UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended November 30, 2017February 29, 2020

 

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

 

Commission File Number: 333-220846

 

Reviv3 Procare Company

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware 47-4125218
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
   
9480 Telstar Avenue., Unit 5, El Monte, CA 9021191731
(Address of Principal Executive Office) (Zip Code)

 

(888) 638-8883

(Registrant’s Telephone Number, Including Area Code)

 

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Not Applicable

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes   No

 

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

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company 
(Do not check if a 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    No  

 

As of January 12, 2018,April 6, 2020, there were 40,505,04741,285,881 shares of the registrant’s common stock, $0.0001 par value, outstanding.


REVIV3 PROCARE COMPANY

INDEX

 

  Page
   
PART I - FINANCIAL INFORMATION
   
Item 1.Financial Statements1
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations2
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk57
   
Item 4.Controls and Procedures57
   
PART II - OTHER INFORMATION 
   
Item 1.Legal Proceedings68
   
Item 1A.Risk Factors68
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds68
   
Item 3.Defaults Upon Senior Securities68
   
Item 4.Mine Safety Disclosures68
   
Item 5.Other Information68
   
Item 6.Exhibits69
   
Signatures710

 

 

FORWARD-LOOKING STATEMENTS

 

Except for any historical information contained herein, the matters discussed in this quarterly report on Form 10-Q contain certain “forward-looking statements’’ within the meaning of the federal securities laws. This includes statements regarding our future financial position, economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the information referred to under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

These forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,’’ “will,’’ “expect,’’ “intend,’’ “estimate,’’ “anticipate,’’ “believe,’’ “continue’’ or similar terminology, although not all forward-looking statements contain these words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Important factors that may cause actual results to differ from projections include, for example:

 

 the success or failure of management’s efforts to implement our business plan;
   
 our ability to fund our operating expenses;
   
 our ability to compete with other companies that have a similar business plan;
   
 the effect of changing economic conditions impacting our plan of operation;
The scope and duration of the COVID-19 outbreak and its impact on global economic systems; and
   
 

our ability to meet the other risks as may be described in future filings with the Securities

and Exchange Commission (the “SEC”).

 

Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this quarterly report on Form 10-Q.

 

When considering these forward-looking statements, you should keep in mind the cautionary statements in this quarterly report on Form 10-Q and in our other filings with the SEC. We cannot assure you that the forward-looking statements in this quarterly report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time-frame,timeframe, or at all.

 

 

 

PART I -1 – FINANCIAL INFORMATION

  

ITEM 1. FINANCIAL STATEMENTS

 

REVIV3 PROCARE COMPANY

INDEX TO FINANCIAL STATEMENTS

NOVEMBER 30, 2017FEBRUARY 29, 2020

UNAUDITED

 

CONTENTS

 

Condensed Balance Sheets - Asas of November 30, 2017February 29, 2020 (Unaudited) and May 31, 20172019F-1
  
StatementCondensed Statements of Operations for the three months and sixnine months ended November 30, 2017February 29, 2020 and 2016February 28, 2019 (Unaudited)F-2
  
StatementCondensed Statements of Cash FlowsChanges in Stockholders' Equity for the sixthree months and nine months ended November 30, 2017February 29, 2020 and 2016February 28, 2019 (Unaudited)F-3
  
Condensed Statements of Cash Flows for the nine months ended February 29, 2020 and February 28, 2019 (Unaudited)F-4
Condensed Notes to Unaudited Financial StatementsF-4F-5 - F-14

 

 -1-

1

 


REVIV3 PROCARE COMPANY

CONDENSED BALANCE SHEETS

 

 November 30, May 31, 
 2017 2017 
 (Unaudited)    February 29, 2020 May 31, 2019
       (Unaudited)     
ASSETS             
CURRENT ASSETS:             
Cash $347,880  $416,873  $142,690  $346,179 
Accounts receivable, net  16,882   32,703   59,927   79,588 
Inventory  364,265   129,794   344,477   264,578 
Advance to suppliers  21,784   16,135 
Prepaid expenses and other current assets  4,116   18,089   1,290   2,993 
                
Total Current Assets  754,927   613,594   548,384   693,338 
                
OTHER ASSETS:                
Intangible assets, net  —     474 
Property and equipment, net  6,519   7,255   34,035   32,803 
Deposits  14,849   14,849 
Deposit  16,278   14,849 
Right of use assets, net  219,105   --_ 
                
Total Other Assets  21,368   22,104   269,418   48,126 
                
TOTAL ASSETS $776,295  $635,698  $817,802  $741,464 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY        
LIABILITIES AND STOCKHOLDERS' EQUITY        
                
CURRENT LIABILITIES:                
Accounts payable and accrued expenses $103,214  $62,968  $63,714  $32,471 
Customer deposits  45,014   20,246   16,203   16,203 
Due to related party  210   -   210   210 
Equipment financing payable, current  3,300   3,300 
Lease liability, current  68,941   —   
                
Total Current Liabilities  148,438   83,214   152,368   52,184 
                
LONG TERM LIABILITIES:        
Equipment financing payable  9,625   11,910 
Lease liability, non-current  151,021   —   
        
Total Liabilities  148,438   83,214   313,014   64,094 
                
Commitments and contingencies (see Note 7)        
Commitments and contingencies (see Note 9)        
                
STOCKHOLDERS’ EQUITY:        
STOCKHOLDERS' EQUITY:        
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; none issued and outstanding  -   -   —     —   
Common stock, $0.0001 par value: 100,000,000 shares authorized; 40,505,047 and 39,679,047 shares issued and outstanding as of November 30, 2017 and May 31, 2017 respectively  4,050   3,968 
Common stock, $0.0001 par value: 100,000,000 shares authorized; 41,285,881 shares issued and outstanding as of February 29, 2020 and May 31, 2019  4,129   4,129 
Additional paid-in capital  4,997,462   4,694,144   5,311,383   5,311,383 
Accumulated deficit  (4,373,655)  (4,145,628)  (4,810,724)  (4,638,142)
                
Total Stockholders’ Equity  627,857   552,484 
Total Stockholders' Equity  504,788   677,370 
                
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $776,295  $635,698 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $817,802  $741,464 

 

SeeThe accompanying notes toare an integral part of these condensed unaudited financial statements.

 

F-1

F-1

 Table of Contents

REVIV3 PROCARE COMPANY

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)(UNAUDITED)

 

 For the Three Months Ended For the Six Months Ended  For the Three Months Ended For the Nine Months Ended
 November 30, November 30,  February 29,            February 28, February 29,             February 28,
 2017 2016 2017 2016  2020 2019 2020 2019
                 
Sales $135,909  $140,341  $247,154  $306,478  $157,880  $281,062  $612,114  $662,401 
                                
Cost of sales  67,618   59,159   112,123   128,850   45,736   158,846   260,603   382,238 
                                
Gross profit  68,291   81,182   135,031   177,628   112,144   122,216   351,511   280,163 
                                
OPERATING EXPENSES:                                
Marketing and selling expenses  25,257   36,672   37,864   59,156   37,497   22,439   140,260   63,911 
Compensation and related taxes  6,816   14,157   12,422   41,861   7,624   7,344   38,817   22,430 
Professional and consulting expenses  88,545   75,740   207,255   204,700   43,431   37,732   142,263   157,912 
General and administrative  47,956   65,050   103,468   95,380   64,703   58,212   201,699   190,538 
                                
Total Operating Expenses  168,574   191,619   361,009   401,097   153,255   125,727   523,039   434,791 
                                
