Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Apr. 30, 2020 | Aug. 10, 2020 | Oct. 31, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | ValueSetters Inc. | ||
Entity Central Index Key | 0001414767 | ||
Document Type | 10-K | ||
Document Period End Date | Apr. 30, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --04-30 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 831,269,212 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Interactive Data Current | Yes | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 3,291,452 |
Balance Sheets
Balance Sheets - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 11,206 | $ 19,110 |
Accounts receivable, net of allowance for doubtful accounts of of $0 in 2020 and $6,750 in 2019 | 6,000 | |
Contract assets | 15,000 | |
Deferred income tax asset | 180,000 | |
Prepaid expenses | 465,555 | 25,699 |
Total current assets | 656,761 | 65,809 |
Deposits | 6,300 | 6,300 |
Non-current prepaid expenses | 143,455 | |
Investments at cost | 1,406,982 | 647,317 |
Total assets | 2,213,498 | 719,426 |
Current liabilities: | ||
Accounts payable - Trade | 278,752 | 278,752 |
Accounts payable - Related party | 16,680 | 16,680 |
Accrued expenses | 149,835 | 131,155 |
Deferred revenue - current | 656 | 15,711 |
Notes payable - related parties | 15,000 | 76,100 |
Secured noted payable to related party | 1,000,000 | |
Loan payable - bank | 34,324 | 34,324 |
Interest payable – related party | 31,235 | 24,102 |
Demand notes payable | 7,860 | 7,860 |
Total current liabilities | 1,534,342 | 584,684 |
Long-term secured note payable to related party | 1,000,000 | |
Total liabilities | 1,534,342 | 1,584,684 |
Commitments and Contingencies | ||
Stockholders' deficit: | ||
Common stock, $.001 par value; 900,000,000 shares authorized, 831,269,212 and 752,519,212 shares issued and outstanding in 2020 and 2019, respectively | 831,269 | 752,519 |
Capital in excess of par value | 2,310,169 | 1,449,356 |
Accumulated deficit | (2,462,282) | (3,067,133) |
Total stockholders' equity (deficit) | 679,156 | (865,258) |
Total liabilities and stockholders' equity (deficit) | $ 2,213,498 | $ 719,426 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ .001 | $ .001 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 831,269,212 | 752,519,212 |
Common stock, shares outstanding | 831,269,212 | 752,519,212 |
Allowance for doubtful accounts | $ 0 | $ 6,750 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 1,753,558 | $ 1,013,612 |
Costs of revenues | 11,105 | 25,198 |
Gross Profit | 1,742,453 | 988,414 |
Cost and expenses: | ||
Consulting fees | 102,600 | 168,300 |
Marketing | 12,863 | 18,518 |
Rent | 50,769 | 51,038 |
Bad debt provision | 6,750 | |
General and administrative | 72,747 | 54,222 |
Stock-based compensation | 356,252 | 65,153 |
Total costs and expenses | 595,231 | 363,981 |
Income from operations | 1,147,222 | 624,433 |
Other income (expense) | ||
Interest expense | (18,879) | (19,408) |
Realized loss on sale of investments | (527,540) | |
Impairment loss | (185,952) | (23,000) |
Other income | 10,000 | 4,600 |
Total other income (expense) | (722,371) | (37,808) |
Net income before taxes | 424,851 | 586,625 |
Income taxes | 604,851 | 582,880 |
Change in deferred tax assets | 309,000 | |
Net income tax (expense) benefit | 180,000 | (3,745) |
Net income | $ 604,851 | $ 582,880 |
Basic and diluted earnings (loss) per share | $ 0 | $ 0 |
Weighted average number of shares outstanding | 804,568,578 | 741,721,963 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Capital In Excess Of Par Value | Accumulated Deficit | Total |
Beginning balance at Apr. 30, 2018 | $ 731,694 | $ 1,434,328 | $ (3,650,013) | $ (1,483,991) |
Beginning balance (in shares) at Apr. 30, 2018 | 731,694,210 | |||
Stock issued to purchase | $ 200 | 500 | 700 | |
Stock issued to purchase (in shares) | 200,000 | |||
Stock-based compensation | $ 3,938 | 2,757 | 6,695 | |
Stock-based compensation (in shares) | 3,937,501 | |||
Balance at Jul. 31, 2018 | $ 735,832 | 1,437,585 | (3,657,220) | (1,483,803) |
Balance (in shares) at Jul. 31, 2018 | 735,831,711 | |||
Beginning balance at Apr. 30, 2018 | $ 731,694 | 1,434,328 | (3,650,013) | (1,483,991) |
Beginning balance (in shares) at Apr. 30, 2018 | 731,694,210 | |||
Net income (loss) | 582,880 | |||
Balance at Apr. 30, 2019 | $ 752,519 | 1,449,356 | (3,067,133) | (865,258) |
Balance (in shares) at Apr. 30, 2019 | 752,519,212 | |||
Beginning balance at Jul. 31, 2018 | $ 735,832 | 1,437,585 | (3,657,220) | (1,483,803) |
Beginning balance (in shares) at Jul. 31, 2018 | 735,831,711 | |||
Net income (loss) | (20,355) | (20,355) | ||
Sale of common stock | $ 2,800 | 2,200 | 5,000 | |
Sale of common stock (in shares) | 2,800,000 | |||
Stock-based compensation | $ 8,262 | 3,946 | 12,208 | |
Stock-based compensation (in shares) | 8,262,501 | |||
Balance at Oct. 31, 2018 | $ 746,894 | 1,443,731 | (3,677,575) | (1,486,950) |
Balance (in shares) at Oct. 31, 2018 | 746,894,212 | |||
Net income (loss) | 12,391 | 12,391 | ||
Stock-based compensation | $ 2,813 | 562 | 3,375 | |
Stock-based compensation (in shares) | 2,812,500 | |||
Balance at Jan. 31, 2019 | $ 749,707 | 1,444,293 | (3,665,184) | (1,471,184) |
Balance (in shares) at Jan. 31, 2019 | 749,706,712 | |||
Net income (loss) | 598,051 | 598,051 | ||
Stock-based compensation | $ 2,812 | 5,063 | 7,875 | |
Stock-based compensation (in shares) | 2,812,500 | |||
Balance at Apr. 30, 2019 | $ 752,519 | 1,449,356 | (3,067,133) | (865,258) |
Balance (in shares) at Apr. 30, 2019 | 752,519,212 | |||
Net income (loss) | 24,475 | 24,475 | ||
Stock-based compensation | $ 2,813 | 16,875 | 19,688 | |
Stock-based compensation (in shares) | 2,812,500 | |||
Balance at Jul. 31, 2019 | $ 755,332 | 1,466,231 | (3,042,658) | (821,095) |
Balance (in shares) at Jul. 31, 2019 | 755,331,712 | |||
Beginning balance at Apr. 30, 2019 | $ 752,519 | 1,449,356 | (3,067,133) | (865,258) |
Beginning balance (in shares) at Apr. 30, 2019 | 752,519,212 | |||
Net income (loss) | 604,851 | |||
Balance at Apr. 30, 2020 | $ 831,269 | 2,310,169 | (2,462,282) | 679,156 |
Balance (in shares) at Apr. 30, 2020 | 831,269,212 | |||
Beginning balance at Jul. 31, 2019 | $ 755,332 | 1,466,231 | (3,042,658) | (821,095) |
Beginning balance (in shares) at Jul. 31, 2019 | 755,331,712 | |||
Net income (loss) | 542,451 | 542,451 | ||
Stock-based compensation | $ 75,312 | 842,031 | 917,343 | |
Stock-based compensation (in shares) | 75,312,500 | |||
Balance at Oct. 31, 2019 | $ 830,644 | 2,308,262 | (2,500,207) | 638,699 |
Balance (in shares) at Oct. 31, 2019 | 830,644,212 | |||
Net income (loss) | 595,174 | 595,174 | ||
Stock-based compensation | $ 313 | 1,187 | 1,500 | |
Stock-based compensation (in shares) | 312,500 | |||
Balance at Jan. 31, 2020 | $ 830,957 | 2,309,449 | (1,905,033) | 1,235,373 |
Balance (in shares) at Jan. 31, 2020 | 830,956,712 | |||
Net income (loss) | (5,577,249) | (5,577,249) | ||
Stock-based compensation | $ 312 | 720 | 1,032 | |
Stock-based compensation (in shares) | 312,500 | |||
Balance at Apr. 30, 2020 | $ 831,269 | $ 2,310,169 | $ (2,462,282) | $ 679,156 |
Balance (in shares) at Apr. 30, 2020 | 831,269,212 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Operating activities | ||
Net income | $ 604,851 | $ 582,880 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 356,252 | 65,153 |
Depreciation | ||
Impairment of fixed assets | 185,952 | 23,000 |
Realized loss on sale of investment | 527,540 | |
Changes in deferred assets | (180,000) | |
Provision for bad debts | 6,750 | |
