UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
FOR THE QUARTERLY PERIOD ENDED:
OR
For the transition period from__________ to __________
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
| 000-55554 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File No.) |
(IRS Employee Identification No.) |
(Address of Principal Executive Offices)
(Issuer Telephone number)
6136 Frisco Square Blvd.
Suite 400, #237
Frisco, TX 75034
(Former Address)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| N/A |
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). Yes
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated Filer ☐ |
| 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 ☐
The number of Registrant’s shares of common stock, $0.0001 par value, outstanding as of April 28, 2022, was .
TABLE OF CONTENTS
| Page | |||
| PART I. FINANCIAL INFORMATION | 3 | ||
| Item 1 | Condensed Consolidated Financial Statements | 3 | |
| Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 20 | |
| Item 4 | Controls and Procedures | 22 | |
| PART II. OTHER INFORMATION | 23 | ||
| Item 1 | Legal Proceedings | 23 | |
| Item 1A | Risk Factors | 23 | |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 23 | |
| Item 3 | Defaults Upon Senior Securities | 23 | |
| Item 4 | Mine Safety Disclosures | 23 | |
| Item 5 | Other Information | 23 | |
| Item 6 | Exhibits | 24 | |
| SIGNATURES | 25 | ||
| 2 |
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LUX AMBER, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| January 31, 2022 | April 30, 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| GOODWILL | ||||||||
| OTHER INTANGIBLES | ||||||||
| OTHER LONG-TERM ASSETS | ||||||||
| FIXED ASSETS | ||||||||
| Furniture, fixtures, and office equipment | ||||||||
| Vehicles and trailers | ||||||||
| Equipment | ||||||||
| Leasehold improvements | ||||||||
| Assets in process | ||||||||
| TOTAL FIXED ASSETS | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Fixed assets, net | ||||||||
| RIGHT OF USE ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Related party payables | ||||||||
| Notes payable – current portion | ||||||||
| Right of use liabilities – current portion | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Notes payable | ||||||||
| Right of use liabilities | ||||||||
| Paycheck Protection Program loans | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $ par value, shares authorized: issued and outstanding shares as of January 31, 2022, and issued and outstanding shares as of April 30, 2021 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
| 3 |
LUX AMBER, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended January 31, 2022 | Three months ended January 31, 2021 | Nine months ended January 31, 2022 | Nine months ended January 31, 2021 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross Profit (Loss) | ( | ) | ||||||||||||||
| Product delivery expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Selling expenses | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Other expense | ||||||||||||||||
| Total other expense | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per common share: | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 4 |
LUX AMBER, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three Months Ended January 31, 2022 and January 31, 2021
Number of Shares Issued and Outstanding | Common Stock Par Value Amount | Additional Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||
| Balance as of October 31, 2021 | $ | $ | $ | ( | ) | $ | |||||||||||||||
| Common stock sold | |||||||||||||||||||||
| Options exercised for outstanding payables | |||||||||||||||||||||
| Shares issued for previous options exercised | |||||||||||||||||||||
| Stock based compensation | – | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ||||||||||||||||
| Balance as of January 31, 2022 | $ | $ | $ | ( | ) | $ | |||||||||||||||
Number of Shares Issued and Outstanding | Common Stock Par Value Amount | Additional Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||
| Balance as of October 31, 2020 | $ | $ | $ | ( | ) | $ | |||||||||||||||
| Notes payable with interest converted | |||||||||||||||||||||
| Share based compensation | – | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ||||||||||||||||
| Balance as of January 31, 2021 | $ | $ | $ | ( | ) | $ | |||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements
| 5 |
LUX AMBER, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
For the Nine Months Ended January 31, 2022 and January 31, 2021
Number of Shares Issued and Outstanding | Common Stock Par Value Amount | Additional Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||
| Balance as of April 30, 2021 | $ | $ | $ | ( | ) | $ | |||||||||||||||
| Options exercised (cashless) | – | ( | ) | ||||||||||||||||||
| Shares issued for previous options exercised | |||||||||||||||||||||
| Options exercised | – | ||||||||||||||||||||
| Common stock sold | |||||||||||||||||||||
| Options exercised for outstanding payables | |||||||||||||||||||||
| Stock based compensation | – | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ||||||||||||||||
| Balance as of January 31, 2022 | $ | $ | $ | ( | ) | $ | ) | ||||||||||||||
Number of Shares | Common Stock Par Value Amount | Additional Paid-in Capital | Accumulated Deficit | Non-Controlling Interest | Total | |||||||||||||||||||
| Balance as of April 30, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock repurchased | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Notes payable with interest converted | ) | |||||||||||||||||||||||
| Dissolution of PCNM | – | ( | ) | ( | ) | |||||||||||||||||||
| Adjustments | ( | ) | ||||||||||||||||||||||
| Share based compensation | – | |||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of January 31, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 6 |
LUX AMBER, CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended January 31, 2022 | For the Nine Months Ended January 31, 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Depreciation and amortization | ||||||||
| Share based compensation | ||||||||
| Non-cash interest | ||||||||
| Right of use amortization | ||||||||
| Accounts receivable - trade | ||||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Other current assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Due to related parties | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Expenditures for fixed assets | ( | ) | ( | ) | ||||
| Total cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from stock sales | ||||||||
| Payments on notes payable | ( | ) | ( | ) | ||||
| Proceeds on notes payable | ( | ) | ||||||
| Proceeds from PPP loans | ||||||||
| Proceeds from stock option exercises | ( | ) | ||||||
| Payments on capital lease obligations | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Cash paid during period for: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
| Noncash Financing Activities | ||||||||
| Convertible notes and accrued interest converted to common stock | $ | $ | ( | ) | ||||
| Stock issued for reduction of outstanding payables | $ | $ | ||||||
| Right of use lease additions | $ | $ | ||||||
The accompanying footnotes are an integral part of these consolidated financial statements.
| 7 |
LUX AMBER, CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
January 31, 2022
(Unaudited)
NATURE OF BUSINESS
Lux Amber, Corp. (“LAC”), formed on January 19, 2018, is an international specialty chemical company. Its corporate offices are currently located at 371 Hostdale Drive, Dothan, AL 36303. LAC’s corporate telephone number is 214-676-5475. LAC has a stock symbol of LXAM.
LAC has three (3) wholly owned subsidiaries (collectively with LAC, the “Company”): Worldwide Specialty Chemicals, Inc. (“WSCI”), Industrial Chem Solutions, Inc. (“ICS”), and Safeway Pest Elimination, LLC, (“SPE”), which was formed July 16, 2018. LAC and its subsidiaries serve as both producers and distributors of environmentally safe, specialty chemicals.
The Company’s products utilize all-natural and renewable resources, contain no dangerous chemicals or additives, and offer “green” solutions to its customers. ICS’ product line includes asphalt release agents, industrial cleaners, environmental remediation gels, odor control agents, and consumer friendly cleaners for a wide range of uses, including construction, environmental remediation, hazardous materials clean-up, nuclear decommissioning, industrial cleaning, and odor control. SPE’s products are designed for the elimination and control of pests.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting polices consistently applied in the preparation of the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) is as follows.
Basis of Consolidation
The condensed consolidated financial statements include the accounts of LAC, WSCI, ICS, and SPE. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
FASB ASC 825-10 requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, related party payables, notes payable, and Paycheck Protection Program loans. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management on January 31, 2022 and April 30, 2021. The carrying value of the financial instruments included in the Company’s consolidated financial statements approximated their fair values.
| 8 |
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities are carried at, or approximate, fair value as of the reporting date because of their short-term nature.
The carrying value of the notes payable approximates fair value as they bear market rates of interest.
Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share has not been presented because there are no dilutive items. Diluted earnings loss per share is based on the assumption that all dilutive stock options, warrants, and convertible debt are converted or exercised by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during periods of net profit, only when the average market price of the common stock during the period exceeds the exercise or conversion price of the items.
For the nine months ended January 31, 2022 and 2021, approximately and common stock warrants, respectively, and and common stock options, respectively, were not added to the diluted average shares because inclusion of such warrants and options would be antidilutive.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an initial maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at several financial institutions located throughout the United States, which at times may exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are recorded at invoiced
amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on experience and other
factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition
of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current economic conditions.
The determination of the collectability of amounts due requires the Company to make judgments regarding future events and trends. Allowances
for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis.
This process consists of a review of historical collection experience, current aging status of the customer account, and the financial
condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific
customers and the accounts receivable portfolio as a whole. On January 31, 2022 and April 30, 2021, the allowance for doubtful accounts
was $
Revenue Recognition
Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Revenue from product sold is recognized when obligations with the customer are satisfied, which generally occurs with the transfer or delivery of the product, signifying the point in time when the customer obtains control of the promised goods. Our performance obligation is delivering the product to the customer; and therefore, the transaction price, which is stated on the invoice, is allocated 100% to the sole performance obligation of product delivery. For the three-month and nine-month periods ended January 31, 2022 and 2021, all revenue was from products sold.
