Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
May 31, 2020 | Feb. 26, 2021 | Nov. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | Momentous Holdings Corp. | ||
Entity Central Index Key | 0001653876 | ||
Document Type | 10-K | ||
Document Period End Date | May 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --05-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 9,391,650 | ||
Entity Common Stock, Shares Outstanding | 34,165,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Emerging Growth Company | true | ||
Transition Period | false | ||
Small Business Entity | true | ||
Interactive data current? | No | ||
Incorporation state | NV | ||
Entity file number | 333-20163 | ||
Entity shell company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | May 31, 2020 | May 31, 2019 |
Current Assets | ||
Cash | $ 1,252 | $ 4,840 |
Inventory | 9,857 | 0 |
Accounts receivable | 13,799 | 17,309 |
Accounts receivable from related party | 5,180 | 2,238 |
Prepaid expenses and other | 6,712 | 3,484 |
Total Current Assets | 36,800 | 27,871 |
Intangible asset | 47,231 | 48,125 |
Property and equipment, net of accumulated depreciation of $3,692 and $1,971, respectively | 7,767 | 1,899 |
TOTAL ASSETS | 91,798 | 77,895 |
Current Liabilities | ||
Accounts payable | 38,652 | 10,470 |
Due to related parties | 162,719 | 96,615 |
Convertible note payable, net of unamortized discount of $86,444 | 44,651 | 0 |
Derivative liability | 94,640 | 0 |
Short term borrowings | 236 | 17,424 |
Other accrued expenses and liabilities | 79,207 | 59,914 |
Total Current Liabilities | 420,105 | 184,423 |
NonCurrent Liabilities | ||
Borrowings | 46,380 | 0 |
Total Noncurrent liabilities | 46,380 | 0 |
Total Liabilities | 466,485 | 184,423 |
Stockholders' Deficit | ||
Common stock, $0.001 par value, 75,000,000 shares authorized; 34,165,000 and 34,115,000 issued and outstanding as of May 31, 2020 and May 31, 2019, respectively | 34,165 | 34,115 |
Additional paid-in capital | 28,257 | 7,807 |
Accumulated deficit | (441,334) | (152,605) |
Accumulated other comprehensive loss | 4,225 | 4,155 |
Total Stockholders' Deficit | (374,687) | (106,528) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 91,798 | $ 77,895 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | May 31, 2020 | May 31, 2019 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 3,692 | $ 1,971 |
Unamortized discount | $ 86,444 | $ 0 |
Common stock, par value | $ 0.001 | $ .001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 34,165,000 | 34,115,000 |
Common stock, shares outstanding | 34,165,000 | 34,115,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations And Other Comprehensive Loss - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Revenues | |||
Total sales | $ 26,067 | $ 175,877 | $ 133,699 |
Cost of goods sold | (22,559) | (145,612) | (104,777) |
Gross Profit | 3,508 | 30,265 | 28,922 |
Operating Expenses | |||
General and administrative expenses | 26,949 | 313,279 | 170,298 |
Selling and distribution expenses | 409 | 12,173 | 4,330 |
Total Operating Expenses | 27,358 | 325,452 | 174,628 |
Operating Loss | (23,850) | (295,187) | (145,706) |
Other income | 2,681 | 19,549 | 8,491 |
Gain on change in fair value of derivative liability | 0 | 33,360 | 0 |
Interest expense | 0 | (46,451) | (665) |
Loss before Income Taxes | (21,169) | (288,729) | (137,880) |
Income Taxes | 0 | 0 | 0 |
Net Loss | (21,169) | (288,729) | (137,880) |
Other Comprehensive Income | |||
Foreign currency translation adjustment | 2,819 | 70 | 4,468 |
Total Comprehensive Loss | $ (18,350) | $ (288,659) | $ (133,412) |
Net Loss per Share: Basic and Diluted | $ (211.69) | $ (0.01) | $ (0.01) |
Weighted Average Number of Shares Outstanding: Basic and Diluted | 100 | 34,153,795 | 24,802,541 |
Sales [Member] | |||
Revenues | |||
Total sales | $ 23,938 | $ 175,877 | $ 131,328 |
Sales to related party [Member] | |||
Revenues | |||
Total sales | $ 2,129 | $ 0 | $ 2,371 |
Consolidated Statements of Chan
Consolidated Statements of Changes Stockholders' Deficit - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance, shares at Jun. 30, 2018 | 15,750,000 | ||||
Beginning balance, value at Jun. 30, 2018 | $ 15,750 | $ (15,750) | $ (14,725) | $ (313) | $ (15,038) |
Net loss | (137,880) | (137,880) | |||
Reverse recapitalization, shares | 18,245,000 | ||||
Reverse recapitalization, value | $ 18,245 | (36,323) | (18,078) | ||
Issuance of common stock issued for cash, shares | 120,000 | ||||
Issuance of common stock issued for cash, value | $ 120 | 59,880 | 60,000 | ||
Foreign currency translation adjustment | 4,468 | 4,468 | |||
Ending balance, shares at May. 31, 2019 | 34,115,000 | ||||
Ending balance, value at May. 31, 2019 | $ 34,115 | 7,807 | (152,605) | 4,155 | (106,528) |
Net loss | (288,729) | (288,729) | |||
Issuance of common stock issued for cash, shares | 40,000 | ||||
Issuance of common stock issued for cash, value | $ 40 | 14,960 | 15,000 | ||
Issuance of common stock issued for services provided, shares | 10,000 | ||||
Issuance of common stock issued for services provided, value | $ 10 | 5,490 | 5,500 | ||
Foreign currency translation adjustment | 70 | 70 | |||
Ending balance, shares at May. 31, 2020 | 34,165,000 | ||||
Ending balance, value at May. 31, 2020 | $ 34,165 | $ 28,257 | $ (441,334) | $ 4,225 | $ (374,687) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net loss | $ (21,169) | $ (288,729) | $ (137,880) |
Adjustments to reconcile net loss to net cash used in operating activities | |||
Depreciation and amortization expense | 265 | 1,721 | 1,971 |
Loss on goodwill impairment | 0 | 0 | 49,581 |
Gain on change in fair value of derivative liability | 0 | (33,360) | 0 |
Amortization of debt discount | 0 | 41,556 | 0 |
Issue of common stock for services | 0 | 5,500 | 0 |
Changes in assets and liabilities: | |||
Inventory | 0 | (9,857) | 0 |
Accounts payable | 747 | 28,182 | 2,501 |
Accounts receivable - third party | (6,276) | 3,510 | 597 |
Accounts receivable - related party | 8,006 | (2,942) | 3,997 |
Prepaid expenses | 1,239 | (3,228) | (3,378) |
Accrued expenses | 155 | 7,491 | 9,485 |
Taxes payable | 5,107 | 11,802 | 17,531 |
Net cash used in operating activities | (11,926) | (238,354) | (55,595) |
CASH FLOW FROM INVESTING ACTIVITIES | |||
Purchase of fixed assets | (3,179) | (7,660) | (1,280) |
Cash received on reverse merger | 0 | 0 | 196 |
Net cash used in investing activities | (3,179) | (7,660) | (1,084) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from the sale of common stock | 0 | 15,000 | 60,000 |
Proceeds from issue of convertible note payable | 0 | 128,000 | 0 |
Loans advanced | 0 | 46,380 | 11,573 |
Loans repaid | 0 | (2,343) | (9,132) |
Related party loans advanced | 0 | 74,146 | 1,515 |
Bank overdraft | 7,481 | (17,188) | 0 |
Related party loans repaid | 0 | (6,419) | (5,225) |
Net cash provided by financing activities | 7,481 | 237,576 | 58,731 |
Effect of exchange rate changes on cash | 2,821 | 4,850 | 2,590 |
Changes in cash | (4,803) | (3,588) | 4,642 |
Cash at beginning of year/period | 198 | 4,840 | 198 |
Cash at end of year/period | 0 | 1,252 | 4,840 |
Significant Non-Cash Investing and Financing Transactions | |||
Common stock issued in reverse merger, net of cash received | 0 | 0 | 18,078 |