Changes in non-cash working capital balances | ||
Accounts receivable | 6,000 | (6,000) |
Investments | (1,538,980) | (647,317) |
Contract receivable | 15,000 | (280,683) |
Other assets | ||
Accounts payable | (235) | |
Interest payable – related party | 16,156 | 16,112 |
Accrued expenses | 18,680 | (9,611) |
Deferred revenue | (15,055) | 280,509 |
Cash provided by (used in) operating activities | (3,604) | 30,558 |
Financing activities | ||
Payments on bank loan | (3,163) | |
Payment on demand note | (14,940) | |
Payments on related party notes | (4,300) | |
Proceeds from sale of common stock | 5,000 | |
Cash used in financing activities | (4,300) | (13,103) |
Increase (decrease) in cash and cash equivalents during the period | (7,904) | 17,455 |
Cash and cash equivalents, beginning of the period | 19,110 | 1,655 |
Cash and cash equivalents, end of the period | 11,206 | 19,110 |
Cash paid for: | ||
Interest | 2,723 | 6,125 |
Income taxes |
Description of Business and Sum
Description of Business and Summary of Accounting Principles | 12 Months Ended |
Apr. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Accounting Principles | 1. Description of Business and Summary of Accounting Principles Description of Business and Concentrations ValueSetters, Inc. (“ValueSetters,” “we,” “our,” or the “Company”) is a provider of consulting services, subscription services, advertising and digital goods using technology distribution platforms like the Internet and mobile devices in the media and entertainment markets. The financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America. The Company’s fiscal year end is April 30. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary after elimination of significant intercompany balances and transactions. Income Taxes The Company accounts for income taxes under the asset and liability method in accordance with ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. Based upon several profitable quarters over the past two years, and the Company's ability to generate operating income of $1,147,222 and $624,433 in fiscal 2020 and 2019, respectively, and taxable income in both fiscal years, the Company recorded a current deferred tax asset of $180,000 as of April 30, 2020, and reduced the valuation allowance to zero dollars, as it is more likely than not that the deferred tax asset will be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits 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 settlement with the tax authorities. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense. The Company has determined that it had no significant uncertain tax positions requiring recognition or disclosure. Revenue Recognition under ASC 606 The Company adopted ASC 606 for the year ended April 30, 2019 on a modified retrospective basis. The Company had no material contracts outstanding at the prior year-end, and consequently there were no material effects upon adoption or on prior period activity. The Company recognizes service revenue from its consulting contracts and its game website using the five-step model as prescribed by ASC 606: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as, the Company satisfies a performance obligation. The Company identifies performance obligations in contracts with customers, which primarily are professional services and subscription services. The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for transferring the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. The Company usually bills its customers before it provides any services, and begins performing services after the first payment is received. Contracts are typically one year or less. For larger contracts, in addition to the initial payment, the Company may allow for progress payments throughout the term of the contract. Judgments and Estimates The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments. The Company enters into contracts with customers that regularly include promises to transfer multiple services, such as digital marketing, web-based videos, offering statements, and professional services. For arrangements with multiple services, the Company evaluates whether the individual services qualify as distinct performance obligations. In its assessment of whether a service is a distinct performance obligation, the Company determines whether the customer can benefit from the service on its own or with other readily available resources, and whether the service is separately identifiable from other services in the contract. This evaluation requires the Company to assess the nature of each individual service offering and how the services are provided in the context of the contract, including whether the services are significantly integrated, highly interrelated, or significantly modify each other, which may require judgment based on the facts and circumstances of the contract. When agreements involve multiple distinct performance obligations, the Company allocates arrangement consideration to all performance obligations at the inception of an arrangement based on the relative standalone selling prices (SSP) of each performance obligation. Where the Company has standalone sales data for its performance obligations which are indicative of the price at which the Company sells a promised service separately to a customer, such data is used to establish SSP. In instances where standalone sales data is not available for a particular performance obligation, the Company estimates SSP by the use of observable market and cost-based inputs. The Company continues to review the factors used to establish list price and will adjust standalone selling price methodologies as necessary on a prospective basis. Service Revenue Service revenue from subscriptions to the Company's game website is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Professional services revenue is recognized over time as the services are rendered. Consequently, when an upfront fee does not relate to the transfer of a promised good or service, the fee is an advance payment for future goods or services and the Company does not recognize the fee as revenue until the future services are provided. When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded as operating expenses against the contract asset (Accounts Receivable). Contract Assets Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services. Contract assets are included in other current assets in the consolidated balance sheets and will be recognized during the succeeding twelve-month period . Deferred Revenue Deferred revenues represent billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services and professional and training services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other non-current liabilities in the consolidated balance sheets. Costs to Obtain a Customer Contract Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized as other current or non-current assets and amortized on a straight-line basis over the life of the contract, which approximates the benefit period. The benefit period was estimated by taking into consideration the length of customer contracts, technology lifecycle, and other factors. All sales commissions are recorded as consulting fees within the Company's consolidated statement of operations. Remaining Performance Obligations The Company's subscription terms are typically less than one year. All of the Company’s revenues in the years ended April 30, 2020 and 2019, which amounted to $1,753,558 and $1,013,612, respectively, are considered contract revenues. Contract revenue as of April 30, 2020 and 2019, which has not yet been recognized, amounted to $656 and $15,711, respectively, and is recorded on the balance sheet as deferred revenue. The Company expects to recognize revenue on all of its remaining performance obligations over the next 12 months. Costs of Services Costs of services consist of direct costs that we pay to third parties in order to provide the services that generate revenue. Earnings Per Share Earnings per share is computed by dividing net income by the weighted-average number of shares outstanding. To the extent that stock options and convertible debt are anti-dilutive, they are excluded from the calculation of diluted earnings per share. As of April 30, 2019, the Company had stock options outstanding to purchase 18,000,000 shares of common stock at $0.03 per share, which were not considered in the earnings per share calculation because of their anti-dilutive effect. See Note 9. The options expired on May 7, 2019 and no options were outstanding as of April 30, 2020. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents during fiscal 2020 and 2019. The Company uses one financial institution for its cash balances and on occasion maintains cash balances that exceed federally insured limits. Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including the vesting of restricted stock grants to employees, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to common stock and capital in excess of par value during the period during which services are rendered. In June 2018, the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based payments. The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees and nonemployees is treated under the same guidance as in ASC 718. No outstanding stock option grants were required to be revalued upon the adoption of this ASU. Advertising Expenses Advertising and marketing expenses are recorded separately in the Statements of Operations and are expensed as incurred. Investments Investments are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company holds three investments that are recorded on its balance sheet. The Company owns 2,350,000 membership interest units of Deuce Drone LLC, at a cost of $0.35 per unit, for a total value of $822,500. The Company owns 300,000 membership interest units of Kingscrowd LLC, at a cost of $1.80 per unit, for a total value of $540,000. The Company owns 488 membership interest units of Netcapital Systems LLC, at cost minus impairment of $91.15 per unit, for a total value of $44,482. Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimate relates to investments and the accruals for income tax valuation allowance. On a continual basis, management reviews its estimates, utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. Determination of Fair Value Cash and cash equivalents, accounts receivable, and accounts payable In general, carrying amounts approximate fair value because of the short maturity of these instruments. Deferred Revenue Deferred Revenue represents revenues collected but not earned as of the year end. The Company renders services, or rights to use its software, over a specific time period and revenues are recognized as earned as time passes. Debt At April 30, 2020 and 2019, the Company’s secured debt was carried at its face value plus accrued interest. Based on the financial condition of the Company, it is impracticable for the Company to estimate the fair value of its debt. The Company has no instruments with significant off balance sheet risk. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which makes modifications to disclosure requirements on fair value measurements. The amendment is effective for public companies with fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. In August 2018, the FASB issued 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40), which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement. The amendment is effective for public companies with fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based payments. The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees and nonemployees is treated under the same guidance as in ASC 718. In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
Going Concern Matters and Reali
Going Concern Matters and Realization of Assets | 12 Months Ended |
Apr. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern Matters and Realization of Assets | 2. Going Concern Matters and Realization of Assets The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. However, the Company had negative working capital of $1,057,581 as of April 30, 2020. In addition, the Company is not certain how the COVID-19 pandemic will impact its future operations. Furthermore, the Company may not be able to meet its obligations as they become due. Although the Company borrowed an aggregate of $2,385,800 in May and June of 2020 from the U.S. Small Business Administration, and believes it may have the cash resources to fund its continuing operations, it may not be able to generate the cash flow it needs to make debt and interest payments, including a principal payment of $1,000,000 that is due on October 31, 2020 to a related party. Accordingly, the management of the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date of these financial statements. The Company may not be able to raise sufficient additional debt, equity or other cash on acceptable terms, if at all. Failure to generate sufficient revenues, achieve certain other business plan objectives or raise additional funds could have a material adverse effect on the Company’s results of operations, cash flows and financial position, including its ability to continue as a going concern, and may require it to significantly reduce, reorganize, discontinue or shut down its operations. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in its existence. Management’s plans include: 1. Seek to merge its business operations with some of the revenue-generating early-stage companies that it has incubated. The Company already owns a portion of more than a dozen companies, and believes that the combination of some of those entities with ValueSetters will provide an efficient use of fixed overhead and create additional cash flow from operations. 2. Continue to look for software niches and digital products that can be sold via an Internet-based store. 3. Continue to provide consulting services and continue to charge both a cash fee and an equity-based fee, when possible, in exchange for these services. There can be no assurance that the Company will be able to achieve or maintain cash-flow-positive operating results. If the Company is unable to generate adequate funds from operations or raise sufficient additional funds, the Company may not be able to repay its existing debt, continue to operate its business network, respond to competitive pressures or fund its operations. As a result, the Company may be required to significantly reduce, reorganize, discontinue or shut down its operations. The financial statements do not include any adjustments that might result from this uncertainty. |
Debt