Our sales policies do not provide for general rights of return, and payment is due net of 15 days. We do not record estimated reductions to revenue for customer programs and incentive offerings including pricing arrangements, promotions, and other volume-based incentives at the time of the sale. We also do not record estimated reserves for product returns and credits at the time of sale and anticipated uncollectible accounts.
| 9 |
Sales Taxes
Sales (and similar) taxes that are imposed on the Company's sales and collected from customers are excluded from revenues.
Shipping and Handling Costs
Costs for shipping and handling activities, including those activities that occur after transfer of control to the customer, are recorded as cost of sales and are expensed as incurred. The Company accrues costs for shipping and handling activities that occur after control of the promised good has transferred to the customer.
Inventory
Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in first-out basis. The carrying value of inventory is reduced for estimated obsolescence. The Company evaluates the inventory carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand.
The following table sets forth the components of the Company’s inventory balances as of:
| January 31, 2022 | April 30, 2021 | |||||||
| Finished goods | $ | $ | ||||||
| Raw materials | ||||||||
| Obsolescence | ( | ) | ( | ) | ||||
| Inventory, net | $ | $ | ||||||
Fixed Assets
Fixed assets consist of furniture, fixtures and office equipment, vehicles and trailers, equipment and leasehold improvements that are stated at cost, less accumulated depreciation. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to earnings over their estimated service lives (3 – 10 years) under the straight-line method.
Maintenance and repairs are charged to earnings as incurred; major repairs and replacements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations.
Goodwill
Goodwill represents the difference between the
enterprise value/cash paid less the fair value of all recognized net asset fair values including identifiable intangible asset values
in a business combination. The Company reviews goodwill for impairment annually during the fourth quarter or whenever events or changes
in circumstances indicate the carrying value of goodwill may not be recoverable. The Company considered the current and expected future
economic and market conditions surrounding COVID-19 and its impact on the reporting unit. As a result of the certain business developments
and changes in the Company's long-term projections, during the fourth quarter of fiscal 2021, the Company concluded a triggering event
had occurred that required an impairment assessment to be performed. The qualitative assessment thresholds were not met. The Company calculated
the quantitative impairment test of using the implied fair market value using market data and concluded there was no goodwill impairment
loss. Based on annual testing, the Company determined that there was
| 10 |
The Company first evaluates qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying amount, including goodwill. If after qualitatively assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then further testing is unnecessary. If after assessing the totality of events or circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company then estimates the fair value of the reporting unit and compares the fair value of the reporting unit with its carrying amount, including goodwill, as discussed below.
The quantitative goodwill impairment test involves a two-step process. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.
The Company recognizes compensation expense for all share-based payments in accordance with FASB Codification Topic 718, Compensation — Stock Compensation, (ASC 718). Under the fair value recognition provisions of ASC 718, the Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award. The fair value at the measurement date of stock options is estimated using the Black-Scholes option-pricing model. Compensation expense is recognized on a straight-line basis over the vesting period based on the estimated number of stock options that are expected to vest.
Income Taxes
The Company accounts for Federal and state income taxes using the asset and liability approach for financial accounting and reporting for income taxes based on tax effects of differences between the financial statement and tax basis of assets and liabilities.
The Company accounts for all uncertain tax positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 740 – Income Taxes (“ASC 740”). ASC 740 provides guidance on de-recognition, classification, interest and penalties and disclosure related to uncertain income tax positions. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties as of January 31, 2022 or April 30, 2021.
From time to time, the Company may be audited by taxing authorities. These audits could result in proposed assessments of additional taxes. The Company believes that its tax positions comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes. The Company’s federal returns since 2016 are still subject to examination by taxing authorities.
License Fee
ICS pays 10% of the net selling price of $9.50
a gallon to CBI Polymers, Inc (“CBI”), as a mutually acceptable license fee. E. Thomas Layton, Chairman and CEO of LAC, is
also the Chairman and CEO and controlling shareholder of CBI. During the nine-month ended January 31, 2022 and 2021, the Company incurred
$
| 11 |
Advertising Costs
The Company recognizes expenses for advertising
costs as they are incurred. During the nine months ended January 31, 2022 and 2021, the Company incurred $
Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The Company has incurred substantial operating losses, resulting
in an accumulated deficit of $
The Company is actively seeking growth of its service offerings, both organically and via new client relationships. In the ordinary course of the Company’s business, management is trying to raise additional capital through sales of common stock as well as seeking debt financing from third parties. There are current indications that additional financing will be available on favorable terms. If additional financing is not available, the Company will need to reduce salaries, defer, or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition, and results of operations, including potential discontinuance of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders. Additionally, incurring additional indebtedness could involve an increased debt service cash obligation, as well as the imposition of covenants that restrict the Company’s operations or the Company’s ability to perform on its current debt service requirements. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. While the Company recognizes the significant impact of additional financing, the Company is a smaller reporting company serving large and growing markets and it will continue to sell securities and enter into financing programs which are deemed to be prudent.
Recently Issued Accounting Pronouncements
Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. The new standard became effective for the Company for annual and interim periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this accounting guidance will have on the consolidated financial statements.
2. ACCOUNTS RECEIVABLE
Accounts receivable relate to trade receivables from product sales made by the Company. Accounts receivable consist of the following at January 31, 2022 and April 30, 2021:
| January 31, 2022 | April 30, 2021 | |||||||
| Trade receivables | $ | $ | ||||||
| 12 |
3. NOTES PAYABLE
Convertible Promissory Notes Payable
During the year ended April 30, 2021, the Company
issued a fourth round of convertible debentures in the principal amount of $
During the year ended April 30, 2021, the Company
issued a fifth round of convertible debentures in the principal amount of $
Vehicles and Equipment Notes Payable
The Company has one note payable relating to the
purchase of a Company vehicle as of January 31, 2022. The balance outstanding under the note payable was $
The Company’s future minimum principal payments as of January 31, 2022 are as follows:
| 2022 | $ | |||
| 2023 | ||||
| Total future minimum payment | $ |
Other Notes Payable
On May 8, 2020, the Company received $
On February 1, 2021, the Company received $
On February 11, 2021, WSC received $
On February 14, 2021, ICS received $
| 13 |
On March 16, 2021, SPE received $
On April 19, 2021, the Company received $
On May 10, 2021, the Company received $
On May 19, 2021, the Company received $
On June 7, 2021, the Company received $
On June 7, 2021, the Company received $
4. ACCRUED EXPENSES
Accrued expenses, consisting primarily of accrued salaries for officers and executive management, include the following balance at January 31, 2022 and April 30, 2021:
| January 31, 2022 | April 30, 2021 | |||||||
| Accrued Compensation | $ | $ | ||||||
| Other Accrued Expenses | ||||||||
| Accrued expenses | $ | $ | ||||||
5. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS
Leases
As of January 31,
2022, the weighted average remaining lease term and weighted average discount rate for financing leases was
| 14 |
The Company’s undiscounted annual future minimum lease payments as of January 31, 2022 consist of:
| 2022 | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total lease payments | ||||
| Interest | ( | ) | ||
| Present value of lease liabilities | $ |
Concentrations
As of January 31, 2022, the Company had three
customers which made up
For the nine months ended January 31, 2022, the
Company had two customers which made up
6. STOCKHOLDERS’ EQUITY
Common Stock and Preferred Stock
As of January 31, 2022, and 2021, the authorized share capital of the Company consisted of 75,000,000 shares of common stock, $0.0001 par value. No other classes of stock are authorized.
Common Stock
For the nine months ended January 31, 2022, the
Company sold shares at $ per share for $
Warrants
During the nine months ended January 31, 2022 and 2021, there were warrants exercised.
For the three months ended January 31, 2022 and 2021, the Company had no sale or repurchase of warrants.
As of January 31, 2022, and April 30 2021, there
were
| 15 |
Stock option plan
Effective February 1, 2017, the Company established the 2016 Stock Option Plan (the “Plan”). The Board of Directors of the Company has the authority and discretion to grant stock options. The maximum number of shares of stock that may be issued pursuant to the exercise of options under the Plan is . Eligible individuals include any employee or director of the Company and any consultant providing services to the Company. The expiration date and exercise price for each stock option grant are as established by the Board of Directors of the Company. No option may be issued under the Plan after February 1, 2027. On March 18, 2018, the Plan was amended to increase the maximum number of shares of stock that may be issued to 5,000,000. On July 10, 2018, the Plan was amended to increase the maximum number of shares of stock that may be issued to 5,500,000. In November of 2019, the Plan was further amended to increase the shares of stock that may be issued to 10,000,000.
During the nine months ended January 31, 2022 and 2021, there were and common stock options granted. options granted have an exercise price of $0.25 and vested immediately. The remaining have an exercise price of $ and vest over a two-year period with each quarter vesting six-months after the grant date.
