UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2018April 30, 2019
o¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the transition period from ____________ to ______________
Commission file number: 333-138951
Toga Limited |
(Exact name of registrant as specified in its charter) |
|
| 98-0568153 |
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
1000 N. West Street,3960 Howard Hughes Pkwy, Suite 1200500
Wilmington, Delaware 19801Las Vegas, Nevada 89169
(Address of principal executive offices)
(302) 295-3839(702) 990-3578
(Registrant'sRegistrant’s telephone number)
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 x No o¨
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 x¨ No ox
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 | x |
| 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. o¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.Act). Yes x¨ No ox
The number of shares of the issuer'sissuer’s common stock outstanding as of March 23, 2018June 7, 2019 was 2,625,028,81590,730,758 shares, par value $0.001$0.0001 per share.share (such number of shares outstanding reflects the result of a 10 for 1 reverse split of the Registrant’s issued and outstanding shares effective in the market on June 5, 2019).
FORM 10-Q
Quarterly Period Ended January 31, 2018April 30, 2019
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5-6 |
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| Notes to the Condensed Consolidated Unaudited Financial Statements |
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| 2 |
Consolidated Balance Sheets
(Unaudited)
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| January 31, |
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| July 31, |
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| (Unaudited) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
| $ | 571,792 |
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| $ | 100 |
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Other receivables |
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| 24,091 |
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| - |
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Total Current Assets |
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| 595,883 |
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| 100 |
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TOTAL ASSETS |
| $ | 595,883 |
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| $ | 100 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities |
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Accounts payable and accrued liabilities |
| $ | 73,931 |
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| $ | 1,262 |
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Due to related parties |
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| 240,654 |
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| 96,212 |
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Notes due to related parties |
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| 24,126 |
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| 24,126 |
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Total Current Liabilities |
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| 338,711 |
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| 121,600 |
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Stockholders’ Equity (Deficit ) |
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Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding |
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| - |
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| - |
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Common stock, $0.0001 par value, 10,000,000,000 shares authorized; 2,625,028,815 and 2,546,354,700 shares issued and outstanding as of January 31, 2018 and July 31, 2017, respectively |
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| 262,504 |
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| 254,636 |
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Common stock subscribed; 30,000,000 common shares, $0.0001 par value |
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| (3,000 | ) |
|
| (3,000 | ) |
Additional paid-in capital |
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| 3,437,216 |
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| 358,015 |
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Accumulated other comprehensive income |
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| 12,757 |
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|
| - |
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Accumulated deficit |
|
| (3,452,305 | ) |
|
| (731,151 | ) |
Total Stockholders’ equity (deficit) |
|
| 257,172 |
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| (121,500 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT) |
| $ | 595,883 |
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| $ | 100 |
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April 30, July 31, 2019 2018 ASSETS Current Assets Cash and cash equivalents Accounts receivable, net Accounts receivable - related party, net Prepaid expense and other current assets Inventories Total Current Assets Property and equipment, net Intangible asset - digital currency Deposit TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable and accrued liabilities Due to related parties Notes due to related parties Deferred revenue Income tax payable Total Current Liabilities Stockholders’ Equity Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 89,812,036 and 69,586,517 shares issued and outstanding as of April 30, 2019 and July 31, 2018, respectively Common stock subscribed; 3,000,000 common shares Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total Stockholders’ Equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY The$ 2,817,300 $ 1,064,672 13,652 367,918 204,538 - 346,812 25,958 206,107 - 3,588,409 1,458,548 327,265 135,706 5,231,858 1,348,920 - 9,780 $ 9,147,532 $ 2,952,954 $ 761,855 $ 180,573 192,473 186,390 24,126 24,126 676,559 20,500 205,655 - 1,860,668 411,589 - - 8,981 6,959 (3,000 ) (3,000 ) 29,727,147 16,942,861 (80,403 ) (53,996 ) (22,365,861 ) (14,351,459 ) 7,286,864 2,541,365 $ 9,147,532 $ 2,952,954
See accompanying notes are an integral part of theseto the unaudited condensed consolidated financial statements
| 3 |
| Table of Contents |
Consolidated Statements of Operations
((Unaudited)
Three Months Ended Nine Months Ended April 30, April 30, 2019 2018 2019 2018 Revenue Revenue from related party Total Revenue Cost of goods sold Gross profit OPERATING EXPENSES General and administrative expenses Stock based compensation Research and development Depreciation Total Operating Expenses LOSS FROM OPERATIONS OTHER INCOME (EXPENSE) Interest income Interest expense Loss on settlement of debt Total Other Income (Expense) Loss before Income Taxes Income Tax Provision NET LOSS OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments TOTAL COMPREHENSIVE LOSS �� BASIC AND DILUTED NET LOSS PER COMMON SHARE: WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING NET LOSS PER COMMON SHARE $ 2,511,408 $ 73,988 $ 3,432,354 $ 73,988 592,624 - 1,270,814 - 3,104,032 73,988 4,703,168 73,988 1,700,357 78,218 2,580,570 78,218 1,403,675 (4,230 ) 2,122,598 (4,230 ) 1,169,397 431,262 2,888,342 851,706 6,805,297 - 6,805,297 - 66,699 - 139,142 - 18,311 3,356 41,974 3,356 8,059,704 434,618 9,874,755 855,062 (6,656,029 ) (438,848 ) (7,752,157 ) (859,292 ) 4,112 - 6,833 - (118 ) - (185 ) (383 ) - - - (2,300,327 ) 3,994 - 6,648 (2,300,710 ) (6,652,035 ) (438,848 ) (7,745,509 ) (3,160,002 ) (124,593 ) - (268,893 ) - $ (6,776,628 ) $ (438,848 ) $ (8,014,402 ) $ (3,160,002 ) (121,785 ) (116,585 ) (26,407 ) (103,828 ) $ (6,898,413 ) $ (555,433 ) $ (8,040,809 ) $ (3,263,830 ) 89,036,190 263,308,592 80,222,349 262,765,549 (0.08 ) (0.00 ) $ (0.10 ) $ (0.01 )
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| Three Months Ended |
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| Six Months Ended |
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| January 31, |
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| January 31, |
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| 2018 |
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| 2017 |
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| 2018 |
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| 2017 |
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OPERATING EXPENSES |
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General and administrative expenses |
| $ | 364,828 |
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| $ | 2,103 |
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| $ | 420,444 |
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| $ | 2,403 |
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Total Operating Expenses |
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| 364,828 |
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| 2,103 |
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| 420,444 |
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| 2,403 |
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LOSS FROM OPERATIONS |
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| (364,828 | ) |
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| (2,103 | ) |
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| (420,444 | ) |
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| (2,403 | ) |
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OTHER EXPENSE |
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Interest expense |
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| (127 | ) |
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| - |