LOSS FROM OPERATIONS  (100,283)  (110,437)  (225,978)  (223,469)  (41,111)  (3,511)  (171,528)  (154,628)
                                
OTHER INCOME (EXPENSE):                                
Interest income  27   -   57   -   25   49   95   95 
Interest expense  (1,042)  -   (2,106)  - 
Interest expense and other finance charges  (513)  (106)  (1,149)  (378)
                                
Other Income (Expense), Net  (1,015)  -   (2,049)  -   (488)  (57)  (1,054)  (283)
                                
LOSS BEFORE PROVISION FOR INCOME TAXES  (101,298)  (110,437)  (228,027)  (223,469)  (41,599)  (3,568)  (172,582)  (154,911)
                                
Provision for income taxes  -   -   -   -   —     —     —     —   
                                
NET LOSS $(101,298) $(110,437) $(228,027) $(223,469) $(41,599) $(3,568) $(172,582) $(154,911)
                                
NET LOSS PER COMMON SHARE - Basic and diluted $(0.00) $(0.00) $(0.01) $(0.01) $(0.00) $(0.00) $(0.00) $(0.00)
                                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
Basic and diluted  40,262,456   38,180,611   40,011,490   38,196,779   41,285,881   41,277,547   41,285,881   40,808,595 

 

SeeThe accompanying notes toare an integral part of these condensed unaudited financial statements.

 

F-2

F-2

 Table of Contents

REVIV3 PROCARE COMPANY

CONDENSED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)FOR THE THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

(UNAUDITED)

 

  For the Six Months Ended 
  November 30, 
  2017  2016 
       
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $(228,027) $(223,469)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  1,204   367 
Bad debts  1,204   - 
Stock based compensation  30,973   106,811 
Change in operating assets and liabilities:        
Accounts receivable  14,617   (11,258)
Inventory  (234,471)  26,191 
Advance to suppliers  (5,649)  (2,714)
Prepaid expenses and other current assets  3,000   - 
Deposits  -   (6,349)
Accounts payable and accrued expenses  40,246   (21,942)
Customer deposits  24,768   (21,504)
         
NET CASH USED IN OPERATING ACTIVITIES  (352,135)  (153,867)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchase of property and equipment  (468)  - 
         
NET CASH USED IN INVESTING ACTIVITIES  (468)  - 
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Issuance of common stock for cash  283,400   70,000 
Note payable from related party  -   675,000 
Repayment of note payable to related party  -   (675,000)
Advances from a related party  210   - 
         
NET CASH PROVIDED BY FINANCING ACTIVITIES  283,610   70,000 
         
NET DECREASE IN CASH  (68,993)  (83,867)
         
CASH - Beginning of period  416,873   369,696 
         
CASH - End of period $347,880  $285,829 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash paid during the period for:        
Interest $-  $- 
Income taxes $-  $- 
         
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Issuance of common stock for prepaid services $20,000  $- 
For the three months ended February 29, 2020        
  Preferred Stock Common Stock Additional Paid-in Accumulated Stockholders'
  Shares Amount Shares Amount Capital Deficit Equity
Balance, November 30, 2019  —    $—     41,285,881  $4,129  $5,311,383  $(4,769,125) $546,387 
                             
Net loss for the three months ended February 29, 2020  —     —     —     —     —     (41,599)  (41,599)
                             
Balance, February 29, 2020  —    $—     41,285,881  $4,129  $5,311,383  $(4,810,724) $504,788 
                             
For the nine months ended February 29, 2020                 
   Preferred Stock    Common Stock    Additional Paid-in   Accumulated   Stockholders' 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity  
Balance, May 31, 2019  —    $—     41,285,881  $4,129  $5,311,383  $(4,638,142) $677,370 
                             
Net loss for the nine months ended February 29, 2020  —     —     —     —     —     (172,582)  (172,582)
                             
Balance, February 29, 2020  —    $—     41,285,881  $4,129  $5,311,383  $(4,810,724) $504,788 
                             
                             
For the three months ended February 28, 2019                 
   Preferred Stock    Common Stock    Additional Paid-in   Accumulated   Stockholders' 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity  
Balance, November 30, 2018  —    $—     41,277,547  $4,128  $5,306,384  $(4,639,510) $671,002 
                             
Net loss for the three months ended February 28, 2019  —     —     —     —     —     (3,568)  (3,568)
                             
Balance, February 28, 2019  —    $—     41,277,547  $4,128  $5,306,384  $(4,643,078) $667,434 
                             
For the nine months ended February 28, 2019                 
   Preferred Stock    Common Stock    Additional Paid-in   Accumulated   Stockholders' 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity  
Balance, May 31, 2018  —    $—     40,505,047  $4,051  $4,997,461  $(4,488,167) $513,345 
                             
Issuance of common stock for cash  —     —     760,000   76   303,924   —     304,000 
                             
Shares to be issued for services  —     —     12,500   1   4,999   —     5,000 
                             
Net loss for the nine months ended February 28, 2019  —     —     —     —     —     (154,911)  (154,911)
                             
Balance, February 28, 2019  —    $—     41,277,547  $4,128  $5,306,384  $(4,643,078) $667,434 

 

SeeThe accompanying notes toare an integral part of these condensed unaudited financial statements.

 

F-3

F-3

REVIV3 PROCARE COMPANY

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

  For the Nine Months Ended
  February 29, 2020 February 28, 2019
     
CASH FLOWS FROM OPERATING ACTIVITIES        
Net loss $(172,582) $(154,911)
Adjustments to reconcile net loss to net cash used in operating activities:        
     Depreciation  7,998   3,625 
     Bad debts (recovery)  (2,342)  2,786 
     Stock based compensation  —     5,000 
         
     Intangibles written off  474   —   
Change in operating assets and liabilities:        
Accounts receivable  22,004   (11,316)
Inventory  (79,899)  (106,224)
Advance to suppliers  —     3,413 
Prepaid expenses and other current assets  1,703   3,505 
Deposits  (1,429)  —   
Right of use assets  857   —   
Accounts payable and accrued expenses  31,242   91,508 
         
Customer deposits  —     42,447 
Other liabilities  —     (47)
         
NET CASH USED IN OPERATING ACTIVITIES  (191,974)  (120,214)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchase of property and equipment  (9,230)  (13,887)
         
NET CASH USED IN INVESTING ACTIVITIES  (9,230)  (13,887)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Issuance of common stock for cash  —     304,000 
Repayment of equipment financing  (2,285)  (275)
Advances from a related party  —     3,000 
         
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES  (2,285)  306,725 
         
NET (DECREASE) INCREASE IN CASH  (203,489)  172,624 
         
CASH - Beginning of period  346,179   227,870 
         
CASH - End of period $142,690  $400,494 
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash paid during the period for:        
   Interest $1,149  $378 
   Income taxes $—    $—   
         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:        
Cash paid during the period for:        
Financing of equipment $—    $16,500 
Right of use assets recognized as lease liability $235,748  $—   
Right of use assets amortization $15,786  $—   

The accompanying notes are an integral part of these condensed unaudited financial statements.


F-4

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

 

Note 1 – Organization

 

Reviv3 Procare Company (the “Company”) was incorporated in the State of Delaware on May 21, 2015 as a reorganization of Reviv3 Procare, LLC which was organized on July 31, 2013. The Company is engaged in the manufacturing, marketing, sale and distribution of professional quality hair and skin care products throughout the United States, Canada, Europe and Asia.