Stock option activity during the nine-month period ended January 31, 2022 is summarized as follows:
Shares Under Option | Price Per Share | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | |||||||||||||
| Outstanding - beginning of period | $0.00 - 1.79 | $ | months | |||||||||||||
| Granted | 0.25 | months | ||||||||||||||
| Exercised | ( | ) | – | – | ||||||||||||
| Canceled or expired | – | – | ||||||||||||||
| Outstanding - end of period | $0.00 - 1.50 | $ | months | |||||||||||||
| Exercisable - end of period | $ | months | ||||||||||||||
Stock option activity during the nine-month period ended January 31, 2021, is summarized as follows:
Shares Under Option | Price Per Share | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | |||||||||||||
| Outstanding - beginning of period | $0.00 - 1.50 | $ | months | |||||||||||||
| Granted | – | – | ||||||||||||||
| Exercised | – | – | ||||||||||||||
| Canceled or expired | – | – | ||||||||||||||
| Outstanding - end of period | $0.00 - 1.50 | $ | months | |||||||||||||
| Exercisable - end of period | $ | months | ||||||||||||||
| 16 |
The fair value of each option grant is calculated using the following assumptions:
| January 31, | January 31, | ||
| 2022 | 2021 | ||
| Expected life – years | NA | ||
| Interest rate | -% | NA | |
| Volatility | % | NA | |
| Dividend yield | % | % |
Total share-based compensation expense
(including stock grants) included in salaries and wages was $ and $ for the nine months ended January 31, 2022 and
2021, respectively. Total share-based compensation expense (including stock grants) included in salaries and wages was $
7. RELATED PARTY TRANSACTIONS
During the nine months ended January 31, 2022
and 2021, the Company incurred consulting fees of $ and $ to five separate entities owned by five current shareholders.
An additional $
During the three months ended January 31, 2022 and 2021, the Company incurred consulting fees of $ and $ to four separate entities owned by four current shareholders. The total related party consulting fees unpaid balance due was $ and $ as of January 31, 2022 and 2021, respectively, and is included in accounts payable in the accompanying consolidated financial statements.
Two separate related parties are allowing the
Company to rent vehicles for a monthly fee of $1,650 and $1,243. For the nine months ended January 31, 2022, the Company paid a total
of $
8. INCOME TAXES
For the nine months ended January 31, 2022 and 2021, the effective tax rate of 0% varies from the U.S. federal statutory rate primarily due to net losses and the valuation allowance associated with the net operating loss carryforwards. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company continues to record a full valuation allowance against its net deferred tax assets. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company’s review of this evidence at January 31, 2022, management determined that a full valuation allowance against all of the Company’s deferred tax assets at January 31, 2022 was appropriate.
| 17 |
The following table summarizes the difference between the actual tax provision and the amounts obtained by applying the statutory tax rates to the income or loss before income taxes for the period ending January 31, 2022 and 2021:
| January 31, 2022 | January 31, 2021 | |||||||
| Tax benefit calculated at statutory rate | ||||||||
| Expense not deductible | ( | ) | ( | ) | ||||
| Changes to valuation allowance | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
9. CORONA VIRUS
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The pandemic has significantly impacted the economic conditions in the U.S., accelerating during the first half of March, as federal, state and local governments react to the public health crisis, creating significant uncertainties in the U.S. economy. In March 2020, we noticed a strong decline in orders from our customers, as businesses around the country began to cease their operations due to COVID-19. In an attempt to mitigate the ongoing impact of the pandemic on our cash flows certain actions were taken. The actions include targeted reductions in discretionary operating expenses such as advertising and payroll expenses, reducing capital expenditures, and reducing travel for business development purposes.
The Paycheck Protection Program (“PPP”)
provides loans from the U.S. Small Business Administration (“SBA”) to help businesses keep their workforce employed during
the Coronavirus (COVID-19) crisis. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used
for payroll, rent, mortgage interest, or utilities. On May 8, 2020, the Company received a PPP loan in the amount of $
On February 11, 2021, WSC received $
On February 14, 2021, ICS received $
On March 16, 2021, SPE received $
Continued impacts of the pandemic have had a material adverse impact on our revenues, earnings, liquidity and cash flows, and may require additional actions in response, including, but not limited to, employee layoffs, reduced production, or further expense reductions, all in an effort to mitigate such impacts. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the U.S., and the related /impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted. This situation is rapidly changing and additional impacts to the business may arise that we are not aware of currently. While the disruption is currently expected to be temporary, there is uncertainty around the duration. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity, or capital resources cannot be reasonably estimated at this time.
| 18 |
11. SUBSEQUENT EVENTS
On March 3, 2022, the Company issued 300,000 shares of stock at $0.15 per share for a total cash amount of $45,000.
On March 15, 2022, the Company issued 180,000 shares of stock at $0.15 per share for a total cash amount of $45,000.
On April 1, 2022, the Company received $76,000 from an investor and in turn issued a promissory note with an 21% interest rate. This note does not require collateral. Two payments of $1,768 were made during the period ended April 30, 2022.
On April 6, 2022, the Company issued 60,000 shares of stock at $0.25 per share for a total cash amount of $15,000.
On April 12, 2022, the company received $25,000 from another investor and in turn issued a promissory note with an 21% interest rate. This note does not require collateral. No payments were during the period ended April 30, 2022.
On May 12, 2022, Mr. Paul Williams, a member of the Board of Directors of Lux Amber Corp., tendered his resignation as a Board member, and as Vice Chairman and Chief Financial Officer. Mr. Williams will continue to serve the Company for a transition period.
| 19 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with its unaudited interim condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the fiscal year ended April 30, 2021.
FORWARD-LOOKING STATEMENTS
The discussion contained herein contains "forward-looking statements" that involve risk and uncertainties. These statements may be identified by the use of terminology such as "believes," "expects," "may," "should" or anticipates" or expressing this terminology negatively or similar expressions or by discussions of strategy. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. The Company’s actual results could differ materially from those discussed in this report.
BUSINESS AND PLAN OF OPERATION
Lux Amber, Corp., based in Dothan, Alabama, is an international specialty chemical company with many products that are friendly to the environment. The common description is “green chemicals.” The Company has degreed chemists on staff with years of successful experience in the specialty chemical industry. The term “specialty chemicals” is best defined by those chemicals whose formulas allow the chemical compounds to perform a specific function for a class of customers. The Company’s products have been used successfully in a diverse array of applications, including:
| · | Chemicals to protect surfaces in asphalt handling equipment |
| · | Chemicals to control the reproduction of pests |
| · | Military Chemical, Biological, Radiological, Nuclear, and Explosives (CBRNE) sites |
| · | Commercial nuclear power plants and nuclear-powered ships |
| · | Hazardous toxic industrial chemical and toxic industrial material clean-up |
The Company’s corporate telephone number is 214-676-5475. The Company’s stock symbol is LXAM.
LAC has three (3) wholly owned subsidiaries (collectively with LAC, the “Company”): Worldwide Specialty Chemicals, Inc. (“WSC”), Industrial Chem Solutions, Inc. (“ICS”), and Safeway Pest Elimination, LLC, (“SPE”), which was formed July 16, 2018. LAC and its subsidiaries serve as both producers and distributors of environmentally safe, specialty chemicals.
The Company’s products utilize all-natural and renewable resources, contain no dangerous chemicals or additives, and offer “green” solutions to its customers. ICS’ product line includes asphalt release agents, industrial cleaners, environmental remediation gels, odor control agents, and consumer friendly cleaners for a wide range of uses, including construction, environmental remediation, hazardous materials clean-up, nuclear decommissioning, industrial cleaning, and odor control. SPE’s products are designed for the elimination and control of pests.
LIQUIDITY AND CAPITAL RESOURCES
During the nine-month period ended January 31, 2022, the primary sources of liquidity were cash flows from financing activities, and in particular, issuance of stock and promissory notes.
| 20 |
As of January 31, 2022, the Company had total assets of $3,150,976 consisting of current assets of $93,829, which included $27,480 in cash, $45,279 in receivables, $16,103 in inventory, $4,967 in prepaid expenses and other current assets, and long-term assets of $2,309,953 in goodwill and other intangibles, $434,110 in fixed assets, $18,270 in other long-term assets, and $294,814 in right of use assets. As of April 30, 2021, the Company had total assets of $3,353,460, consisting of current assets of $112,982 in receivables, $137,211 in inventory, $7,960 in prepaid expenses and other current assets and long-term assets of $2,309,953 in goodwill and other intangibles, and $512,697 in fixed assets and $272,657 in right of use assets.
As of January 31, 2022, the Company had total liabilities totaling $2,974,722 including $2,354,123 in current payables and accrued expenses, $211,442 in related party payables, $21,076 notes payable, $104,752 in Paycheck Protection Program loans, and $283,329 in right of use liabilities. As of April 30, 2021, the Company had total liabilities totaling $2,468,547 including $1,756,156 in accounts payable and accrued expenses, $208,756 in related party payables, $127,624 in notes payable, and $271,259 in lease liabilities, and $104,752 in Paycheck Protection Program loans.
As January 31, 2022, the Company had an accumulated stockholders’ equity of $176,253 and $884,913 at April 30,2021. The decrease is result of the items discussed below.
RESULTS OF OPERATIONS
Comparison of the three and nine-month periods ended January 31, 2022 and January 31, 2021.
Revenues
For the nine-month period ended January 31, 2022, the Company had revenues of $1,112,022, and $816,598 for the same period in 2021. The increase in sales is primarily of an increase in ICS’s sales of approximately $295,424 due to an increase in selling price and new customers. The increase in the cost of goods sold is due to an increase in sales volume.