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| (383 | ) |
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| - |
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Loss on settlement of debt |
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| (2,300,327 | ) |
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| - |
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| (2,300,327 | ) |
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| - |
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Total Other Expenses |
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| (2,300,454 | ) |
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| - |
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| (2,300,710 | ) |
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| - |
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Loss before Income Taxes |
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| (2,665,282 | ) |
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| (2,103 | ) |
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| (2,721,154 | ) |
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| (2,403 | ) |
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Income Tax Provision |
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| - |
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| - |
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| - |
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| - |
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NET LOSS |
| $ | (2,665,282 | ) |
| $ | (2,103 | ) |
| $ | (2,721,154 | ) |
| $ | (2,403 | ) |
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OTHER COMPREHENSIVE INCOME |
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Foreign currency translation adjustments |
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| 13,103 |
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| - |
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|
| 12,757 |
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|
| - |
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TOTAL COMPREHENSIVE LOSS |
| $ | (2,652,179 | ) |
| $ | (2,103 | ) |
| $ | (2,708,397 | ) |
| $ | (2,403 | ) |
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BASIC AND DILUTED NET LOSS PER COMMON SHARE: |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |
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| 2,604,216,889 |
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| 980,586,100 |
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| 2,581,955,094 |
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| 662,017,700 |
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NET LOSS PER COMMON SHARE |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
TheSee accompanying notes are an integral part of theseto the unaudited condensed consolidated financial statements
| 4 |
| Table of Contents |
Consolidated Statements of Cash FlowsChanges in Stockholders’ Equity
(Unaudited)For the nine months ended April 30, 2019
(Unaudited)
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| Six Months Ended |
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| January 31, |
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| 2018 |
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| 2017 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
| $ | (2,721,154 | ) |
| $ | (2,403 | ) |
Adjustments to reconcile net loss to net cash from operating activities: |
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Loss on settlement of debt |
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| 2,300,327 |
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|
| - |
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Changes in operating assets and liabilities: |
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|
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Other receivables |
|
| (23,945 | ) |
|
| - |
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Accounts payable and accrued liabilities |
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| 121,173 |
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| 2,403 |
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Net cash used in operating activities |
|
| (323,599 | ) |
|
| - |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from issuance of common stock |
|
| 633,386 |
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|
| - |
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Proceeds from related party note |
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| 1,089,324 |
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|
| - |
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Repayment to related party note |
|
| (852,001 | ) |
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| - |
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Net cash provided by financing activities |
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| 870,709 |
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|
| - |
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Effects on changes in foreign exchange rate |
|
| 24,582 |
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|
| - |
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Net increase in cash and cash equivalents |
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| 571,692 |
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| - |
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Cash and cash equivalents - beginning of period |
|
| 100 |
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| - |
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Cash and cash equivalents - end of period |
| $ | 571,792 |
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| $ | - |
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Supplemental Cash Flow Disclosures |
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Cash paid for interest |
| $ | - |
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| $ | - |
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Cash paid for income taxes |
| $ | - |
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| $ | - |
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Non-Cash Investing and Financing Activity: |
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Common stock issued to settled note due to related party |
| $ | 153,356 |
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| $ | - |
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Reclass of due to related to note due to related party |
| $ | 152,973 |
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| $ | - |
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Contribution of Capital to Pay for Expenses on Behalf of the Company – related party |
| $ | - |
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| $ | 2,000 |
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Common Stock Subscribed |
| $ | - |
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| $ | 3,000 |
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Conversion of Related Party Debt to Common Stock |
| $ | - |
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| $ | 533,925 |
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Expenses Paid by Related Party |
| $ | 50,868 |
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| $ | 100 |
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| Accumulated |
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| Other |
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| Common Stock |
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| Additional |
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| Comprehensive |
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| Total |
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| Number of Shares |
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| Amount |
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| Subscription Receivable |
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| Paid-in Capital |
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| Accumulated Deficit |
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| Income (Loss) |
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| Stockholders’ Equity |
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Balance - July 31, 2018 |
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| 69,586,517 |
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| $ | 6,959 |
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| $ | (3,000 | ) |
| $ | 16,942,861 |
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| $ | (14,351,459 | ) |
| $ | (53,996 | ) |
| $ | 2,541,365 |
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Issuance of common shares for cash |
|
| 6,270,762 |
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|
| 627 |
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|
| - |
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| 1,253,524 |
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|
| - |
|
|
| - |
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|
| 1,254,151 |
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Cancellation of common shares |
|
| (20,000 | ) |
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| (2 | ) |
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| - |
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| 2 |
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|
| - |
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|
| - |
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|
| - |
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Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (27,507 | ) |
|
| (27,507 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (335,463 | ) |
