300,064. As well as the reasons discussed above, Other income (expenses) comprised interest expense of $99,233, a loss on foreign exchange of $2,294.
Results of Operations for the Six Months Ended February 28, 2022 and February 28, 2021
Operating expenses
Operating expenses comprised of general and administrative expenses were $2,518,113 for the six months ended February 28, 2022, compared to $1,609,124 general and administrative expense for the six months ended February 28, 2021, an increase of $908,989 in general and administrative expenses. The increase is due primarily to stock based compensation associated with our convertible notes totaling $883,841.
Net Loss
Net loss for the six months ended February 28, 2022 was $2,638,351 compared to $2,445,563 for the six months ended February 28, 2021. As well as the reasons discussed above, Other income (expenses) comprised interest expense of 99,218 and a gain of $1,205.
Liquidity and capital resources
At February 28, 2022, we had $186,843 in cash and there were outstanding liabilities of $3,115,271 (cash of $69,827 and liabilities of $2,489,789 on August 31, 2021, respectively). The stockholders’ deficit was $2,298,290 as of February 28, 2022 and $1,804,402 as of August 31, 2021.
There was $501,137 cash used by operations in the six months ended February 28, 2022 ($875,064 net cash used in operating activities during the six months ended February 28, 2021), $112,716 used in cash for investing activities for the six months ended February 28, 2022 ($217,077 used in cash for investing activities during the six month period ended February 28, 2021) and $719,047 cash provided through financing activities during the six months ended February 28, 2022 ($1,058,643 up to February 28, 2021). This resulted in $117,015 changes in net cash during the six months ended February 28, 2022 and $33,498 change in net cash during the six months ended February 28, 2021, respectively.
Cayo Ventures GmbH has verbally agreed to continue to loan the company funds for operating expenses in a limited scenario, but it has no legal obligation to do so.
There is limited historical financial information about us upon which to base an evaluation of our performance. We have meaningfully commenced business operations based upon the amount of revenue we have been able to generate. We are in start-up stage of operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Off-balance sheet arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable as we are currently considered a smaller reporting company.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our CEO and CFO, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this document. Based on the evaluation, they have concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures were not effective as of February 28, 2022 due to the material weaknesses as disclosed in the Company’s Annual Report on Form 10-K filed with the SEC.
Limitations of the Effectiveness of Disclosure Controls and Internal Controls
Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.
The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting subsequent to February 28, 2022, which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
19
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
THE EFFECTS OF THE RECENT COVID-19 CORONAVIRUS PANDEMIC ARE NOT IMMEDIATELY KNOWN, BUT MAY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, LIQUIDITY, AND CASH FLOW.
Presently, the impact of COVID-19 has not shown any imminent adverse effects on our business. This notwithstanding, it is still unknown and difficult to predict what adverse effects, if any, COVID-19 can have on our business, or against the various aspects of same, or how COVID-19 will continue to effect the world as the virus case numbers rise and fall.
As of the date of this Annual Report, COVID-19 coronavirus has been declared a pandemic by the World Health Organization, has been declared a National Emergency by the United States Government. COVID-19 coronavirus caused significant volatility in global markets. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain countries, states and municipalities have enacted, quarantining and “shelter-in-place” regulations which severely limit the ability of people to move and travel and require non-essential businesses and organizations to close. While some places have lessened their “shelter-in-place” restrictions and travel bans, as they are removed there is no certainty that an outbreak will not occur and additional restrictions imposed again in response.
It is unclear how such restrictions, which will contribute to a general slowdown in the global economy, will affect our business, results of operations, financial condition and our future strategic plans. Shelter-in-place and essential-only travel regulations could negatively impact us. The current status of COVID-19 coronavirus closures and restrictions could negatively impact our ability to receive funding from our existing capital sources as each business is and has been affected uniquely.
If any of our employees, consultant, customers, or visitors were to become infected we could be forced to close our operations temporarily as a preventative measure to prevent the risk of spread which could also negatively impact our ability to receive funding from our existing capital sources as each business is and has been affected uniquely
In addition, our headquarters are located in Miami, Florida which experienced restrictions on individuals and business shutdowns as the result of COVID-19. These COVID-19 closures did not have an effect on our operations.
GENERAL SECURITIES MARKET UNCERTAINTIES RESULTING FROM THE COVID-19 PANDEMIC.
Since the outset of the pandemic the United States and worldwide national securities markets have undergone unprecedented stress due to the uncertainties of the pandemic and the resulting reactions and outcomes of government, business and the general population. These uncertainties have resulted in declines in all market sectors, increases in volumes due to flight to safety and governmental actions to support the markets. As a result, until the pandemic has stabilized, the markets may not be available to the Company for purposes of raising required capital. Should we not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible we may be unable to sustain the necessary capital to pursue our strategic plan and may have to reduce the planned future growth and/or scope of our operations.
20
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
None
21
ITEM 6. EXHIBITS
The following exhibits are included as part of this report by reference:
| 01.INS* | XBRL Instance Document | Filed herewith. | ||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | Filed herewith. | ||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | ||
| 101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | Filed herewith. | ||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. | ||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. |
| * | Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Boatim Inc. | ||
| Date: May 5, 2022 | By: | /s/ Joseph Johnson |
| Joseph Johnson | ||
| Chief Executive Officer(Principal Executive Officer) | ||
| Date: May 5, 2022 | By: | /s/ Mario Beckles |
| Mario Beckles | ||
| Chief Financial Officer(Principal Financial and Principal Accounting Officer) |
23
EXHIBIT 31.1
CERTIFICATION
I, Jospeh Johnson, certify that:
| 1. | I have reviewed this report on Form 10-Q. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 5, 2022 | By: | /s/ Joseph Johnson |
| Joseph Johnson | ||
| Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Mari Beckles, certify that:
| 1. | I have reviewed this report on Form 10-Q. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 5, 2022 | By: | /s/ Mario Beckles |
| Mario Beckles | ||
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Boatim Inc. (the “Company”) on Form 10-Q for the period ending February 28, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joeseph Johnson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification.
| Date. May 5, 2022 | By: | /s/ Joseph Johnson |
| Joseph Johnson | ||
| Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Boatim Inc. (the “Company”) on Form 10-Q for the period ending February 28, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mario Beckles, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
| (3) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (4) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this certification.