For the three-month period ended January 31, 2022, the Company had revenues of $248,944, and $130,183 for the same period in 2021. The increase in sales is primarily the result of an increase in ICS’s sales of approximately $118,606 due to an increase in selling price and new customers. The increase in the cost of goods sold is due to an increase in sales volume.
Operating Expenses
For the nine-month period ended January 31, 2022, the Company had total operating expenses of $2,089,921 which included $24,629 in product delivery expenses, $1,944,324 in general and administrative expenses, $11,607 in selling expenses, and $109,362 in depreciation and amortization of assets. For the nine-month period ended January 31, 2021, the Company had total operating expenses of $1,628,240 which included $404,895 in product delivery expenses, $1,038,304 in general and administrative expenses, $70,450 in selling expenses, and $114,591 in depreciation of assets. The increase in operating expenses is primarily related to 1) increase in stock compensation expense; 2) offset by lower selling expenses; 3) lower product delivery costs.
For the three-month period ended January 31, 2022, the Company had total operating expenses of $988,772 which included $15,475 in product delivery expenses, $874,730 in general and administrative expenses, $6,683 in selling expenses, and $91,884 in depreciation and amortization of assets. For the three-month period ended January 31, 2021, the Company had total operating expenses of $188,495 which included $103,629 in product delivery expenses, $10,547 in general and administrative expenses, $34,695 in selling expenses, and $39,624 in depreciation of assets. The increase in operating expenses is primarily related to 1) increase in stock compensation expense; 2) offset by lower selling expenses; 3) lower product delivery costs.
.
| 21 |
GOING CONCERN
The accompanying consolidated financial statements are presented on a going concern basis. The Company's financial condition raises substantial doubt about the Company's ability to continue as a going concern. The Company has limited cash, its current liabilities exceed its current assets as of January 31, 2022 and has incurred reoccurring losses from operations during the nine months ended January 31, 2022. The Company is relying on capital from investors to meet the majority of its operating expenses.
OFF-BALANCE SHEET ARRANGEMENTS
There are no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that have, or may have, a material effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of the Company.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
The Company’s management, with the participation of its President and Chief Executive Officer, has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and President have concluded that, as of such date, its disclosure controls and procedures are not effective.
INTERNAL CONTROL OVER FINANCIAL REPORTING
As indicated in the Company’s Form 10-K filed on September 30, 2021, the Company’s Principal Executive Officer and President concluded that its internal control over financial reporting was not effective during the 2021 fiscal year.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the period covered by this report, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 22 |
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes to the risks to the Company’s business from those described in its Annual Report on Form 10-K for the fiscal year ended April 30, 2021, as filed with the SEC on September 30, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
To assist the Company to obtain and preserve working capital to support its current operations the Company entered into the following transactions:
On July 13, 2021, the Company sold 200,000 common shares at $0.50 per share for a total cash amount of $100,000.
On July 23, 2021, the Company sold 100,000 common shares at $0.50 per share for a total cash amount of $50,000.
On July 23, 2021, the Company sold 100,000 common shares at $0.50 per share for an assigned note receivable.
On September 20, 2021, the Company issued 60,000 shares at $0.33 per share for payment of $20,000 of outstanding payables.
On September 20, 2021, the Company issued 300,000 shares at $0.33 per share for a total cash amount of $100,000.
On January 11, 2022, the Company issued 683,020 shares at $0.25 per share for a payment of $235,755 of outstanding payables.
On January 11, 2022, the Company issued 500,000 shares at $0.15 per share for a total cash amount of $105,050.
During the period ending January 31, 2022, the Company received $162,500 total cash proceeds for common stock shares to be issued in March of 2022.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
| 23 |
ITEM 6. EXHIBITS
| 24 |
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.
Date: May 25, 2022
| Lux Amber, Corp. | ||
| By: | /s/ E. Thomas Layton | |
| E. Thomas Layton, CEO and Director | ||
| By: | /s/ Walton A. Ashwander Jr. | |
| Walton A. Ashwander Jr., President and Director | ||
| 25 |
EXHIBIT 31.1
RULE 13a-14(a)/15d-14(a) - CERTIFICATION
I, E. Thomas Layton, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Lux Amber, Corp.; |
| 2. | Based on my knowledge, this quarterly 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 quarterly report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; |
| 4. | The small business issuer’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 small business issuer 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 small business issuer, 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 small business issuer’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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and |
| 5. | The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting. |
| Date: May 25, 2022 | By: | /s/ E. Thomas Layton | |
| E. Thomas Layton | |||
| Chief Executive Officer | |||
EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) - CERTIFICATION
I, Walton A. Ashwander Jr., certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Lux Amber, Corp.; |
| 2. | Based on my knowledge, this quarterly 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 quarterly report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; |
| 4. | The small business issuer’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 small business issuer 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 small business issuer, 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 small business issuer’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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and |
| 5. | The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting. |
| Date: May 25, 2022 | By: | /s/ Walton A. Ashwander Jr. | |
| Walton A. Ashwander Jr. | |||
| President |
EXHIBIT 32.1
CERTIFICATION 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 Lux Amber, Corp. (the “Company”) on Form 10-Q for the quarter ended January 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report). I, E. Thomas Layton, Chief Executive Officer of the company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief.
| (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 results of operations of the Company. |
| Dated: May 25, 2022 | By: | /s/ E. Thomas Layton | |
| E. Thomas Layton, | |||
|
Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION 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 Lux Amber, Corp. (the “Company”) on Form 10-Q for the quarter ended January 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report). I, Walton A. Ashwander Jr., President of the company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief.
| (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 results of operations of the Company. |
| Dated: May 25, 2022 | By: | /s/ Walton A. Ashwander Jr. | |
| Walton A. Ashwander Jr., | |||
|
President (Principal Financial Officer) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Jan. 31, 2022 |
Apr. 30, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 75,000,000 | 75,000,000 |
| Common stock, shares issued | 33,394,678 | 31,111,658 |
| Common stock, shares outstanding | 33,394,678 | 31,111,658 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jan. 31, 2022 |
Jan. 31, 2021 |
Jan. 31, 2022 |
Jan. 31, 2021 |
|
| Income Statement [Abstract] | ||||
| Revenue | $ 248,944 | $ 130,183 | $ 1,112,022 | $ 816,598 |
| Cost of goods sold | 270,800 | 108,695 | 740,442 | 534,149 |
| Gross Profit (Loss) | (21,856) | 21,488 | 371,580 | 282,449 |
| Product delivery expenses | 15,475 | 103,629 | 24,629 | 404,895 |
| General and administrative expenses | 874,730 | 10,547 | 1,944,324 | 1,038,304 |
| Selling expenses | 6,683 | 34,695 | 11,607 | 70,450 |
| Depreciation and amortization | 91,884 | 39,624 | 109,362 | 114,591 |
| Total operating expenses | 988,772 | 188,495 | 2,089,921 | 1,628,240 |
| Loss from operations | (1,010,628) | (167,007) | (1,718,341) | (1,345,791) |
| Other expenses | ||||
| Interest expense | 18,370 | 29,673 | 34,755 | 52,968 |
| Other expense | 0 | 118,268 | 4,823 | 114,988 |
| Total other expense | 18,370 | 147,941 | 39,578 | 167,956 |
| Net loss | $ (1,028,998) | $ (314,948) | $ (1,757,919) | $ (1,513,747) |
| Loss per common share: | ||||
| Basic and diluted | $ (0.03) | $ (0.01) | $ (0.05) | $ (0.05) |
| Weighted Average Number of Common Shares Outstanding: | ||||
| Basic and diluted | 31,794,579 | 30,958,663 | 33,394,678 | 30,389,570 |
NATURE OF BUSINESS |
9 Months Ended |
|---|---|
Jan. 31, 2022 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| NATURE OF BUSINESS | NATURE OF BUSINESS
Lux Amber, Corp. (“LAC”), formed on January 19, 2018, is an international specialty chemical company. Its corporate offices are currently located at 371 Hostdale Drive, Dothan, AL 36303. LAC’s corporate telephone number is 214-676-5475. LAC has a stock symbol of LXAM.
LAC has three (3) wholly owned subsidiaries (collectively with LAC, the “Company”): Worldwide Specialty Chemicals, Inc. (“WSCI”), Industrial Chem Solutions, Inc. (“ICS”), and Safeway Pest Elimination, LLC, (“SPE”), which was formed July 16, 2018. LAC and its subsidiaries serve as both producers and distributors of environmentally safe, specialty chemicals.
The Company’s products utilize all-natural and renewable resources, contain no dangerous chemicals or additives, and offer “green” solutions to its customers. ICS’ product line includes asphalt release agents, industrial cleaners, environmental remediation gels, odor control agents, and consumer friendly cleaners for a wide range of uses, including construction, environmental remediation, hazardous materials clean-up, nuclear decommissioning, industrial cleaning, and odor control. SPE’s products are designed for the elimination and control of pests.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting polices consistently applied in the preparation of the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) is as follows.