|
| - |
|
|
| (335,463 | ) |
Balance - October 31, 2018 |
|
| 75,837,279 |
|
| $ | 7,584 |
|
| $ | (3,000 | ) |
| $ | 18,196,387 |
|
| $ | (14,686,922 | ) |
| $ | (81,503 | ) |
| $ | 3,432,546 |
|
Issuance of common shares for cash |
|
| 2,993,121 |
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|
| 299 |
|
|
| - |
|
|
| 598,327 |
|
|
| - |
|
|
| - |
|
|
| 598,626 |
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Issuance of common shares for digital currency |
|
| 8,575,916 |
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|
| 857 |
|
|
| - |
|
|
| 3,802,823 |
|
|
| - |
|
|
| - |
|
|
| 3,803,680 |
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Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 122,885 |
|
|
| 122,885 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (902,311 | ) |
|
| - |
|
|
| (902,311 | ) |
Balance - January 31, 2019 |
|
| 87,406,316 |
|
| $ | 8,740 |
|
| $ | (3,000 | ) |
| $ | 22,597,537 |
|
| $ | (15,589,233 | ) |
| $ | 41,382 |
|
| $ | 7,055,426 |
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Issuance of common shares for cash |
|
| 1,226,479 |
|
|
| 123 |
|
|
| - |
|
|
| 245,173 |
|
|
| - |
|
|
| - |
|
|
| 245,296 |
|
Issuance of common shares for digital currency |
|
| 396,293 |
|
|
| 40 |
|
|
| - |
|
|
| 79,218 |
|
|
| - |
|
|
| - |
|
|
| 79,258 |
|
Issuance of common shares for compensation |
|
| 782,948 |
|
|
| 78 |
|
|
| - |
|
|
| 6,805,219 |
|
|
| - |
|
|
| - |
|
|
| 6,805,297 |
|
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (121,785 | ) |
|
| (121,785 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (6,776,628 | ) |
|
| - |
|
|
| (6,776,628 | ) |
Balance - April 30, 2019 |
|
| 89,812,036 |
|
| $ | 8,981 |
|
| $ | (3,000 | ) |
| $ | 29,727,147 |
|
| $ | (22,365,861 | ) |
| $ | (80,403 | ) |
| $ | 7,286,864 |
|
TheSee accompanying notes are an integral part of theseto the unaudited condensed consolidated financial statements
| 5 |
| Table of Contents |
Toga Limited
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the nine months ended April 30, 2018
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| Accumulated |
|
|
|
| |||||||
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|
|
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| Other |
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| Total |
| ||||||||
|
| Common Stock |
|
|
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| Additional |
|
|
|
| Comprehensive |
|
| Stockholders’ |
| ||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Subscription Receivable |
|
| Paid-in Capital |
|
| Accumulated Deficit |
|
| Income (Loss) |
|
| Equity (Deficit) |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance - July 31, 2017 |
|
| 254,635,470 |
|
| $ | 25,464 |
|
| $ | (3,000 | ) |
| $ | 587,187 |
|
| $ | (731,151 | ) |
| $ | - |
|
| $ | (121,500 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common shares for cash |
|
| 1,333,860 |
|
|
| 133 |
|
|
| - |
|
|
| 133,253 |
|
|
| - |
|
|
| - |
|
|
| 133,386 |
|
Other comprehensive loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (346 | ) |
|
| (346 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (55,872 | ) |
|
| - |
|
|
| (55,872 | ) |
Balance - October 31, 2017 |
|
| 255,969,330 |
|
| $ | 25,597 |
|
| $ | (3,000 | ) |
| $ | 720,440 |
|
| $ | (787,023 | ) |
| $ | (346 | ) |
| $ | (44,332 | ) |
Issuance of common shares for cash |
|
| 5,000,000 |
|
|
| 500 |
|
|
| - |
|
|
| 499,500 |
|
|
| - |
|
|
| - |
|
|
| 500,000 |
|
Issuance of common shares for settlement of related party debt |
|
| 1,533,552 |
|
|
| 153 |
|
|
| - |
|
|
| 2,453,530 |
|
|
| - |
|
|
| - |
|
|
| 2,453,683 |
|
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 13,103 |
|
|
| 13,103 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,665,282 | ) |
|
| - |
|
|
| (2,665,282 | ) |
Balance - January 31, 2018 |
|
| 262,502,882 |
|
| $ | 26,250 |
|
| $ | (3,000 | ) |
| $ | 3,673,470 |
|
| $ | (3,452,305 | ) |
| $ | 12,757 |
|
| $ | 257,172 |
|
Issuance of common shares for cash |
|
| 2,069,069 |
|
|
| 207 |
|
|
| - |
|
|
| 206,701 |
|
|
| - |
|
|
| - |
|
|
| 206,908 |
|
Other comprehensive income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (116,585 | ) |
|
| (116,585 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (438,848 | ) |
|
| - |
|
|
| (438,848 | ) |
Balance - April 30, 2018 |
|
| 264,571,951 |
|
| $ | 26,457 |
|
| $ | (3,000 | ) |
| $ | 3,880,171 |
|
| $ | (3,891,153 | ) |
| $ | (103,828 | ) |
| $ | (91,353 | ) |
See accompanying notes to the unaudited condensed consolidated financial statements
| 6 |
| Table of Contents |
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended April 30, 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation Stock based compensation Loss on settlement of debt Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other current assets Deferred revenue Accounts payable and accrued liabilities Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock Proceeds from related parties Repayment to related party Net cash provided by financing activities Effects on changes in foreign exchange rate Net increase in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Supplemental Cash Flow Disclosures Cash paid for interest Cash paid for income taxes Non-Cash Investing and Financing Activity: Cancellation of common stock Note exchanged for due to related parties Common stock issued for digital currency $ (8,014,402 ) $ (3,160,002 ) 41,974 3,356 6,805,297 - - 2,300,327 149,702 (59,043 ) (205,406 ) - (309,220 ) (46,694 ) 643,336 212,998 787,558 121,638 (101,161 ) (627,420 ) (198,017 ) (62,558 ) (198,017 ) (62,558 ) 2,098,073 840,294 126,813 1,430,620 (74,927 ) (1,055,333 ) 2,149,959 1,215,581 (98,153 ) (52,017 ) 1,752,628 473,586 1,064,672 100 $ 2,817,300 $ 473,686 $ - $ - $ - $ - $ 2 $ - $ - $ 152,973 $ 3,882,938 $ -
See accompanying notes to the unaudited condensed consolidated financial statements
| 7 |
| Table of Contents |
Notes to the Condensed Consolidated Financial Statements
January 31, 2018April 30, 2019
(Unaudited)(Unaudited)
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Business description
On June 30, 2016, Blink Couture, Inc. entered into a merger agreement with its wholly owned subsidiary, Toga Limited (the “Company”), a Delaware corporation with no material operations. The Company continued operations under the name Toga Limited.
Blink Couture, Inc. was originally incorporated as Fashionfreakz International Inc. on October 23, 2003, under the laws of the State of Delaware. On December 2, 2005, Fashionfreakz International Inc. changed its name to Blink Couture Inc. Until March 4, 2008, the Company’s principal business was the online retail marketing of trendy clothing and accessories produced by independent designers. On March 4, 2008, the Company discontinued its prior business and changed its business plan. The Company’s business plan now consists of exploring potential targets for a business combination through the purchase of assets, share purchase or exchange, merger or similar type of transaction. The Company has nominal operations and nominal assets, and is considered a Shell company as defined by Rule 12b-2 of the Exchange Act. On June 13, 2016, a change of control of the Company occurred. On that date, the current president and Chief Executive Officer purchased a total of 13,869,150 of the issued and outstanding shares of the Company.
On June 10, 2017, the Board of Directors unanimously adopted resolutions authorizing the increase of the Company’s authorized number of shares of common stock from one hundred million (100,000,000) shares to ten billion (10,000,000,000) shares and increased the number of the Company’s total issued and outstanding shares of common stock by conducting a forward split at the rate of fifty (50) shares for every one (1) (50:1) share currently issued and outstanding (the “Forward Split”). The Forward Split became effective in the market on September 11, 2017 following approval by the FINRA. All share amounts in this filing have been adjusted retroactively.
The Company incorporated a wholly-owned subsidiary, TOGL Technologies SDN. BHD.Technology Sdn. Bhd. (“TOGL”) in Malaysia on September 26, 2017.
On May 28, 2018, the Company’s wholly-owned subsidiary TOGL formed a branch office in Taiwan.
The Company is currentlyincorporated a wholly-owned subsidiary, PT. Toga International Indonesia (“PT Toga”) in Indonesia on November 23, 2017.
The Company’s wholly-owned subsidiary TOGL formed a wholly-owned subsidiary Toga Vietnam Company Limited (“Toga Vietnam”) in Vietnam on January 15, 2019.
On May 8, 2019, the Company filed a Certificate of Amendment with the Nevada Secretary of State whereby it amended Article IV of its Articles of Incorporation by decreasing the Company’s authorized number of shares of common stock from ten billion (10,000,000,000) shares to one billion (1,000,000,000) shares and decreasing its issued and outstanding shares of common stock at a ratio of ten (10) shares for every one (1) share held (“10-1 Reverse Split”). The Company’s Board of Directors approved this amendment on April 24, 2019.
On May 17, 2019, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the 10-1 Reverse-Split and share decrease be effected in the process of formingmarket. All share and incorporating a new subsidiary, PT Toga International Indonesia. As of January 31, 2018,per share information in these consolidated financial statements retroactively reflect this subsidiary has not yet been created.stock distribution.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the consolidated financial statements not misleading have been included. The balance sheet at July 31, 2017,2018, has been derived from the Company’s audited consolidated financial statements as of that date.
