| Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated
financial statements of the Company as of January 31, 2019, and for the three and six months ended January 31, 2019 and 2018, have
been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for
interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. In the opinion of management,
such financial information includes all adjustments considered necessary for a fair presentation of the Company's financial position
at such date and the operating results and cash flows for such periods. Operating results for the interim period ended January
31, 2019 are not necessarily indicative of the results that may be expected for the entire year. Certain information and footnote disclosure
normally included in financial statements in accordance with GAAP have been omitted pursuant to the rules of the United States
Securities and Exchange Commission ("SEC"). These unaudited financial statements should be read in conjunction with our
audited financial statements and accompanying notes for the years ended July 31, 2018 and 2017 included in the Company's Form 10-K
filed on January 25, 2019. The accompanying unaudited consolidated
financial statements include the accounts of Grand Perfecta and its wholly-owned subsidiaries LBC, Umajin HK, WRN and SPI. The
Company discontinued the operations of its wholly-owned subsidiaries LBC and SPI in June 2018. The accounts for these subsidiaries
have been presented in the discontinued operations in the accompanying consolidated financial statements. All intercompany balances
and transactions have been eliminated in consolidation. The Company has determined that three affiliated entities, Space Cultivation
Mobile, Japan Horse Circle and Basougu Shokuninkai, which LBC conducts business with were variable interest entities and that the
Company was the primary beneficiary of each entity. As a result, the Company has consolidated the accounts of these variable interest
entities into the accompanying consolidated financial statements. As the Company does not have any ownership interest in these
variable interest entities, the Company has allocated the contributed capital in these variable interest entities as a component
of non-controlling interest. These three variable interest entities did business with LBC. Therefore, these three entities have
also been presented in the discontinued operations in the accompanying consolidated financial statements. After the discontinued
operations, the Company consists of Grand Perfecta and its two remaining wholly-owned subsidiaries, Umajin HK and WRN. There are
no variable interest entities since the Company discontinued operations in June 2018. Financial Statement Reclassification Certain account balances from prior periods
have been reclassified in these consolidated financial statements to conform to current period classifications. The prior year
amounts have also been modified in these financial statements to properly report amounts under current operations and discontinued
operations (see note 6). Use of Estimates The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues
and expenses during the reported periods. Amounts could materially change in the future. Going Concern Based on operating losses and negative
cash from operations and the discontinued operations of most of the Company’s operations, substantial doubt exists about
the Company’s ability to continue as a going concern. Management’s plan in this regard is to find new operations to
enter into and focus on building profitable operations. To finance operations while it finds new operations, the Company will continue
financing activity such as taking loans and issuing new shares of the Company’s common stock. As of January 31, 2019, we had cash of
$5,929 and a working capital deficit of $611,694 as compared to cash of $52,716 and a working capital deficit of 574,780 as of
July 31, 2018. We continue to have a significant working
capital deficit that adversely affects our business by limiting the resources we have available to pursue the promotion of our
information services and develop new service opportunities for potential customers. Historically, we have relied on extensions
of note payment due dates and new debt financing to repay note obligations as they came due in order to continue operations. Going
forward we will continue to use extensions and new debt financing to address note obligations that come due, endeavor to gradually
reduce obligations with cash flow provided by operations, and pursue over the next 12 months equity financing that we can apply
to debt reduction and business development. Nevertheless, the shortage of working capital adversely affects our ability to develop,
sponsor, or participate in activities that promote our information services to prospective customers and to develop new content,
because a substantial portion of cash flow goes to reduce debt rather than to advance operating activities. There is no assurance
that our plans for addressing our working capital shortages will be successful, and our failure to be reasonably successful should
be expected to result in a significant contraction of our operations and potentially a failure of the business. Foreign Exchange The Company’s primary operations
are conducted in Japan and performed by its wholly owned subsidiaries WRN and until sold, LBC. The Company also conducted operations
through SPI, and its Malaysian subsidiary SPT. A wholly owned subsidiary, Umajin HK, had been delivering information on horse racing
to its users through its website similar to LBC, however it terminated its service at the end of June 2017. WRN and LBC’s
functional currency is the Japanese Yen and Umajin HK’s functional currency is the Hong Kong Dollar. SPT’s functional
currency is the Malaysian Ringgit. The financial statements of each entity
are prepared using the applicable functional currencies, and have been translated into U.S. dollars (“USD”). Assets
and liabilities are translated into USD at the applicable exchange rates at period-end. Stockholders’ equity is translated
using historical exchange rates. Revenue and expenses are translated at the average exchange rates for the period. Any translation
adjustments are included as foreign currency translation adjustments in accumulated other comprehensive income in the Company’s
stockholders’ equity. The following rates were used to translate
the accounts of Umajin HK and WRN into USD at the following balance sheet dates.