| Date: May 5, 2022 | By: | /s/ Mario Beckles |
| Mario Beckles | ||
| Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Feb. 28, 2022 |
Aug. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares par value | $ 0.001 | $ 0.001 |
| Common stock, shares issued | 58,271,539 | 51,780,838 |
| Common stock, shares outstanding | 58,271,539 | 51,780,838 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
Feb. 28, 2022 |
Feb. 28, 2021 |
|
| Income Statement [Abstract] | ||||
| Revenue | $ (0) | $ 717 | $ (0) | $ 717 |
| Operating Expenses: | ||||
| General and administrative | 1,082,427 | 1,330,596 | 2,518,113 | 1,609,124 |
| Total Operating Expenses | 1,082,427 | 1,330,596 | 2,518,113 | 1,609,124 |
| Loss from operations | (1,082,427) | (1,329,879) | (2,518,113) | (1,608,407) |
| Other Income (Expense) | ||||
| Change in fair value of derivative liability | 89,697 | (191,208) | ||
| Interest expense | (99,233) | (260,565) | (99,218) | (645,948) |
| Gain (Loss) on foreign exchange | (2,294) | (5,497) | 1,205 | |
| Total other income (expense) | (101,527) | (176,365) | (98,013) | (837,156) |
| Net loss before income tax provision | (1,183,954) | (1,506,244) | (2,616,125) | (2,445,563) |
| Provision for income tax | ||||
| Net Loss | (1,183,954) | (1,506,244) | (2,616,125) | (2,445,563) |
| Other comprehensive loss: | ||||
| Foreign currency translation adjustment | 11,613 | 39,820 | 11,820 | 24,006 |
| Total comprehensive loss | $ (1,172,341) | $ (1,466,424) | $ (2,604,306) | $ (2,421,557) |
| Net loss per common share | ||||
| Basic and diluted | $ (0.02) | $ (0.03) | $ (0.04) | $ (0.05) |
| Weighted average common shares outstanding | ||||
| Basic and diluted | 58,271,539 | 51,645,800 | 58,271,539 | 51,645,800 |
ORGANIZATION AND NATURE OF BUSINESS |
6 Months Ended |
|---|---|
Feb. 28, 2022 | |
| Accounting Policies [Abstract] | |
| ORGANIZATION AND NATURE OF BUSINESS | NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Boatim Inc.. (“we”, “our, “Boatim”, the “Company”) is a for profit corporation established under the corporate laws of the State of Nevada on August 15, 2014. Its fiscal year end is August 31.
Boatim, Inc. established Boatim Europe S.L. (“Boatim Europe”) as a private limited company pursuant to the laws of Spain on December 18, 2019, with the Company having indirect control of one hundred percent of the issued and outstanding membership interests of Boatim Europe. Boatim Europe commenced operations in February 2020 and is engaged in the business of providing software development, marketing, and selling services for Boatim Inc.
We acquired and further developed the Boatim software platform which is an online boat trading marketplace that combines data-driven technology and our digital marketing capabilities to offer a rolling subscription for service model of access to the platform for the extensive market of global boat dealers.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary. All intercompany accounts, balances and transactions have been eliminated in the consolidation as at February 28, 2022.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended February 28, 2022 are not necessarily indicative of the results that may be expected for the year ending August 31, 2022.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fixed Assets
Fixed assets are stated at historical cost less accumulated depreciation. The historical cost of acquiring an item of fixed assets includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. Costs associated with repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 years.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2022 and August 31, 2021.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accounts payable, convertible notes and notes payable. Fair values were assumed to approximate carrying values for these financial instruments due to their short term maturities.
Foreign Currency
Assets and liabilities of Boatim Europe are translated into U.S. dollars at the respective rates of exchange prevailing at the end of the reporting period. Income and expense accounts are translated at average exchange rates prevailing during the reporting period. Translation adjustments resulting from this process are recorded directly in equity as accumulated other comprehensive income (loss) (“AOCI”) and will be included as income or expense only upon sale or liquidation of the underlying entity. Boatim Europe considers its local currency (EURO) as its functional currency.
In accordance with ASC Topic 830-30, “Translation of Financial Statements”, monetary asset and liability accounts are translated into the Company’s reporting currency, the US dollar, using the closing exchange rate in effect at the balance sheet date, nonmonetary accounts are translated using historical exchange rates and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.
Translation of amounts from the local currency of Boatim Europe into US$ has been made at the following exchange rates:
Capitalized Software Development Costs
Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other–Internal Use Software, in which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as incurred.
Costs capitalized during the application development stage include external direct costs of materials and services consumed in developing or obtaining internal-use software. During the six months ended February 28, 2022 and for the fiscal year ended to August 31, 2021, a total of $0 and $321,562 in software development costs has been incurred, respectively.
Impairment of Long-Lived Assets
The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Long-lived assets were evaluated for impairment and the Company recorded impairment loss on Capitalized software development costs of $0 during the six months ended February 28, 2022 and 2021, respectively.
Leases
As of September 1, 2019, the Company adopted the provisions of “Accounting Standards Codification Topic 842 Leases (ASC 842)” using the modified retrospective basis for all agreements
The Company recognizes a right-of-use asset and lease liability for all financing and operating leases with terms greater than twelve months. The lease liability is measured based on the present value of the lease payments not yet paid. The right-of-use asset is measured based on the initial measurement of the lease liability adjusted for any direct costs incurred upon commencement of the lease. The right-of-use assets are amortized on a straight-line basis over the lease term, and are tested for impairment in a manner consistent with the other long-lived assets held by the Company.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on information available when the financial statements are prepared. Actual results could differ from those estimates.
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of February 28, 2022 and August 31, 2021 were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive:
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors and non-employees (effective September 1, 2019), the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.
Recent Accounting Pronouncements
On December 18, 2019, the FASB issued ASU 2019-12, which modifies ASC 740 to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users. This ASU was adopted by the Company on September 1, 2021. The Company evaluated and concluded that the adoption did not have a material impact on the Company’s financial position, results of operations or cash flows.
In May 2021, the FASB issued ASU 2021-04 in response EITF consensus. This ASU addresses how the issuer should account for modifications or exchanges of Freestanding Equity Classified Written Call Options. Freestanding written call options (such as warrants) are sometimes issued to enhance the marketability of a company’s debt or common stock offering. Some of these warrants are classified as equity in the issuer’s financial statements but are not accounted for as either stock compensation or derivatives. US GAAP does not address how the issuer should account for modifications of these instruments. The FASB has approved an EITF consensus to fill that void. Under the new guidance, if the modification does not change the instrument’s classification as equity, the company that issued the warrants accounts for the modification as an exchange of the original instrument for a new instrument. In general, if the fair value of the ‘new’ instrument is greater than the fair value of the ‘original’ instrument, the excess is recognized based on the substance of the transaction, as if the issuer had paid cash. The new rule is effective for fiscal years beginning after December 15, 2021 for both public and private companies. Transition is prospective. Early adoption is permitted, as discussed further below. The Company is evaluating whether this will have any impact of on its consolidated financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.