Basis of Consolidation
The condensed consolidated financial statements include the accounts of LAC, WSCI, ICS, and SPE. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
FASB ASC 825-10 requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, related party payables, notes payable, and Paycheck Protection Program loans. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management on January 31, 2022 and April 30, 2021. The carrying value of the financial instruments included in the Company’s consolidated financial statements approximated their fair values.
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities are carried at, or approximate, fair value as of the reporting date because of their short-term nature.
The carrying value of the notes payable approximates fair value as they bear market rates of interest.
Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share has not been presented because there are no dilutive items. Diluted earnings loss per share is based on the assumption that all dilutive stock options, warrants, and convertible debt are converted or exercised by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during periods of net profit, only when the average market price of the common stock during the period exceeds the exercise or conversion price of the items.
For the nine months ended January 31, 2022 and 2021, approximately and common stock warrants, respectively, and and common stock options, respectively, were not added to the diluted average shares because inclusion of such warrants and options would be antidilutive.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an initial maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at several financial institutions located throughout the United States, which at times may exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on experience and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer account, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. On January 31, 2022 and April 30, 2021, the allowance for doubtful accounts was $0.
Revenue Recognition
Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Revenue from product sold is recognized when obligations with the customer are satisfied, which generally occurs with the transfer or delivery of the product, signifying the point in time when the customer obtains control of the promised goods. Our performance obligation is delivering the product to the customer; and therefore, the transaction price, which is stated on the invoice, is allocated 100% to the sole performance obligation of product delivery. For the three-month and nine-month periods ended January 31, 2022 and 2021, all revenue was from products sold.
Our sales policies do not provide for general rights of return, and payment is due net of 15 days. We do not record estimated reductions to revenue for customer programs and incentive offerings including pricing arrangements, promotions, and other volume-based incentives at the time of the sale. We also do not record estimated reserves for product returns and credits at the time of sale and anticipated uncollectible accounts.
Sales Taxes
Sales (and similar) taxes that are imposed on the Company's sales and collected from customers are excluded from revenues.
Shipping and Handling Costs
Costs for shipping and handling activities, including those activities that occur after transfer of control to the customer, are recorded as cost of sales and are expensed as incurred. The Company accrues costs for shipping and handling activities that occur after control of the promised good has transferred to the customer.
Inventory
Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in first-out basis. The carrying value of inventory is reduced for estimated obsolescence. The Company evaluates the inventory carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand.
The following table sets forth the components of the Company’s inventory balances as of:
Fixed Assets
Fixed assets consist of furniture, fixtures and office equipment, vehicles and trailers, equipment and leasehold improvements that are stated at cost, less accumulated depreciation. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to earnings over their estimated service lives (3 – 10 years) under the straight-line method.
Maintenance and repairs are charged to earnings as incurred; major repairs and replacements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations.
Goodwill
Goodwill represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination. The Company reviews goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company considered the current and expected future economic and market conditions surrounding COVID-19 and its impact on the reporting unit. As a result of the certain business developments and changes in the Company's long-term projections, during the fourth quarter of fiscal 2021, the Company concluded a triggering event had occurred that required an impairment assessment to be performed. The qualitative assessment thresholds were not met. The Company calculated the quantitative impairment test of using the implied fair market value using market data and concluded there was no goodwill impairment loss. Based on annual testing, the Company determined that there was no goodwill impairment in Fiscal 2021. The Company noted no triggering events as of January 31, 2022.
The Company first evaluates qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying amount, including goodwill. If after qualitatively assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then further testing is unnecessary. If after assessing the totality of events or circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company then estimates the fair value of the reporting unit and compares the fair value of the reporting unit with its carrying amount, including goodwill, as discussed below.
The quantitative goodwill impairment test involves a two-step process. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.
The Company recognizes compensation expense for all share-based payments in accordance with FASB Codification Topic 718, Compensation — Stock Compensation, (ASC 718). Under the fair value recognition provisions of ASC 718, the Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award. The fair value at the measurement date of stock options is estimated using the Black-Scholes option-pricing model. Compensation expense is recognized on a straight-line basis over the vesting period based on the estimated number of stock options that are expected to vest.
Income Taxes
The Company accounts for Federal and state income taxes using the asset and liability approach for financial accounting and reporting for income taxes based on tax effects of differences between the financial statement and tax basis of assets and liabilities.
The Company accounts for all uncertain tax positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 740 – Income Taxes (“ASC 740”). ASC 740 provides guidance on de-recognition, classification, interest and penalties and disclosure related to uncertain income tax positions. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties as of January 31, 2022 or April 30, 2021.
From time to time, the Company may be audited by taxing authorities. These audits could result in proposed assessments of additional taxes. The Company believes that its tax positions comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes. The Company’s federal returns since 2016 are still subject to examination by taxing authorities.
License Fee
ICS pays 10% of the net selling price of $9.50 a gallon to CBI Polymers, Inc (“CBI”), as a mutually acceptable license fee. E. Thomas Layton, Chairman and CEO of LAC, is also the Chairman and CEO and controlling shareholder of CBI. During the nine-month ended January 31, 2022 and 2021, the Company incurred $8,780 and $17,510 of license fees to CBI for those sales. During the three-month ended January 31, 2022 and 2021, the Company incurred $8,663 and $12,320 of license fees to CBI for those sales.
Advertising Costs
The Company recognizes expenses for advertising costs as they are incurred. During the nine months ended January 31, 2022 and 2021, the Company incurred $3,227 and $17,919 in advertising costs. During the three months ended January 31, 2022 and 2021, the Company incurred $393 and $6,022 in advertising costs.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred substantial operating losses, resulting in an accumulated deficit of $16,626,543 on January 31, 2022. The Company has a working capital deficit of $2,674,826 as of January 31, 2022. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are being issued. Accordingly, the Company is arranging for additional financing to fully implement its business plan, including continued growth and establishment of a stronger brand.
The Company is actively seeking growth of its service offerings, both organically and via new client relationships. In the ordinary course of the Company’s business, management is trying to raise additional capital through sales of common stock as well as seeking debt financing from third parties. There are current indications that additional financing will be available on favorable terms. If additional financing is not available, the Company will need to reduce salaries, defer, or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition, and results of operations, including potential discontinuance of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders. Additionally, incurring additional indebtedness could involve an increased debt service cash obligation, as well as the imposition of covenants that restrict the Company’s operations or the Company’s ability to perform on its current debt service requirements. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. While the Company recognizes the significant impact of additional financing, the Company is a smaller reporting company serving large and growing markets and it will continue to sell securities and enter into financing programs which are deemed to be prudent.
Recently Issued Accounting Pronouncements
Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. The new standard became effective for the Company for annual and interim periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this accounting guidance will have on the consolidated financial statements.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE |
9 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | ||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE | 2. ACCOUNTS RECEIVABLE
Accounts receivable relate to trade receivables from product sales made by the Company. Accounts receivable consist of the following at January 31, 2022 and April 30, 2021:
|
|||||||||||||||||||||||||||
NOTES PAYABLE |
9 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||
| NOTES PAYABLE | 3. NOTES PAYABLE
Convertible Promissory Notes Payable During the year ended April 30, 2021, the Company issued a fourth round of convertible debentures in the principal amount of $525,500. The debentures were convertible into shares of the Company’s common stock at the maturity date of September 15, 2020 and pay any unpaid interest at a rate of 8%. The debentures were converted into shares of common stock at a price of $ per share and the accrued interest unpaid amount of $16,459 was converted into shares of common stock at a price of $0.86 per share.
During the year ended April 30, 2021, the Company issued a fifth round of convertible debentures in the principal amount of $204,800. The debentures were convertible into shares of the Company’s common stock at the maturity date of January 15, 2021 and pay any unpaid interest at a rate of 8%. This round of debentures was converted shares of common stock at a price of $ per share and accrued interest of $2,074 was converted into shares of common stock at a price of $1.25 per share.
Vehicles and Equipment Notes Payable
The Company has one note payable relating to the purchase of a Company vehicle as of January 31, 2022. The balance outstanding under the note payable was $20,956 as of January 31, 2022. The note payable bears interest of 5.99% with principal and interest due monthly. The note matures in September 2023. The Company had the same note payable relating to the purchase of a Company vehicle as of April 30, 2021 with a balance outstanding of $40,474.
The Company’s future minimum principal payments as of January 31, 2022 are as follows:
Other Notes Payable
On May 8, 2020, the Company received $100,344 from the Paycheck Protection Program. This PPP loan has a two-year term and bears interest at a rate of 1% per annum and does not require collateral. The loan was fully forgiven in November of 2020 by the SBA and a gain on extinguishment of debt of $100,344 was recorded within other income during the year ended April 30, 2021.
On February 1, 2021, the Company received $50,000 from an investor and in turn issued a promissory note with an 8% interest rate, with collateral of 8 drag slat application units, and is to be paid in full by February 28, 2022. During the year ended April 30, 2021, the Company had paid $666 in interest for this note. A payment of $5,225 was made during the nine month period ending January 31, 2022. During the period ended January 31, 2022, the outstanding debt was used as proceeds for stock option exercises of shares of stock.