Debt | 12 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 3. Debt The following table summarizes components debt as of April 30, 2020 and 2019: 2020 2019 Interest Rate Secured lender (affiliate) $ 1,000,000 $ 1,000,000 1.25 % Notes payable – related parties 15,000 76,100 0.0 % Demand notes payable 7,860 7,860 0.0 – 10.0 % Loan payable – bank 34,324 34,324 5.5 % Total Debt $ 1,057,184 $ 1,118,284 As of April 30, 2020 and 2019, the Company owed its principal lender (“Lender”) $1,000,000 under a loan and security agreement (“Loan”) dated April 28, 2011, that was amended on July 26, 2014 and again on October 31, 2017. The Lender is also the largest shareholder of the Company, owning 271,371,454 shares of common stock, or 32.6% of the 831,269,212 shares issued and outstanding, as of April 30, 2020. The Loan was amended on October 31, 2017 to change the maturity date to October 31, 2020, reduce the interest rate from 8% to 1.25% per annum, and reduce the default interest rate from 15% to 8% per annum (the “Amendments”). In conjunction with the Amendments, the Lender also agreed to reduce the total debt and accrued interest payable by $453,031 to $1,000,000, in exchange for the Company issuing to the Lender 44,198,246 shares of its common stock. Consequently, upon issuance of the 44,198,246 shares, the Company recorded an increase of $44,198 in common stock and $408,833 in capital in excess of par value. In connection with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company may not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the agreement, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, incur any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has been pledged to the Lender, make any loans to any person, except for prepaid items or deposits incurred in the ordinary course of business, or make any material capital expenditures. To secure the payment of all obligations to the Lender, the Company granted to the Lender a continuing security interest and first lien on all of the assets of the Company. As of April 30, 2020 and 2019, the Company’s related-party unsecured notes payable totaled $15,000 and $76,100, respectively. The Company also owes $34,324 as of April 30, 2020 and 2019 to Chase Bank. For the loan from Chase Bank, the Company pays interest only on a monthly basis, which is calculated at a rate of 5.5% per annum. The debt to Chase Bank had been personally guaranteed by a former Chief Executive Officer and Chairman of the Board (the “Former CEO”). The Former CEO sold shares of the Company to a third-party, and in addition to payments to the Former CEO, the contract of sale required the third-party make monthly payments to Chase Bank to pay down the money owed to Chase Bank. Total payments received from the third-party in fiscal 2020 and 2019 amounted to $0 and $4,600, respectively. The receipt of the $4,600 in fiscal 2019 was recorded as other income. In fiscal 2020, the Company received a $10,000 advance from the U.S. Small Business Administration (“SBA”) in conjunction with an Economic Injury Disaster Loan application. Based upon SBA information regarding the advance payments that were made to U.S. businesses, the Company considers the $10,000 received as a grant and recorded the $10,000 as other income. Demand notes payable totaled $7,860 as of April 30, 2020 and 2019. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Apr. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures of financial instruments on a recurring basis. Fair Value Hierarchy The Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Determination of Fair Value Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the Company bases its fair value on 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. It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon management’s own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current or future value. See Note 1 for a description of valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value where it is practicable to do so for financial instruments not recorded at fair value (disclosures required by the Fair Value Measurements Topic of the FASB Accounting Standards Codification). |
Income Taxes
Income Taxes | 12 Months Ended |
Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. Income Taxes The Tax Cuts and Jobs Act ("Tax Act") was enacted on December 22, 2017. Among numerous provisions, the Tax Act reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. As a result of the Tax Act, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. As of April 30, 2020, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $700,000 expiring in the years of 2021 through 2034. Utilization of the net operating losses may be subject to annual limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of April 30, 2020 and 2019 were as follows: 2020 2019 Deferred tax assets, net: Net operating loss carryforwards $ 140,000 $ 1,300,000 Asset impairment loss 40,000 — Deferred tax assets 180,000 1,300,000 Valuation allowance (1,300,000 ) Net deferred assets $ 180,000 $ — At April 30, 2020, the Company had net deferred tax assets calculated at an expected rate of 21%, or approximately $180,000. At April 30, 2019, the Company recognized the net deferred asset to the extent of the impact on current book earnings. Effective April 30, 2020, Company management believes that historical, current and expected earnings are sufficient to meet the more likely than not standard to enable the Company to recognize the net deferred tax asset. As allowable under accounting standards, the Company elected to fully remove the valuation allowance as of April 30, 2020. The following is a reconciliation of the tax provisions for the years ended April 30, 2020 and 2019 with the statutory Federal income tax rates: Percentage of Pre-Tax Income 2020 2019 Statutory Federal income tax rate 21.0 % 21.0 % Loss generating no tax benefit (21.0 ) (21.0 ) Effective tax rate — — The Company recorded no interest and penalties relating to unrecognized tax benefits as of and during the years ended April 30, 2020 and 2019. The Company is subject to U.S. federal income tax, as well as taxes by various state jurisdictions. The Company is currently open to audit under the statute of limitations by the federal and state jurisdictions for the years ending April 30, 2018 through 2020. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Apr. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Litigation The Company is subject to legal proceedings and claims that arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability, if any, is not likely to have a material effect on the financial condition, results of operations or liquidity of the Company. However, as the outcome of litigation or legal claims is difficult to predict, significant changes in the estimated exposures could occur. There are no known legal complaints or claims against the Company. The Company utilizes office space in Boston, Massachusetts, at a cost of approximately $4,200 per month, under a month-to-month lease agreement that allows the company to end its lease by providing 30-day written notice. The lease agreement includes a deposit of $6,300. |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Apr. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Deficit | 7. Stockholders’ Equity (Deficit) The Company is authorized to issue 900,000,000 shares of its common stock, par value $0.001. 831,269,212 and 752,519,212 shares were outstanding as of April 30, 2020 and 2019, respectively. In fiscal 2020, 78,750,000 shares were issued for stock-based compensation. In fiscal 2019, 17,825,002 shares were issued for stock-based compensation, 2,800,000 shares were issued in conjunction with a private placement memorandum for the private sale of common stock, and 200,000 shares were issued for the purchase of an Internet game company. For the years ended April 30, 2020 and 2019, the Company recorded $356,252 and $65,153, respectively, in stock-based compensation expense. As of April 30, 2020 and 2019, there was $609,010 and $25,699 of prepaid stock-based compensation expense. The prepaid expense was recorded from the issuance of shares of our common stock. 