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GOING CONCERN |
6 Months Ended |
|---|---|
Feb. 28, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GOING CONCERN | NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. However, the Company had no revenues for the six months ended February 28, 2022 and incurred recurring losses. In addition, the Company had a negative working capital as of February 28, 2022 and has not completed its efforts to establish a stable source of revenues sufficient to cover operating costs over an extended period of time. Therefore, there is substantial doubt about the Company’s ability to continue as a going concern.
Management anticipates that the Company will be dependent, for the near future, on borrowings from related party to fund operating expenses. In light of management’s efforts, there are no assurances that the Company will be successful in any of its endeavors or become financially viable and continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
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RELATED PARTY TRANSACTIONS |
6 Months Ended |
|---|---|
Feb. 28, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 4 – RELATED PARTY TRANSACTIONS
During the fiscal year ended August 31, 2021, Cayo Ventures GmbH (“Cayo”), a related party, advanced a total of $1,216,420 to the Company. Cayo is owned by the former majority shareholder and former officer, Mr. Yves Toelderer. On June 07, 2021 and June 08, 2021, the Company issued convertible notes in the amount of $696,000 and $441,000 to two unrelated parties, in exchange for their assumption of related party loans owed to Cayo for the same amounts. There was no gain or loss on extinguishment recorded on the old Cayo Venture loan. During the six months ended February 22, 2022 and 2021, Cayo Ventures advanced the Company a total of $258,371 and $810,557, respectively. As of February 22, 2022 and August 31, 2021, the Company owed a total of $685,822 and 427,451, respectively, to Cayo, which includes $2,833 owed to Yves Toelderer. These loans are unsecured, non-interest bearing and due on demand.
On June 1, 2020, the Company entered into services agreement with Mr. Wolfgang Tippner, as Chief Executive Officer. The agreement calls for a sign-on bonus of $, payable within 6 months from the date of the agreement and a cash compensation for his services of $8,000 per month. During the six months ended February 22, 2022 and August 31, 2020, a total of $0 has been paid to Mr. Tippner, respectively. As of February 22, 2022 and August 31, 2021, $120,000 in accrued compensation remains outstanding.
On July 1, 2020, the Company entered into a service agreement with Mr. Patrick Burkert, as Chief Marketing Officer. The agreement calls for a sign on bonus of 500,000 shares of restricted common stock, of which 50,000 shares are due within two weeks of the date of the agreement, 200,000 shares after 6 months, and the remaining shares after 12 months. He will also receive a base salary of €144,000 per year. In addition, Mr. Burkert is eligible to receive a performance bonus equal to 50% of his base salary, based upon targets set by the board of directors of the Company. None of the bonus has been earned to date. Mr. Patrick Burkert resigned as a member of the Board of Directors on February 12, 2021. During the six months ended February 22, 2022 and 2021, a total of $0 and $38,794, respectively, has been paid to Mr. Burkert in cash compensation. As of February 22, 2021 and August 31, 2021, $0 in accrued cash compensation remains outstanding.
On January 1, 2021, the Company entered into a service agreement with Mr. Benjamin Salter, as Director and Chief Financial Officer. The agreement calls for a sign on bonus of options for shares of common stock at a strike price of $0.10 per share. See Note 10. The options must be exercised within 15 months from the date of the agreement and can be executed no earlier as follows: 50,000 within two weeks of the date of the agreement, 200,000 shares after 6 months, and the remaining shares after 12 months. The agreement calls for a base salary of Swiss francs (CHF) 150,000 per year, increasing to CHF 180,000, payable in increments of CHF 15,000 per month from April 1, 2021 onward. In addition, Mr. Salter is eligible to receive a performance bonus equal to 50% of his base salary, based upon targets set by the board of directors of the Company. During the six months ended February 22, 2022 a total of $43,992 has been paid to Mr. Salter in cash compensation. As of February 22, 2022 and August 31, 2021, $87,889 and $78,679 in accrued cash compensation remains outstanding, respectively. As of August 31, 2021, there was $0 earned or accrued for a performance-based bonus. Mr. Salter resigned as a member of the Board of Directors and as CFO on March 19, 2021 but continues with the Company heading business development and operations in Europe.
On April 1, 2021, the Company entered into an independent contractor agreement with Mr. Salter, as Head of Operations. The agreement calls for a monthly payment of CHF 14,000 per month with CHF 8,000 to be paid in cash and the balance of $6,000 to be deferred on a monthly basis up to an amount not exceeding CHF 70,000 with payment terms to be decided by the Company. In addition, Mr. Salter is to receive options for shares of common stock each month at a strike price of $0.10 per share with a term of 15 months. The Company agreed to also make a cash payment to Mr. Salter on exercise of his options of $2,500. During the year ended August 31, 2021, the Company recognized $ of stock-based compensation expense for the options granted under this agreement. On January 1, 2022, Mr. Salter resigned as head of business development and operations in Europe. During the six months ended February 28, 2022 a total of $26,480 in cash compensation was paid to Mr. Salter under this agreement, and $23,558 of stock options were granted.
On March 19, 2021, the Company entered into a service agreement with Mr. Mario Beckles, as Director and Chief Financial Officer, commencing on April 1, 2021. The agreement calls for cash compensation in the amount of $3,000 per month to be paid monthly. During the six months ended February 28, 2022 a total of $18,000 has been paid to Mr. Beckles in cash compensation. As of February 28, 2022 and August 31, 2021, $4,500 and $4,500 unpaid cash compensation is outstanding, respectively.
On June 22, 2021, the Company entered into an employment agreement with Mr. Joseph Johnson, as a member of the Board of Directors and as Chief Executive Officer. The agreement provides for a base salary of $250,000 per year, subject to an inflationary increase using the US Consumer Price Index. The agreement also provides for an annual incentive bonus equal to 200% of his base salary and a sign on bonus of shares of unrestricted common stock which will be fully vested with a service period of six (6) months from the date of the agreement. In addition, Mr. Johnson is eligible to receive a performance bonus equal to 1,000,000 fully vested shares of common stock for each net liquid $1,000,000 in equity raised by the Company during his first six (6) months of tenure as CEO, up to a maximum of 5,000,000 shares. During the six months ended February 28, 2022 a total of $114,965 was earned and $10,800 was paid to Mr. Johnson and $270,000 in stock based compensation has been earned but not issued to Mr. Johnson to date. As of February 28, 2022, there was $0 earned or accrued for the incentive-based bonus. As of February 28, 2022 and August 31, 2021, $104,165 and $20,833 unpaid cash compensation is outstanding, respectively. As of February 28, 2022, Mr. Johnson is owed $30,103 in Company related expenses. This loan has no maturity and is non interest bearing.