 

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

 

Basis of Presentation

 

The unaudited financial statements for the sixthree and nine months ended November 30, 2017February 29, 2020 and 2016February 28, 2019 have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of November 30, 2017February 29, 2020 and 2016,February 28, 2018, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been or omitted. The unaudited financial statements should be read in conjunction with the audited financial statements as of and notes thereto included in the Company’s annual report on Form 10-K for the year ended May 31, 2017 and footnotes thereto included in the Company’s Report on Form S-1/A filed with the SEC on December 1, 2017.2019. The results of operations for the sixthree months and nine months ended November 30, 2017February 29, 2020 are not necessarily indicative of the results to be expected for the full year.

Going Concern

 

As reflected in the accompanying financial statements, the Company has a net loss and net cash used in operations of $228,027 and $352,135, respectively,$172,582 for the sixnine months ended November 30, 2017.February 29, 2020, and used cash from operating activities of $191,974 for the nine months ended February 29, 2020.  Additionally, the Company has an accumulated deficit of $4,373,655$4,810,724 at November 30, 2017.February 29, 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the issuance date of this report. The ability of the Company to continue as a going concern is dependent on the Company’s ability to implementcontinue its business plan, raise capital, and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. Management intends to raise additional funds by way of a private or public offering. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company isbe unable to continue as a going concern.

 

Use of estimates

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates made by management include, but are not limited to, the allowance for doubtful accounts, inventory valuations, the useful life of property and equipment, the valuation of intangible assets, the valuation of deferred tax assets, the value of stock-based compensation, and the fair value of non-cash common stock issuances. 

 

Cash and cash equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents.  The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation.

 

F-5

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Accounts receivable and allowance for doubtful accounts

 

The Company has a policy of providing on allowance for doubtful accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable.  The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt.  Account balances deemed to be uncollectible are charged to bad debt expense and included in the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

 

Prepaid expenses and other current assets

 

Prepaid expenses and other current assets of $4,116$1,290 and $18,089$2,993 at November 30, 2017February 29, 2020 and May 31, 2017,2019, respectively, consist primarily of costs paid for future services which will occur within a year.year and cash prepayment to vendors. Prepaid expenses primarily included prepayments in common stock for consulting services which are being amortized over the terms of their respective agreements.  

F-4

REVIV3 PROCARE COMPANY

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017

Advances to suppliers

Advances to a supplier represents the cash paid in advance for installment payments for the purchase of inventory. The advances to a supplier are interest free and unsecured. As of November 30, 2017at February 29, 2020 and May 31, 2017, advances2019 primarily included cash prepayment to the Company’s major supplier amounted $21,784 and $16,135, respectively. Upon shipment of the purchase inventory, the Company reclassifies such advances to supplier into inventory.vendors.   

 

Inventory

 

The Company values inventory, consisting of finished goods and raw materials, at the lower of cost and net realizable value. Cost is determined using an average cost method. The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its net realizable value. The Company evaluates its current level of inventory considering historical sales and other factors and, based on this evaluation, classifies inventory markdowns in the statement of operations as a component of cost of goods sold. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations.

  

Property and Equipment

 

Property and equipment are carried at cost less accumulated depreciation.  Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed, and any resulting gains or losses are included in the statement of operations.

 

Revenue recognition

Effective June 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, “Revenue From Contracts With Customers”, which is effective for public business entities with annual reporting periods beginning after December 15, 2017.  This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures and there was no cumulative effect of the adoption of ASC 606.

 

The Company follows paragraph 605-10-S99-1sells a variety of the FASB Accounting Standards Codification for revenue recognition.hair and skin care products. The Company will recognizerecognizes revenue for the agreed upon sales price when ita purchase order is realized or realizablereceived from the customer and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii)subsequently the product has beenis shipped (iii)to the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

customer, which satisfies the performance obligation. Consideration paid to the customer to promote and sell the Company’s products to customers is typically recorded as a reduction in revenues in accordance with Accounting Standard Codification (“ASC”) ASC 605-50-45-2, Revenue Recognition—Customer Payments and Incentives.revenues. See Note 11 for revenue disaggregation disclosures.

 

Cost of Sales

 

The primary components of cost of sales include the cost of the product and shipping fees.freight-in.

F-6

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

 

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Shipping and Handling Costs

 

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification.ASC 606. While amounts charged to customers for shipping products are included in revenues, the related costs of shipping products to customers are classified in marketing and selling expenses as incurred. Shipping costs included in marketing and selling expense were $16,112$11,292 and $22,954$11,900 for the sixthree months ended November 30, 2017February 29, 2020 and 2016,February 28, 2019, respectively. Shipping costs included in marketing and selling expense were $31,898 and $30,601 for the nine months ended February 29, 2020 and February 28, 2019, respectively.

 

Marketing, selling and advertising

 

Marketing, selling and advertising costs are expensed as incurred.

 

Customer Deposits

 

Customer deposits consisted of prepayments from customers to the Company. The Company will recognize the prepayments as revenue upon delivery of products in compliance with its revenue recognition policy.

 

F-5

REVIV3 PROCARE COMPANY

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017

Fair value measurements and fair value of financial instruments

 

The Company adopted Accounting Standards Codification (“ASC”)ASC 820, “FairFair Value Measurements and Disclosures”Disclosures (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: 

 

Level 1:Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s

own assumptions.

 

The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

The estimated fair value of certain financial instruments, including prepaid expenses, deposits, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

 

Income Taxes

 

The Company accounts for income taxes pursuant to the provision of ASC 740-10, “AccountingAccounting for Income Taxes”Taxes (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

F-7

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions.Positions”. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.

 

Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

 

The Company has adopted ASC 740-10-25, “DefinitionDefinition of Settlement”Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open.  The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.

  

Impairment of long-lived assets  

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record anyrecorded impairment losses of $474 as an operating expense in the accompanying financial statements, during the sixnine months ended November 30, 2017 and 2016.February 29, 2020.

Stock-based compensation

 

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, “CompensationCompensation — Stock Compensation”Compensation (“ASC 718”), which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

 

Pursuant to ASC Topic 505-50, “EquityEquity Based Payments to Non-employees”Non-employees, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

 

F-6

REVIV3 PROCARE COMPANY

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017

Net loss per share of common stock

 

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares during the period. Diluted net loss per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding during the period. At November 30, 2017February 29, 2020 and 2016,February 28, 2019, the Company has none and 430,000, respectively,had no potentially dilutive securities outstanding related to common stock warrants. Those potentially dilutive common stock equivalents were excluded from the dilutive loss per share calculation as they would be antidilutive due to the net loss.outstanding.

F-8

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

 

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Recently Issued Accounting PronouncementsChanges

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842). The new standard requiresLeases”, which require lessees to apply a dual approach, classifying leases as either finance or operating leases basedreport on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to recordtheir balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under the prior guidance. Under the new guidance, codified as ASC Topic 842,Leases, the lease liability must be measured initially based on the present value of future lease payments, subject to certain conditions. The right-of-use asset must be measured initially based on the amount of the liability, plus certain initial direct costs. As permitted, the Company adopted ASC Topic 842 effective May 1, 2019 using the optional cumulative-effect transition method. The Company, signed a lease for all leases with a3 years on December 1, 2019 and will record the initial lease liability and right-of-use asset, in the same aggregate amount. The Company’s right-of-use asset relates to the lease involving office space and will be amortized over the lease term of greater than 12 months regardlessthree years. The adoption of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods and is applied retrospectively. Early adoption is permitted. The Company doesASC Topic 842 did not believe the guidance willotherwise have a material impact on itsthe Company’s financial statements.