25 million shares of our common stock, valued at $305,000, were issued on September 7, 2019 for consulting services for the service period from September 7, 2019 to August 31, 2021, which accounts for $205,580 of the prepaid expense at April 30, 2020. The remaining $403,430 in prepaid expenses as of April 30, 2020 is the result of the issuance of 50 million shares of our common stock, valued initially at $610,000, for services of our Chief Executive Officer and Chief Financial Officer for the service period from September 9, 2019 to July 31, 2021. The prepaid balances are being amortized on a straight-line basis over the respective service periods. On May 7, 2014, the Company granted 5-year stock options that fully vest over a three-year period to three consultants. Each consultant was granted an option to purchase up to 6 million shares of the Company’s common stock at a price of $0.03 per share. The Company entered consulting agreements to issue common stock and options to purchase common stock and recorded the applicable non-cash expense in accordance with the authoritative guidance of the Financial Accounting Standards Board. All such stock option grants expired on May 7, 2019 and none of the option holders exercised their option to buy common stock. The table below presents the components of stock-based compensation expense for the years ended April 30, 2020 and 2019. Description April 30, 2020 April 30, 2019 Chief Executive Officer $ 112,035 $ 9,063 Chief Financial Officer 112,035 9,063 Chief Marketing Officer 7,061 2,313 Related party consultant 49,711 — Marketing consultant 25,699 34,999 Marketing consultant — 1,700 Marketing consultant 7,140 Marketing consultant — 875 Business consultant 49,711 — Total $ 356,252 $ 65,153 The table below presents the shares issued as compensation for the years ended April 30, 2020 and 2019: Year Ended Year Ended Description April 30, 2020 April 30, 2019 Chief Executive Officer 26,250,000 5,375,000 Chief Financial Officer 26,250,000 5,375,000 Chief Marketing Officer 1,250,000 1,250,000 Related party consultant 12,500,000 — Business consultant 12,500,000 — Marketing consultant — 625,002 Marketing consultant — 1,000,000 Marketing consultant — 4,200,000 Total 78,750,000 17,825,002 The table below presents the prepaid compensation expense as of April 30, 2020 and 2019: Year Ended Year Ended Description April 30, 2020 April 30, 2019 Chief Executive Officer $ 201,715 $ — Chief Financial Officer 201,715 — Related party consultant 102,790 — Business consultant 102,790 — Marketing consultant — 25,699 Total $ 609,010 $ 25,699 The following tables present the outstanding and exercisable options, and the new issuances and deletions for the two-year period ended April 30, 2020. Options Outstanding Options Exercisable Weighted- Average Weighted- Weighted- Remaining Average Average Number Contractual Exercise Number Exercise Range of Exercise Prices Outstanding Life (Years) Price Outstanding Price As of April 30, 2019 $0.03 18,000,000 0.02 $ 0.03 18,000,000 $ 0.03 As of April 30, 2020 - - $ - - $ - Number of Exercise Price Average Outstanding April 30, 2018 18,000,000 $ 0.03 $ 0.03 Granted during year ended April 30, 2019 - - - Exercised/canceled during year ended April 30, 2019 - - - Outstanding April 30, 2019 18,000,000 $ 0.03 $ 0.03 Granted during year ended April 30, 2020 - - - Exercised/canceled during year ended April 30, 2020 (18,000,000 ) $ 0.03 $ 0.03 Outstanding April 30, 2020 - $ - $ - Options exercisable, April 30, 2020 - $ - $ - |
Earnings Per Common Share
Earnings Per Common Share | 12 Months Ended |
Apr. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | 8. Earnings Per Common Share Earnings per common share data was computed as follows: 2020 2019 Net income $ 604,851 $ 582,880 Weighted average common shares outstanding 804,568,578 741,721,963 Effect of dilutive securities — — Weighted average dilutive common shares outstanding 804,568,578 741,721,963 Earnings per common share – basic $ 0.00 $ 0.00 Earnings per common share – diluted $ 0.00 $ 0.00 No dilutive securities existed as of April 30, 2020. For the year ended April 30, 2019 the Company excluded 18,000,000 shares of common stock issuable upon the exercise of outstanding stock options from the calculation of earnings per share because the exercise price of the stock options was greater than the closing market price of the common stock on April 30, 2019, and the effect would be anti-dilutive. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Apr. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 9. Related Party Transactions Our largest shareholder, Vaxstar LLC, is also our working capital lender. As of April 30, 2020 and 2019, we owe our largest shareholder $1,000,000, under a term note agreement that bears interest at an annual rate of 1.25%. We have not made any principal or interest payments to our working capital lender. Unpaid interest has been accrued. Our Chief Executive Officer is also the Chief Executive Officer of Vaxstar LLC. In connection with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company may not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the agreement, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, incur any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has been pledged to the Lender, make any loans to any person, except for prepaid items or deposits incurred in the ordinary course of business, or make any material capital expenditures. Compensation to officers in the years ended April 30, 2020 and 2019 consisted of common stock valued at $231,131 and $20,438, respectively, and cash compensation of $72,000 and $125,000, respectively. Compensation to a related party consultant in the years ended April 30, 2020 and 2019 consisted of common stock valued at $49,711 and $0, respectively, and cash compensation of $26,200 and $10,000, respectively. We owe Steven Geary, a director, $31,680 as of April 30, 2020 and 2019. This obligation is not interest bearing. $16,680 is recorded as a related party trade accounts payable and $15,000 as a related party note payable. We have no signed agreements for the indebtedness to Mr. Geary. As of April 30, 2019, we owed $61,000 to a company controlled by one of our directors. Payment in full was rendered to the related party with cash payments during fiscal 2020 of $4,300 and by the sale of membership interest units (the "Units") of Netcapital Systems LLC ("Netcapital") on April 30, 2020. 722 Units were sold to the related party at a price of $91.15 per Unit for a total of $65,823, which paid off all remaining debt and accrued interest payable to the related party. The price per Unit was similar to an offer to purchase Units directly from Netcapital. The carrying amount of the 722 Units was $659,186, and the sale resulted in a realized loss of $527,540. Based upon the price of $91.15 per Unit, for the year ended April 30, 2020, the Company recorded an impairment loss of $185,952, which is not tax deductible, on the remaining Units in its possession. |
Investments
Investments | 12 Months Ended |
Apr. 30, 2020 | |
Notes to Financial Statements | |