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LEASES |
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Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | NOTE 5 – LEASES
On February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The ASU introduces a new leasing model for both lessees and lessors. Topic 842 provides guidance in how to identify whether a lease arrangement exists. Management has evaluated its leasing arrangements and has classified these as operating leases. Additionally, the lease terms of each of our office leases are short term in nature, however, the Company elected to apply ASC Topic 842 to these leases, because we intend to renew each lease for terms longer than 12 months. As a result of the adoption of ASC Topic 842, the Company recognized a right-of-use asset and operating lease liabilities based on the present value of the minimum rental payments.
Operating Lease Obligations
On August 1, 2019, the Company entered into an office lease for a six person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €2,340 plus VAT in monthly payments. The lease begins August 01, 2019, is month to month with a six month permanency clause, of which management intends to renew. On April 30, 2021, the Company terminated this six person office lease and it was not renewed. As a result of the early termination of this lease, the Company wrote off $6,842 in remaining operating lease obligation and right of use asset on April 30, 2021, in accordance with ASC Topic 842.
On April 20, 2020, the Company entered into an office lease for a six-person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €2,550 plus VAT in monthly payments. The lease begins April 20, 2020 is month to month with a six month permanency clause, of which management intends to renew. On April 30, 2021, the Company terminated this six-person office lease and it was not renewed. As a result of the early termination of this lease, the Company wrote off $41,859 in remaining operating lease obligation on April 30, 2021, in accordance with ASC Topic 842.
On December 1, 2019, the Company entered into an office lease for a nine person office space located at Marina Port Vell Carrer de l’Escar, 26, 08039 Barcelona Spain with OneCoWork. The lease calls for rent payments of €3,120 plus VAT in monthly payments. The lease begins December 1, 2019, is month to month with a six month permanency clause, of which management intends to renew. On April 30, 2021, the Company ended this nine person office lease and entered into an 8 person lease contract on May 1, 2021. As a result of the early termination of this lease, the Company wrote off $27,318 in remaining operating lease obligation on April 30, 2021, in accordance with ASC Topic 842. This new lease calls for rent payments of €1,800 plus VAT in monthly payments. In addition, the lease also includes the use of a flexible work desk for an additional €150 plus VAT. The lease begins May 1, 2021, is month to month with no permanency clause, of which management intends to renew for 24 months. Management has evaluated this new leasing arrangement and has classified this as an operating lease and has accounted for it as a separate new lease contract due to the changes that were noted in this lease. The Company has elected to apply ASC Topic 842 to this lease, because we intend to renew this lease for a term longer than 12 months. As a result of the adoption of ASC Topic 842, the Company has recognized a right-of-use asset of $68,397 and operating lease liability of $68,397 on this lease. On November 07, 2021, the Company terminated this eight-person office lease and it was not renewed. As a result of the early termination of this lease, the Company wrote off $157,820 in remaining operating lease obligation on December 01, 2021, in accordance with “ASC Topic 842”.
On October 06, 2021, the Company entered into an office lease for a one-person office space located at 100 Bayview Circle, Suite 100, New Port Beach, CA 92660 with INDUSTRIOUS NPB 100 BAYVIEW CIRCLE LLC. The lease calls for rent payments of $579 in monthly payments. The lease begins October 07, 2021 is month to month with a six month permanency clause, of which management intends to renew after at least two years.
On November 17, 2021, the Company entered into an office lease for a nine-person office space located at Marina Port Vell Carrer de l’Escar, 20, ES 08039 Barcelona Spain with Monday by Urbania. The lease calls for rent payments of €3,447 plus VAT in monthly payments. The lease begins December 01, 2021 is month to month with a six month permanency clause, of which management intends to renew after at least two years.
The Company has recorded operating lease expense in the amount of $13,748 and $29,307 during the six months ended February 28, 2022 and February 29, 2021, respectively As of February 28, 2022, the Company had $124,510 ($55,743, August 31, 2021) in Right of Use Asset and $124,510 (55,743, August 31, 2021) Operating lease liability. As of February 28, 2022, the discount rate for these leases is 2.23% and the weighted average remaining term is months. Future minimum operating lease payments at February 22, 2022 consist of:
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LOAN PAYABLE |
6 Months Ended |
|---|---|
Feb. 28, 2022 | |
| Receivables [Abstract] | |
| LOAN PAYABLE | NOTE 6 – LOAN PAYABLE
On February 11, 2021, the Company received a short-term loan from an unrelated third party in the amount of $20,000. The loan is unsecured, has no maturity date and is non-interest bearing. On August 28, 2020, this loan was assigned to an unrelated third party for the full amount of the loan. The loan is also unsecured, has not maturity and is non-interest. As of February 28, 2022 and August 31, 2021, $20,000 remains outstanding.
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CONVERTIBLE NOTES |
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Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE NOTES | NOTE 7 – CONVERTIBLE NOTES
On July 21, 2020, the Company issued convertible notes in the amount of $500,000 and $560,000 to two unrelated parties, in exchange for their assumption of the December 8, 2018 note and related party loans owed to Cayo for the same amounts. (See Note 4). The notes do not bear interest and matured on January 22, 2021. The first note in the amount of $500,000 is convertible into common shares at the rate equivalent to 70% of the Company’s 30-day average stock price prior to conversion. The second note in the amount of $560,000 is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion.
On September 22, 2020, the Board approved the issuance of up to $5,000,000 in new convertible notes, in multiple tranches, convertible at maturity into common shares. During the second, third and fourth fiscal quarters ended August 31, 2021 the Company has received tranches of $62,500, $45,000, $60,000, $110,000, $130,000, $83,000 and $48,100, respectively from unrelated parties under this facility. The note in the amount of $ matures on March 31, 2021 and is convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion. The note in the amount of $ matures on June 22, 2021, the note in the amount of $ matures on July 22, 2021, the note in the amount of $ matures on August 22, 2021, the note in the amount of $ matures on September 22, 2021, the note in the amount of $ matures on October 1, 2021 and the note in the amount of $ matures on October 1, 2021; these notes are convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion but no less than $ value per share of common stock.
Due to these provisions, the embedded conversion option of the notes issued under the September 22, 2020 issuances do not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging.
On January 10, 2021 the holder of the note in the amount of $500,000 converted $500,000 of its note into shares of common stock and the unamortized discount at the date of conversion of $27,838 was written off to interest expense.
On January 10, 2021 the holder of the note in the amount of $560,000 converted $560,000 of its note into shares of common stock and the unamortized discount at the date of conversion of $22,439 was written off to interest expense.
On April 23, 2021 the holder of the note in the amount of $62,500 converted $62,500 of its note into shares of common stock.