 

Recently Issued Accounting Pronouncements

In January 2017,August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement” (Topic 820) which modifies the disclosure requirements on fair value measurements under ASC Topic No. 2017-4, “Intangibles – Goodwill820, Fair Value Measurement, as amended (“ASC 820”). For public companies, ASU 2018-13 removes (a) the prior requirement to disclose the amount and Other” (Topic 350): Simplifying the Testreason for Goodwill Impairment, which eliminates Steptransfers between Level 1 and Level 2 from the goodwill impairment test. When an indication of impairment was identified after performing the first step of the goodwill impairment test, Step 2 required that an entity determine the fair value athierarchy (please see Note 3 below for discussion of the impairment testing datethree-level hierarchy for measuring fair value), (b) the policy for timing of its assetstransfers between levels, and liabilities (including unrecognized assets and liabilities) using(c) the same procedure that would be required in determining thevaluation processes used for level 3 fair value measurements. For public companies, ASU 2018-13 also adds, among other things, a requirement to disclose the range and weighted average of assets acquired and liabilities assumedsignificant unobservable inputs used in a business combination. Under the amendments in ASU No. 2017-4, an entity would perform its annual, or interim, goodwill impairment test by comparing theLevel 3 fair value of a reporting unit with its carrying value. An entity would recognize an impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. In addition, an entity must consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. A public business entity thatmeasurements. This amendment is a SEC filer should adopt the amendments in ASU No. 2017-4 for its annual, or any interim, good will impairment tests in fiscal years beginning after December 15, 2019. The Company does not believe the guidance will have a material impact on its financial statements.

In May 2017, the FASB released ASU 2017-09, “Compensation - Stock Compensation”. The update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9, unless all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The provisions of this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. TheCompany does not believe the guidance will have a material impact on its financial statements.

In July 2017, the FASB issued ASU 2017-11 “Earnings Per Share” (Topic 260). The amendments in the update change the classification of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with Topic 260, Earnings Per Share, to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.2019. Early adoption was permitted upon issuance of ASU 2018-13. The Company has not adopted ASU 2018-13 and, based on its preliminary assessment, does not believe the guidanceimpact of adoption will have abe material impact on its financial statements.

statements.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

 

F-7

F-9

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

 

Note 3 – Accounts Receivable

 

Accounts receivable, consisted of the following:

 

  November 30,
2017
  May 31,
2017
 
       
Accounts receivable $18,897  $33,513 
Less: Allowance for bad debts  (2,015)  (810)
  $16,882  $32,703 
  February 29, 2020 May 31, 2019
Accounts Receivable $60,362  $82,365 
Less: Allowance for doubtful debts  (435)  (2,777)
  $59,927  $79,588 

  

The Company recorded bad debt recovery of ($2,342) and bad debt expense of $1,204 and $0$2,786 during the sixnine months ended November 30, 2017February 29, 2020 and 2016,February 28, 2019, respectively.

 

Note 4 – Inventory

 

Inventory consisted of the following:

 

  November 30,
2017
  May 31,
2017
 
       
Finished goods $114,774  $82,494 
Raw materials  249,491   47,300 
  $364,265  $129,794 
  February 29, 2020 May 31, 2019
Finished Goods $40,671  $69,256 
Raw Materials  303,806   195,322 
  $344,477  $264,578 

 

In the six months ended November 30, 2017At February 29, 2020 and 2016, the Company did not write down inventory for any obsolescence or slow-moving inventory. At November 30, 2017,May 31, 2019, inventory held at third party locations amounted to $102,414.$580 and $13,176, respectively. At February 29, 2020 and May 31, 2019, inventory in- transit amounted to $0 and $3,450, respectively.

During the nine months ended February 29, 2020 the Company sold some of the slow- moving inventory which had been written off and recovered $769. During the nine months ended February 28, 2019, the Company wrote down inventory for obsolescence of $636 which is included in cost of sales.

 

Note 5 – Property and Equipment

 

Property and equipment, stated at cost, consisted of the following:

 

  Estimated life November 30,
2017
  May 31,
2017
 
         
Furniture and fixtures 5 years $5,759  $5,398 
Computer equipment 3 years  3,840   3,733 
Less: Accumulated depreciation    (3,080)  (1,876)
    $6,519  $7,255 
  Estimated Life February 29, 2020 May 31, 2019
Furniture and Fixtures 5 years $5,759  $5,759 
Computer Equipment 3 years  17,392   17,392 
Plant Equipment 5-10 years  29,720   20,490 
Less: Accumulated Depreciation    (18,836)  (10,838)
    $34,035  $32,803 

 

Depreciation expense amounted to $1,204$2,459 and $367$1,582 for the sixthree months ended February 29, 2020 and February 28, 2019, respectively. Depreciation expense amounted to $7,998 and $3,625 for the nine months ended February 29, 2020 and February 28, 2019, respectively.

F-10

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

Note 6 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses comprised of the following:

  February 29, 2020 May 31, 2019
Trade Payables $48,173  $14,610 
Credit Cards  12,905   14,407 
Other  2,636   3,454 
  $63,714  $32,471 

Note 7 – Equipment Financing Payable

During the year ended May 31, 20172019, the Company purchased a forklift under an installment purchase plan. The loan amount was $16,500 payable in 60 monthly installment payments of $317 comprising of principal payment of $275 and 2016, respectively. interest payment of $42. As of February 29, 2020, and May 31, 2019, the balance outstanding on the loan was $12,925 and $15,210. $3,300 of the loan is payable within one year and the balance $9,625, is payable after one year from February 29, 2020. The Company recorded an interest expense of $31 and $10, respectively on the loan in the accompanying unaudited financial statements for the three months and nine months ended February 29, 2020. The Company recorded an interest expense of $42 on the loan in the accompanying unaudited financial statements for the three months and nine months ended February 28, 2019.

The amounts of principal payments due in the next five years ended February 28, are as follows:

 2021 $3,300 
 2022  3,300 
 2023  3,300 
 2024  3,025 
   $12,925 

 

Note 68 – Stockholders’ Equity

 

Shares Authorized

 

The authorized capital of the Company consists of 100,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.0001 per share.

 

Preferred Stock

 

The preferred stock may be issued from time to time in one or more series. The Board of Directors of the Company is expressly authorized to provide for the issuance of all or any of the shareshares of the preferred stock in one or more series, and to fix the number of shares and to determine or alter, for each such series, such voting powers, full or limited, or no voting powers and such designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed ununtil the resolution adopted by the Board of Directors providing the issueissuance of such shares. The Board of Directors is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issue of shares of that series. In case the number of shares of any such series shall be so decreased, the decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

 

As of February 29, 2020, no shares of preferred stock were issued and outstanding.

F-8

F-11

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

Note 8 – Stockholders’ Equity (continued)

Common Stock

 

In June 2017,As of February 29, 2020, 41,285,891 shares of common stock were issued and outstanding. 

No stock was issued during the nine months ended February 29, 2020.

During the nine months period ended February 28, 2019, the Company issued an aggregate of 80,000760,000 shares of the Company’s common stock for $304,000 cash proceeds to various consultants pursuantthird party investors at $0.40 per share.

During the nine months period ended February 28, 2019, the Company recorded 12,500 shares of common stock for shares earned by third party consultant for services provided to consulting agreements related to marketing and business advisory services.the Company. The term of the consulting agreements ranges from 2 months to 6 months. The Companyshares were valued these common shares at the fair value of $20,000$0.40 per share or $5,000, based on the sale ofrecent common stock in the recent private placements at $0.25 per common share. In connection with the issuance of these common shares, the Company recorded stock based compensation of $18,885 and prepaid expense of $1,115 remained at November 30, 2017 to be amortized over the remaining term of its respective consulting agreements.sales.