Investments | 10. Investments During fiscal 2019, the Company entered into a consulting contract with NetCapital, which allowed the Company to receive up to 1,000 membership interest units of NetCapital in return for consulting services. As of April 30, 2020, 960 membership units were earned. The Company initially earned 709 membership interest units in fiscal 2019 and valued the 709 membership interest units at $647,317, based upon a private sale The Company continued to earn additional membership interest units of Netcapital in fiscal 2020, and for three quarters, recorded the membership interest units at a value of $913 per until. However, as part of a tax-planning strategy, upon receiving notice of a proposed sale of membership interest units by Netcapital, the Company sold 722 Units on April 30, 2020 and incurred a realized loss on the sale of such units of $527,540. As of April 30, 2020, the Company owns 488 units of Netcapital at cost minus impairment value of $91.15 per unit, or $44,482 in total. On January 2, 2020, the Company entered into a consulting contract with Deuce Drone LLC (“Drone”), which allowed the Company to receive up to 2,350,000 membership interest units of Drone in return for consulting services. The Company earned all 2,350,000 membership interest units in fiscal 2020. The Drone units are valued at $0.35 per unit based on a sales price of $0.35 per unit when the units were earned, or $822,500. Drone is currently selling Drone units for $1.00 per unit on an online funding portal. The Company owns less than 20% of Drone. In August 2019, the Company entered into a consulting contract with Kingscrowd LLC (“Kingscrowd”), which allowed the Company to receive 300,000 membership interest units of Kingscrowd in return for consulting services. The Kingscrowd units are valued at $1.80 per unit based on a sales price of $1.80 per unit when the units were earned, or $540,000. Kingscrowd units currently trade at a price of $1.80 per unit on a secondary trading platform. The Company owns less than 20% of Kingscrowd. The following table summarizes the components of investments as of April 30, 2020 and 2019: April 30, 2020 April 30, 2019 Netcapital $ 44,482 $ 647,317 Deuce Drone 822,500 — Kingscrowd 540,000 — Total Investments at cost $ 1,406,982 $ 647,317 The above investments do not have a readily determinable fair value, as identified in ASC 321-10-35-2, and all investments are measured at cost less impairment. The Company monitors the investments for any changes in observable prices from orderly transactions. During fiscal 2018, the Company acquired a 20% interest in AthenaSoft Corp., an entity that provides programming services and sales to its wholly owned subsidiary, AthenaSoft Inc. The Company has no influence over the operations of AthenaSoft Corp. and recorded its investment at cost, which amounted to $23,000. On April 30, 2019, the Company determined its investment in AthenaSoft Corp. was impaired. The Company recorded a valuation loss on investments as of April 30, 2020 and 2019 of $185,952 and $23,000, respectively. |
Concentrations
Concentrations | 12 Months Ended |
Apr. 30, 2020 | |
Notes to Financial Statements | |
Concentrations | 11. Concentrations For the year ended April 30, 2020, the Company had one customer that constituted 47% of its revenues, a second customer that constituted 31% of its revenues and a third customer that accounted for 13% of its revenues. For the year ended April 30, 2019, the Company had one customer that constituted 65% of its revenues and a second customer that constituted 23% of its revenues. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Apr. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events The Company evaluated subsequent events through the date these financial statements were available to be issued. On May 6, 2020 the Company borrowed $1,885,800 (the “May Loan”) and on June 17, 2020 the Company borrowed $500,000 (the “June Loan”) from a U.S. Small Business Administration (the "SBA") loan program. The May Loan has an initial terms of two years and an interest rate of 1% per annum. The June Loan requires installment payments of $2,437 monthly, beginning on June 17, 2021 over a term of thirty years. Interest accrues at a rate of 3.75% per annum. The Company agreed to grant a continuing security interest in its assets to secure payment and performance of all debts, liabilities, and obligations to the SBA. The June Loan was personally guaranteed by the Company’s Chief Financial Officer. On July 31, 2020 312,500 shares of the Company's common stock vested in accordance with the terms of a stock grant to the Company's Chief Marketing Officer. |
Description of Business and S_2
Description of Business and Summary of Accounting Principles (Policies) | 12 Months Ended |
Apr. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Concentrations | Description of Business and Concentrations ValueSetters, Inc. (“ValueSetters,” “we,” “our,” or the “Company”) is a provider of consulting services, subscription services, advertising and digital goods using technology distribution platforms like the Internet and mobile devices in the media and entertainment markets. The financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting principles in the United States of America. The Company’s fiscal year end is April 30. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary after elimination of significant intercompany balances and transactions. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method in accordance with ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. Based upon several profitable quarters over the past two years, and the Company's ability to generate operating income of $1,147,222 and $624,433 in fiscal 2020 and 2019, respectively, and taxable income in both fiscal years, the Company recorded a current deferred tax asset of $180,000 as of April 30, 2020, and reduced the valuation allowance to zero dollars, as it is more likely than not that the deferred tax asset will be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits 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 settlement with the tax authorities. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense. The Company has determined that it had no significant uncertain tax positions requiring recognition or disclosure. |
Revenue Recognition | Revenue Recognition under ASC 606 The Company adopted ASC 606 for the year ended April 30, 2019 on a modified retrospective basis. The Company had no material contracts outstanding at the prior year-end, and consequently there were no material effects upon adoption or on prior period activity. The Company recognizes service revenue from its consulting contracts and its game website using the five-step model as prescribed by ASC 606: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when or as, the Company satisfies a performance obligation. The Company identifies performance obligations in contracts with customers, which primarily are professional services and subscription services. The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for transferring the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. The Company usually bills its customers before it provides any services, and begins performing services after the first payment is received. Contracts are typically one year or less. For larger contracts, in addition to the initial payment, the Company may allow for progress payments throughout the term of the contract. Judgments and Estimates The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments. The Company enters into contracts with customers that regularly include promises to transfer multiple services, such as digital