On June 7, 2021 and June 8, 2021, the Company issued convertible notes in the amount of $696,000 and $441,000 to two unrelated parties, in exchange for their assumption of related party loans owed to Cayo for the same amounts. These notes are convertible into common stock at the rate equivalent to 80% of the Company’s 30-day average stock price prior to conversion but no less than $ value per share of common stock. Due to these provisions, the embedded conversion option does not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging.
On January 4, 2022, the Company received $ in exchange for a December 20, 2021 secured convertible note in the amount of $ from an unrelated third party, This note, was issued with a $ original issue discount, a $ one time interest charge and a $ charge for legal fees. The note matures 12 months after the issuance date and bears a % interest rate. The note is convertible at any time at a fixed price of $ or the finalized price in a Reg A offering and in the event of default notice a conversion price of $ per share. Due to these provisions, this convertible notes not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging. In addition the Company issued to the note holder common stock as commitment shares as well as warrants shares to purchase common stock at a exercise price of $ per share. The Company also recorded a discount totaling $ consisting of the fair value of the warrants($), the commitment shares($) and a beneficial conversion feature($).
On January 7, 2022, the Company received $ in exchange for a December 22, 2021 secured convertible note in the amount of $ from an unrelated third party, This note, was issued with a $ original issue discount, $3,333 one commission charge and a $ charge for legal fees. The note matures eight months from the date of issuance and bears a % interest rate. The note is convertible at any time at a fixed price of $ or the finalized price in a Reg A offering and in the event of default notice a conversion price of $ per share. Due to these provisions, the embedded conversion option does not qualify for derivative accounting under ASC 815-15, Derivatives and Hedging. In addition the Company issued to the note holder 1,810,145 common stock as commitment shares as well as 724,058 warrants shares to purchase common stock at a exercise price of $ per share. The Company also recorded a discount totaling $ consisting of the fair value of the warrants($), the commitment shares($) and a beneficial conversion feature($).
A summary of value changes to the notes for the six months ended February 28, 2022 is as follows:
As of February 28, 2022, the was a total unamortized discount remaining in the amount of $281,672 with a remaining life of 470 days or 16 months. As of February 28, 2022, the if converted price on each convertible note was $0.13 to $0.17 and the if converted number of shares totaled common shares.
Warrants
One January 20, 2022, The Company entered in common stock purchase warrant agreement with an unrelated party to purchase up to warrant shares with an exercise price of $ per share and valued at $. These warrants may also be exercised, in whole or in part, at such time by means of a cashless exercise in which the holder shall be entitled to receive a number of warrant shares equal to the VWAP on the trading day immediately preceding the date of the applicable Notice of exercise and the exercise price of this warrant and the number of warrant shares that would be exercised by means of cash. The warrants expire January 20, 2023.
One January 20, 2022, The Company entered in common stock purchase warrant agreement with an unrelated party to purchase up to 1,750,000 warrant shares with an exercise price of $0.001 per share and valued at $317,641. These warrants may also be exercised, in whole or in part, at such time by means of a cashless exercise in which the holder shall be entitled to receive a number of warrant shares equal to the VWAP on the trading day immediately preceding the date of the applicable Notice of exercise and the exercise price of this warrant and the number of warrant shares that would be exercised by means of cash. The warrants expire January 20, 2023.
As of February 28, 2022, the if converted number of common shares of these warrants totaled 2,750,000 shares of common stock.
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COMMON STOCK |
6 Months Ended |
|---|---|
Feb. 28, 2022 | |
| Equity [Abstract] | |
| COMMON STOCK | NOTE 8 – COMMON STOCK
On October 26, 2021, the Company issued common shares to an unrelated third party vendor for marketing services valued at $ per share for a total $.
On November 12, 2021, the Company issued common shares to an unrelated third party vendor for marketing services valued at $ per share for a total $.
On January 4, 2022, the Company received $ in exchange for a December 20, 2021 secured convertible note in the amount of $ from an unrelated third party, As part of the note agreement, the Company is required to issue to the note holder common stock as commitment shares.
On January 7, 2022, the Company received $ in exchange for a December 22, 2021 secured convertible note in the amount of $ from an unrelated third party, As part of the note agreement, the Company is required to issue to the note holder common stock as commitment shares as well as warrants shares to purchase common stock at a exercise price of $ per share.
On February 15, 2022, the Company filed a Reg 1A offering statement with the Securities and Exchange Commission (SEC) offering up to 41,666,667 of common stock to investors at an overing price of $ per share. During the period ending February 28, 2022, the company received a total of $100,010 in common stock subscriptions for the aforementioned common stock.
As of February 28, 2022, and August 31, 2020, a total of and shares of common stock were issued and outstanding, respectively.
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SHARE-BASED COMPENSATION |
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| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHARE-BASED COMPENSATION |
Stock Options
During the six months ended February 28, 2022, the Company granted options for the purchase of the Company’s common stock to certain employees and consultants as consideration for services rendered. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options generally vest upon the one-year anniversary date of the grant and have a maximum term of fifteen months.
The following summarizes the stock option activity for the six months ended February 28, 2022:
The total share-based compensation expense in connection with issuance of stock options recognized during the six months ended February 28, 2022 was $23,558. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the six months ended February 28, 2022:
Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option. The expected lives of the stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term.
The following summarizes certain information about stock options vested and expected to vest as of February 28, 2022:
Restricted Stock Awards
The following summarizes the restricted stock activity for the six months ended February 28, 2022:
As of February 28, 2022 and August 31, 2021, there was unrecognized compensation cost of $, related to non-vested share-based compensation, respectively, which is expected to be recognized over the next year. In addition, none of the restricted share awards presented above has been issued or outstanding as of February 28, 2022.
Warrants
One January 20, 2022, The Company entered into two separate common stock purchase warrant agreement with an two unrelated third parties to purchase up to warrant shares each with an exercise price of $ per share. The warrants totaling 3,500,000 shares were valued at $635,282. These warrants may also be exercised, in whole or in part, at such time by means of a cashless exercise in which the holder shall be entitled to receive a number of warrant shares equal to the VWAP on the trading day immediately preceding the date of the applicable Notice of exercise and the exercise price of this warrant and the number of warrant shares that would be exercised by means of cash. The warrants expire January 20, 2023.
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SUBSEQUENT EVENTS |
6 Months Ended |
|---|---|
Feb. 28, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS
On March 23, 2022, a third party investor exercise their warrants and the company received $1,750 in exchange for 1,750,000 shares of common stock. On March 29, 2022, a third party investor exercise their warrants and the company received $1,740 in exchange for 1,750,000 shares of common stock. During the period March 01, 2022 thru April 28, 2022, the company issued a total of 1,250,083 shares of common stock also received a total of $50,000 in cash from common stock subscriptions.
