| Summary of Significant Accounting Policies | NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies
is presented to assist in understanding the financial statements. The financial statements and notes are representations of the
Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to US GAAP
and have been consistently applied in the preparation of the financial statements. Basis of Preparation The accompanying interim consolidated financial
statements have been prepared to present the consolidated statements of financial position, the consolidated statements of operations
and comprehensive loss, consolidated statements of changes in stockholders’ deficit and consolidated cash flows of the Company
for the nine months ended January 31, 2017, and have been prepared in accordance with US GAAP. Basis of Consolidation The accompanying interim consolidated financial
statements include the accounts of the Company, and its former direct and indirect wholly-owned subsidiaries, DTS8 Holdings, DTS8
Coffee, and DTS8 Huzhou. All significant inter-company transactions and balances were eliminated upon consolidation. Use of Estimates In preparing financial statements in conformity
with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues, goodwill
impairment and expenses during the reporting periods. Management makes these estimates using the best information available at
the time the estimates are made. However, actual results could differ materially from those estimates. Concentrations of Credit Risk Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, bank indebtedness and accounts
receivable. During the period ended January 31, 2017, substantially all of the Company’s cash and cash equivalents were held
by major financial institutions located in the United States of America, which management believes aren’t of high credit
quality. With respect to accounts receivable, the Company extends credit based on an evaluation of the customer’s financial
condition. The Company generally did not require collateral for accounts receivable and maintained an allowance for doubtful accounts
of accounts receivable if necessary. As of January 31, 2017, the Company has no accounts receivable. Cash and Cash Equivalents Cash equivalents comprise certain highly liquid
instruments with a maturity of three months or less when purchased. As at January 31, 2017 and April 30, 2016, cash and cash equivalents
consisted of cash only. Receivables and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at net
realizable value and do not bear interest. The Company evaluates its allowance for doubtful accounts based upon knowledge of its
customers and their compliance with credit terms. The evaluation process includes a review of customers’ accounts on a regular
basis. The review process evaluates all account balances with amounts outstanding for more than 60 days and other specific amounts
for which information obtained indicates that the balance may be uncollectible. As of January 31, 2017 and April 30, 2016, there
was no allowance for doubtful accounts. Based on management’s best estimate of the amount of probable credit losses in accounts
receivable. The Company does not have any off-balance-sheet credit exposure related to its customers. As of January 31, 2017, from
the disposition of its operations during the year, the Company had no accounts receivable. Inventories Inventories are stated at the lower of cost
or market. The cost for inventories is determined using the first-in, first-out method. The cost includes all expenditures incurred
in bringing the goods to the point of sale and putting them in a sellable condition. In assessing the ultimate realization of inventories,
management makes judgments as to future demand requirements compared to current or committed inventory levels. The Company estimates
the demand requirements based on market conditions, forecasts prepared by its customers, sales contracts and orders in hand. In
addition, the Company estimates net realizable value based on intended use, current market value and inventory aging analyses.
The Company writes down inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost
of inventories and their estimated market value based upon assumptions about future demand and market conditions. Inventories principally
consist of green coffee beans, roasted coffee beans and packing supplies. As of January 31, 2017, from the disposition of its operations
during the year, the Company had no inventory. Property and Equipment Property and equipment are recorded at cost.
Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Depreciation
is provided on a straight-line basis over their estimated useful lives as set out below. Major remodels and improvements are capitalized.
Maintenance and repairs that do not improve or extend the life of the respective assets are charged to expense as incurred. Upon
sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net
amount less proceeds from disposal is charged or credited to income.