Derivative liability from convertible debt | 0 | 128,000 | 0 |
Interest expense forming part of convertible debt | $ 0 | $ 3,095 | $ 0 |
1. Organization, Description of
1. Organization, Description of Business and Principles of Consolidation | 12 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Organization, Description of Business and Principles of Consolidation | NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND PRINCIPLES OF CONSOLIDATION We were incorporated as Momentous Holdings Corp., “the Company”, on May 29, 2015 in the State of Nevada for the purpose of designing, acquiring and developing mobile apps and mobile software for download by end consumers. On August 1, 2018, V Beverages Limited. (“V Beverages”), acquired MaxChater Ltd. (“MaxChater”), for £1. MaxChater is the operating entity in the transaction and is therefore viewed as the predecessor entity for financial reporting purposes, and V Beverages is viewed as the successor entity. The acquisition of MaxChater by V Beverages was accounted for using the acquisition method of accounting, and the excess of the consideration paid over the net liabilities acquired, representing goodwill on acquisition, was fully impaired at the date of the transaction, as further described in Note 10. On December 31, 2018, the Company entered into a Share Exchange Agreement with Andrew Eddy (“Owner”), an individual residing in Great Britain and owner of 100% of the issued and outstanding capital shares of V Beverages, a company organized under the laws of the United Kingdom (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, the Company acquired 100% of the issued and outstanding capital shares of V Beverages (the “Target Shares”). Upon the closing of the transaction under the Share Exchange Agreement, the Owner transferred the Target Shares to the Company in exchange for 15,750,000 shares of the Company’s common stock, par value $0.001. The board members of the Company were replaced with those of V Beverages at the date of the transaction. The transaction has been accounted for as a reverse merger and recapitalization, whereby V Beverages is considered to be the accounting acquirer and became a wholly-owned subsidiary of the Company. V Beverages is considered to be the accounting acquirer following the replacement of the Momentous Holdings Corp. board and management by V Beverages management and board member. Following the reverse merger we ceased operations of our app, the original business of the Company. Throughout the consolidated financial statements, we refer to “Successor” and “Predecessor”. For periods after the acquisition of MaxChater Ltd. (since August 1, 2018), our operating results and cash flows are referred to as Successor. For periods prior to the acquisition of MaxChater Ltd., our operating results and cash flows are referred to as Predecessor. Where tables are presented, a black line separates the Successor and Predecessor financial information to highlight the lack of comparability between the periods. The consolidated financial statements for the period from August 1, 2018 to May 31, 2019 (successor) and as at that date, comprise the financial statements of V Beverages and MaxChater. The financial statements for the period ended July 31, 2018 (predecessor – separated by black bar) comprise the financial statements of MaxChater Ltd for the period from June 1, 2018 to July 31, 2018. |
2. Going Concern
2. Going Concern | 12 Months Ended |
May 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 - GOING CONCERN 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 normal course of business. The Company had a working capital deficit of $383,305, a total stockholders’ deficit of $374,687 at May 31, 2020 and accumulated losses at that date of $441,334. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The ongoing coronavirus pandemic, which arose during the fourth quarter of the fiscal year, has also had a significant impact on the ability of the Company to continue as a going concern. Further details of the impact of the coronavirus pandemic on the Company’s operations are set out in Note 14 ‘Subsequent Events’. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future and repay its liabilities arising from normal business operations as they become due. Details of the Company’s debt are set out in Note 7. Following the completion of the 10-K for the year ended May 31, 2019, management raised funds to provide working capital for the immediate future and on January 13, 2020 issued a Convertible Promissory Note, details of which are set out in Note 7. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 12 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The consolidated balance sheets as at May 31, 2020 and May 31, 2019 comprise the consolidated net assets and equity of Momentous Holdings Corp, V Beverages Limited and MaxChater Ltd. The consolidated statements of operations and other comprehensive loss and statements of cash flows for the period ended May 31, 2019 comprise the consolidated financial statements of Momentous Holdings Corp, V Beverages Limited and MaxChater Ltd. for the period from August 1, 2018 to May 31, 2019 (successor). The consolidated statements of operations and other comprehensive loss and statements of cash flows for the period ended July 31, 2018 (predecessor – separated by black bar) comprise the financial statements of MaxChater Ltd. for the period from June 1, 2018 to July 31, 2018. The consolidated statements of changes in stockholders' deficit presents the changes in equity of MaxChater Ltd. for the period from June 1, 2018 to July 31, 2018 (predecessor) and of Momentous Holdings Corp, V Beverages Limited and MaxChater Ltd. for the period from August 1, 2018 to May 31, 2019 and for the year ended May 31, 2020 (successor). Related party transactions and balances are separately disclosed in the financial statements where appropriate. Principles of Consolidation The consolidated financial statements include the financial statements of Momentous Holdings Corp, together with the financial statements of V Beverages Limited and MaxChater Ltd, presented in accordance with the basis of preparation note. All significant intercompany balances and transactions have been eliminated in full. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of long-lived and indefinite-lived assets. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As at May 31, 2020 and May 31, 2019, we had no other cash equivalents. Revenue Recognition Effective June 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers ("Topic 606") using the retrospective application method. Our revenue (referred to in our financial statements as “sales”) consists primarily of the sale of spirits produced and sold in the UK. Sales of products are for cash or otherwise agreed-upon credit terms. Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our customers consist primarily of individuals, bars and restaurants. In developing our revenue recognition accounting policy, we considered the following steps: · Identify the contract: the company has no supply contracts with customers, revenue is earned on the basis of sales of spirits for cash or on credit terms. Sales are made subject to the retail laws of the UK. · Identify the performance obligations: the company is obliged to deliver spirts to a customer based on that customer’s order. · Determine the transaction price: the retail price of the spirits sold. · Allocate the transaction price to the performance obligations / recognise revenue when the performance obligation is satisfied: sales are recognized at the point the goods are delivered, which is the point when the performance obligation is satisfied. Management has concluded that our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution and shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. Our sales terms do not allow for a right of return except for matters related to any manufacturing defects on our part. Our other revenue generating activities include the sale of branded merchandise, hosting of 'pop up' events and white labelling for certain customers. We have evaluated these other revenue generating activities under the disaggregation disclosure criteria outlined within the amended guidance and concluded that these other revenue generating activities are immaterial for separate disclosure. Revenue is also shown net of Value Added Tax ('VAT') payable to the UK tax authority on the sale of products. All our revenue is generated within the UK. Accounts receivable Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. Inventory Inventory is stated at the lower of cost and net realizable value using the first-in, first-out method. Inventory consists primarily of Neutral Grain Spirits used in production. Income Taxes We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. 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 effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. Property and Equipment Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. Impairment of long lived assets As a result of the acquisition of MaxChater, the Company impaired the goodwill arising of $49,581 on the basis that there were insufficient discounted future cash flows to support the carrying value (Note 10). The ‘Victory’ brand intangible asset is recorded at the fair value of the consideration paid. Further details are provided in Note 4. The Company reviews the carrying value of intangible assets not subject to amortization annually to determine whether impairment may exist, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Following a review, the company has concluded that there no impairment to the carry value of the intangible assets is required. Basic and Diluted/Net Loss Per Share Basic net income (loss) per share amounts are computed based on the weighted average number of common stock actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report. The company does not have any outstanding dilutive securities during the current or prior reporting periods. Foreign Currency Translation The functional currency of the Company is Great British Pounds (GBP). Assets and liabilities of our operations are translated into United States dollar equivalents using the exchange rates in effect at the balance sheet date. Revenues and expenses are translated using the average exchange rates during each period and equity accounts are translated at historical cost. Adjustments resulting from the process of translating foreign functional currency financial statements into U.S. dollars are included in accumulated other comprehensive income in shareholders’ deficit. Fair value of financial instruments The carrying amounts reflected in the balance sheets for cash, accounts receivable, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale. The Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or ASC 820, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as 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. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The embedded conversion feature in the Convertible Note Payable that the Company issued on January 13, 2020, that became convertible during the period ended May 31, 2020 qualifies as a derivative instrument due to a Low-Priced Security adjustment feature in the Note related to the increased volatility, potential lack of liquidity, and increased transaction costs that arise if and when the Trading Price of the Company’s common stock falls or is below certain levels at any point during the 20 Trading Days prior to the Conversion Date. The valuation of the derivative liability was determined through the use of a Black Scholes option-pricing model (See Note 7). Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, a lessee will recognize assets and liabilities on its balance sheet for most leases, but will recognize expense similar to current lease accounting guidance. Additionally, this guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company has elected to defer adoption of ASU 2016-02 until June 1, 2020. From time to time other new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
4. Intangible Asset
4. Intangible Asset | 12 Months Ended |
May 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset | NOTE 4 - INTANGIBLE ASSET The intangible asset of $47,231 (May 31, 2019: $48,125) represents the cost of the ‘Victory’ brand acquired by V Beverages from a related party in November 2017 under the terms of a Trademark Purchase Agreement. The change in value is attributable to changes in foreign exchange rates in the year. This Agreement states that the total value of the transaction was £38,188 ($48,125) in the form of a credit note plus 10% common stock of the parent company (Momentous Holdings Corp) that is undilutable until $1,000,000 of investment is made into Momentous Holdings Corp. This balance was due for repayment in two equal installments by August 2, 2019 without interest, however the terms of the credit note were extended until December 2020 and subsequently to April 30, 2021. Management considers the useful life of the brand intangible not to be limited or restricted, and therefore its useful life is indefinite. Accordingly, the intangible asset will not be amortised but is tested annually for impairment. In reaching this conclusion, management considered the following factors: The intangible asset is a brand which already exists and was registered with the UK Intellectual Property Office (UKIPO) before the company acquired it. Therefore the useful life does not include any period of time to develop it and comprises only the time over which the company expects the intangible asset to contribute to the Company’s cash flows. The Company does not expect to sell the intangible asset before it is consumed. The Victory trademark is the Company’s sole brand name, without which it could not operate. In the future, if any additional brand is acquired or if the Company changes its business strategy, an impairment review would be conducted of the intangible asset and a decision taken to redesignate it as having a finite life. In that case the intangible asset would be amortised over the period it is expected to contribute to cash flows. But that is a hypothetical situation at this time. The brand’s existing registration with the UKIPO will be renewed within the next 5 years, thereafter it will be renewed again every 10 years. Registration of the brand is not mandatory and was made to protect the brand. The company has ‘common law’ rights under English law to use it without it being formally registered. |