On March 21, 2022, the Company entered into an employment agreement with Ms. Taylor Gripentrog, as an Assistant Director of Brand Development. The agreement provides for a base salary of $34,000 per year and an annual incentive bonus equal to 30% of the base salary. Ms. Gripentrog was also entitled to a signing of $2,000. In accordance with the terms of the employment agreement, Ms. Gripentrog is to receive 22 days paid vacation as well as $69 per day for expenses. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Principles of Consolidation | Principles of Consolidation
The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary. All intercompany accounts, balances and transactions have been eliminated in the consolidation as at February 28, 2022.
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| Basis of Presentation | Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. The unaudited interim financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended February 28, 2022 are not necessarily indicative of the results that may be expected for the year ending August 31, 2022.
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| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
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| Fixed Assets | Fixed Assets
Fixed assets are stated at historical cost less accumulated depreciation. The historical cost of acquiring an item of fixed assets includes the costs necessarily incurred to bring it to the condition and location necessary for its intended use. Costs associated with repairs and maintenance are expensed as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 years.
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| Revenue Recognition | Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of February 28, 2022 and August 31, 2021.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1 - Quoted market prices available in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accounts payable, convertible notes and notes payable. Fair values were assumed to approximate carrying values for these financial instruments due to their short term maturities.
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| Foreign Currency | Foreign Currency
Assets and liabilities of Boatim Europe are translated into U.S. dollars at the respective rates of exchange prevailing at the end of the reporting period. Income and expense accounts are translated at average exchange rates prevailing during the reporting period. Translation adjustments resulting from this process are recorded directly in equity as accumulated other comprehensive income (loss) (“AOCI”) and will be included as income or expense only upon sale or liquidation of the underlying entity. Boatim Europe considers its local currency (EURO) as its functional currency.
In accordance with ASC Topic 830-30, “Translation of Financial Statements”, monetary asset and liability accounts are translated into the Company’s reporting currency, the US dollar, using the closing exchange rate in effect at the balance sheet date, nonmonetary accounts are translated using historical exchange rates and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.
Translation of amounts from the local currency of Boatim Europe into US$ has been made at the following exchange rates:
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| Capitalized Software Development Costs | Capitalized Software Development Costs
Computer software development costs related to software developed for internal use falls under the accounting guidance of ASC Topic 350-40, Intangibles Goodwill and Other–Internal Use Software, in which computer software costs are expensed as incurred during the preliminary project stage and capitalization begins in the application development stage once the capitalization criteria are met. Costs associated with post implementation activities are expensed as incurred.
Costs capitalized during the application development stage include external direct costs of materials and services consumed in developing or obtaining internal-use software. During the six months ended February 28, 2022 and for the fiscal year ended to August 31, 2021, a total of $0 and $321,562 in software development costs has been incurred, respectively.
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| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Long-lived assets were evaluated for impairment and the Company recorded impairment loss on Capitalized software development costs of $0 during the six months ended February 28, 2022 and 2021, respectively.
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| Leases | Leases
As of September 1, 2019, the Company adopted the provisions of “Accounting Standards Codification Topic 842 Leases (ASC 842)” using the modified retrospective basis for all agreements
The Company recognizes a right-of-use asset and lease liability for all financing and operating leases with terms greater than twelve months. The lease liability is measured based on the present value of the lease payments not yet paid. The right-of-use asset is measured based on the initial measurement of the lease liability adjusted for any direct costs incurred upon commencement of the lease. The right-of-use assets are amortized on a straight-line basis over the lease term, and are tested for impairment in a manner consistent with the other long-lived assets held by the Company.
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| Use of Estimates | Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Management makes its best estimate of the outcome for these items based on information available when the financial statements are prepared. Actual results could differ from those estimates.
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| Basic and Diluted Loss Per Share |
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Potentially dilutive common shares consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. The following potentially dilutive equity securities outstanding as of February 28, 2022 and August 31, 2021 were not included in the computation of dilutive loss per common share because the effect would have been anti-dilutive:
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| Stock Based Compensation |
The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors and non-employees (effective September 1, 2019), the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by the Company in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements
On December 18, 2019, the FASB issued ASU 2019-12, which modifies ASC 740 to simplify the accounting for income taxes. The ASU’s amendments are based on changes that were suggested by stakeholders as part of the FASB’s simplification initiative (i.e., the Board’s effort to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users. This ASU was adopted by the Company on September 1, 2021. The Company evaluated and concluded that the adoption did not have a material impact on the Company’s financial position, results of operations or cash flows.