Useful life Residue value
Machinery equipment 10 years 10 %
Office equipment 5 years 10 %
Production equipment 5 years 10 %
Vehicles 4 years 10 %
Leasehold Improvements 3 years 0 % Impairment of Long-Lived Assets The Company accounts for impairment of property
and equipment in accordance with Accounting Standards Codification (“ASC”) 360, “Accounting for Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of”, which requires the Company to evaluate a long-lived asset for
recoverability when there is an event or circumstance that indicate the carrying value of the asset may not be recoverable. An
impairment loss is recognized when the carrying amount of a long-lived asset or asset group is not recoverable (when carrying amount
exceeds the gross, undiscounted cash flows from use and disposition) and is measured as the excess of the carrying amount over
the asset’s (or asset group’s) fair value. There was no impairment of long-lived assets for the periods ended January
31, 2017. Fair Value of Financial Instruments ASC 820 “Fair Value Measurements and
Disclosures”, adopted January 1, 2008, defines fair value, establishes a three-level valuation hierarchy for disclosures
of fair value measurement and enhances disclosure requirements for fair value measures. The Company’s financial instruments
include cash and cash equivalents, current receivables and payables, and derivative liabilities. These financial instruments are
measured at their respective fair values. The three levels are defined as follows: Level 1 - inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology
include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability,
either directly or indirectly, for substantially the full term of the financial instruments. Level 3 - inputs to the valuation methodology
are unobservable and significant to the fair value. The Company has determined that certain convertible
notes covered by these financial statements qualifies as derivative financial instruments under the provisions of Financial Accounting
Standards Board (“FASB”) ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s
Own Stock”. See Note 13 for more details. Estimating the fair value of derivative financial
instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration
of the instrument with related changes in internal and external market factors. The assumptions used to value the Company’s
derivatives will have a direct effect on the fair values. In addition, valuation techniques are sensitive to changes in the trading
market price of the Company’s common stock and its estimated volatility and interest rate changes and other variables or
market conditions not within the Company’s control that can significantly affect management’s estimates of fair value
and changes in fair value. Because derivative financial instruments are initially and subsequently carried at fair value, the Company’s
net income may include significant charges or credits as these estimates and assumptions change. The fair value of the derivative liabilities
was determined using the Black-Scholes Model with any change in fair value during the period recorded in earnings as “Change
in fair value of derivative liabilities”. Significant inputs used to calculate the fair value of the derivative liabilities
include expected volatility, risk-free interest rate and dividend yield. For cash, cash equivalents, bank indebtedness,
accounts receivables, prepaid expenses, and accounts payable and accruals, it is management’s opinion that the carrying values
are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their
expected realization and if applicable, their stated interest rate approximates current rates available. Management believes it is not practical to
estimate the fair value of related party payables because the transactions cannot be assumed to have been consummated at arm’s
length, the terms are not deemed to be market terms, there are no quoted values available for these instruments, and an independent
valuation would not be practical due to the lack of data regarding similar instruments, if any, and the associated potential costs. Revenue Recognition The Company derives its revenue from the sale
of roasted coffee. Revenue is recognized when persuasive evidence of an arrangement exists, delivery occurs, the sales price is
fixed or determinable and collectability is reasonably assured. Coffees are considered delivered when title and risk have been
transferred to the customer. Retail sales are recorded when payment is tendered at the point of sale. Wholesale sales are recorded
upon delivery of coffee to the customers. In the People’s Republic of China, a value added tax (“VAT”) of 17%
on invoiced amount is collected on behalf of tax authorities. Revenues represent the invoiced value of goods sold, net of VAT. Advertising and Promotion Costs Advertising and promotion costs are expensed
as incurred. For the period ended January 31, 2017, the Company did not incur any advertising costs. Income Taxes The Company uses the asset and liability method
of accounting for income taxes pursuant to ASC 740, “Income Taxes”. ASC 740 requires an asset and liability approach
for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon
the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided
for 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. Valuation allowances are provided for deferred tax assets if it is more
likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility
is uncertain. The provision for income taxes represents current taxes payable net of the change during the period in deferred tax
assets and liabilities. Comprehensive Income The Company has adopted ASC 220, “Reporting
Comprehensive Income”, which requires inclusion of foreign currency translation adjustments, reported separately in its statement
of stockholders’ equity, in other comprehensive income. During the periods presented, other comprehensive income includes
cumulative translation adjustment from foreign currency translation. Foreign Currency Translation The Company’s functional and reporting
currency is United States dollars (“USD”). The functional currency of the Company’s former wholly-owned subsidiaries
DTS8 Coffee and DTS8 Huzhou in the People’s Republic of China was Chinese currency Renminbi (“RMB”). Since RMB
is not freely convertible into foreign currencies, all foreign exchange transactions involving RMB must take place either through
the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The
exchange rate adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC. The Company maintains its financial statements
in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated
into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of
the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income
(loss) for the respective periods. For financial reporting purposes, the financial
statements of the Company’s former wholly-owned subsidiaries DTS8 Coffee and DTS8 Huzhou in the People’s Republic of
China were maintained in RMB and translated into USD. Balance sheet accounts with the exception of equity were translated using
the closing exchange rate in effect at the balance sheet date, income and expense accounts were translated using the average exchange