On February 11, 2021, WSC received $40,625 from the Paycheck Protection Program. The PPP Loan has a five-year term and bears interest at a rate of 1% per annum and does not require collateral. Monthly principal and interest payments are deferred for ten months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. WSC has not yet applied for forgiveness but believes it will be forgiven.
On February 14, 2021, ICS received $48,510 from the Paycheck Protection Program. The PPP Loan has a five-year term and bears interest at a rate of 1% per annum and does not require collateral. Monthly principal and interest payments are deferred for ten months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. ICS has not yet applied for forgiveness but believes it will be forgiven.
On March 16, 2021, SPE received $15,657 from the Paycheck Protection Program. The PPP Loan has a five-year term and bears interest at a rate of 1% per annum and does not require collateral. Monthly principal and interest payments are deferred for ten months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. SPE has not yet applied for forgiveness but believes it will be forgiven.
On April 19, 2021, the Company received $50,000 from an investor and in turn issued a promissory note with an 8% interest rate. This note does not require collateral and is to be paid in full by May 19, 2022. No payments have been made at this time. During the nine-month period ended January 31, 2022, the outstanding debt was used as proceeds for stock option exercises of shares of stock.
On May 10, 2021, the Company received $25,000 from an investor and in turn issued a promissory note with an 6% interest rate. This note does not require collateral and is to be paid in full by August 6, 2021. During the nine-month period ended January 31, 2022, the outstanding debt was used as proceeds for stock option exercises of shares of stock.
On May 19, 2021, the Company received $50,000 from an investor and in turn issued a promissory note with an 8% interest rate. This note does not require collateral and is to be paid in full by May 19, 2022. During the nine-month period ended January 31, 2022, the outstanding debt was used as proceeds for stock option exercises of shares of stock.
On June 7, 2021, the Company received $26,000 from an investor and in turn issued a promissory note with an 6% interest rate. This note does not require collateral and is to be paid in full by August 7, 2021. During the nine-month period ended January 31, 2022, the outstanding debt was used as proceeds for stock option exercises of shares of stock.
On June 7, 2021, the Company received $20,000 from another investor and in turn issued a promissory note with an 6% interest rate. This note does not require collateral and is to be paid in full by August 7, 2021. During the nine-month period ended January 31, 2022, the outstanding debt was used as proceeds for stock option exercises of shares of stock. During the nine-month period ended January 31, 2022, the Company had accrued $20,000 in unpaid interest for promissory notes that were also used as proceeds for stock option exercises of 5,000 shares of stock.
|
ACCRUED EXPENSES |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| ACCRUED EXPENSES | 4. ACCRUED EXPENSES
Accrued expenses, consisting primarily of accrued salaries for officers and executive management, include the following balance at January 31, 2022 and April 30, 2021:
|
|||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS | 5. COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS
Leases
As of January 31, 2022, the weighted average remaining lease term and weighted average discount rate for financing leases was 2.2 years and 3.99%, respectively. The Company's future financing lease obligations that have not yet commenced are immaterial. For nine-month period January 31, 2022 and January 31, 2021, the Company's cash paid for financing leases was $40,248 and $22,950. For the three-month period January 31, 2022 and 2021, the Company paid $13,414 and $0 for financing leases.
The Company’s undiscounted annual future minimum lease payments as of January 31, 2022 consist of:
Concentrations
As of January 31, 2022, the Company had three customers which made up 60% of the outstanding accounts receivable balance. As of April 31, 2021, the Company had four customers which made up 63% of the outstanding accounts receivable balance.
For the nine months ended January 31, 2022, the Company had two customers which made up 50% of total revenues. For the nine months ended January 31, 2021, the Company had two customers which made up 48% of total revenues. For the three months ended January 31, 2022, the Company had three customers which made up 64% of total revenues. For the three months ended January 31, 2021, the Company had two customers which made up 46% of total revenues.
|
STOCKHOLDERS’ EQUITY |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY | 6. STOCKHOLDERS’ EQUITY
Common Stock and Preferred Stock
As of January 31, 2022, and 2021, the authorized share capital of the Company consisted of 75,000,000 shares of common stock, $0.0001 par value. No other classes of stock are authorized.
Common Stock
For the nine months ended January 31, 2022, the Company sold shares at $ per share for $100,000 in cash proceeds, shares at $ per share for $150,000 in cash proceeds and $50,000 in an assigned note receivable, and shares at $ per share for total cash proceeds of $162,550. Of the 1.55 million shares of stock, shares have been issued, and shares of stock have yet to be issued. For the nine months ended January 31, 2021, the Company has common shares repurchased at $ per share for a total cash payment amount of $45,313 including interest.
Warrants
During the nine months ended January 31, 2022 and 2021, there were warrants exercised.
For the three months ended January 31, 2022 and 2021, the Company had no sale or repurchase of warrants.
As of January 31, 2022, and April 30 2021, there were 82,668 common stock warrants outstanding, respectively, with an exercise price of $0.50.
Stock option plan
Effective February 1, 2017, the Company established the 2016 Stock Option Plan (the “Plan”). The Board of Directors of the Company has the authority and discretion to grant stock options. The maximum number of shares of stock that may be issued pursuant to the exercise of options under the Plan is . Eligible individuals include any employee or director of the Company and any consultant providing services to the Company. The expiration date and exercise price for each stock option grant are as established by the Board of Directors of the Company. No option may be issued under the Plan after February 1, 2027. On March 18, 2018, the Plan was amended to increase the maximum number of shares of stock that may be issued to 5,000,000. On July 10, 2018, the Plan was amended to increase the maximum number of shares of stock that may be issued to 5,500,000. In November of 2019, the Plan was further amended to increase the shares of stock that may be issued to 10,000,000.
During the nine months ended January 31, 2022 and 2021, there were and common stock options granted. options granted have an exercise price of $0.25 and vested immediately. The remaining have an exercise price of $ and vest over a two-year period with each quarter vesting six-months after the grant date.
Stock option activity during the nine-month period ended January 31, 2022 is summarized as follows:
Stock option activity during the nine-month period ended January 31, 2021, is summarized as follows:
The fair value of each option grant is calculated using the following assumptions:
Total share-based compensation expense (including stock grants) included in salaries and wages was $ and $ for the nine months ended January 31, 2022 and 2021, respectively. Total share-based compensation expense (including stock grants) included in salaries and wages was $239,915 and $44,553 for the three months ended January 31, 2021 and 2020, respectively. Unamortized share-based compensation expense amounted to $, which is expected to be recognized over the next 10 months as of January 31, 2022.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS |
9 Months Ended |
|---|---|
Jan. 31, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | 7. RELATED PARTY TRANSACTIONS
During the nine months ended January 31, 2022 and 2021, the Company incurred consulting fees of $ and $ to five separate entities owned by five current shareholders. An additional $108,000 and $74,000 in consulting fees were incurred by the Company from an entity owned by the spouse of the CEO during the nine months ended January 31, 2022 and 2021, respectively. The total related party consulting fees unpaid balance due was $ and $ as of January 31, 2022 and 2021, respectively, and is included in accounts payable in the accompanying consolidated financial statements.
During the three months ended January 31, 2022 and 2021, the Company incurred consulting fees of $ and $ to four separate entities owned by four current shareholders. The total related party consulting fees unpaid balance due was $ and $ as of January 31, 2022 and 2021, respectively, and is included in accounts payable in the accompanying consolidated financial statements.
Two separate related parties are allowing the Company to rent vehicles for a monthly fee of $1,650 and $1,243. For the nine months ended January 31, 2022, the Company paid a total of $14,850 and $11,187. For the three months ended January 31, 2022, the Company paid a total of $4,950 and $3,729. For the nine months ended January 31, 2021, the Company paid a total of $12,875 and $9,690. For the three months ended January 31, 2021, the Company paid a total of $4,950 and $3,729.
|
INCOME TAXES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | 8. INCOME TAXES
For the nine months ended January 31, 2022 and 2021, the effective tax rate of 0% varies from the U.S. federal statutory rate primarily due to net losses and the valuation allowance associated with the net operating loss carryforwards. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company continues to record a full valuation allowance against its net deferred tax assets. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company’s review of this evidence at January 31, 2022, management determined that a full valuation allowance against all of the Company’s deferred tax assets at January 31, 2022 was appropriate.
The following table summarizes the difference between the actual tax provision and the amounts obtained by applying the statutory tax rates to the income or loss before income taxes for the period ending January 31, 2022 and 2021:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
CORONA VIRUS |
9 Months Ended |
|---|---|
Jan. 31, 2022 | |
| Corona Virus | |
| CORONA VIRUS | 9. CORONA VIRUS
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The pandemic has significantly impacted the economic conditions in the U.S., accelerating during the first half of March, as federal, state and local governments react to the public health crisis, creating significant uncertainties in the U.S. economy. In March 2020, we noticed a strong decline in orders from our customers, as businesses around the country began to cease their operations due to COVID-19. In an attempt to mitigate the ongoing impact of the pandemic on our cash flows certain actions were taken. The actions include targeted reductions in discretionary operating expenses such as advertising and payroll expenses, reducing capital expenditures, and reducing travel for business development purposes.
