| Related Party Transactions | 3 Related Party Transactions Stock Purchase and Loan Agreements On May 8, 2018, we
completed a subscription agreement for the sale of 2,000,000 shares of our common stock to our largest stockholder for $800,000.
$230,195 of the purchase price was applied to the settlement of related party notes payable and accrued interest and the remaining
$569,805 was paid in cash. During the year ended February 28, 2019, we recorded a loss on settlement of debt of $184,156 on the
accompanying condensed statement of operations based on the excess in fair market value of the shares issued in connection with
this transaction. On April 16, 2019,
we borrowed $50,000 from our largest stockholder, China-Israel Biological Technology, Co. Ltd. (“CIB”) pursuant to
a Note with an annual interest rate of 10% and having a maturity date of October 16, 2019 (the “April 2019 Note”).
The April 2019 Note was repaid as part of the funding of the May 24, 2019 Subscription Agreement, as discussed below. On May 24, 2019, we
entered into a Subscription Agreement with CIB pursuant to which we sold 4,290,000 units. Each single Unit consists of one (1)
share of our common stock and two and one half (2.5) warrants (collectively the “Units”). The warrants are exercisable
for 18 months at $0.05 per share. The aggregate purchase price for the Units is USD $214,500 (the “Purchase Price”)
or USD $0.05 per share. The Purchase Price was paid as follows: (i) $50,507 applied in extinguishment of the principal and accrued
interest underlying the April 2019 Note between CIB and our Company, and (ii) $163,993 in cash funded May 29, 2019. The shares
were issued effective May 29, 2019. We valued the common
stock and warrant at $386,100 using the Black-Scholes option-pricing model. The use of the Black-Scholes model required that we
make a number of estimates, including the expected option term (1.5 years), the expected volatility in the price of our common
stock (284% going back 1.5 years), the risk-free rate of interest (2.25% using average Treasury Bill rates) and the dividend yield
on our common stock (no dividends). If our variable volatility assumptions were different, the resulting determination of
the fair value of the warrant could be materially different and our results of operations could be materially impacted. Accrued Payroll – Related Parties Our Company approved
compensation to Michael Dunn in the amount of $5,000 per month beginning in June 2017, and to Qingxi Huang, our CEO and Chairman,
in the amount of $3,000 per month beginning in April 2019. In addition, at February 28, 2019, we owed Safa Movassaghi compensation
of $5,000 for the month of February 2019. As of May 31, 2019 and February 28, 2019, we have recorded accrued and unpaid payroll,
inclusive of estimated payroll taxes, for each of these individuals as follows:
May 31, February 28,
Michael Dunn (1) $ 33,000 $ 33,000
Qingxi Huang (2) 7,083 –
Safa Movassaghi (3) – 5,500
Total accrued payroll – related parties $ 40,083 $ 38,500 _______________
(1) Mr. Dunn is deceased; his estate may pursue his accrued and unpaid compensation.
(2) Amounts owed to Mr. Huang remain unpaid.
(3) All amounts owed to Mr. Movassaghi were paid March 1, 2019. Due to related party As
of May 31, 2019 and February 28, 2019, we owed $1,600 to Andrew Dunn for one time services provided, respectively. The amount owed
is Andrew Dunn is the
son of Michael Dunn, our former President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman
of the Board; his beneficial ownership includes 2,900,000 shares of common stock, as acquired control of the shares as administrator
of the Dunn Estate and 0 shares issuable upon the exercise of stock options. Mr. Michael Dunn passed away November 19, 2017. Mr.
Michael Dunn’s beneficial ownership has been transferred to the administrator, Andrew Dunn, however the estate is still in
probate pending completion. Joint Venture On April 1, 2019, our
Board approved our entering into a strategic joint venture agreement with BSP for the creation of a joint venture, BSP Medical
America, Inc (the “JV”). Our Company will acquire 50% of the JV pursuant to a subscription agreement for $100,000,
and BSP shall contribute the same for their 50% ownership. Our CEO, Qingxi Huang, will be an officer and director of the JV. We
are awaiting confirmation of consent from BSP and their executed JV agreement. As of the date of this filing the JV is to be voted
on by stockholders of BSP at a special meeting to be held at the end of July 2019. As such, the JV is pending approval. Our initial review
of the JV suggests it will be treated as a Variable Interest Entity (“VIE”) to be consolidated. While the JV entity
has been established, its future implementation cannot be assured until BSP approves and executes the joint venture agreement which
has not yet been completed. As such, our determination of the VIE treatment will be determined once all approvals are obtained
and the agreement has been executed. |