marketing, web-based videos, offering statements, and professional services. For arrangements with multiple services, the Company evaluates whether the individual services qualify as distinct performance obligations. In its assessment of whether a service is a distinct performance obligation, the Company determines whether the customer can benefit from the service on its own or with other readily available resources, and whether the service is separately identifiable from other services in the contract. This evaluation requires the Company to assess the nature of each individual service offering and how the services are provided in the context of the contract, including whether the services are significantly integrated, highly interrelated, or significantly modify each other, which may require judgment based on the facts and circumstances of the contract. When agreements involve multiple distinct performance obligations, the Company allocates arrangement consideration to all performance obligations at the inception of an arrangement based on the relative standalone selling prices (SSP) of each performance obligation. Where the Company has standalone sales data for its performance obligations which are indicative of the price at which the Company sells a promised service separately to a customer, such data is used to establish SSP. In instances where standalone sales data is not available for a particular performance obligation, the Company estimates SSP by the use of observable market and cost-based inputs. The Company continues to review the factors used to establish list price and will adjust standalone selling price methodologies as necessary on a prospective basis. Service Revenue Service revenue from subscriptions to the Company's game website is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Professional services revenue is recognized over time as the services are rendered. Consequently, when an upfront fee does not relate to the transfer of a promised good or service, the fee is an advance payment for future goods or services and the Company does not recognize the fee as revenue until the future services are provided. When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded as operating expenses against the contract asset (Accounts Receivable). Contract Assets Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services. Contract assets are included in other current assets in the consolidated balance sheets and will be recognized during the succeeding twelve-month period . Deferred Revenue Deferred revenues represent billings or payments received in advance of revenue recognition and is recognized upon transfer of control. Balances consist primarily of annual plan subscription services and professional and training services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other non-current liabilities in the consolidated balance sheets. Costs to Obtain a Customer Contract Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized as other current or non-current assets and amortized on a straight-line basis over the life of the contract, which approximates the benefit period. The benefit period was estimated by taking into consideration the length of customer contracts, technology lifecycle, and other factors. All sales commissions are recorded as consulting fees within the Company's consolidated statement of operations. Remaining Performance Obligations The Company's subscription terms are typically less than one year. All of the Company’s revenues in the years ended April 30, 2020 and 2019, which amounted to $1,753,558and $1,013,612, respectively, are considered contract revenues. Contract revenue as of April 30, 2020 and 2019, which has not yet been recognized, amounted to $656 and $15,711, respectively, and is recorded on the balance sheet as deferred revenue. The Company expects to recognize revenue on all of its remaining performance obligations over the next 12 months. |
Costs of Services | Costs of Services Costs of services consist of direct costs that we pay to third parties in order to provide the services that generate revenue. |
Earnings Per Share | Earnings Per Share Earnings per share is computed by dividing net income by the weighted-average number of shares outstanding. To the extent that stock options and convertible debt are anti-dilutive, they are excluded from the calculation of diluted earnings per share. As of April 30, 2019, the Company had stock options outstanding to purchase 18,000,000 shares of common stock at $0.03 per share, which were not considered in the earnings per share calculation because of their anti-dilutive effect. See Note 9. The options expired on May 7, 2019 and no options were outstanding as of April 30, 2020. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company did not have any cash equivalents during fiscal 2020 and 2019. The Company uses one financial institution for its cash balances and on occasion maintains cash balances that exceed federally insured limits. |
Stock Based Compensation | Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including the vesting of restricted stock grants to employees, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to common stock and capital in excess of par value during the period during which services are rendered. In June 2018, the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based payments. The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees and nonemployees is treated under the same guidance as in ASC 718. No outstanding stock option grants were required to be revalued upon the adoption of this ASU. |
Advertising Expenses | Advertising Expenses Advertising and marketing expenses are recorded separately in the Statements of Operations and are expensed as incurred. |
Investments | Investments Investments are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company holds three investments that are recorded on its balance sheet. The Company owns 2,350,000 membership interest units of Deuce Drone LLC, at a cost of $0.35 per unit, for a total value of $822,500. The Company owns 300,000 membership interest units of Kingscrowd LLC, at a cost of $1.80 per unit, for a total value of $540,000. The Company owns 488 membership interest units of Netcapital Systems LLC, at cost minus impairment of $91.15 per unit, for a total value of $44,482. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimate relates to investments and the accruals for income tax valuation allowance. On a continual basis, management reviews its estimates, utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates. |
Determination of Fair Value | Determination of Fair Value Cash and cash equivalents, accounts receivable, and accounts payable In general, carrying amounts approximate fair value because of the short maturity of these instruments. |
Deferred Revenue | Deferred Revenue Deferred Revenue represents revenues collected but not earned as of the year end. The Company renders services, or rights to use its software, over a specific time period and revenues are recognized as earned as time passes. |