Balance Sheet Dates
January 31, 2019 July 31, 2018
Japanese Yen to USD 0.0092 0.0090
Hong Kong Dollars to USD 0.1275 0.1274 The following rates were used to translate
the accounts of LBC, Umajin HK, SPT and WRN into USD for the following operating periods.
For the Six Months Ended
January 31, 2019 January 31, 2018
Japanese Yen to USD 0.0090 0.0090
Hong Kong Dollars to USD 0.1276 0.1280
Malaysian Ringgit to USD N/A 0.2407 Cash and Cash Equivalents The Company considers all highly liquid
holdings with maturities of three months or less at the time of purchase to be cash equivalents. The Company had no cash equivalents
as of January 31, 2019 and July 31, 2018. Accounts Receivable Accounts receivable are carried at net
realizable value, representing the outstanding balance less an allowance for doubtful accounts based on a review of all outstanding
amounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and
considering each customer's financial condition and credit history, as well as current economic conditions. Accounts receivable
are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.
The Company had no allowance for doubtful accounts as of January 31, 2019 and July 31, 2018. Fair Value of Financial Instruments In accordance with ASC 820, the carrying
value of cash and cash equivalents and accounts payable approximates fair value due to the short-term maturity of these instruments.
ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy
to classify the inputs used in measuring fair value as follows: Level 1- Inputs are unadjusted quoted prices
in active markets for identical assets or liabilities available at the measurement date. Level 2- Inputs are unadjusted quoted prices
for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets
that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable
market data. Level 3- Inputs are unobservable inputs
which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the
asset or liability based on the best available information. The Company has determined that the book
value of its outstanding financial instruments as of January 31, 2019 and July 31, 2018 approximates the fair value. Concentration of Credit Risk Financial instruments that potentially
expose the Company to concentration of credit risk include cash and accounts receivable. The Company maintains its cash in banks
located in Japan, Hong Kong and the United States in financial institutions with high credit ratings. Substantially all of the
Company’s revenues are generated from customers in Japan. The Company conducts periodic reviews of the financial condition
and payment practices of its customers. The Company had no losses related to the write off of accounts receivable during the six
months ended January 31, 2019 and 2018. Revenue Recognition Effective August 1, 2018 we adopted the
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 606-10,
Revenue from Contracts with Customers (“ASC 606-10”). The adoption of ASC 606-10 had no impact on prior year or previously
disclosed amounts. In accordance with ASC 606-10, revenue is measured based on a consideration specified in a contract with a customer
and recognized when we satisfy the performance obligation specified in each contract. The Company’s revenue consists primarily
of sales of comprehensive horse racing information through multiple websites focusing on all aspects of the horse racing industry
in Japan. Publication of horse racing digital magazines, and participating in other public events and media programs related to
the horse racing industry do not generate significant revenue directly. These activities are undertaken for the purpose of increasing
the number of horse racing fans and driving potential customers to our websites so as to hopefully eventually convert them to paying
customers. The majority of the Company’s revenue
is generated by per-item sales. For certain users, payment is received at the time of purchase and for others it is received after
purchase. In either case, our performance obligation is to provide the requested information to users. Therefore, we recognize
revenue for per-item sales when the requested information is supplied to the user or for information packages that span a period
of time, ratably over the subscription period. Revenues are presented net of refunds, credits and known and estimated credit card
chargebacks. The Company reports revenue net of any required taxes collected from customers and remitted to government authorities,
with the collected taxes recorded as current liabilities until remitted to the relevant government authority. Rights to information
purchased by customers in advance of the information being provided are recorded as deferred. As of January 31, 2019, the Company had
$5,447 in deferred revenues. The Company will amortize these deferred revenues based on the monthly subscriptions and record revenue
in line with the amortization of these advance payments. Income Taxes The Company accounts for income taxes in
accordance with ASC 740, Income Taxes, using the asset and liability method. Under this method, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
assets and liabilities and their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Advertising Costs The Company expenses advertising costs
as incurred. Advertising costs incurred amounted to $0 and $70,384 (all from discontinued operations) for the six months ended
January 31, 2019 and 2018, respectively. Basic and Diluted Earnings Per Share In accordance with ASC 260, Earnings Per
Share, the basic income per common share is computed by dividing the net income available to common stockholders by the weighted
average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted
if diluted potential common stock had been converted to common stock. No dilutive potential common shares were included in the
computation of diluted net income per share because their impact was anti-dilutive. As of January 31, 2018, the Company had total
options of 3,000,000 which were excluded from the computation of net income per share because they are anti-dilutive. As of January
31, 2019, the Company did not have any convertible notes or the options of 3,000,000. As a result, the basic and diluted earnings
per share were the same for each of the periods presented. Recent Accounting Pronouncements From time to time, new accounting pronouncements
are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that
the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial
statements upon adoption. |