rate prevailing during the reporting period and the equity accounts were stated at their historical exchange rate. Adjustments resulting from the translation
or RMB to USD are included in accumulated other comprehensive income (loss) in stockholders’ deficit. The exchange rates used for foreign currency
translation were as follows (USD$1 = RMB):
Period Covered
Balance Sheet Date Rates
Annual Average Rates
January 31, 2017 6.8767 6.7863
April 30, 2016 6.4589 6.3504 Related Parties A party is considered to be related to the
Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common
control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate
families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls
or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties
might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or
operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate
interests is also a related party. Earnings per Share Basic earnings per share are computed by dividing
income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted
earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number
of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common
stock instruments, such as convertible note payable, unless the effect is to reduce a loss or increase earnings per share. The
Company had no dilutive securities for the periods ended January 31, 2017 and 2016. Stock Issued for Services The Company accounts for stock-based compensation
to employees in accordance with ASC 718 which requires companies to measure the cost of services received in exchange for an award
of an equity instrument based upon the grant-date fair value of the award. Stock-based compensation expense is recognized on a
straight-line basis over the requisite service period. Stock-based compensation awards to non-employees are accounted for in accordance
with ASC 505-50. Recently Issued Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07,
“Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,”
to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 simplifies the accounting
for nonemployee share-based payments, aligning it more closely with the accounting for employee awards. These changes become effective
for the Company’s fiscal year beginning January 1, 2019. Early application is permitted. At this time, the Company does not
expect this standard to affect the Company’s financial position, results of operations or cash flows and disclosures. In February 2017, the FASB issued ASU 2017-05,
“Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope
of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” which addresses the transfer to
noncustomers of nonfinancial assets or ownership interests in consolidated subsidiaries that do not constitute a business and the
contribution of nonfinancial assets that are not a business to a joint venture or other noncontrolled investee. These changes become
effective for the Company’s fiscal year beginning January 1, 2018. At this time, the Company does not expect this standard
to affect the Company’s financial position, results of operations or cash flows and disclosures. In January 2017, the FASB issued ASU 2017-01,
“Business Combinations (Topic 805): Clarifying the Definition of a Business,” which clarifies the definition of a business
to assist entities in the evaluation of acquisitions and disposals of assets or businesses. If substantially all of the fair value
of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is
not considered a business. These changes become effective for the Company’s fiscal year beginning January 1, 2018. At this
time, the Company does not expect this standard to affect the Company’s financial position, results of operations or cash
flows and disclosures. In November 2016, the FASB issued ASU 2016-18,
“Statement of Cash Flows (Topic 230): Restricted Cash,” which requires entities to show the changes in the total of
cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. These changes become effective
for the Company’s fiscal year beginning January 1, 2018. At this time, the Company does not expect this standard to affect
the Company’s financial position, results of operations or cash flows and disclosures. In October, 2016, the FASB issued ASU 2016-16,
“Income Taxes (Topic 740): Intra Entity Transfer of Assets Other than Inventory,” which requires the recognition of
the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. These changes
become effective for the Company’s fiscal year beginning after December 15, 2018. At this time, the Company does not expect
this standard to affect the Company’s financial position, results of operations or cash flows and disclosures. In August 2016, the FASB issued ASU 2016-15,
“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides guidance
on the presentation and classification of certain cash receipts and payments in the statement of cash flows. These changes become
effective for the Company’s fiscal year beginning January 1, 2018. At this time, the Company does not expect this standard
to affect the Company’s financial position, results of operations or cash flows and disclosures. In February 2016, the FASB issued ASU 2016-02,
“Leases (Topic 842)” which will require lessees to recognize assets and liabilities for the rights and obligations
created by most leases on the balance sheet. These changes become effective for the Company’s fiscal year beginning January
1, 2019. Modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, is
required with an option to use certain transition relief. The Company is in the process of evaluating the impact of this ASU on
its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01,
“Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,”
which (i) requires equity investments (except those accounted for under the equity method of accounting, or those that result in
consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, (ii) requires
public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes,
(iii) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial
asset, and (iv) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used
to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. These changes become effective for the Company’s
fiscal year beginning January 1, 2018. At this time, the Company does not expect this standard to affect the Company’s financial
position, results of operations or cash flows and disclosures. In May 2014, the FASB issued ASU 2014-09, “Revenue
from Contracts with Customers (Topic 606),” which has subsequently been amended to update revenue guidance under the newly-created
ASC 606. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded
disclosures about revenue recognition. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers
(Topic 606): Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09, “Revenue from Contracts
with Customers (Topic 606)” become effective for the Company’s fiscal year beginning January 1, 2018. At this time,
the Company does not expect this standard to affect the Company’s financial position, results of operations or cash flows
and disclosures. Other recent accounting pronouncements issued
by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not expected to have a material impact on the
Company’s present or future financial statements. |