Debt | Debt At April 30, 2020 and 2019, the Company’s secured debt was carried at its face value plus accrued interest. Based on the financial condition of the Company, it is impracticable for the Company to estimate the fair value of its debt. The Company has no instruments with significant off balance sheet risk. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which makes modifications to disclosure requirements on fair value measurements. The amendment is effective for public companies with fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. In August 2018, the FASB issued 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40), which reduces complexity for the accounting for costs of implementing a cloud computing service arrangement. The amendment is effective for public companies with fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently assessing the impact of this pronouncement to its consolidated financial statements. In June 2018, the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based payments. The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees and nonemployees is treated under the same guidance as in ASC 718. In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of components debt | 2020 2019 Interest Rate Secured lender (affiliate) $ 1,000,000 $ 1,000,000 1.25 % Notes payable – related parties 15,000 76,100 0.0 % Demand notes payable 7,860 7,860 0.0 – 10.0 % Loan payable – bank 34,324 34,324 5.5 % Total Debt $ 1,057,184 $ 1,118,284 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | 2020 2019 Deferred tax assets, net: Net operating loss carryforwards $ 140,000 $ 1,300,000 Asset impairment loss 40,000 — Deferred tax assets 180,000 1,300,000 Valuation allowance (1,300,000 ) Net deferred assets $ 180,000 $ — |
Schedule of tax provisions | Percentage of Pre-Tax Income 2020 2019 Statutory Federal income tax rate 21.0 % 21.0 % Loss generating no tax benefit (21.0 ) (21.0 ) Effective tax rate — — |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
Equity [Abstract] | |
Schedule of stockholders' deficit | Description April 30, 2020 April 30, 2019 Chief Executive Officer $ 112,035 $ 9,063 Chief Financial Officer 112,035 9,063 Chief Marketing Officer 7,061 2,313 Related party consultant 49,711 — Marketing consultant 25,699 34,999 Marketing consultant — 1,700 Marketing consultant 7,140 Marketing consultant — 875 Business consultant 49,711 — Total $ 356,252 $ 65,153 The table below presents the shares issued as compensation for the years ended April 30, 2020 and 2019: Year Ended Year Ended Description April 30, 2020 April 30, 2019 Chief Executive Officer 26,250,000 5,375,000 Chief Financial Officer 26,250,000 5,375,000 Chief Marketing Officer 1,250,000 1,250,000 Related party consultant 12,500,000 — Business consultant 12,500,000 — Marketing consultant — 625,002 Marketing consultant — 1,000,000 Marketing consultant — 4,200,000 Total 78,750,000 17,825,002 The table below presents the prepaid compensation expense as of April 30, 2020 and 2019: Year Ended Year Ended Description April 30, 2020 April 30, 2019 Chief Executive Officer $ 201,715 $ — Chief Financial Officer 201,715 — Related party consultant 102,790 — Business consultant 102,790 — Marketing consultant — 25,699 Total $ 609,010 $ 25,699 The following tables present the outstanding and exercisable options, and the new issuances and deletions for the two-year period ended April 30, 2020. Options Outstanding Options Exercisable Weighted- Average Weighted- Weighted- Remaining Average Average Number Contractual Exercise Number Exercise Range of Exercise Prices Outstanding Life (Years) Price Outstanding Price As of April 30, 2019 $0.03 18,000,000 0.02 $ 0.03 18,000,000 $ 0.03 As of April 30, 2020 - - $ - - $ - Number of Exercise Price Average Outstanding April 30, 2018 18,000,000 $ 0.03 $ 0.03 Granted during year ended April 30, 2019 - - - Exercised/canceled during year ended April 30, 2019 - - - Outstanding April 30, 2019 18,000,000 $ 0.03 $ 0.03 Granted during year ended April 30, 2020 - - - Exercised/canceled during year ended April 30, 2020 (18,000,000 ) $ 0.03 $ 0.03 Outstanding April 30, 2020 - $ - $ - Options exercisable, April 30, 2020 - $ - $ - |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 12 Months Ended |
Apr. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | 2020 2019 Net income $ 604,851 $ 582,880 Weighted average common shares outstanding 804,568,578 741,721,963 Effect of dilutive securities — — Weighted average dilutive common shares outstanding 804,568,578 741,721,963 Earnings per common share – basic $ 0.00 $ 0.00 Earnings per common share – diluted $ 0.00 $ 0.00 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | Apr. 30, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Working capital | $ 1,057,581 |
Debt (Details)
Debt (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Debt Disclosure [Abstract] | ||
Secured lender (affiliate) | $ 1,000,000 | $ 1,000,000 |
Notes payable - related parties | 15,000 | 76,100 |
Demand notes payable | 7,860 | 7,860 |
Loan payable - bank | 34,324 | 34,324 |
Total Debt | $ 1,057,184 | $ 1,118,284 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Apr. 30, 2020 | Apr. 30, 2019 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 140,000 | $ 1,300,000 |
Asset impairment loss | 40,000 | |
Deferred tax assets | 180,000 | 1,300,000 |
Valuation allowance | (1,300,000) | |
Net deferred assets | $ 180,000 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory Federal income tax rate | 21.00% | 21.00% |
Loss generating no tax benefit | (21.00%) | (21.00%) |
Effective tax rate |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) | 12 Months Ended |
Apr. 30, 2020$ / sharesshares | |
Option activity | |
Number of Options, Outstanding (in shares) | 18,000,000 |
Exercised/canceled | (18,000,000) |
Number of Options, Outstanding (in shares) | |
Weighted Average Exercise Price | |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 0.03 |
Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 0.03 |
Stockholders' Deficit-Shares Is
Stockholders' Deficit-Shares Issued for Services (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Chief Executive Officer | ||
Stock issued for services | $ 112,035 | $ 9,063 |
Stock issued for services (in shares) | 26,250,000 | 5,375,000 |
Chief Financial Officer | ||
Stock issued for services | $ 112,035 | $ 9,063 |
Stock issued for services (in shares) | 26,250,000 | 5,375,000 |
Chief Marketing Officer | ||
Stock issued for services | $ 7,061 | $ 2,313 |
Stock issued for services (in shares) | 1,250,000 | 1,250,000 |
Related Party Consultant | ||
Stock issued for services | $ 49,711 | |
Stock issued for services (in shares) | 12,500,000 | |
Marketing Consultant | ||
Stock issued for services | $ 25,699 | |
Stock issued for services (in shares) | ||
Business Consultant | ||
Stock issued for services | $ 49,711 | |
Stock issued for services (in shares) | 12,500,000 | |
Total | ||
Stock issued for services | $ 356,252 | $ 65,153 |
Stock issued for services (in shares) | 78,750,000 | 17,825,002 |
Marketing Consultant 1 | ||
Stock issued for services | $ 34,999 | |
Stock issued for services (in shares) | 625,002 | |
Marketing Consultant 2 | ||
Stock issued for services | $ 625,002 | |
Stock issued for services (in shares) | 1,000,000 | |
Marketing Consultant 3 | ||
Stock issued for services | $ 7,140 | |
Stock issued for services (in shares) | 4,200,000 | |
Marketing Consultant 4 | ||
Stock issued for services | $ 875 | |
Stock issued for services (in shares) |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) | 12 Months Ended | |
Apr. 30, 2020 | Apr. 30, 2019 | |
Earnings Per Share [Abstract] | ||
Net income | $ 604,851 | $ 582,880 |
Weighted average common shares outstanding | 804,568,578 | 741,721,963 |
Effect of dilutive securities | ||
Weighted average dilutive common shares outstanding | 804,568,578 | 741,721,963 |
Earnings (loss) per common share – basic | $ 0 | $ 0 |
Earnings (loss) per common share – diluted | $ 0 | $ 0 |