5. Property and Equipment
5. Property and Equipment | 12 Months Ended |
May 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 5 - PROPERTY AND EQUIPMENT Property consists of equipment purchased for the production of revenues. As of: May 31, 2020 May 31, 2019 Equipment $ 11,459 $ 3,870 Less accumulated depreciation (3,692 ) (1,971 ) Equipment, net $ 7,767 $ 1,899 During the year ended May 31, 2020 the Company purchased property and equipment totaling $7,660. Assets are depreciated over their useful lives beginning when placed in service. Depreciation expense was $1,721 for the year ended May 31, 2020, $1,971 for the period ended May 31, 2019 (successor) and $265 for the period ended July 31, 2018 (predecessor), respectively. |
6. Accounts Receivable
6. Accounts Receivable | 12 Months Ended |
May 31, 2020 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 6 – ACCOUNTS RECEIVABLE Accounts receivable comprised the following: May 31, 2020 May 31, 2019 Amounts due from third parties $ 15,444 $ 23,901 Allowance for bad and doubtful debts (1,645 ) (6,592 ) 13,799 17,309 Amounts due from related parties (see note 9) 5,180 2,238 $ 18,979 $ 19,547 |
7. Debt
7. Debt | 12 Months Ended |
May 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 7 – DEBT Short term borrowings from related parties at May 31, 2020 include an amount of $41,047 due in respect of the purchase of the ‘Victory’ brand acquired in November 2017 (see details in Note 4). This balance was due for repayment in two equal installments by August 2, 2019 without interest, however the terms of the credit note were extended until December 2020 and subsequently until April 30, 2021. During the year an amount of $6,169 was repaid against the amount due by agreement with the related party. The total amount loaned to the Company by the directors was $121,672 as of May 31, 2020, comprising $48,490 loaned in the prior year, additional loans of $74,146, repayments of $250 and foreign exchange movements of $714 during the year ended May 31, 2020. The total amounts loaned to the company by related parties as of May 31, 2020 was therefore $162,719. Each of the loans and other borrowings are unsecured, interest-free and have no fixed repayment terms, except where otherwise stated. On August 2, 2019, the Company entered into a new £20,000 ($24,250) bank overdraft facility with an effective rate of 12.22 per cent per annum which is personally guaranteed by one of the Company’s directors. The facility does not have a fixed or minimum duration but may be cancelled by the bank at any time. As of May 31, 2020 the Company had drawn $236 from the overdraft facility. On May 6, 2020, the Company obtained a bank loan, the equivalent of $46,380 under a UK Government backed loan scheme to assist businesses affected by COVID-19. For the first twelve (12) months of the loan, the loan is interest-free and no repayments are due. Thereafter the loan is repayable over 5 years at an interest rate of 2.5% per annum. Convertible note payable On January 13, 2020, the Company issued a Convertible Note Payable in the principal amount of $250,000 (the “Note”) to a venture capital firm with offices in New York, New York (the “Holder”). Per the terms of the Note, the principal amount of the Note shall accrue interest at the rate of ten percent (10%) per annum. The Note was due to mature on January 13, 2021 and includes various rates of penalties for earlier repayment but is otherwise unsecured. The maturity of the note has been extended to February 28, 2021 by agreement among the parties and payment of all interest and penalties waived. The Note is convertible, at the Holder’s sole discretion, into shares of the Company’s common stock at a fixed price of $0.25 per share. The Holder is restricted from exercising its right to convert any portion of the Note if such conversion would result in the number of shares of the Company’s common stock received from such conversion plus the number of such shares beneficially owned by the Holder and its affiliates on the date of conversion equaling or exceeding more than 9.9% of the outstanding shares of the Company’s common stock. The Conversion Price is subject to Low-Priced Security adjustments due to, but not limited to, the increased volatility, potential lack of liquidity, and increased transaction costs that arise if and when the Trading Price of the Company’s common stock falls or is below certain levels at any point during the 20 Trading Days prior to the Conversion Date. The Company had received total proceeds of $128,000 under the Note as of May 31, 2020 in two tranches, comprising $95,000 received on February 29, 2020 and $33,000 received on April 17, 2020. The Note has been accounted for in accordance with ASC 815 at fair value and an embedded derivative liability measured using a Black-Scholes option pricing model. As of May 31, 2020 there is a derivative liability of $94,640 and convertible debt net of discount of $44,651 on which interest payable of $3,095 has been accrued. The change in fair value of the derivative liability during the period is as follows: Balance – June 1, 2019 $ – Debt discount recognized at inception 128,000 Day one loss on valuation of derivative 122,840 Gain on change in fair value of derivative during the period (156,200 ) Balance – May 31, 2020 $ 94,640 The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at the date each tranche was received: May 31, January 13, Expected term 8 months 1 year Expected average volatility 195.00% 192.99% Expected dividend yield - - Risk-free interest rate 0.17% 1.53% The following table presents the derivative financial instrument, the Company’s only financial liability measured and recorded at fair value on the company’s consolidated balance sheet on a recurring basis, and its level within the fair value hierarchy as of May 31, 2020: Amount Level 1 Level 2 Level 3 Embedded derivative liability $ 94,640 $ – $ – $ 94,640 Total $ 94,640 – – $ 94,640 |
8. Income Taxes
8. Income Taxes | 12 Months Ended |
May 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8- INCOME TAXES The reconciliation of income tax provision (benefit) at the U.S. statutory rate of 21% for the periods ended May 31, 2020, May 31, 2019 and July 31, 2018 to the Company’s effective tax rate is as follows: Year ended August 1, 2018 - June 1, 2018 - Income tax benefit at statutory rate $ 115,536 $ 48,050 $ – Change in valuation allowance (115,536 ) (48,050 ) – Income tax provision $ – $ – $ – As at May 31, 2020, the Company has approximately $550,172 of cumulative net operating losses (“NOL”) carried forward to offset taxable income, if any, in future years with no expiry date. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized. We also considered the effect of U.S. Internal Revenue Code (Code) Section 382 on our ability to utilize existing net operating loss and tax credit carryforwards. Section 382 imposes limits on the amount of tax attributes that can be utilized where there has been an ownership change as defined under the Code. We experienced an ownership change on December 31, 2018 and management continues to evaluate the application of the Code to our net operating losses which may potentially be limited. The U.S. Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%. The Company's deferred tax assets were calculated to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%. The Company pays Value Added Tax (“VAT”) or similar taxes (“input VAT”), income taxes, and other taxes within the normal course of its business in the United Kingdom related to the procurement of merchandise and/or services it acquires and/or on sales and taxable income. The Company also collects VAT or similar taxes on behalf of the government (“output VAT”) for merchandise and/or services it sells. If the output VAT exceeds the input VAT, this creates a VAT payable to the government. If the input VAT exceeds the output VAT, this creates a VAT receivable from the government. The VAT tax return is filed on a monthly basis offsetting the payables against the receivables. The Company is part of a simplified ‘flat-rate’ VAT scheme and pays VAT at the rate of 8% on its gross sales instead of applying the standard rate of VAT of 20% to net sales and expenses and paying and reclaiming the net difference. The company has disclosed ‘other income’ of $9,393, $8,491 and $2,681 as being the effect of applying the flat rate VAT scheme for the periods ended May 31, 2020, May 31, 2019 and July 31, 2018 respectively. Taxes due and payable are $60,460 and $49,246 as of May 31, 2020 and May 31, 2019, respectively. The taxes relate to United Kingdom VAT and payroll-related taxes. Taxes payable are disclosed within other accrued expenses and liabilities in the consolidated balance sheet. |
9. Related Party Transactions
9. Related Party Transactions | 12 Months Ended |
May 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 9 - RELATED PARTY TRANSACTIONS During the year ended May 31, 2020, additional amounts loaned by the current directors to the Company were $74,146 and amounts repaid to the directors by the Company were $250, bringing the total balance due to the current directors by the Company to $111,799, net of foreign exchange movements, as of May 31, 2020 (May 31, 2019: $38,617). The amounts loaned by the directors are unsecured, non-interest bearing, and due on demand. Amounts due to a former director as of May 31, 2020 and May 31, 2019 were $9,873 with no transactions in the current year. The amounts loaned are unsecured, non-interest bearing, and due on demand. Amounts totaling $5,360 were loaned by the company to a director of the company’s UK subsidiary and his family member. £5,180 of this balance is included in Amounts due from related parties and £180 is included in Prepaid expenses and other in the Consolidated Balance Sheet. The loans are interest free and repayable on demand. During the year ended May 31, 2020, the Company invoiced and sold products, totaling $0 to one related party, The Drafthouse, which is considered to be a related party due to there being a common significant shareholder with Momentous Holdings Corp. During the period ended May 31, 2019 (successor) the Company invoiced and sold products totaling $2,371 to The Drafthouse. During the period ended July 31, 2018 (predecessor) the Company sold products totaling $2,129 to this same related party. Accounts receivable balances from The Drafthouse were $0 nd $2,238 at May 31, 2020, and May 31, 2019, respectively. During the year ended May 31, 2020 the Company repaid an amount of $6,169 to a related party in respect of the acquisition of the ‘Victory’ brand. The balance due to that related party as of May 31, 2020 was $41,047 (May 31, 2019: $48,125). Further details are provided in Note 7. |
10. Acquisition of Max Chater L
10. Acquisition of Max Chater Limited | 12 Months Ended |
May 31, 2020 | |
Business Combinations [Abstract] | |
Acquisition of Max Chater Limited | NOTE 10 – ACQUISITION OF MAX CHATER LIMITED On August 1, 2018, V Beverages Limited acquired MaxChater Ltd. for a nominal sum of £1. The fair value of net liabilities of Max Chater at the date of the acquisition was $49,582 and no other intangible assets other than goodwill arising on the acquisition. The Company determined that the carrying value of the goodwill should be fully impaired to $Nil and, accordingly, the goodwill was expensed in full on August 2, 2018 (successor). The fair value of the net liabilities acquired are as follows: $ Tangible fixed assets - net book amount 6,588 Accounts receivable 24,137 Other receivable 106 Assets 30,831 Accounts payable 1,127 Overdrafts and loans 7,760 Taxes payable 31,710 Wages payable 4,477 Other payables 519 Loans and advances by V Bev 34,820 Liabilities 80,413 Net liabilities (49,582 ) Fair value adjustment 0 Fair value of net liabilities acquired. (49,582 ) Consideration 1 Goodwill $ 49,581 |
11. Capital Stock
11. Capital Stock | 12 Months Ended |
May 31, 2020 | |
Equity [Abstract] | |
Capital Stock | NOTE 11 – CAPITAL STOCK On December 31, 2018, we issued 18,245,000 shares of common stock in relation to the reverse recapitalization and the change of control of Momentous Holdings Corp., net of the cancellation of 10,000,000 shares of a former Director involving no cash payment. These shares were formally cancelled on April 17, 2019. On February 18, 2019, we issued 20,000 shares of common stock for cash in the amount of $0.50 per share for a total of $10,000. On April 5, 2019, we issued 50,000 shares of common stock for cash in the amount of $0.50 per share for a total of $25,000. On May 2, 2019, we issued 50,000 shares of common stock for cash in the amount of $0.50 per share for a total of $25,000. On August 8, 2019, the company issued 40,000 shares of common stock for cash in the amount of $0.375 per share for a total of $15,000. On October 17, 2019, the company issued 10,000 shares of our common stock to one of our independent service providers as additional compensation for continued service and deferment of payment owed by the Company for prior services rendered. The value of the stock based compensation was determined at $5,500 with reference to the market value of the Company’s shares as of October 17, 2019. |
12. Commitments and Contingenci
12. Commitments and Contingencies | 12 Months Ended |
May 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 12 - COMMITMENTS AND CONTINGENCIES Operating leases The Company operated from rent-free premises in Central London until March 26, 2018 when the Company leased approximately 300 square feet of industrial space in Tottenham, London in the United Kingdom for approximately $400 per month which was cancelable by either party with one months notice The Company also purchased a shipping container for additional space on location. The company incurred no rental costs for the shipping container. On April 26, 2019, the Company entered into an agreement with a third party for the sale and leaseback of the shipping container in the amount of $2,223. Rental payment after usage of the credit from the sale and leaseback of the shipping container was agreed at $1,090 per month. On November 1, 2019, the Company relinquished the 300 square feet of industrial space and retained the shipping container at a reduced rental of approximately $410 per month, cancelable by either party with two weeks’ notice. Effective from the August 29, 2020 the rental contract of the shipping container was cancelled. On December 1, 2019, the Company leased approximately 500 square feet of industrial space in Walthamstow, London in the United Kingdom for approximately $1,300 per month for a two year term, which is cancelable by either party with six months’ notice. The space will be used as the new Company distillery. The Company paid approximately $1,300 as a refurbishment fee and a refundable deposit of approximately $4,000 to the Landlord. The rental expense for the year ended May 31, 2020 was $20,633, for the period ended May 31, 2019 (successor) was $5,719 and for the period ended July 31, 2018 (predecessor) was $3,891. |