The unaudited consolidated condensed financial statements included herein should be read in conjunction with the audited consolidated financial statements and the notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2017,2018, that was filed with the SEC on November 14, 2017.March 19, 2019. The results of operations for the sixnine months ended January 31, 2018,April 30, 2019 are not necessarily indicative of the results to be expected for the full year.
| 8 |
| Table of Contents |
Basis of Consolidation
These consolidated condensed financial statements include the accounts of the Company and the wholly-owned subsidiary,subsidiaries, TOGL Technologies SDN. BHD.Technology Sdn. Bhd., and PT. Toga International Indonesia. All material intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.
Tax benefits from an uncertain tax positionBasic and Diluted Earnings per Share
Pursuant to the authoritative guidance, basic net income and net loss per share are only recognized if it is more likely than not thatcomputed by dividing the tax position will be sustained on examinationnet income and net loss by the taxing authorities, based onweighted average number of common shares outstanding. Diluted net income and net loss per share is the technical meritssame as basic net income and net loss per share due to the lack of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any ofdilutive items. At the reporting periods presented.dates, there were no common stock equivalents outstanding.
Foreign Currency Translations
The Company’s functional and reporting currency is the U.S. dollar. Our subsidiary’s functional currency is the Malaysian Ringgit. All transactions initiated in Malaysian Ringgit, New Taiwan dollar and Vietnamese dong, and Indonesian rupiah are translated into U.S. dollars in accordance with ASC 830-30, “”Translation of Financial Statements,” as follows:
| Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. | |
| Equity at historical rates. | |
| Revenue and expense items at the average rate of exchange prevailing during the period. |
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income. Gains and losses from foreign currency transactions are included in earnings in the period of settlement.
Nine months ended Year ended Nine months ended April 30, July 31, April 30, 2019 2018 2018 Spot MYR: USD exchange rate Average MYR: USD exchange rate Spot NTD: USD exchange rate Average NTD: USD exchange rate Spot IDR: USD exchange rate Average IDR: USD exchange rate Spot VND: USD exchange rate Average VND: USD exchange rate $ 0.2417 $ 0.2460 $ 0.2550 $ 0.2443 $ 0.2489 $ 0.2562 $ 0.0323 $ 0.0326 $ n/a $ 0.0324 $ 0.0330 $ n/a $ 0.000070 $ 0.000069 $ n/a $ 0.000069 $ 0.000072 $ n/a $ 0.000043 $ n/a $ n/a $ 0.000043 $ n/a $ n/a
Revenue Recognition
The Company currently generates revenue through development for advertising using a custom-built advertising feature that matches client advertising requirements. Advertisements are created in batches, and completed/invoices in monthly batches. In addition, the Company generates revenue through management fees and information technology fees.
The Company recognizes revenues on contracts with customers in accordance with the ASC 606, including performing the following: (i) identify the contract, (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price, (v) recognize revenue.
Concentration of Revenue by Customer
The Company’s concentration of revenue for individual customers above 10% are as follows:
· | Agel Enterprise International Sdn Bhd: 27%, | |
· | Others: 73% |
| 9 |
| Table of Contents |
Concentration of Revenue by Country:
- | Malaysia (TOGL Technology Sdn. Bhd): 54% | |
- | Indonesia (PT. Toga International Indonesia): 42% | |
- | United States (Toga Limited): 4% |
The Company attributes revenue from external customers to individual countries based upon the responsibility of the entity to fulfil the sales obligation and the entity from which the actual service is provided.
Accounts Receivable
The Company’s accounts receivable balance is related to advertising through TOGL. Accounts receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company does not currently have any amount recorded as an allowance for doubtful accounts. Based on management’s estimate and based on all accounts being current, the Company has not deemed it necessary to reserve for doubtful accounts at this time.
As of April 30, 2019, the Company’s accounts receivable are concentrated 94% with Agel Enterprise International Sdn Bhd.
As of April 30, 2019, the Company’s accounts receivable are concentrated 91% in Malaysia (TOGL Technology Sdn. Bhd) and 9% in United States (Toga Limited).
Recent Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases” (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018. The Company is evaluating the adoption of ASC 842, but has not determined the effects it may have on the Company’s consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-08 “Collaborative Arrangements” (Topic 808) intended to improve financial reporting around collaborative arrangements and align the current guidance under ASC 808 with ASC 606 “Revenue from Contracts with Customers.” The ASU affects all companies that enter into collaborative arrangements. The ASU clarifies when certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 and changes certain presentation requirements for transactions with a collaborative arrangement participants that are not directly related to sales to third parties. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods therein. Earlier adoption is permitted for any annual or interim period for which consolidated financial statements have not yet been issued. The Company has not entered into any collaborative arrangements and therefore does not currently expect the adoption of this standard to have a material effect on its Consolidated Financial Statements. The Company plans to adopt this ASU either on the effective date of January 1, 2020 or possibly in an earlier period if a collaborative arrangement is entered. Upon adoption, the Company will utilize the retrospective transition approach, as prescribed within this ASU.
The Company has reviewed and analyzed the above recent accounting pronouncements, and notes no material impact on the financial statements as of April 30, 2019.
NOTE 3. GOING CONCERN
The accompanying unaudited consolidated interimcondensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company, through April 30, 2019, has not yet generated net income for any revenues,fiscal year and has accumulated deficit and has incurred net losses, and has accumulated deficit.losses. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company is partially dependent on advances from its principal shareholders or other affiliated parties for continued funding. There are no commitments or guarantees from any third party to provide such funding nor is there any guarantee that the Company will be able to access the funding it requires to continue its operations. The Company did enter into a subscription agreement whereby Toga Capital agreed to purchase up to 120 million shares of the Company’s common stock at a subscription price of $0.10 per share for an aggregate purchase price of Twelve Million USD ($12,000,000); however, the fulfilment of this funding is not guaranteed. The Company has also entered into a subscription agreement with Agel Enterprise International Sdn Bhd (“Agel”), whereby Agel agreed to purchase up to 107,675,242 shares of the Company’s common stock at a subscription price of $0.20 per share for an aggregate purchase price of $21,535,048; however, fulfilment is not guaranteed.
| 10 |
| Table of Contents |
NOTE 4. OTHER RECEIVABLEPROPERTY AND EQUIPMENT
As of JanuaryApril 30, 2019 and July 31, 2018, the balance of property and equipment represented consisted of the followings:
|
| April 30, |
|
| July 31, |
| ||
|
| 2019 |
|
| 2018 |
| ||
Renovation |
| $ | 143,695 |
|
| $ | 85,362 |
|
Fixtures and Furniture |
|
| 68,005 |
|
|
| 38,046 |
|
Tools and Equipment |
|
| 78,575 |
|
|
| 20,796 |
|
Vehicles |
|
| 66,951 |
|
|
| - |
|
Computer Equipment |
|
| 23,612 |
|
|
| 5,798 |
|
|
|
| 380,838 |
|
|
| 150,002 |
|
Accumulated depreciation |
|
| (53,573 | ) |
|
| (14,296 | ) |
Total |
| $ | 327,265 |
|
| $ | 135,706 |
|
Depreciation expense for the nine months ended April 30, 2019 and 2018 was $41,974 and $3,356, respectively.