On September 26, 2017, the Company sold 100,000 shares of its common stock at $0.25 per common share for proceeds of $25,000.

Between September 27, 2017 and October 2, 2017, the Company sold an aggregate of 271,000 shares of its common stock at $0.40 per common share for proceeds of $108,400.

On September 29, 2017, the Company sold 375,000 shares of its common stock to an affiliated company at $0.40 per common share for proceeds of approximately $150,000. The affiliated company is managed by the brother of the Company’s Chief Executive Officer.

 

Note 79 – Commitments and Contingencies

 

In September 2016,Leases

As discussed in Note 2 above, the Company executedadopted ASU No. 2016-02, “Leases”on June 1, 2019, which require lessees to report on their balance sheets a right-of-use asset and a lease liability in connection with most lease agreements classified as operating leases under the prior guidance. The Company has a lease agreement in connection with its office and warehouse facility in California under an operating leaseslease which expired in October 2019. On December 1, 2019, the Company signed an extension of the lease for 3 years. The rent will be $7,567.34 per month for the first year and increase by a certain amount each year.

The Company treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of 37 months commencingtime in October 2016exchange for consideration, or the Company directs the use of the asset and expiringobtains substantially all the economic benefits of the asset. These leases are recorded as right-of-use (“ROU”) assets and lease obligation liabilities for leases with terms greater than 12 months. ROU assets represent the Company’s right to use an underlying asset for the entirety of the lease term. Lease liabilities represent the Company’s obligation to make payments over the life of the lease. A ROU asset and a lease liability are recognized at commencement of the lease based on the present value of the lease payments over the life of the lease. Initial direct costs are included as part of the ROU asset upon commencement of the lease. Since the interest rate implicit in October 2019. a lease is generally not readily determinable for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease term to obtain an asset of similar value.

The Company shall payreviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets. The Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations.

Lease expense is recognized on a monthly basestraight-line basis over the lease term, while variable lease payments are expensed as incurred. Variable payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result in a remeasurement of lease liabilities. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants.

F-12

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

Note 9 – Commitments and Contingencies (continued)

Pursuant to the new standard, the Company recorded an initial lease liability of $235,748 and an initial right of use asset in the same amount. During the three months ended February 29, 2020, the Company recorded rent starting at $6,782 plusexpense in the amount of $23,589 for the three months ended February 29, 2020. As of February 29, 2020, the lease liability balance was $219,962 and the right of use asset balance was $219,105. A lease term of three years and a pro rata sharediscount rate of 12% was used.

Supplemental balance sheet information related to leases was as follows:

  February 29, 2020
Assets    
Operating lease assets, net $213,452 
     
Liabilities    
Current Operating  68,941 
Non-current Operating  151,021 
Total Lease Liabilities $219,962 

Maturities of operating expenses. The base rent is subjectlease liabilities were as follows as of February 29, 2020:

Operating Lease  
Year 1 $91,665 
Year 2  95,091 
Year 3  73,246 
Total  260,002 
Less: Imputed interest  (40,040)
Present value of lease liabilities  219,962 
Less: current portion  (68,941)
Non- current portion $151,021 

Rent expense, prior to an annual increase beginning in October 2017 as defined in the signing of the new lease agreement.agreement, amounted to $0 and $23,666 for the three months ended February 29, 2020 and February 28, 2019, respectively. Rent expense amounted to $36,266$71,105 and $26,205$71,203 for the sixnine months ended November 30, 2017February 29, 2020 and 2016,February 28, 2019, respectively. Future minimum rental payments required under this operating lease are as follows:

  Total  1 Year  2-3 Year  Thereafter 
Operating lease $163,905  $41,976  $121,929  $      - 
Total $163,905  $41,976  $121,929  $- 

In November 2017, the Company executed an Agreement with a third party located in Hong Kong, China, whereby the third party shall promote, market, distribute and resell the Company’s products to end-user consumers through direct online sales or third party e-commerce platforms in the following territories: Hong Kong, Macau, and the People’s Republic of China. The term of the agreement is for 36 months from the effective date. Parties shall have the right to terminate this agreement, with or without cause, upon 60 days prior written notice. For services provided in connection with this agreement, the Company shall pay the third party 16.5% of the gross revenues generated from sales channel initiated and subsequently maintained by the third party or $3,300 per month, whichever is greater. At November 30, 2017, $11,496 of inventory was held in consignment at this third party facility.

 

Note 810 – Related Party Transactions

 

The Company’s Chief Executive Officer, from time to time, provided advances to the Company for working capital purposes. At November 30, 2017February 29, 2020 and May 31, 2017,2019, the Company had a payable to the officer of $210 and $0,$210, respectively. These advances were short-term in natureare unsecured, due on demand and non-interest bearing.

 

On September 29, 2017,During the nine months ended February 28, 2019, the Company sold 375,000 shares of its common stockpaid $280 to an affiliated company at $0.40 per common share for proceeds of approximately $150,000.advisory services rendered. The affiliated company is managed by the brother of the Company’s Chief Executive Officer.

 

F-13

F-9

REVIV3 PROCARE COMPANY

CONDENSED NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOVEMBER 30, 2017FEBRUARY 29, 2020 AND FEBRUARY 28, 2019

 

Note 911 – Concentrations and Revenue Disaggregation

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade accounts receivable and cash deposits, investments and cash equivalents instruments. The Company maintains its cash in bank deposits accounts. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At November 30, 2017February 29, 2020 and May 31, 2019, the Company held cash of approximately $0 and $102,454, respectively, in excess of federally insured limits by approximately $97,000.limits. The Company has not experienced any losses in such accounts through November 30, 2017.February 29, 2020.

 

Concentration of Revenue, Product Line, Accounts Receivable and Supplier

 

During the sixthree months ended November 30, 2017February 29, 2020 sales to four customers, which each represented over 10% of our total sales, aggregated to approximately 67%68% of the Company’s net sales at 23%21%, 17%20%, 14%15% and 13%12%. During the sixnine months ended November 30, 2016February 29, 2020, sales to three customercustomers, which each represented over 10% of our total sales, aggregated to approximately 45%48% of the Company’s net sales at 12%26%, 15%,10% and 18%12%. During the three months ended February 28, 2019 sales to one customer, which represented over 10% of our total sales, amounted to approximately 50% of the Company’s net sales. During the nine months ended February 28, 2019 sales to two customers, which each represented over 10% of our total sales, aggregated to approximately 51% of the Company’s net sales at 38% and 13%.

 

During the sixthree months ended November 30, 2017February 29, 2020, sales to customers outside the United States represented approximately 47%42% which consisted of 33%41% from Canada and 14%1% from Italyother countries and forduring the sixnine months ended November 30, 2016,February 29, 2020, sales to customers outside the United States represented approximately 33% which consisted of 24% from Canada, 8% from Italy and 1% from UK. During the nine months period ended February 28, 2019 sales to customers outside the United States represented approximately 30% which consisted of 20% from Canada.Canada, 5% from Italy, 3% from Hong Kong and 2% from United Kingdom. During the three months period ended February 28, 2019 sales to customers outside the United States represented approximately 26% which consisted of 22% from Canada and 4% from United Kingdom.