In May 2021, the FASB issued ASU 2021-04 in response EITF consensus. This ASU addresses how the issuer should account for modifications or exchanges of Freestanding Equity Classified Written Call Options. Freestanding written call options (such as warrants) are sometimes issued to enhance the marketability of a company’s debt or common stock offering. Some of these warrants are classified as equity in the issuer’s financial statements but are not accounted for as either stock compensation or derivatives. US GAAP does not address how the issuer should account for modifications of these instruments. The FASB has approved an EITF consensus to fill that void. Under the new guidance, if the modification does not change the instrument’s classification as equity, the company that issued the warrants accounts for the modification as an exchange of the original instrument for a new instrument. In general, if the fair value of the ‘new’ instrument is greater than the fair value of the ‘original’ instrument, the excess is recognized based on the substance of the transaction, as if the issuer had paid cash. The new rule is effective for fiscal years beginning after December 15, 2021 for both public and private companies. Transition is prospective. Early adoption is permitted, as discussed further below. The Company is evaluating whether this will have any impact of on its consolidated financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or in management’s opinion will not have a material impact on the Company’s present or future consolidated financial statements.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Foreign Currency Translation |
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| Schedule of anti-dilutive shares |
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LEASES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Summary of future minimum operating lease payments |
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CONVERTIBLE NOTES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of convertible notes |
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SHARE-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock option activity |
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| Summary of weighted average assumptions |
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| Summary of stock option vested |
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| Summary of restricted stock activity |
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| Schedule of restricted stock awards |
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UMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
Feb. 28, 2022 |
Aug. 31, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Current EUR: US$ exchange rate | 1.1197 | 1.1771 |
| Average EUR: US$ exchange rate | 1.1320 | 1.1951 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
Feb. 28, 2022 |
Aug. 31, 2021 |
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| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 26,266,912 | 11,244,188 |
| Unrelated Party [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 10,796,232 | |
| Convertible Debt [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 12,720,680 | 9,494,188 |
| Stock Options [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 2,750,000 | 1,750,000 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
Aug. 31, 2021 |
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| Property, Plant and Equipment [Line Items] | |||
| Estimated useful lives of the assets | 3 years | ||
| Impairment loss | $ 0 | $ 0 | |
| Capitalized Software Development Costs [Member] | |||
| Property, Plant and Equipment [Line Items] | |||
| Software development costs | $ 0 | $ 321,562 | |
GOING CONCERN (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Feb. 28, 2022 |
Feb. 28, 2021 |
Feb. 28, 2022 |
Feb. 28, 2021 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
| Revenues | $ (0) | $ 717 | $ (0) | $ 717 |
RELATED PARTY TRANSACTIONS (Details Narrative) |
6 Months Ended | 12 Months Ended | 13 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Apr. 01, 2021
USD ($)
$ / shares
shares
|
Jan. 01, 2021
USD ($)
$ / shares
shares
|
Feb. 28, 2022
USD ($)
shares
|
Feb. 28, 2021
USD ($)
|
Aug. 31, 2021
USD ($)
shares
|
Jul. 01, 2021
EUR (€)
|
Aug. 31, 2020
USD ($)
|
Jun. 22, 2022
USD ($)
shares
|
Jun. 08, 2021
USD ($)
|
Jun. 07, 2021
USD ($)
|
|
| Related Party Transaction [Line Items] | ||||||||||
| Common stock shares issued | shares | 58,271,539 | 51,780,838 | ||||||||
| Stock-based compensation expense | $ 928,841 | $ 704,228 | ||||||||
| Mr Johnson [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Accrued compensation | 270,000 | |||||||||
| Salary paid | $ 250,000 | |||||||||
| Unrestricted common stock | shares | 1,000,000 | |||||||||
| Agreement description | In addition, Mr. Johnson is eligible to receive a performance bonus equal to 1,000,000 fully vested shares of common stock for each net liquid $1,000,000 in equity raised by the Company during his first six (6) months of tenure as CEO, up to a maximum of 5,000,000 shares. | |||||||||
| Compensation Paid | 114,965 | |||||||||
| Accrued for incentive-based bonus | 0 | |||||||||
| Unpaid cash compensation | 104,165 | $ 20,833 | ||||||||
| Related expenses | 30,103 | |||||||||
| Cayo Ventures [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Advance from related party | 258,371 | 810,557 | 1,216,420 | |||||||
| Convertible notes issued | $ 441,000 | $ 696,000 | ||||||||
| Due to related parties | 685,822 | 427,451 | ||||||||
| Mr. Wolfgang Tippner [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Common Shares | shares | 24,000 | |||||||||
| Cash compensation monthly | $ 8,000 | |||||||||
| Cash compensation | 0 | $ 0 | ||||||||
| Accrued compensation | 120,000 | 120,000 | ||||||||
| Mr. Patrick Burkert [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Cash compensation | 0 | $ 38,794 | ||||||||
| Accrued compensation | 0 | 0 | ||||||||
| Agreement Descriptions | 50,000 shares are due within two weeks of the date of the agreement, 200,000 shares after 6 months, and the remaining shares after 12 months. | |||||||||
| Salary paid | € | € 144,000 | |||||||||
| Performance Bonus | 50.00% | |||||||||
| Mr. Benjamin Salter [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Cash compensation | 26,480 | |||||||||
| Agreement Descriptions | the Company entered into an independent contractor agreement with Mr. Salter, as Head of Operations. The agreement calls for a monthly payment of CHF 14,000 per month with CHF 8,000 to be paid in cash and the balance of $6,000 to be deferred on a monthly basis up to an amount not exceeding CHF 70,000 with payment terms to be decided by the Company. | |||||||||
| Strike price | $ / shares | $ 0.10 | |||||||||
| Option granted | shares | 25,000 | |||||||||
| Option term | 15 months | |||||||||
| Exercise cash payment | $ 2,500 | |||||||||
| Stock-based compensation expense | 31,331 | |||||||||
| Stock options granted | 23,558 | |||||||||
| Mr. Benjamin Salter [Member] | Director And Chief Financial Officer [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Cash compensation | 43,992 | |||||||||
| Accrued compensation | 87,889 | 78,679 | ||||||||
| Agreement Descriptions | The options must be exercised within 15 months from the date of the agreement and can be executed no earlier as follows: 50,000 within two weeks of the date of the agreement, 200,000 shares after 6 months, and the remaining shares after 12 months. The agreement calls for a base salary of Swiss francs (CHF) 150,000 per year, increasing to CHF 180,000, payable in increments of CHF 15,000 per month from April 1, 2021 onward. | |||||||||
| Performance Bonus | 50.00% | |||||||||
| Common stock shares issued | shares | 500,000 | |||||||||
| Strike price | $ / shares | $ 0.10 | |||||||||
| Performance-based bonus | 0 | |||||||||