During the nine months ended April 30, 2019 and 2018, the Company acquired property and equipment of $198,017 and $62,558, respectively.
NOTE 5. INTANGIBLE ASSET - DIGITAL CURRENCY
During the nine months ended April 30, 2019, the Company issued 8,972,209 shares of common stock at $0.43 for digital currency valued at $3,882,938.
During the year ended July 31, 2018, the Company has $24,091issued 269,838 shares of other receivables, consistingcommon stock at $5.00 per share for digital currency valued at $1,348,920.
As of $3,788April 30, 2019, and July 31, 2018, the Company had digital currency of expenses$5,231,858 and $20,303 for a deposit paid for$1,348,920, respectively.
Digital currencies are nonfinancial assets that lack physical substance. We believe that digital currencies meet the definition of indefinite-lived intangible assets
We complete an intent to acquire a new subsidiary whichevaluation of digital currency on an annual basis. As of the date of the last evaluation no impairment loss was not executed. The deposit and expenses paid will be repaid to the Company.recognized.
NOTE 5.6. RELATED PARTY TRANSACTIONS
Note payableRevenue and accounts receivable
During the nine months ended April 30, 2019, the Company recorded revenue of $1,270,814, included in revenue from Agel Enterprise International Sdn Bhd (“Agel”). who owns more than 10% of the Company’s common stock. As of April 30, 2019, the Company recorded accounts receivable from Agel of $204,538.
Notes due to related parties
On September 30, 2017, the Company issued a note payable in the amount of $152,973 to Toga Capital Sdn BhdSdn. Bhd. (“Toga Capital”), which is partially owned by an officer and director of the Company, for repayment of amounts due to related parties of $152,973. The note is a 2% interest bearing promissory note that is payable on September 30, 2018.
During the six monthsyear ended JanuaryJuly 31, 2018, the Company issued 15,335,5151,533,552 shares of common stock with a fair value of $2,453,683 to repay the note payable of $152,973 and accrued interest of $383. As a result, the Company recorded a loss on settlement of debt of $2,300,327.
On May 31, 2016, all outstanding related party advances were paid by a current director of the Company. The Company has outstanding notes payable to related partiesparty who is a Company’s director, of $24,126 and $24,126 as of January 31, 2018April 30, 2019 and July 31, 2017,2018, respectively. The amount is non-interest bearing, unsecured and due on demand.
| Table of Contents |
Due to related parties
During the sixnine months ended January 31,April 30, 2019 and 2018, and 2017, the Company borrowed a total amount of $1,089,324$122,678 and $0$1,430,620 from a related parties,party, Toga Capital, and repaid $72,959 and $1,055,333, respectively.
During the sixnine months ended January 31,April 30, 2019 and 2018, and 2017, the Company repaid a total amount of $852,001 and $0 from related parties, respectively.
During the six months ended January 31, 2018 and 2017, total expenses paid directly by a related party, Toga Capital, on behalf of the Company were $50,868$0 and $200,$52,429, respectively.
During the nine months ended April 30, 2019 and 2018, the Company borrowed a total amount of $4,135 and $0, respectively and repaid $1,968 and $0, respectively, from the Chief Executive Officer of the Company.
During the nine months ended April 30, 2019 and 2018, the Company purchased property and equipment of $0 and $25,218 from related parties, respectively.
As at January 31, 2018April 30, 2019 and July 31, 2017, $240,6542018, $192,473 and $96,212$186,390 is due to thea related parties, respectively. Theparty, Toga Capital, the amount is non-interest bearing, unsecured and due on demand.
NOTE 7. EQUITY
Amendment to Articles of Incorporation and reverse stock split
On May 8, 2019, the Company filed a Certificate of Amendment with the Nevada Secretary of State whereby it amended Article IV of its Articles of Incorporation by decreasing the Company’s authorized number of shares of common stock from 10,000,000,000 shares to 1,000,000,000 shares and decreasing its issued and outstanding shares of common stock at a ratio of 10 shares for every 1 share held (“10-1 Reverse Split”) (see Note 1). All share and per share information in these consolidated financial statements retroactively reflect this stock distribution.
Preferred stock
The Company is authorized to issue 20,000,000 shares of preferred stock at a par value of $0.0001.
As of April 30, 2019, and July 31, 2018, no preferred shares were issued and outstanding.
Common stock
The Company is authorized to issue 1,000,000,000 shares of common stock at a par value of $0.0001 at April 30, 2019.
During the sixnine months ended January 31, 2018,April 30, 2019, the Company issued 20,245,519 shares of common stock, as follows:
|
| |
| · | 8,972,209 shares of common stock issued for $3,882,938 of digital currency (see Note 4) |
|
|
|
On October 29, 2018, a shareholder of the Company canceled 20,000 shares of common stock without consideration for such cancelation.
As of April 30, 2019, and July 31, 2018, 89,812,036 and 69,586,517 shares of the Company’s common stock were issued and outstanding, respectively.
NOTE 8. COMMITMENTS AND CONTINGENCIES
On October 17, 2018, TOGL entered into two Sale and Purchase Agreements with Mammoth Empire Estate Sdn. Bhd., a Malaysian corporation for the purchase of certain real property. In furtherance to the purchase of that certain real property, the Company entered into a Subscription Agreement with Mammoth dated November 29, 2018 for the purchase of 470,476 shares of the Company’s common stock for an aggregate purchase price of $3,999,048, valued at $8.50, the closing price of the shares on October 16, 2018, remitted by Mammoth in the form of legal title to those certain portions of real property. As of April 30, 2019, the title has not yet passed to the Company and is currently pending and the related shares are held in escrow.
NOTE 6.9. SUBSEQUENT EVENTS
On May 28, 2019, the Company issued a total of 348,953 shares of its common stock to 29 of its employees and consultants as additional compensation for services rendered.
On March 18, 2019 Agel subscribed to purchase 11,073 shares of the Company's common stock pursuant to the Amended Subscription Agreement for an aggregate purchase price of $97,436. The market price of the Company’s shares was $8.80 per share which Agel elected to pay to the Company in the form of 25 Bitcoins.
On May 9, 2019 Agel subscribed to purchase 88,195 shares pursuant to the Amended Subscription Agreement for an aggregate purchase price of $829,025. The market price of the Company’s shares was $9.39 per share which Agel elected to pay to the Company in the form of 144 Bitcoins.
Subsequent to the period ending April 30, 2019, the Company sold a total of 1,200 Bitcoins for a total $9,067,676.
As discussed above in Note 8, there is currently 470,476 common shares of the Company held in escrow pending the completion of two sale and purchase agreements.