 

During the sixnine months ended November 30, 2017,February 29, 2020, sales by product lines which each represented over 10% of sales consisted of approximately 17% from sale of introductory kit (shampoo, conditioner and treatment spray) and 26% from sale of fragrance shampoo and conditioner. During the three months ended February 29, 2020, sales by product lines which each represented over 10% of sales consisted of approximately 25% from sale of introductory kit (shampoo, conditioner and treatment spray), 26% from sale of prep shampoo and 10% from prime moisturizer and conditioner. During the nine months period ended February 28, 2019, sales by product line which each represented over 10% of sales consisted of approximately 23% from sales of hair shampoo, 17% from sales of hair shampoo and conditioner, 26% from sale of hair treatment spray and repair products and 31%20% from sale of introductory kit (shampoo, conditioner and treatment spray)., 16% from prep shampoo and conditioner, 11% from sale of moisturizer and conditioner and 29% from fragrance shampoo and conditioner. During the sixthree months period ended November 30, 2016,February 28, 2019, sales by product line which each represented over 10% of sales consisted of approximately 19% from sales of hair shampoo, 15% from sales of hair shampoo and conditioner, 19% from sale of hair treatment and repair products and 40% from sale of introductory kit (shampoo, conditioner and treatment spray)., 21% from fragrance shampoo and 21% from fragrance conditioner. 

During the nine months ended February 29, 2020 and February 28, 2019, sales by product line comprised of the following:

  For the Nine Months ended
Hair Care Products February 29, 2020 February 28, 2019
Shampoos and Conditioners  80%  76%
Ancillary Products  20%  24%
Total  100%  100%

 

As of November 30, 2017 and May 31, 2017,February 29, 2020, accounts receivable from twofive customers represented approximately 64%85% at 53%14%, 15%, 16%, 18% and 11%22% and fourat May 31, 2019, accounts receivable from five customers represented approximately 89%94% at 18%, 30%, 10%13%, 23%, 14% and 31% of the accounts receivable,14%, respectively.

 

The Company purchased inventories and products from three vendorsone vendor totaling approximately $239,000 (85%$203,916 (77% of the purchases) and three vendors totaling $92,000 (91%approximately $308,761 (76% of the purchases) duringpurchases at 10%, 28% and 38%) for the sixnine months ended November 30, 2017February 29, 2020 and 2016,February 28, 2019, respectively.

 

F-14

F-10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion of our financial condition and results of operations should be read in conjunction with, ourand is qualified in its entirety by, the condensed financial statements and the related notes and other financial informationthereto included in Item 1 in this prospectus.Quarterly Report on Form 10-Q. 

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking.  Forward-looking statements are, by their very nature, uncertain and risky.  Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words that, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus.Quarterly Report on Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors”.Quarterly Report on Form 10-Q.

 

Although the forward-looking statements in this Registration StatementQuarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

OurProspective investors should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements are statedand the related notes and other financial information included elsewhere in United States Dollars (USDthis Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or US$)set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares instrategy for our capital stock.business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”

 

Overview

 

Reviv3 Procare Company is engaged in the manufacturing, marketing, sale and distribution of professional quality hair and skin care products under various trademarks and brands, and hasbrands. We have adopted and used the trademarks of our products for distribution throughout the United States, Canada, Europe, and Asia pursuant to the terms of 11twelve exclusive distribution agreements with various parties throughout our targeted market. All of our products use tested and FDA approved, all-natural products. Our manufacturing operations are outsourced and fulfilled by through our co-packers and manufacturing partners. Currently, we produce 7seven products with 13sixteen separate sku’sstock-keeping units (“SKUs”) and look to expand our product lines significantly over the next 12twelve months.

 

Since our inception, we have engaged in significant operational activities as described in “Business,” above.-2-

JOBS Act

 

We are an “emerging growth company” (“EGC”) that is exempt from certain financial disclosure and governance requirements for up to five years as defined inOn April 5, 2012, the Jumpstart Our Business Startups Act (“of 2012, or the JOBS Act”),Act, was enacted. Section 107 of the JOBS Act provides that eases restrictions on the salean “emerging growth company” can take advantage of securities; and increases the number of shareholders a company must have before becoming subject to the U.S. Securities and Exchange Commission’s (SEC’s) reporting and disclosure rules (See “Emerging Growth Companies” section above). We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows us tostandards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions from, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that have different effective dates for publicmay be adopted by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and private companiesthe financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until those standards apply to private companies. As a resultthe earliest of (a) the last day of our fiscal year following the fifth anniversary of the closing of this election,offering, (b) the last day of the first fiscal year in which our financial statements may notannual gross revenues exceed $1.07 billion, (c) the last day of our fiscal year in which we are deemed to be comparable to companiesa “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, or Exchange Act (which would occur if the market value of our equity securities that comply with public company effective dates.is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), or (d) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.

 

Results of Operations

 

For the Three months and SixNine months ended February 29, 2020 Compared to the Three Months Ended November 30, 2017and Nine Months ended February 28, 2019

 

Our results of operationsRevenues for the three and six months ended November 30, 2017 and 2016 are summarized below.

  

Three Months Ended

November 30,
2017

  Three Months Ended
November 30,
2016
 
Revenues $135,909  $140,341 
Cost of Sales $67,618  $59,159 
Total operating expenses $168,574  $191,619 
Loss from operations $(100,283) $(110,437)
Net loss $(101,298) $(110,437)

2

  

Six Months Ended

November 30,
2017

  Six Months Ended
November 30,
2016
 
Revenues $247,154  $306,478 
Cost of Sales $112,123  $128,850 
Total operating expenses $361,009  $401,097 
Loss from operations $(225,978) $(223,469)
Net loss $(228,027) $(223,469)

For the three months ended November 30, 2017, revenues slightly decreased by approximately $4,000, or 3%, as compared toFebruary 29, 2020 and February 28, 2019 were $157,880 and $281,062, respectively. Revenues for the three months ended November 30, 2016. ForFebruary 29, 2020 decreased by $123,182 or 44% over the sixsame comparable period in 2019. Revenues for the nine months periods ended February 29, 2020 and February 28, 2019 were $612,114 and $662,401, respectively. Revenues for the nine months ended November 30, 2017, revenuesFebruary 29, 2020 decreased by approximately $59,000,$50,287 or 19%, as compared to8% over the six months ended November 30, 2016, which issame comparable period in 2019. Revenues have decreased in the 2020 respective periods primarily due to decrease inthe Company’s inability to receive certain components from China due to extended factory delays caused by Coronavirus (COVID – 19) after the Chinese New Year, and continued diversification of selling our products from domestic distribution to direct to consumer sales to two of our wholesale distributors based on cyclical ordering patterns of existing customers.channels.

 

Cost of sales includes theconsisted primarily of cost of product and shipping fee. Forfreight-in costs. Cost of sales for the three months ended November 30, 2017, costFebruary 29, 2020 and February 28, 2019 was $45,736 and $158,846, respectively. Cost of sales increased by approximately $8,000, or 14%as a percentage of sales for the three months ended February 29, 2020 and February 28, 2019 was 29% and 57%, respectively. Cost of sales for the nine months ended February 29, 2020 and February 28, 2019 was $260,603 and $382,238, respectively. Cost of sales as a percentage of sales for the nine months ended February 29, 2020 and February 28, 2019 was 43% and 58%, respectively. Cost of sales as a percentage of sales decreased in 2020 for the respective periods as compared to the three months ended November 30, 2016. Forsame comparable periods in 2019 primarily due to the six months ended November 30, 2017,Company continued streamlining of its operations for assembly of our products resulting in lower cost of sales decreased by approximately $17,000, or 12%, as compared to the six months ended November 30, 2016.The decrease is primarily attributable to decrease in sales during the six months ended November 30, 2017.sales.