| Mr. Mario Beckles [Member] | Director And Chief Financial Officer [Member] | ||||||||||
| Related Party Transaction [Line Items] | ||||||||||
| Cash compensation monthly | 3,000 | |||||||||
| Cash compensation | 18,000 | |||||||||
| Accrued compensation | $ 4,500 | $ 4,500 | ||||||||
LEASES (Details) - USD ($) |
Feb. 28, 2022 |
Aug. 31, 2021 |
|---|---|---|
| Leases [Abstract] | ||
| Operating Lease obligation, less current portion | $ 14,583 | $ 22,410 |
LEASES (Details Narrative) |
1 Months Ended | 6 Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Dec. 01, 2019
USD ($)
|
Dec. 01, 2019
EUR (€)
|
Aug. 01, 2019
EUR (€)
|
Nov. 17, 2021
EUR (€)
|
Apr. 30, 2021
EUR (€)
|
Apr. 20, 2020
EUR (€)
|
Feb. 28, 2022
USD ($)
|
Feb. 28, 2021
USD ($)
|
Dec. 02, 2021
USD ($)
|
Aug. 31, 2021
USD ($)
|
Apr. 30, 2021
USD ($)
|
Apr. 20, 2020
USD ($)
|
Aug. 01, 2019
USD ($)
|
|
| Leases [Abstract] | |||||||||||||
| Lease rental expense, per month | € | € 3,120 | € 2,340 | € 3,447 | € 1,800 | € 2,550 | ||||||||
| Write off remaining operating lease obligation | $ 157,820 | $ 27,318 | $ 41,859 | $ 6,842 | |||||||||
| Additional rent payment | € | € 150 | ||||||||||||
| Right of use asset and operating lease liability recognized from adoption of ASC 842 | $ 68,397 | ||||||||||||
| Operating lease expense | $ 8,397 | $ 13,748 | $ 29,307 | ||||||||||
| Right of use asset - operating lease | 124,510 | $ 55,743 | |||||||||||
| Operating lease liability | $ 124,510 | $ 55,743 | |||||||||||
| Lease discount rate | 2.23% | ||||||||||||
| Weighted average remaining term | 21 months | ||||||||||||
LOAN PAYABLE (Details Narrative) - Third Party [Member] - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Feb. 28, 2022 |
Aug. 31, 2021 |
Feb. 11, 2022 |
|
| Defined Benefit Plan Disclosure [Line Items] | |||
| Loan received from related party | $ 20,000 | ||
| Outstanding loan | $ 20,000 | $ 20,000 |
CONVERTIBLE NOTES (Details) |
Feb. 28, 2022
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| Carrying value of Convertible Notes at August 31, 2021 | $ 1,613,556 |
| New principal | 441,666 |
| Total principal | 2,055,222 |
| Less: conversion of principal | |
| Less: discount related to fair value of the beneficial conversion feature | 360,666 |
| Less: discount related to original issue discount | 44,167 |
| Add: amortization of discount and deferred financing fees | 99,379 |
| Carrying value of Convertible Notes at February 28, 2022 | $ 1,712,935 |
COMMON STOCK (Details Narrative) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|---|
Nov. 12, 2021 |
Dec. 22, 2021 |
Dec. 20, 2021 |
Oct. 26, 2021 |
Feb. 15, 2021 |
Nov. 30, 2021 |
Feb. 28, 2022 |
Feb. 28, 2021 |
Aug. 31, 2021 |
|
| Defined Benefit Plan Disclosure [Line Items] | |||||||||
| Common shares issued for service, value | $ 743,125 | ||||||||
| Convertible note ,amount | $ 360,666 | $ 276,049 | |||||||
| Common stock issued | 58,271,539 | 51,780,838 | |||||||
| Common stock, shares outstanding | 58,271,539 | 51,780,838 | |||||||
| Unrelated Party [Member] | |||||||||
| Defined Benefit Plan Disclosure [Line Items] | |||||||||
| Common shares issued for service | 1,055,556 | 875,000 | |||||||
| Price per share | $ 0.36 | $ 0.415 | |||||||
| Common shares issued for service, value | $ 380,000 | $ 363,126 | |||||||
| Company Borrowed | $ 143,166 | $ 217,500 | |||||||
| Convertible note ,amount | $ 166,666 | $ 275,000 | |||||||
| Common stock as commitment shares | 1,810,145 | 2,750,000 | |||||||
| Warrant shares | 724,058 | 1,100,000 | |||||||
| Exercise pice | $ 0.25 | $ 0.25 | |||||||
| Mr. Benjamin Salter [Member] | |||||||||
| Defined Benefit Plan Disclosure [Line Items] | |||||||||
| Price per share | $ 0.12 | ||||||||
| Number of common stock issued | 41,666,667 | ||||||||
SHARE-BASED COMPENSATION (Details) - Stock Options [Member] |
6 Months Ended |
|---|---|
|
Feb. 28, 2022
$ / shares
shares
| |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Options outstanding, Beginning | shares | 175,000 |
| Weighted average exercise price Balance, Beginning | $ / shares | $ 0.10 |
| Options Grants | shares | 100,000 |
| Weighted average exercise price, Grants | $ / shares | $ 0.10 |
| Options Exercised | shares | |
| Weighted average exercise price, Exercised | $ / shares | |
| Options Forfeited | shares | |
| Weighted average exercise price, Forfeited | $ / shares | |
| Options outstanding, Ending | shares | 275,000 |
| Weighted average exercise price Balance, Ending | $ / shares | $ 0.10 |
SHARE BASED COMPENSATION (Details 1) |
6 Months Ended |
|---|---|
|
Feb. 28, 2022
USD ($)
| |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Expected term (years) | 1 year 3 months |
| Expected dividend | |
| Minimum [Member] | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Expected stock price volatility | 110.00% |
| Weighted-average risk-free rate | 0.10% |
| Maximum [Member] | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Expected stock price volatility | 195.00% |
| Weighted-average risk-free rate | 0.20% |
SHARE BASED COMPENSATION (Details 2) - Stock Options Vested [Member] |
6 Months Ended |
|---|---|
|
Feb. 28, 2022
$ / shares
shares
| |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Number of options, Outstanding | shares | 275,000 |
| Weighted-average remaining contractual life, Outstanding | 1 month 2 days |
| Weighted-average exercise price, Exercisable | $ / shares | $ 0.10 |
| Number of options, Exercisable | shares | 275,000 |
| Weighted-average remaining contractual life, Exercisable | 1 month 2 days |
| Weighted-average exercise price, Expected to vest | $ / shares | $ 0.10 |
| Number of options, Expected to vest | shares | 0 |
| Weighted-average remaining contractual life, Expected to vest | 1 month 2 days |
| Weighted-average exercise price, Outstanding | $ / shares | $ 0.10 |
SHARE-BASED COMPENSATION (Details 4) - shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
Feb. 28, 2022 |
Aug. 31, 2021 |
|
| Share-based Payment Arrangement [Abstract] | ||
| Vested | 450,000 | 450,000 |
| Non-vested | ||
| Restricted stock | 450,000 | 450,000 |
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) |
1 Months Ended | 6 Months Ended | |
|---|---|---|---|
Jan. 20, 2022 |
Feb. 28, 2022 |
Aug. 31, 2021 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Total fair value of stock options recognized | $ 23,558 | ||
| Restricted Stock Awards [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Unrecognized compensation cost | $ 0 | $ 0 | |
| Warrants expire date | Jan. 20, 2023 | ||
| Warrant [Member] | |||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
| Warrant shares | 1,750,000 | ||
| Exercise pice | $ 0.001 | ||
| Number of warrants issued | 3,500,000 | ||
| Proceeds from Issuance of Warrants | $ 635,282 | ||
| Warrants expire date | Jan. 20, 2023 |
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) |
1 Months Ended | 2 Months Ended | ||
|---|---|---|---|---|
Mar. 29, 2022 |
Mar. 23, 2022 |
Mar. 21, 2022 |
Apr. 28, 2022 |
|
| Subsequent Event [Line Items] | ||||
| Number of common stock issued | 1,250,083 | |||
| Common stock subscriptions received | $ 50,000 | |||
| Base Salary | $ 34,000 | |||
| Weighted average exercise price Balance, Ending | ||||
| Subsequent Event [Line Items] | ||||
| Number of warrants exercised | 1,740 | 1,750 | ||
| Proceeds from Warrant Exercises | $ 1,750,000 | $ 1,750,000 | ||
| VAT receivable | Less: conversion of principal | ||||
| Subsequent Event [Line Items] | ||||
| Vacation expenses per day | $ 69 | |||