13. Concentration
13. Concentration | 12 Months Ended |
May 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration | NOTE 13 – CONCENTRATION During the year ended May 31, 2020, total cost of goods sold was $145,612 of which $112,666 or 78% was paid to one non-related supplier of Neutral Grain Spirits (NGS). During the period ended May 31, 2019 (successor), total cost of goods sold was $104,777 of which $62,249 or 59% was paid to one non-related supplier of NGS. During the period ended July 31, 2018 (predecessor), total cost of goods sold was $22,559 of which $19,766 or 87% was paid to one non-related supplier of NGS. During the year ended May 31, 2020, the Company invoiced and sold products, totaling $26,952 or 15% of total sales to non-related parties via its online web shop, the sales from which were insignificant in the period ended May 31, 2019 (successor) and the period ended July 31, 2018 (predecessor). During the year ended May 31, 2020 the company invoiced and sold products totaling $39,759 or 23% of total sales to two non-related parties. During the period ended May 31, 2019 (successor) the company sold products totaling $33,564 or 26% to two non-related parties. During the period ended July 31, 2018 (predecessor) the company invoiced and sold products totaling $13,455 or 56% of total non-related party revenue, to two non-related parties. The accounts receivable balances in respect of these non-related parties were $0 on May 31, 2020 and $9,581 at, May 31, 2019. Refer to Note 9 for details of sales to related parties. |
14. Subsequent Events
14. Subsequent Events | 12 Months Ended |
May 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS Coronavirus pandemic (“COVID-19”) During the quarter ended May 31, 2020 and subsequent to the balance sheet date, the Company was significantly affected by the ongoing COVID-19 pandemic and is currently operating under severe restrictions following implemented UK Government policy. We are unable to estimate when we will resume full operations, including tours and masterclasses at this time. On March 20, 2020, the Company’s distillery was partially closed and all employees placed on furlough for the duration of the crisis, with the exception of Max Chater, the director of our wholly owned operating subsidiary. The Company has obtained financial assistance from the UK Government, and in the meantime, the business is focusing on its online sales and other means of distribution until normal business is able to resume. On July 15, 2020 MaxChater Ltd. changed its legal and business name to V Beverages (London) Ltd. Effective from the August 29, 2020, the rental contract of the shipping container in Tottenham was cancelled. The following funds were received under the Convertible Note Payable, the details of which are set out in note 7. On September 4, 2020, the Company received $19,500. On September 24, 2020, the Company received $46,500. On September 28, 2020, the Company received $20,000. On October 15, 2020 the Company received $11,000. On November 2, 2020 the Company received $24,000. On January 19, 2020 the maturity of the convertible note payable was extended to February 28, 2021 and payment of all interest and penalties from the issuance date waived. |
3. Summary of Significant Acc_2
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
May 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The consolidated balance sheets as at May 31, 2020 and May 31, 2019 comprise the consolidated net assets and equity of Momentous Holdings Corp, V Beverages Limited and MaxChater Ltd. The consolidated statements of operations and other comprehensive loss and statements of cash flows for the period ended May 31, 2019 comprise the consolidated financial statements of Momentous Holdings Corp, V Beverages Limited and MaxChater Ltd. for the period from August 1, 2018 to May 31, 2019 (successor). The consolidated statements of operations and other comprehensive loss and statements of cash flows for the period ended July 31, 2018 (predecessor – separated by black bar) comprise the financial statements of MaxChater Ltd. for the period from June 1, 2018 to July 31, 2018. The consolidated statements of changes in stockholders' deficit presents the changes in equity of MaxChater Ltd. for the period from June 1, 2018 to July 31, 2018 (predecessor) and of Momentous Holdings Corp, V Beverages Limited and MaxChater Ltd. for the period from August 1, 2018 to May 31, 2019 and for the year ended May 31, 2020 (successor). Related party transactions and balances are separately disclosed in the financial statements where appropriate. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of Momentous Holdings Corp, together with the financial statements of V Beverages Limited and MaxChater Ltd, presented in accordance with the basis of preparation note. All significant intercompany balances and transactions have been eliminated in full. |
Use of estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates and assumptions are required in the determination of the fair value of financial instruments and the valuation of long-lived and indefinite-lived assets. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As at May 31, 2020 and May 31, 2019, we had no other cash equivalents. |
Revenue Recognition | Revenue Recognition Effective June 1, 2018, we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers ("Topic 606") using the retrospective application method. Our revenue (referred to in our financial statements as “sales”) consists primarily of the sale of spirits produced and sold in the UK. Sales of products are for cash or otherwise agreed-upon credit terms. Our payment terms vary by location and customer, however, the time period between when revenue is recognized and when payment is due is not significant. Our customers consist primarily of individuals, bars and restaurants. In developing our revenue recognition accounting policy, we considered the following steps: · Identify the contract: the company has no supply contracts with customers, revenue is earned on the basis of sales of spirits for cash or on credit terms. Sales are made subject to the retail laws of the UK. · Identify the performance obligations: the company is obliged to deliver spirts to a customer based on that customer’s order. · Determine the transaction price: the retail price of the spirits sold. · Allocate the transaction price to the performance obligations / recognise revenue when the performance obligation is satisfied: sales are recognized at the point the goods are delivered, which is the point when the performance