The Paycheck Protection Program (“PPP”) provides loans from the U.S. Small Business Administration (“SBA”) to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. On May 8, 2020, the Company received a PPP loan in the amount of $100,344. The loan was fully forgiven in November of 2020.
On February 11, 2021, WSC received $40,625 from the Paycheck Protection Program. The PPP Loan has a five-year term and bears interest at a rate of 1% per annum and does not require collateral. Monthly principal and interest payments are deferred for ten months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. WSC has not yet applied for forgiveness but believes it will be forgiven.
On February 14, 2021, ICS received $48,510 from the Paycheck Protection Program. The PPP Loan has a five-year term and bears interest at a rate of 1% per annum and does not require collateral. Monthly principal and interest payments are deferred for ten months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. ICS has not yet applied for forgiveness but believes it will be forgiven.
On March 16, 2021, SPE received $15,657 from the Paycheck Protection Program. The PPP Loan has a five-year term and bears interest at a rate of 1% per annum and does not require collateral. Monthly principal and interest payments are deferred for ten months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. SPE has not yet applied for forgiveness but believes it will be forgiven.
Continued impacts of the pandemic have had a material adverse impact on our revenues, earnings, liquidity and cash flows, and may require additional actions in response, including, but not limited to, employee layoffs, reduced production, or further expense reductions, all in an effort to mitigate such impacts. The extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the U.S., and the related /impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted. This situation is rapidly changing and additional impacts to the business may arise that we are not aware of currently. While the disruption is currently expected to be temporary, there is uncertainty around the duration. The ultimate impact of the pandemic on the Company’s results of operations, financial position, liquidity, or capital resources cannot be reasonably estimated at this time.
|
SUBSEQUENT EVENTS |
9 Months Ended |
|---|---|
Jan. 31, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS
On March 3, 2022, the Company issued 300,000 shares of stock at $0.15 per share for a total cash amount of $45,000.
On March 15, 2022, the Company issued 180,000 shares of stock at $0.15 per share for a total cash amount of $45,000.
On April 1, 2022, the Company received $76,000 from an investor and in turn issued a promissory note with an 21% interest rate. This note does not require collateral. Two payments of $1,768 were made during the period ended April 30, 2022.
On April 6, 2022, the Company issued 60,000 shares of stock at $0.25 per share for a total cash amount of $15,000.
On April 12, 2022, the company received $25,000 from another investor and in turn issued a promissory note with an 21% interest rate. This note does not require collateral. No payments were during the period ended April 30, 2022.
On May 12, 2022, Mr. Paul Williams, a member of the Board of Directors of Lux Amber Corp., tendered his resignation as a Board member, and as Vice Chairman and Chief Financial Officer. Mr. Williams will continue to serve the Company for a transition period. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Consolidation | Basis of Consolidation
The condensed consolidated financial statements include the accounts of LAC, WSCI, ICS, and SPE. All significant intercompany accounts and transactions have been eliminated in consolidation.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates | Use of Estimates
The preparation of 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | Fair Value of Financial Instruments
FASB ASC 825-10 requires disclosure of fair value information about certain financial instruments, including, but not limited to, cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, related party payables, notes payable, and Paycheck Protection Program loans. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management on January 31, 2022 and April 30, 2021. The carrying value of the financial instruments included in the Company’s consolidated financial statements approximated their fair values.
The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities are carried at, or approximate, fair value as of the reporting date because of their short-term nature.
The carrying value of the notes payable approximates fair value as they bear market rates of interest.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic and Diluted Net Loss Per Share |
Basic net loss per share is computed using the weighted average number of common shares outstanding. Diluted loss per share has not been presented because there are no dilutive items. Diluted earnings loss per share is based on the assumption that all dilutive stock options, warrants, and convertible debt are converted or exercised by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Options, warrants and/or convertible debt will have a dilutive effect, during periods of net profit, only when the average market price of the common stock during the period exceeds the exercise or conversion price of the items.
For the nine months ended January 31, 2022 and 2021, approximately and common stock warrants, respectively, and and common stock options, respectively, were not added to the diluted average shares because inclusion of such warrants and options would be antidilutive.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers all highly liquid investments with an initial maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at several financial institutions located throughout the United States, which at times may exceed insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivables are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on experience and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable, and current economic conditions. The determination of the collectability of amounts due requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer account, and the financial condition of the Company’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. On January 31, 2022 and April 30, 2021, the allowance for doubtful accounts was $0.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition | Revenue Recognition
Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service. Revenue from product sold is recognized when obligations with the customer are satisfied, which generally occurs with the transfer or delivery of the product, signifying the point in time when the customer obtains control of the promised goods. Our performance obligation is delivering the product to the customer; and therefore, the transaction price, which is stated on the invoice, is allocated 100% to the sole performance obligation of product delivery. For the three-month and nine-month periods ended January 31, 2022 and 2021, all revenue was from products sold.
Our sales policies do not provide for general rights of return, and payment is due net of 15 days. We do not record estimated reductions to revenue for customer programs and incentive offerings including pricing arrangements, promotions, and other volume-based incentives at the time of the sale. We also do not record estimated reserves for product returns and credits at the time of sale and anticipated uncollectible accounts.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sales Taxes | Sales Taxes
Sales (and similar) taxes that are imposed on the Company's sales and collected from customers are excluded from revenues.
Shipping and Handling Costs
Costs for shipping and handling activities, including those activities that occur after transfer of control to the customer, are recorded as cost of sales and are expensed as incurred. The Company accrues costs for shipping and handling activities that occur after control of the promised good has transferred to the customer.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory | Inventory
Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in first-out basis. The carrying value of inventory is reduced for estimated obsolescence. The Company evaluates the inventory carrying value for potential excess and obsolete inventory exposures by analyzing historical and anticipated demand.
The following table sets forth the components of the Company’s inventory balances as of:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed Assets | Fixed Assets
Fixed assets consist of furniture, fixtures and office equipment, vehicles and trailers, equipment and leasehold improvements that are stated at cost, less accumulated depreciation. Depreciation is provided in amounts sufficient to relate the cost of depreciable assets to earnings over their estimated service lives (3 – 10 years) under the straight-line method.
Maintenance and repairs are charged to earnings as incurred; major repairs and replacements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in operations.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill | Goodwill
Goodwill represents the difference between the enterprise value/cash paid less the fair value of all recognized net asset fair values including identifiable intangible asset values in a business combination. The Company reviews goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company considered the current and expected future economic and market conditions surrounding COVID-19 and its impact on the reporting unit. As a result of the certain business developments and changes in the Company's long-term projections, during the fourth quarter of fiscal 2021, the Company concluded a triggering event had occurred that required an impairment assessment to be performed. The qualitative assessment thresholds were not met. The Company calculated the quantitative impairment test of using the implied fair market value using market data and concluded there was no goodwill impairment loss. Based on annual testing, the Company determined that there was no goodwill impairment in Fiscal 2021. The Company noted no triggering events as of January 31, 2022.
The Company first evaluates qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying amount, including goodwill. If after qualitatively assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then further testing is unnecessary. If after assessing the totality of events or circumstances, the Company determines that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company then estimates the fair value of the reporting unit and compares the fair value of the reporting unit with its carrying amount, including goodwill, as discussed below.
The quantitative goodwill impairment test involves a two-step process. In the first step, the Company compares the fair value of each reporting unit to its carrying value. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value, the Company must perform the second step of the impairment test to measure the amount of impairment loss. In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation |
The Company recognizes compensation expense for all share-based payments in accordance with FASB Codification Topic 718, Compensation — Stock Compensation, (ASC 718). Under the fair value recognition provisions of ASC 718, the Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award. The fair value at the measurement date of stock options is estimated using the Black-Scholes option-pricing model. Compensation expense is recognized on a straight-line basis over the vesting period based on the estimated number of stock options that are expected to vest.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | Income Taxes
The Company accounts for Federal and state income taxes using the asset and liability approach for financial accounting and reporting for income taxes based on tax effects of differences between the financial statement and tax basis of assets and liabilities.
The Company accounts for all uncertain tax positions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 740 – Income Taxes (“ASC 740”). ASC 740 provides guidance on de-recognition, classification, interest and penalties and disclosure related to uncertain income tax positions. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties as of January 31, 2022 or April 30, 2021.