As discussed above in Note 1 and 7, the Company amended its Articles of Incorporation and provided an Issuer Company-Related Action Notification to FINRA to effect the Reverse Split. FINRA subsequently caused the Reverse Split to take effect in the processmarket on June 5, 2019. As a result of establishingsuch action, the Company's total issued and outstanding shares of common stock, on the effective date, was reduced to 90,730,758. In addition, FINRA affixed a new subsidiary, PT Toga International Indonesia. To date,"D" to the subsidiary has not yet been finalized and formed.Company's ticker symbol (which was previously "TOGL") which will automatically be removed 30 days following the effective date.
| Table of Contents |
ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this quarterquarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Our auditedunaudited condensed consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Forward-Looking Statements
This quarterly reportQuarterly Report on Form 10-Q (the(this “Report”), including “Management’s Discussion and Analysis and Results of Operations” in Item 2, contains forward-looking statements regarding future events and the future results of Toga Limited (the “Company”) that are based on management’s current expectations, estimates, projections and assumptions about the Company’s business. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “sees,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to, those discussed in “Management’s Discussion and Analysis and Results of Operations” in Item 2 and elsewhere in this Report as those discussed from time to time in the Company’s other Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions. Such forward-looking statements speak only as of the date of this Report or, in the case of any document incorporated by reference, the date of that document, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Report. If we update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections with respect to other forward-looking statements.
Description of Business
The Company was incorporated in the State of Delaware on October 23, 2003, under the name Fashionfreakz International Inc. On December 2, 2005, the Company changed its name to Blink Couture, Inc. Until March 4, 2008, the Company’s principal business was the online retail marketing of trendy clothing and accessories produced by independent designers. On March 4, 2008, the Company discontinued and changed its prior business and changed its business plan. The Company’s business plan now consists of exploring potential targets for a business combination through the purchase of assets, share purchase or exchange, merger or similar type of transaction.
On June 30, 2016, Blink Couture, Inc., (the “Registrant”), a Delaware corporation entered into an Agreement and Plan of Merger (the "Merger Agreement"“Merger Agreement”) pursuant to which the Company merged with its wholly owned subsidiary, Toga Limited, a Delaware corporation with no material operations ("(“Merger Sub"Sub” and such merger transaction, the "Merger"“Merger”). Upon the consummation of the Merger, the separate existence of Merger Sub ceased and shareholders of the Company became shareholders of the surviving company named “Toga Limited.”
As permitted by the Delaware General Corporation Law Title 8, Section 251(f), the sole purpose of the Merger was to effect a change of the Company'sCompany’s name from Blink Couture, Inc., to Toga Limited. Upon the filing of the Certificate of Merger (the "Certificate“Certificate of Merger"Merger”) with the Secretary of State of Delaware on July 22, 2016 to effect the Merger, the Company'sCompany’s Articles of Incorporation were deemed amended to reflect the change in the Company'sCompany’s corporate name.
The name change to Toga Limited became effective in the market on December 16, 2016, following approval by the Financial Industry Regulatory Authority, Inc. (FINRA), and in conjunction with the name change, the trading symbol for the Company’s common stock was changed. Its shares are now listed for quotation on OTC Markets under the symbol “TOGL.”
On June 10, 2017, the Board of Directors unanimously adopted resolutions authorizing the increase of the Company’s authorized number of shares of common stock from one hundred million (100,000,000) shares to ten billion (10,000,000,000) shares and increased the number of the Company’s total issued and outstanding shares of common stock by conducting a forward split at the rate of fifty (50) shares for every one (1) (50:1) share currently issued and outstanding (the “Forward Split”). The Forward Split became effective in the market on September 11, 2017 following approval by the FINRA.
The Company incorporated a wholly-owned subsidiary, TOGL TechnologiesTechnology Sdn. Bhd. (“TOGL”) in Malaysia on September 26, 2017.
The Company has plans and is in the process of evaluating, incorporating, and acquiring further subsidiaries.
Results of Operations
The Company has not conducted any active operations since March 4, 2008, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company since inception in October 2003.
The Company has recently incorporated a wholly-owned subsidiary, TOGL,PT. Toga International Indonesia (“PT Toga”), in Indonesia on November 23, 2017.
In 2017, the Company developed “Yippi,” a social media app for mobile devices. The Company commenced development with the hiring of a Chief Technology Officer and is strategically planning to acquire or incorporate other operational subsidiaries. The Company’s plan of operation for the next twelve months is to strategically acquire or incorporate additional subsidiaries and grow revenue generating operations.development team.
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The Yippi App is a messaging app with a focus on entertainment and security. It’s fast, simple, secure and free. Yippi seamlessly syncs a user’s normal messages and secret messages into one application. Users can send an unlimited number of messages, photos, and voice messages. Yippi groups allow users to send broadcasts to up to 100 contacts at a time. Users download the Yippi App through the Apple App Store, Google Play, or the Amazon App Store. Revenue is generated from selling advertising, emoji stickers, and special filters, effects and features for use within Yippi.
On May 28, 2018, the Company’s wholly-owned subsidiary TOGL formed a branch office in Taiwan.
On July 10, 2018, the Company changed its state of incorporation from the State of Delaware to the State of Nevada.
On October 17, 2018, TOGL entered into two Sale and Purchase Agreements with Mammoth Empire Estate Sdn. Bhd., a Malaysian corporation for the purchase of certain real property. In furtherance to the purchase of that certain real property, the Company entered into a Subscription Agreement with Mammoth dated November 29, 2018 for the purchase of 470,476 shares of the Company’s common stock for an aggregate purchase price of $3,999,049 remitted by Mammoth in the form of legal title to those certain portions of real property. On February 7, 2019, the Company issued such shares in the name of Mammoth Empire Estates Sdn. Bhd. and delivered to a law firm in Kuala Lumpur, Malaysia to hold in escrow pending completion of the transfer of title to the Company.
The Company’s wholly-owned subsidiary TOGL formed a wholly-owned subsidiary Toga Vietnam Company Limited in Vietnam on January 15, 2019.
Three Months PeriodResults of Operations
The Company’s operations are focused on the development of Yippi and attracting active users to Yippi. The Company commenced generating advertising revenue from Yippi during the fiscal-year ended July 31, 2018.
The Company has incorporated two wholly-owned subsidiaries, TOGL Technology Sdn Bhd and PT Toga International Indonesia.
The Company’s wholly-owned subsidiary TOGL formed a wholly-owned subsidiary Toga Vietnam Company Limited in Vietnam on January 15, 2019.
Three-Months Ended January 31, 2018April 30, 2019 Compared to 2017.2018.
Our net loss for the three-month period ended January 31, 2018April 30, 2019 was $2,665,282$6,776,628 compared to a net loss of $2,103$438,848 for the three-month period ended January 31, 2017.April 30, 2018. During the three-month period ended January 31,April 30, 2019 and April 30, 2018 we generated $3,104,032, and January 31, 2017, we have not generated any revenue.$73,988 in revenue, respectively.