 

For-3-

Gross profit for the three months ended November 30, 2017, grossFebruary 29, 2020 and February 28, 2019 was $112,144 and $122,216, respectively. Gross profit amounted to approximately $68,000 as compared to $81,000, a decreasepercentage of approximately $13,000, or 16%. Forrevenues for the three months ended November 30, 2017 and 2016, gross profit margins were at 50% and 58%, respectively. For the six months ended November 30, 2017, gross profit amounted to approximately $135,000February 29, 2020 was 71% as compared to $178,000, a decrease of approximately $43,000, or 24%. For43% for the sixsame comparable period in 2019. Gross profit for the nine months ended November 30, 2017February 29, 2020 and 2016, grossFebruary 28, 2019 was $351,511 and $280,163, respectively. Gross profit margins were at 55% and 58%, respectively.as a percentage of revenues for the nine months ended February 29, 2020 was 57% as compared to 42% for the same comparable period in 2019. The decreaseincrease in gross profit margins isfor the nine months ended February 29, 2020 was primarily attributable in increase in shipping cost duringto the six months ended November 30, 2017.continued refocusing and diversification of our sales channels from the traditional distribution sales to direct to consumer channels.

 

ForOperating expenses consisted of marketing and selling expenses, professional and consulting fees, compensation to employees and other general and administrative expenses. Operating expenses for the three months ended November 30, 2017February 29, 2020 and 2016, we incurredFebruary 28, 2019 were $153,255 and $125,727, respectively. Operating expenses as a percentage of revenues for the three months ended February 29, 2020 and February 28, 2019 were 97% and 45%, respectively. Operating expenses for the three months ended February 29, 2020 increased by $27,528 or 22% over the comparable period in 2019. Operating expenses for the nine months ended February 29, 2020 and February 28, 2019 were $523,039 and $434,791, respectively. Operating expenses as a percentage of revenues for the nine months ended February 29, 2020 and February 28, 2019 were 85% and 66%, respectively. Operating expenses for the nine months ended February 29, 2020 increased by $88,248 or 20% over the comparable period in 2019. The increase in operating expenses is attributable primarily due to the increase in marketing and advertising expense to promote Company’s brand name and its products in the direct to consumer channels, a general increase in the general and administrative expenses relating to rent, insurance, and other expenses, offset by reduction in independent contractors and their fees and reduction in legal and professional fees during the respective periods in 2020 compared to the same comparable periods in 2019.

As a result of $168,574 and $191,619, respectively, andthe above, we reported a net loss of $(101,298)$41,599 and $(110,437), respectively. The operating expenses are costs related to marketing$172,582 for the three months and selling expenses, compensation and related taxes, professional and consulting fees, and general and administrative costs. Operating expenses decreased by approximately $23,000 or 12% primarily due to a decreased stock based consulting expenses related to business advisory service agreements, decreased in compensation due to decrease in full time employees and decreased marketing expenses due to decrease freight out delivery offset by increase in professional and consulting expenses due to increase accounting expenses related to our public filings and increase in general administrative expenses primarily attributable to increase rent and travel expenses.

For the sixnine months ended November 30, 2017 and 2016, we incurred operating expenses of $361,009 and $401,097, respectively, andFebruary 29, 2020 as compared to a net loss of $(228,027)$3,568 and $(223,469), respectively. The operating expenses are costs related to marketing$154,911 for the three months and selling expenses, compensation and related taxes, professional and consulting fees, and general and administrative costs. Operating expenses decreased by approximately $40,000 or 9% primarily due to a decreased stock based consulting expenses related to business advisory service agreements, decreased in compensation due to decrease in full time employees and decrease marketing expenses due to decrease freight out delivery offset by increase in professional and consulting expenses due to increase accounting expenses related to our public filings and increase in general administrative expenses primarily attributable to increase rent and travel expenses.nine months ended February 28, 2019.

 

During the three and six months ended November 30, 2017, other expense increase by approximately $1,000 or 100% and $2,000 or 100%, respectively, primarily due to increase interest expense related to business credit card financing charges.

Liquidity and Capital Resources

  

For the Six Months Ended November 30, 2017 and 2016

The following table provides detailed information about our net cash flows:

  

For the
Six Months

Ended
November 30,
2017

  For the
Six Months Ended
November 30,
2016
 
Cash Flows      
Net cash used in operating activities $(352,135) $(153,867)
Net cash used in investing activities  (468)  - 
Net cash provided by financing activities  283,610   70,000 
Net change in cash $(68,993) $(83,867)

3

 

We are an emerging growth company and currently engaged in our initial product sales and development. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during the fiscal year 2018.2019. This raises substantial doubt about our ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Operating ActivitiesCash Flows

 

For the Six Months Ended November 30, 2017 and 2016Operating Activities

 

CashNet cash flows used in operating activities for the sixnine months ended November 30, 2017 consisted of net loss as well as the effect of changes in operating assets and liabilities as well as adjustmentsFebruary 29, 2020 was $191,974, attributable to reconcile net to loss to net cash used in operating activities. Cash used in operating activities of $(352,135) consisted of a net loss of $(228,027). The net loss was partially offset by reconciliation of$172,582, depreciation of $1,204,$7,998, bad debtdebts recovery of $1,204, stock based compensation $30,973, offset by$2,342, write-off of intangibles of $474, and net changeschange in operating assets and liabilities of $157,489$25,523 primarily fromdue to decrease in accounts receivable, prepaid expenses and other current assets, and security deposits offset by an increase in inventory, advances to suppliers and increase in accounts payable and accrued expenses, and customer deposits.

Cashright of use assets. Net cash flows used in operating activities for the sixnine months ended November 30, 2016 consisted of net loss as well as the effect of changes in operating assets and liabilities as well as adjustmentsFebruary 28, 2019 was $120,214, attributable to reconcile net to loss to net cash used in operating activities. Cash used in operating activities of $(153,867) consisted of a net loss of $(223,469). The net loss was partially offset by reconciliation of$154,911, depreciation of $367,$3,625, bad debt write-off of $2,786, stock based compensation of $106,811 offset by the$5,000 and net changeschange in operating assets and liabilities of $37,576$23,286 primarily due to a decreaseincrease in accounts receivable, inventory, decrease inadvance to suppliers, accounts payable and accrued expenses, customer deposits and customer deposits.other liabilities, and decrease in prepaid expenses and other current assets.

-4-

Investing Activities

 

Investing ActivitiesNet cash flows used by investing activities for the nine months ended February 29, 2020 and February 28, 2019 was $9,230 and $13,887, respectively. We purchased property and equipment of $9,230 and $13,887 during the nine months ended February 29, 2020 and February 28, 2019, respectively.

 

For the Six Months Ended November 30, 2017 and 2016Financing Activities

 

Net cash flows used in financing activities for the nine months ended February 29, 2020 was $2,285, and net cash flows provided by financing activities for the nine months ended February 28, 2019 was $306,725, respectively. For the sixnine months ended November 30, 2017 and 2016,February 29, 2020, we derived cash flow from investing activities of $(468) and $0, respectively, consisting of purchases ofpaid $2,285 towards equipment and property.

Financing Activities

financing. For the Six Months Ended November 30, 2017 and 2016

For the sixnine months ended November 30, 2017February 28, 2019, we raised $304,000 in capital funds through private placement offerings, received advances from a related party of $210$3,000, and we raised $283,400 fromrepaid $275 of the sale of our common shares to investors.financed equipment.