obligation is satisfied. Management has concluded that our revenue generating activities have a single performance obligation and are recognized at the point in time when control transfers and our obligation has been fulfilled, which is when the related goods are shipped or delivered to the customer, depending upon the method of distribution and shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for the sale of our product. Our sales terms do not allow for a right of return except for matters related to any manufacturing defects on our part. Our other revenue generating activities include the sale of branded merchandise, hosting of 'pop up' events and white labelling for certain customers. We have evaluated these other revenue generating activities under the disaggregation disclosure criteria outlined within the amended guidance and concluded that these other revenue generating activities are immaterial for separate disclosure. Revenue is also shown net of Value Added Tax ('VAT') payable to the UK tax authority on the sale of products. All our revenue is generated within the UK. |
Accounts Receivable | Accounts receivable Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts against gross accounts receivable reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. |
Inventory | Inventory Inventory is stated at the lower of cost and net realizable value using the first-in, first-out method. Inventory consists primarily of Neutral Grain Spirits used in production. |
Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. 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 effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented. |
Property and Equipment | Property and Equipment Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. |
Impairment of long-lived assets | Impairment of long lived assets As a result of the acquisition of MaxChater, the Company impaired the goodwill arising of $49,581 on the basis that there were insufficient discounted future cash flows to support the carrying value (Note 10). The ‘Victory’ brand intangible asset is recorded at the fair value of the consideration paid. Further details are provided in Note 4. The Company reviews the carrying value of intangible assets not subject to amortization annually to determine whether impairment may exist, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Following a review, the company has concluded that there no impairment to the carry value of the intangible assets is required. |
Basic and Diluted/Net Loss Per Share | Basic and Diluted/Net Loss Per Share Basic net income (loss) per share amounts are computed based on the weighted average number of common stock actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report. The company does not have any outstanding dilutive securities during the current or prior reporting periods. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company is Great British Pounds (GBP). Assets and liabilities of our operations are translated into United States dollar equivalents using the exchange rates in effect at the balance sheet date. Revenues and expenses are translated using the average exchange rates during each period and equity accounts are translated at historical cost. Adjustments resulting from the process of translating foreign functional currency financial statements into U.S. dollars are included in accumulated other comprehensive income in shareholders’ deficit. |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts reflected in the balance sheets for cash, accounts receivable, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale. The Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or ASC 820, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as 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. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The embedded conversion feature in the Convertible Note Payable that the Company issued on January 13, 2020, that became convertible during the period ended May 31, 2020 qualifies as a derivative instrument due to a Low-Priced Security adjustment feature in the Note related to the increased volatility, potential lack of liquidity, and increased transaction costs that arise if and when the Trading Price of the Company’s common stock falls or is below certain levels at any point during the 20 Trading Days prior to the Conversion Date. The valuation of the derivative liability was determined through the use of a Black Scholes option-pricing model (See Note 7). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, a lessee will recognize assets and liabilities on its balance sheet for most leases, but will recognize expense similar to current lease accounting guidance. Additionally, this guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from leasing arrangements. The Company has elected to defer adoption of ASU 2016-02 until June 1, 2020. From time to time other new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
5. Property and Equipment (Tabl
5. Property and Equipment (Tables) | 12 Months Ended |
May 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | May 31, 2020 May 31, 2019 Equipment $ 11,459 $ 3,870 Less accumulated depreciation (3,692 ) (1,971 ) Equipment, net $ 7,767 $ 1,899 |
6. Accounts Receivable (Tables)
6. Accounts Receivable (Tables) | 12 Months Ended |
May 31, 2020 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable (net of allowance) | May 31, 2020 May 31, 2019 Amounts due from third parties $ 15,444 $ 23,901 Allowance for bad and doubtful debts (1,645 ) (6,592 ) 13,799 17,309 Amounts due from related parties (see note 9) 5,180 2,238 $ 18,979 $ 19,547 |
7. Debt (Tables)
7. Debt (Tables) | 12 Months Ended |
May 31, 2020 | |
Debt Disclosure [Abstract] | |
Change in fair value of derivative liability | The change in fair value of the derivative liability during the period is as follows: Balance – June 1, 2019 $ – Debt discount recognized at inception 128,000 Day one loss on valuation of derivative 122,840 Gain on change in fair value of derivative during the period (156,200 ) Balance – May 31, 2020 $ 94,640 |
Valuation terms for derivative liability | May 31, January 13, Expected term 8 months 1 year Expected average volatility 195.00% 192.99% Expected dividend yield - - Risk-free interest rate 0.17% 1.53% |
Schedule of financial liability on a recurring basis | The following table presents the derivative financial instrument, the Company’s only financial liability measured and recorded at fair value on the company’s consolidated balance sheet on a recurring basis, and its level within the fair value hierarchy as of May 31, 2020: Amount Level 1 Level 2 Level 3 Embedded derivative liability $ 94,640 $ – $ – $ 94,640 Total $ 94,640 – – $ 94,640 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 12 Months Ended |
May 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Reconciliation of income tax provision (benefit) | Year ended August 1, 2018 - June 1, 2018 - Income tax benefit at statutory rate $ 115,536 $ 48,050 $ – Change in valuation allowance (115,536 ) (48,050 ) – Income tax provision $ – $ – $ – |
10. Acquisition of Max Chater_2
10. Acquisition of Max Chater Limited (Tables) | 12 Months Ended |
May 31, 2020 | |
Business Combinations [Abstract] | |