During the three-month period ended January 31, 2018,April 30, 2019, we incurred general and administrative expenses of $364,828$1,169,397 compared to $2,103$431,262 incurred for the three-month period ended January 31, 2017.April 30, 2018. General and administrative fee expenses incurred during the three-month period ended January 31, 2018 and January 31, 2017 were primarily related to maintenance of applications, corporate overhead, financial and administrative contracted services, professional fees, salaries and wages, legal fees for reorganization of the Company and costs incurred for potential acquisitions. The increase in general and administrative expenses is primarily due to an increase in professional fees, salaries and wages, and costs associated with strategic reorganization costs and potential acquisitionscommencing operations through subsidiaries during the three-month period ended January 31,April 30, 2019. During the three-month period ended April 30, 2019, we incurred $6,805,297 in stock-based compensation expenses related to the issuance of 782,948 of shares of our common stock to certain of our employees as additional compensation. We did not incur any stock-based compensation expenses during the same period for the previous fiscal year.
During the three-month period ended April 30, 2019, we incurred research and development costs of $66,699. We did not incur any research and development expenses during the same period for the previous fiscal year.
During the three-month period ended April 30, 2019, we incurred depreciation of $18,311 compared to $3,356 for the three-month period ended April 30, 2018.
During the three-month period ended January 31, 2018,April 30, 2019, we incurredgenerated other income of $3,994 compared to $0 for the three-month period ended April 30, 2018. Other expenses includingconsisted of interest income of $4,112 and interest expense of $127, and a loss on settlement of debt of $2,300,327. The loss of settlement of debt was related to$118, for the issuance of 15,335,515 shares of common stock with a fair value of $2,453,683 to repay note payable of $152,973 and accrued interest of $383.three-month period ended April 30, 2019.
Six Months PeriodNine-Months Ended January 31, 2018April 30, 2019 Compared to January 31, 20172018..
ForOur net loss for the six-monthnine-month period ended January 31, 2018, the Company hadApril 30, 2019 was $8,014,402 compared to a net loss of $2,721,154, compared to net loss of $2,403$3,160,002 for the six-monthnine-month period ended January 31, 2017.April 30, 2018. During the six-monthnine-month period ended January 31,April 30, 2019 and April 30, 2018 we generated $4,703,168, and January 31, 2017, we have not generated any revenue.$73,988 in revenue, respectively.
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During the six-monthnine-month period ended January 31, 2018,April 30, 2019, we incurred general and administrative expenses of $420,444$2,888,342 compared to $2,403$851,706 incurred for the six-monthnine-month period ended January 31, 2017.April 30, 2018. General and administrative fee expenses incurred during the six month period ended January 31, 2018 and January 31, 2017 were primarily related to maintenance of applications, corporate overhead, financial and administrative contracted services, professional fees, salaries and wages, legal fees for reorganization of the Company and costs incurred for potential acquisitions. The increase in general and administrative expenses is primarily due to an increase in professional fees, salaries and wages, and costs associated with strategic reorganization costs and potential acquisitionscommencing operations through subsidiaries during the six-monthnine-month period ended January 31,April 30, 2019. During the nine-month period ended April 30, 2019, we incurred $6,805,297 in stock-based compensation expenses related to the issuance of 782,948 of shares of our common stock to certain employees as additional compensation. We did not incur any stock-based compensation expenses during the same period for the previous fiscal year. During the nine-month period ended April 30, 2019, we incurred research and development costs of $139,142. We did not incur any research and development expenses during the same period for the previous fiscal year.
During the nine-month period ended April 30, 2019, we incurred depreciation of $41,974 compared to $3,356 for the nine-month period ended April 30, 2018.
During the six-monthnine-month period ended January 31,April 30, 2019, we generated other income of $6,648 compared to $2,300,710 for the nine-month period ended April 30, 2018. Other expenses consisted of interest income of $6,833 and interest expense of $185, for the nine-month period ended April 30, 2019. As compared to 2018 we incurred other expenses includingconsisted of interest expense of $383 and a loss on settlement of debt of $2,300,327. The loss of settlement of debt was related to the issuance of 15,335,515 shares of common stock with a fair value of $2,453,683 to repay note payable of $152,973 and accrued interest of $383.
Plan of Operation
The Company currentlyCompany’s current business activity does not engage in any business activities thatat this time provide positive cash flow.flow, although the Company has commenced generating revenue for the first time during the two most recent quarters. During the next twelve months, we anticipate incurring costs related to:
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We believe that we are nearing the point where we will commence generating net profit on a quarterly basis, although we cannot predict exactly when this will occur. We have commenced generating gross revenues and believe our revenue will increase during the next fiscal year. We believe that in order to grow our business going forward, we will need to continue to invest in marketing and advertising of our Yippi App throughout Asia. Because of this, we expect going forward to continue to invest heavily in marketing and advertising. We believe we will be able to meet theseour operating costs and additional marketing and advertising in excess of our revenues, through additional amounts, as necessary, to be loaned to or invested in us by our stockholders and management, and/or other investors.
The Company is in the progress of acquiring other businesses, some of which mayalthough no agreements have recently commenced operations, are developing-stage company in need of additional funds for expansionbeen entered into new products or markets, are seeking to develop a new product or service, or are established businesses which may be experiencing financial or operating difficulties and are in need of additional capital. In the alternative, any such business combination may involve the acquisition of, or merger with a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering.
Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.
The Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.anyone.
Liquidity and Capital Resources
As of January 31, 2018,April 30, 2019, our total assets were $595,883$9,147,532 and our total liabilities were $338,711.$1,860,668 comprised of accounts payable, accrued liabilities, due to related parties, notes due to related parties, deferred revenue and income tax.
Stockholders’ deficitequity increased from a deficit of $121,500$2,541,365 as of July 31, 20172018 to shareholders’ equity of $257,172$7,286,864 as of January 31, 2018.April 30, 2019.
We had $571,792$2,817,300 of cash on hand at January 31, 2018,as of April 30, 2019, and the Company had no other assets to meet ongoing expenses or debts that may accumulate. Accumulated deficit was at $3,452,305$22,365,861 as of January 31, 2017,April 30, 2019 compared to accumulated deficit of $731,151$14,351,459 as of July 31, 2017.2018. As of April 30, 2019, we had working capital of $1,727,741.
Cash Flow from Operating Activities
We have not generated anysignificant positive cash flow from operating activities. For the six-monthnine-month period ended January 31, 2018,April 30, 2019, net cash flows used in operating activities was $323,599.$101,161. Net cash flows used in operating activities was $0$627,420 for the six-monthnine-month period ended January 31, 2017. April 30, 2018.
Cash flowFlows from operating activitiesInvesting Activities
During the nine-month period ended April 30, 2019, we used $198,017 for purchase of property and equipment. During the nine-month period ended April 30, 2018, we used $62,558 for the six-month period ended January 31, 2018 was due to a net losspurchase of $2,721,154,property and an increase in other receivable of $23,945, offset by loss on settlement of debt of $2,300,327, and increase in accounts payable and accrued liabilities of $121,173.equipment.