 

ForAs a result of the sixactivities described above, we recorded a net decrease in cash of $203,489 for the nine months ended November 30, 2016 we raised $70,000 fromFebruary 29, 2020, and a net increase of cash of $172,624 for the sale of our common shares to investors and from issuance of note payable –related party of $675,000 offset by the repayment of note payable of $675,000.nine months ended February 28, 2019.

 

We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

 

We are dependent on our product sales to fund our operations and may require the sale of additional common stock to maintainexpand our operations. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.

 

If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies 

The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of 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. Such estimates and assumptions affect the reported amounts of expenses during the reporting period. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

4

-5-

We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require the most difficult, subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These critical accounting policies relate to revenue recognition, impairment of intangible assets and long-lived assets, inventory, stock compensation, and evaluation of contingencies. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial condition or results of operations.

Significant Accounting Policies

See the footnotes to our unaudited condensed financial statements for the quarter ended February 29, 2020, included with this quarterly report.

Impact of COVID-19

During the three months ended February 29, 2020, the effects of a new coronavirus (“COVID-19”) and related actions to attempt to control its spread began to impact our business. The impact of COVID-19 on our operating results for the three months ended February 29, 2020 was limited, in all material respects, to our sales in Europe and in China where the Chinese government mandated numerous measures, including closures of businesses, limitations on movements of individuals and goods, and the imposition of other restrictive measures, in its efforts to mitigate the spread of COVID-19 within the country.

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Governments around the world have mandated, and continue to introduce, orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets.

To the extent that COVID-19 continues or worsens, governments may impose additional restrictions or additional governments may impose restrictions. The result of COVID-19 and those restrictions could result in a number of adverse impacts to our business, including but not limited to additional disruption to the economy and consumers’ willingness and ability to spend, temporary or permanent closures by businesses that consume our products, such as salons and spas, additional work restrictions, and supply chains being interrupted, slowed, or rendered inoperable. As a result, it may be challenging to obtain and process raw materials and supply chains to support our business needs, and individuals could become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. Also, governments may impose other laws, regulations or taxes which could adversely impact our business, financial condition or results of operations. Further, if our customers’ businesses or incomes are similarly affected, they might delay or reduce purchases from us. The potential effects of COVID-19 also could impact us in a number of other ways including, but not limited to, reductions to our profitability, laws and regulations affecting our business, the availability of future borrowings, the cost of borrowings, and credit risks of our customers and counterparties.

Given the evolving health, economic, social, and governmental environments, the potential impact that COVID-19 could have on our business remains uncertain.

-6-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the Company’s disclosureWe maintain "disclosure controls and procedures, as that term is defined in Rule 13a-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of November 30, 2017. Based on such review and evaluation, our Chief Executive Officer and Chief Financial Officer concluded that,1934, as of November, 2017, the disclosureamended (the "Exchange Act"). Disclosure controls and procedures were effectiveinclude controls and procedures designed to ensure that information required to be disclosed by the Company in theour reports that it files or submitsfiled under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’sSEC's rules and forms, and (b)that such information is accumulated and communicated to the Company’sour management, including itsthe principal executive officer and principal financial officers, as appropriateofficer, to allow timely decisions regarding required disclosure. Our management, with the participation of the principal executive officer and principal financial officer, evaluated our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of February 29, 2020, our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting.

The ineffectiveness of our internal control over financial reporting was due to the following material weaknesses in our internal control over financial reporting which we identified and previously reported in the Annual Report on Form 10-K for the year ended May 31, 2019: (1) insufficient number of qualified accounting personnel governing the financial close and reporting process, (2) lack of independent directors, and (3) lack of proper segregation of duties.

We expect to be materially dependent upon third parties to provide us with accounting and consulting services for the foreseeable future. We believe this will be sufficient to remediate the material weaknesses related to our accounting discussed above. We plan to recruit independent directors in the near future to oversee, establish and maintain adequate internal controls over financial reporting. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements. A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Changes in Internal Controlinternal control over Financial Reportingfinancial reporting

There were no changes in the Company’sour internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the fiscal quarter ended November 30, 2017February 29, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.

 

-7-

5

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not a party to any material litigation, nor, to the knowledge of management, is any litigation threatened against us that may materially affect us.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company, we are not required to provide risk factors. Please refer to our registration statement under Form S-1 for more information regarding risks related to the securities of the Company.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On September 26, 2017, the Company sold 100,000 shares of its common stock at $0.25 per common share for proceeds of $25,000.None.

Between September 27, 2017 and October 2, 2017, the Company sold an aggregate of 271,000 shares of its common stock at $0.40 per common share for proceeds of $108,400.

On September 29, 2017, the Company sold 375,000 shares of its common stock to an affiliated company at $0.40 per common share for proceeds of approximately $150,000. The affiliated company is managed by the brother of the Company’s Chief Executive Officer.

The Company relied on the exemption from registration provided under Rule 506(b) of Regulation D in the sale of these securities. 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ItemITEM 4. Mine Safety DisclosuresMINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

(a) Not applicable.

 

(b) During the quarter ended November 30, 2017,February 29, 2020, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

-8-

ITEM 6. EXHIBITS

 

      Incorporated by reference
Exhibit   Filed    Period   Filing
Number Exhibit Description herewith Form Ending Exhibit date
3.1 Articles of Incorporation filed with the state of Delaware on May 21, 2015   S-1 05/31/2017  3.1 10/6/2017
3.2 Bylaws   S-1 05/31/2017 3.2 10/6/2017
3.3 Certificate of Amendment filed in the state of Delaware on June 9, 2015   S-1 05/31/2017 4.2 10/6/2017
10.1 Contribution Agreement between Reviv3 Procare, LLC and Reviv3 Procare Company, dated June 1, 2015   S-1 05/31/2017  10.1 10/6/2017
10.2 Lease Agreement between Riviv3 Procare Company and the Realty Association Fund VIII, L.P. dated September 28, 2016   S-1/A 5/31/2017 10.2 11/17/2017
31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X   11/30/2017    
31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X   11/30/2017    
32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X   11/30/2017    
32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    11/30/2017    
101.INS XBRL Instance X   11/30/2017    
101.SCH XBRL Taxonomy Extension Schema X   11/30/2017    
101.CAL XBRL Taxonomy Extension Calculation X   11/30/2017    
101.DEF XBRL Taxonomy Extension Definition X   11/30/2017    
101.LAB XBRL Taxonomy Extension Labels X   11/30/2017    
101.PRE XBRL Taxonomy Extension Presentation X   11/30/2017    

 6Incorporated by reference
ExhibitFiled PeriodFiling
NumberExhibit DescriptionherewithFormEndingExhibitdate
31.1Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.X02/29/2020
31.2Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.X02/29/2020
32.1Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X02/29/2020
32.2Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.X02/29/2020
101.INSXBRL InstanceX02/29/2020
101.SCHXBRL Taxonomy Extension SchemaX02/29/2020
101.CALXBRL Taxonomy Extension CalculationX02/29/2020
101.DEFXBRL Taxonomy Extension DefinitionX02/29/2020
101.LABXBRL Taxonomy Extension LabelsX02/29/2020
101.PREXBRL Taxonomy Extension PresentationX02/29/2020 

-9-

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.

 

Reviv3 Procare Company
Date: January 12, 2018By:/s/ Jeff Toghraie
Jeff Toghraie
Chief Executive Officer and
Chief Financial Officer
(principal executive officer,
principal accounting officer and
principal financial officer)

REVIV3 PROCARE COMPANY

 

 

7Date: April 6, 2020

By: /s/ Jeff Toghraie

____________________________

Jeff Toghraie

Chief Executive Officer

(Principal Executive Officer)

 

-10-