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Summary of Significant Accounting Policies
6 Months Ended
Aug. 31, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Note 2 - Summary of Significant Accounting Policies


Principles of Consolidation

The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Mango Moi and Glow Markets, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
Significant Accounting Policies and Use of Estimates:
 
There were no material changes in the Company’s significant accounting policies for the six months ended August 31, 2023 as compared to the year ended February 28, 2023 except for lease accounting for operating lease entered into in Q1, where the company has applied Accounting Standards Codification (ASC) 842 (See Note 7). Further, see Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2023, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates.




The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates of stock option valuation, Right-of-use assets - operating leases, lease liability and the valuation allowance associated with the Company’s deferred tax assets.
 
Interim Financial Statements
 
The accompanying unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in shareholders’ deficit and cash flows as of August 31, 2023 and for the related periods presented, have been included. The results for the six-months period ended August 31, 2023 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto for the year ended February 28, 2023 issued on June 9, 2023.
 
Revenue Recognition
 
The Company has prepared its unaudited condensed consolidated financial statements in accordance with GAAP. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.
 
The Company adopted ASC 606 - Revenue from contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
 
Revenue for products is recognized when the products are delivered to the customer, and the customer completes the product inspection. Cash receipts for undelivered products are recorded as deferred revenues. As of August 31, 2023 and 2022, the Company had no deferred revenues.
 
Basis of Presentation
 
This summary of significant accounting policies is presented to assist in understanding the Company’s unaudited condensed consolidated financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
 
Use of Estimates
 
The preparation of unaudited condensed consolidated 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
 
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at August 31, 2023 and February 28, 2023 were $3,209 and $ 13,773 respectively.
 
Property and Equipment
 
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets (primarily three to five years).
 
Inventory
 
Inventories, which include the costs of material, labor and overhead, are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis.
 
Better Suds manufactures only what it sells in a drop ship business model, therefore the Company had $910 and $979 in inventory as of August 31, 2023 and February 28, 2023 respectively.

Income Taxes
 
The Company accounts for income taxes under ASC 740, “
Income Taxes
.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized at August 31, 2023 as
a 100% valuation allowance has been established on deferred tax assets at August 31, 2023 and February 28, 2023, due to the uncertainty of our ability to realize future taxable income.”
 
Basic/ Diluted Earnings (Loss) Per Share
 
The Company computes basic and diluted earnings (loss) per share in accordance with ASC Topic 260,
Earnings per Share
. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
 
The Company does not have any potentially dilutive instruments as of August 31, 2023 and, thus, anti-dilution issues are not applicable.
 
Fair Value of Financial Instruments
 
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
 
ASC 820,
Fair Value Measurements and Disclosures
, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
 
- Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
 
- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
 
- Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
 
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of August 31, 2023. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, prepaid expenses, other receivable, inventory, accounts payable, deferred compensation, notes payable-related party, lease liability current portion and convertible notes.
 
Related Parties
 
The Company follows ASC 850,
Related Party Disclosures,
for the identification of related parties and disclosure of related party transactions. See notes 8 and 9 below for details of related party transactions in the period presented
 
Leases:
 
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our balance sheet.

ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases do not provide an implicit rate, the Company elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. The operating ROU asset also includes any lease payments made and exclude lease incentives. Lease expense for lease payment is recognized on a straight-line basis over lease term.
 
On April 1, 2023, the Company entered into office Lease Agreement, for
9,247
square feet office in Columbus, OH. The lease has a term of 3 years starting from April 1, 2023 to March 31, 2026. The lease does not provide an implicit rate; therefore, the Company elected the practical expedient to utilize the risk-free rate to determine the present value of lease payments. Therefore, we have adopted a treasury rate of 3.81%.
 
The lease includes the following physical space:
9,247
square feet (SF) on the first, second, and third floors, the 3,000 SF of storage and fulfillment in the sublevel finished basement, and nearly
1,000
SF of lab space in the first floor of the Carriage House (a cumulative total of approximately
10,247
SF), and secure off-street parking.
 
Share-Based Compensation
 
ASC 718, “
Compensation – Stock Compensation
”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
 
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “
Equity – Based Payments to Non-Employees.”
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
 
Except as specified for the Independent Directors’ compensation, the Company had
no
stock-based compensation plans as of August 31, 2023 and February 28, 2023.
 
Recently Issued Accounting Pronouncements
 
In June 2016, the FASB issued ASU No. 2016-13 “Credit Losses - Measurement of Credit Losses on Financial Instruments.” ASU No. 2016-13 significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables, by replacing today’s “incurred loss” approach with an “expected loss” model under which allowances will be recognized based on expected rather than incurred losses. ASU No. 2016-13 is effective for us in the first quarter of fiscal year 2024. The adoption of ASU No. 2016-13 resulted in no change in the allowance for doubtful accounts.