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Cash Flows from Financing Activities
We have financed our operations primarily from either advances and loans from related and third parties or the issuance of equity instruments. For the six-monthnine-month period ended January 31,April 30, 2019, net cash provided by financing activities was $2,149,959 consisting of the sale of shares of our common stock and proceeds from related parties. For the nine-month period ended April 30, 2018, net cash from financing activities was $870,709, compared to $0 proceeds from notes due to related parties for the six-month period ended January 31, 2017.
Cash flows from financing activities for the six-months ended January 31, 2018 consisted of $633,386 proceeds from the issuance of common stock, and $1,089,324 proceeds from related party, offset by $852,001 repayments to related party.
We have no commitment for any capital expenditure and foresee none, other than costs associated with potential acquisitions. We will also continue to incur routine fees and expenses incident to our reporting duties as a public company. We will continue to incur expenses in finding and investigating possible acquisitions and other fees and expenses in the event we make an acquisition or attempt but are unable to complete an acquisition. If we do not consummate a merger or other transaction with another business, our cash requirements for the next twelve months are relatively modest, principally legal expenses, accounting expenses, and other expenses relating to making filings required under the Exchange Act, which should not exceed $50,000 in the fiscal year ending July 31, 2018. Any travel, lodging or other expenses which may arise related to finding, investigating and attempting to complete a combination with one or more potential acquisitions could also amount to thousands of dollars.
We will only be able to pay our future obligations and meet operating expenses by raising additional funds, acquiring a profitable company or otherwise generating positive cash flow. As a practical matter, we are unlikely to generate positive cash flow by any means other than acquiring a company with such cash flow. We believe that management, stockholders or affiliates will lend funds to us as needed for operations prior to completion of an acquisition. Management, stockholders and any such affiliates are not obligated to provide funds to us, however, and it is not certain they will always want or be financially able to do so. Our stockholders, management and/or affiliates who advance funds to us to cover operating expenses will expect to be reimbursed, either by us or by the company acquired, prior to or at the time of completing a combination.
There currently are no plans to sell additional securities to raise capital, although sales of securities may be necessary to obtain needed funds. Our current management has agreed to continue their services to us and to accrue sums owed them for services and expenses and expect payment reimbursement only.
Should existing management or stockholders refuse to advance needed funds, however, we would be forced to turn to outside parties to either lend funds to us or buy our securities. There is no assurance whatsoever that we will be able to raise necessary funds, when needed, from outside sources. Such a lack of funds could result in severe consequences to us, including among others:
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It is our intention to seek reimbursement from potential acquisition candidates for professional fees and travel, lodging and other due diligence expenses incurred by our management, in connection with our investigation, negotiation and consummation of a business combination with such acquisition candidates. There is no assurance that any potential candidate will agree to reimburse us for such costs.$1,215,581.
Going Concern
Our independent auditors have added an explanatory paragraph to their audit issued in connection with the consolidated financial statements for the period ended July 31, 2017,2018, relative to our ability to continue as a going concern. The Company, whichthrough April 30, 2019, has not yet generated net income for any revenues,fiscal year and has incurred net losses, has nominal assets and a stockholders’accumulated deficit. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty
The Company is dependent on advances from its principal shareholders or other affiliated parties for continued funding. There are no commitments or guarantees from any third party to provide such funding nor is there any guarantee that the Company will be able to access the funding it requires to continue its operations.uncertainty.
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 of operations, liquidity, capital expenditures or capital resources that is material to an investor in our securities.
Contractual Obligations
Not required for smaller reporting companies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to Item 305(e) of Regulation of S-K (§229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
OurThe Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by usthe Company in the reports that we filethe Company files or submitsubmits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission'sCommission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer'sissuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
AnIn accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was conductedcompleted under the supervision and with the participation of ourthe Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of ourthe Company’s disclosure controls and procedures as of January 31, 2018.the end of the period covered by this quarterly report. Based on that evaluation, ourthe Company’s management including the Principal Executive Officer and Principal Financial Officer, concluded that ourthe Company’s disclosure controls and procedures were not effective as of such date to ensurein providing reasonable assurance that information required to be disclosed in the Company’s reports that we filefiled or submitsubmitted under the Exchange Act iswas recorded, processed, summarized, and reported within the time periods specified in SECthe SEC’s rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the six-month period ended January 31, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
There have beenwere no changes in our internal control over financial reporting that occurred during the quarter ended January 31, 2018,period ending April 30, 2019, or subsequent to the date the Company completed its evaluation, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
This quarterquarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this quarter report.
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There are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the six (6) months ended January 31, 2018,quarter ending April 30, 2019, the Company issued a total of 78,674,11510,490,362 shares of common stock to Toga Capitalresulting in a total of $2,098,073 cash proceeds from Agel Enterprises International Sdn. Bhd., a Malaysian corporation (“Toga Capital”Agel”) pursuant to a Subscription Agreement entered into between the Company and Toga CapitalAgel on October 31, 2017 (the “Subscription Agreement”). Toga Capital is deemed a related party of the Company since the Company’s CEO, Mr. Michael Toh, is an officer and director of Toga Capital. The total of 78,674,115 shares sold to Toga Capital includes 13,338,600 shares that were disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended October 31, 2017 as shares that the Company “agreed to issue.”
Under the Subscription Agreement, Toga Capital agreed to purchase up to 1.2 billion shares of the Company’s common stock at a subscription price of USD$0.01 per share for an aggregate purchase price of Twelve Million and 00/100 USD ($12,000,000) (the “Purchase Price”).
Through October 31, 2017, Toga Capital, through a related party, had provided the Company with $133,386 in cash. The Company and Toga Capital agreed that the Company would issue 13,338,600 shares pursuant to the Subscription Agreement in exchange for the $133,386 in cash.May 7, 2018.
During the three months ended January 31, 2018,quarter ending April 30, 2019, the Company made the following issuances of its common stock to Toga Capital pursuant to the terms of the Subscription Agreement:
No placement agent or broker dealer was used or participated in any offering or sale of the above shares.
The sales described above are and will be made pursuant to the exemption from registration set forth in Regulation S, promulgated by the Securities Exchange Commission under the Securities Act of 1933. No underwriters were utilized in connection with the sale of securities.
The issuance of these securities will be to a single “non-U.S. person” (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which the Company relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”), as the conditions of Regulation S were met, including but not limited to the following conditions:
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Each certificate representing theissued 8,972,209 shares of common stock contains or will contain a legend that transferfor $3,882,938 of digital currency.
During the quarter ending April 30, 2019, the Company issued 782,948 shares is prohibited except in accordance with the provisions of Regulation S, pursuantcommon stock to a registration under the Act, oremployees pursuant to an available exemption from registration and the holder may not engage in hedging transactions with regards to the Company’s common stock unless in compliance with the Act.Employee Stock Bonus Agreement.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.
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Exhibits:
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In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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DATED: June 18, 2019 | By: | /s/ Toh Kok Soon | ||
Toh Kok Soon | ||||
Chief Executive Officer (Principal Executive Officer) |
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| Alexander D. Henderson | |||
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