From time to time, the Company may be audited by taxing authorities. These audits could result in proposed assessments of additional taxes. The Company believes that its tax positions comply in all material respects with applicable tax law. However, tax law is subject to interpretation, and interpretations by taxing authorities could be different from those of the Company, which could result in the imposition of additional taxes. The Company’s federal returns since 2016 are still subject to examination by taxing authorities.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| License Fee | License Fee
ICS pays 10% of the net selling price of $9.50 a gallon to CBI Polymers, Inc (“CBI”), as a mutually acceptable license fee. E. Thomas Layton, Chairman and CEO of LAC, is also the Chairman and CEO and controlling shareholder of CBI. During the nine-month ended January 31, 2022 and 2021, the Company incurred $8,780 and $17,510 of license fees to CBI for those sales. During the three-month ended January 31, 2022 and 2021, the Company incurred $8,663 and $12,320 of license fees to CBI for those sales.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Advertising Costs | Advertising Costs
The Company recognizes expenses for advertising costs as they are incurred. During the nine months ended January 31, 2022 and 2021, the Company incurred $3,227 and $17,919 in advertising costs. During the three months ended January 31, 2022 and 2021, the Company incurred $393 and $6,022 in advertising costs.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Going Concern | Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred substantial operating losses, resulting in an accumulated deficit of $16,626,543 on January 31, 2022. The Company has a working capital deficit of $2,674,826 as of January 31, 2022. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are being issued. Accordingly, the Company is arranging for additional financing to fully implement its business plan, including continued growth and establishment of a stronger brand.
The Company is actively seeking growth of its service offerings, both organically and via new client relationships. In the ordinary course of the Company’s business, management is trying to raise additional capital through sales of common stock as well as seeking debt financing from third parties. There are current indications that additional financing will be available on favorable terms. If additional financing is not available, the Company will need to reduce salaries, defer, or cancel development programs, planned initiatives and overhead expenditures. The failure to adequately fund its capital requirements could have a material adverse effect on the Company’s business, financial condition, and results of operations, including potential discontinuance of operations. Moreover, the sale of additional equity securities to raise financing will result in additional dilution to the Company’s stockholders. Additionally, incurring additional indebtedness could involve an increased debt service cash obligation, as well as the imposition of covenants that restrict the Company’s operations or the Company’s ability to perform on its current debt service requirements. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. While the Company recognizes the significant impact of additional financing, the Company is a smaller reporting company serving large and growing markets and it will continue to sell securities and enter into financing programs which are deemed to be prudent.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements
Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses, which amends how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, which applies to trade accounts receivable and the calculation of the allowance for uncollectible accounts receivable. The new standard became effective for the Company for annual and interim periods beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this accounting guidance will have on the consolidated financial statements.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventory |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE (Tables) |
9 Months Ended | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | ||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||
| Schedule of accounts receivable |
|
|||||||||||||||||||||||||||
NOTES PAYABLE (Tables) |
9 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||
| Schedule of future minimum debt payments |
|
ACCRUED EXPENSES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued expenses |
|
|||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of future minimum lease payments |
|
STOCKHOLDERS’ EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of option activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value assumption |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of income tax reconciliation |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Inventory) - USD ($) |
Jan. 31, 2022 |
Apr. 30, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Finished goods | $ 18,174 | $ 93,203 |
| Raw materials | 15,219 | 61,298 |
| Obsolescence | (17,290) | (17,290) |
| Inventory, net | $ 16,103 | $ 137,211 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Jan. 31, 2022 |
Jan. 31, 2021 |
Jan. 31, 2022 |
Jan. 31, 2021 |
Apr. 30, 2021 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
| Allowance for doubtful accounts | $ 0 | $ 0 | $ 0 | ||
| Goodwill impairment | 0 | ||||
| License fees | 8,663 | $ 12,320 | 8,780 | $ 17,510 | |
| Advertising costs | 393 | $ 6,022 | 3,227 | $ 17,919 | |
| Accumulated deficit | 16,626,543 | 16,626,543 | $ 14,868,624 | ||
| Working capital deficit | $ 2,674,826 | $ 2,674,826 | |||
| Warrant [Member] | |||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
| Antidilutive shares | 82,668 | 82,668 | |||
| Equity Option [Member] | |||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||
| Antidilutive shares | 8,984,750 | 6,569,750 | |||
ACCOUNTS RECEIVABLE (Details) - USD ($) |
Jan. 31, 2022 |
Apr. 30, 2021 |
|---|---|---|
| Receivables [Abstract] | ||
| Trade receivables | $ 45,279 | $ 112,982 |
NOTES PAYABLE (Details - Minimum debt payments) |
Jan. 31, 2022
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2022 | $ 4,158 |
| 2023 | 16,798 |
| Total future minimum payment | $ 20,956 |
ACCRUED EXPENSES (Details) - USD ($) |
Jan. 31, 2022 |
Apr. 30, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued Compensation | $ 1,164,013 | $ 934,104 |
| Other Accrued Expenses | 513,693 | 267,464 |
| Accrued expenses | $ 1,677,706 | $ 1,201,568 |
COMMITMENTSCONTINGENCIES AND CONCENTRATIONS (Details - Minimum Lease payments) |
Jan. 31, 2022
USD ($)
|
|---|---|
| Commitments and Contingencies Disclosure [Abstract] | |
| 2022 | $ 56,105 |
| 2023 | 142,902 |
| 2024 | 65,962 |
| 2025 | 28,076 |
| 2026 | 13,994 |
| Total lease payments | 307,038 |
| Interest | (23,709) |
| Present value of lease liabilities | $ 283,329 |
COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Jan. 31, 2022 |
Jan. 31, 2021 |
Jan. 31, 2022 |
Jan. 31, 2021 |
Apr. 30, 2021 |
|
| Product Information [Line Items] | |||||
| Weighted average remaining lease term | 2 years 2 months 12 days | 2 years 2 months 12 days | |||
| Weighted average discount rate | 3.99% | 3.99% | |||
| Finance lease cost | $ 13,414 | $ 0 | $ 40,248 | $ 22,950 | |
| Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Customer [Member] | |||||
| Product Information [Line Items] | |||||
| Concentration risk percentage | 60.00% | 63.00% | |||
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customer [Member] | |||||
| Product Information [Line Items] | |||||
| Concentration risk percentage | 46.00% | 50.00% | 48.00% | ||
| Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Customer [Member] | |||||
| Product Information [Line Items] | |||||
| Concentration risk percentage | 64.00% | ||||
STOCKHOLDERS' EQUITY (Details - Fair value assumption) - USD ($) |
9 Months Ended | |
|---|---|---|
Jan. 31, 2022 |
Jan. 31, 2021 |
|
| Equity [Abstract] | ||
| Expected life years | 6 years | |
| Interest rate, minimum | 1.58% | |
| Interest rate, maximum | 1.89% | |
| Volatility | 72.70% | |
| Dividend yield | $ (0) | $ 0 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Jan. 31, 2022 |
Jan. 31, 2021 |
Jan. 31, 2022 |
Jan. 31, 2021 |
Apr. 30, 2021 |
|
| Related Party Transaction [Line Items] | |||||
| Consulting fees | $ 108,000 | $ 74,000 | |||
| Due to related parties | $ 211,442 | 211,442 | $ 208,756 | ||
| Lease expense | 4,950 | $ 3,729 | 14,850 | 11,187 | |
| Vehicle Rental 1 [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Lease expense | 4,950 | 12,875 | |||
| Vehicle Rental 2 [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Lease expense | 3,729 | 9,690 | |||
| Five Shareholders [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Consulting fees | 122,829 | 214,487 | |||
| Due to related parties | 108,000 | 62,693 | 108,000 | 62,693 | |
| Four Shareholders [Member] | |||||
| Related Party Transaction [Line Items] | |||||
| Consulting fees | 53,863 | 62,693 | |||
| Due to related parties | $ 32,863 | $ 30,741 | $ 32,863 | $ 30,741 | |
INCOME TAXES (Details - Income tax reconciliation) |
9 Months Ended | |
|---|---|---|
Jan. 31, 2022 |
Jan. 31, 2021 |
|
| Income Tax Disclosure [Abstract] | ||
| Tax benefit calculated at statutory rate | 21.00% | 21.00% |
| Expense not deductible | 0.05% | 0.06% |
| Changes to valuation allowance | 20.95% | 20.94% |
| Provision for income taxes | 0.00% | 0.00% |
CORONA VIRUS (Details Narrative) - Paycheck Protection Program [Member] - USD ($) |
Mar. 16, 2021 |
Feb. 14, 2021 |
Feb. 11, 2021 |
May 08, 2020 |
Mar. 08, 2020 |
|---|---|---|---|---|---|
| Debt Instrument [Line Items] | |||||
| Loan received | $ 15,657 | $ 48,510 | $ 40,625 | ||
| Debt Instrument, Interest Rate, Stated Percentage | 1.00% | 1.00% | 1.00% | ||
| S B A [Member] | |||||
| Debt Instrument [Line Items] | |||||
| Loan received | $ 100,344 | $ 100,344 | |||
| Debt Instrument, Interest Rate, Stated Percentage | 1.00% |
,D#;#A[B%
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MMQ;F L_BWY8[MWC?10[H3XI6^^%,>S0"OB%<^5[H+!SP,_YU6E>P(=OW>=
MSOIWZH;[UR^]7YG!PV#N6,O/1?6S+-3Z>);.4,%7;%NI[^+Q,]\-*-+]Y:)J
MS5_TV-DFP0SEVU:)>M<8%-1ET_VRIYTC]AI /^X&9-> C!N$$PWHK@$U ^V4
MF6%=,,5.CJ1X1%);0V_ZPOC&M(;1E(V>QJ62\-\2VJF3\YOKB\OKY>4%@JOE
MS=&PO=V]R:W-H965T
M