Fair value of the net liabilities acquired | $ Tangible fixed assets - net book amount 6,588 Accounts receivable 24,137 Other receivable 106 Assets 30,831 Accounts payable 1,127 Overdrafts and loans 7,760 Taxes payable 31,710 Wages payable 4,477 Other payables 519 Loans and advances by V Bev 34,820 Liabilities 80,413 Net liabilities (49,582 ) Fair value adjustment 0 Fair value of net liabilities acquired. (49,582 ) Consideration 1 Goodwill $ 49,581 |
2. Going Concern (Details Narra
2. Going Concern (Details Narrative) - USD ($) | May 31, 2020 | May 31, 2019 | Jun. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accumulated losses | $ (441,334) | $ (152,605) | |
Stockholders' deficit | (374,687) | $ (106,528) | $ (15,038) |
Working capital | $ (383,305) |
3. Summary of Significant Acc_3
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Accounting Policies [Abstract] | |||
Cash equivalents | $ 0 | ||
Loss on goodwill impairment | $ 0 | $ 0 | $ 49,581 |
4. Intangible Asset (Details Na
4. Intangible Asset (Details Narrative) - USD ($) | May 31, 2020 | May 31, 2019 |
Intangible asset | $ 47,231 | $ 48,125 |
Trademarks [Member] | ||
Intangible asset | $ 48,125 |
5. Property and Equipment (Deta
5. Property and Equipment (Details) - USD ($) | May 31, 2020 | May 31, 2019 |
Property, Plant and Equipment [Abstract] | ||
Equipment | $ 11,459 | $ 3,870 |
Less accumulated depreciation | (3,692) | (1,971) |
Equipment, net | $ 7,767 | $ 1,899 |
5. Property and Equipment (De_2
5. Property and Equipment (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 265 | $ 1,721 | $ 1,971 |
Payments for property and equpment | $ 3,179 | $ 7,660 | $ 1,280 |
6. Accounts Receivable (Details
6. Accounts Receivable (Details) - USD ($) | May 31, 2020 | May 31, 2019 |
Receivables [Abstract] | ||
Amounts due from third parties, gross | $ 15,444 | $ 23,901 |
Allowance for bad and doubtful debts | (1,645) | (6,592) |
Amounts due from third parties, net | 13,799 | 17,309 |
Amounts due from related parties | 5,180 | 2,238 |
Total accounts receivable, net | $ 18,979 | $ 19,547 |
7. Debt (Details - Changes in l
7. Debt (Details - Changes in liability) | 12 Months Ended |
May 31, 2020USD ($) | |
Debt Disclosure [Abstract] | |
Derivative liability, beginning balance | $ 0 |
Debt discount recognized at inception | 128,000 |
Day one loss on valuation of derivative | 122,840 |
Gain on change in fair value of derivative during the period | (156,200) |
Derivative liability, ending balance | $ 94,640 |
7. Debt (Details - Valuation)
7. Debt (Details - Valuation) - Valuation Technique Option Pricing Model [Member] | 7 Months Ended | 12 Months Ended |
Jan. 13, 2020 | May 31, 2020 | |
Measurement Input Expected Term [Member] | ||
Derivative basis | 1 year | 8 months |
Measurement Input Price Volatility [Member] | ||
Derivative basis | 195.99% | 195.00% |
Measurement Input Expected Dividend Rate [Member] | ||
Derivative basis | n/a | n/a |
Measurement Input Risk Free Interest Rate [Member] | ||
Derivative basis | 1.53% | 0.17% |
7. Debt (Details - Recurring ba
7. Debt (Details - Recurring basis) - USD ($) | May 31, 2020 | May 31, 2019 |
Derivative liability | $ 94,640 | $ 0 |
Fair Value Measurements Recurring [Member] | ||
Derivative liability | 94,640 | |
Fair Value Measurements Recurring [Member] | Fair Value Inputs Level 1 [Member] | ||
Derivative liability | 0 | |
Fair Value Measurements Recurring [Member] | Fair Value Inputs Level 2 [Member] | ||
Derivative liability | 0 | |
Fair Value Measurements Recurring [Member] | Fair Value Inputs Level 3 [Member] | ||
Derivative liability | $ 94,640 |
7. Debt (Details Narrative)
7. Debt (Details Narrative) | 2 Months Ended | 12 Months Ended | |||||
Jul. 31, 2018USD ($) | May 31, 2020USD ($) | May 31, 2019USD ($) | May 06, 2020USD ($) | Jan. 13, 2020USD ($) | Aug. 02, 2019USD ($) | Aug. 02, 2019GBP (£) | |
Short term borrowings | $ 236 | $ 17,424 | |||||
Repayment of debt | $ 0 | 2,343 | 9,132 | ||||
Line of credit maximum amount | $ 24,250 | ||||||
Line of credit - outstanding | 236 | ||||||
Proceeds from convertible note | $ 0 | 128,000 | 0 | ||||
Derivative liability | 94,640 | 0 | |||||
Unamortized debt discount | $ 86,444 | $ 0 | |||||
UK Government Loan [Member] | |||||||
Bank loan | $ 46,380 | ||||||
Convertible Note [Member] | |||||||
Debt face amount | $ 250,000 | ||||||
Debt maturity date | Feb. 28, 2021 | ||||||
Proceeds from convertible note | $ 128,000 | ||||||
Derivative liability | 94,640 | ||||||
Unamortized debt discount | 44,651 | ||||||
Accrued interest | 3,095 | ||||||
United Kingdom, Pounds | |||||||
Line of credit maximum amount | £ | £ 20,000 | ||||||
Victory Brand [Member] | |||||||
Short term borrowings | 41,047 | ||||||
Repayment of debt | $ 6,169 |
8. Income Taxes (Details - Inco
8. Income Taxes (Details - Income tax expense) - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefit at statutory rate | $ 0 | $ 115,536 | $ 48,050 |
Change in valuation allowance | 0 | (115,536) | (48,050) |
Income tax provision | $ 0 | $ 0 | $ 0 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | 24 Months Ended | ||
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | May 31, 2021 | May 31, 2020 | |
U.S. statutory tax rate | 21.00% | 21.00% | 21.00% | ||
Net operating loss carryforward | $ 550,172 | $ 550,172 | |||
Taxes due and payable | 60,460 | $ 49,246 | 60,460 | ||
Other income | $ 2,681 | $ 19,549 | $ 8,491 | ||
Vat Tax flat rate [Member] | |||||
Other income | $ 2,681 | $ 9,393 | $ 8,491 |
9. Related Party Transactions (
9. Related Party Transactions (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Due to related parties | $ 162,719 | $ 96,615 | |
Proceeds from related parties | $ 0 | 74,146 | 1,515 |
Repayments to related parties | 0 | 6,419 | 5,225 |
Accounts receivable - related party | 5,180 | 2,238 | |
Current Directors [Member] | |||
Due to related parties | 111,799 | 38,617 | |
Proceeds from related parties | 74,146 | ||
Repayments to related parties | 250 | ||
Former Director [Member] | |||
Due to related parties | 9,873 | 9,873 | |
Director of UK Subsidiary [Member] | |||
Due to related parties | 5,360 | ||
Director of UK Subsidiary [Member] | Due to Related Parties [Member] | |||
Due to related parties | 5,180 | ||
Director of UK Subsidiary [Member] | Prepaid Expenses [Member] | |||
Due to related parties | 180 | ||
The Drafthouse [Member] | |||
Sales to related party | $ 2,129 | 0 | 2,371 |
Accounts receivable - related party | 0 | 2,238 | |
Victory related party [Member] | |||
Due to related parties | 41,047 | $ 48,125 | |
Repayments to related parties | $ 6,169 |
10. Acquisition of Max Chater_3
10. Acquisition of Max Chater Limited (Details) - MaxChater Ltd [Member] | 2 Months Ended |
Aug. 01, 2018USD ($) | |
Tangible fixed assets - net book amount | $ 6,588 |
Accounts receivable | 24,137 |
Other receivable | 106 |
Assets | 30,831 |
Accounts payable | 1,127 |
Overdrafts and loans | 7,760 |
Taxes payable | 31,710 |
Wages payable | 4,477 |
Other payables | 519 |
Loans and advances by V Bev | 34,820 |
Liabilities | 80,413 |
Net liabilities | (49,582) |
Fair value of net liabilities acquired | (49,582) |
Consideration | 1 |
Goodwill | $ 49,581 |
10. Acquisition of Max Chater_4
10. Acquisition of Max Chater Limited (Details Narrative) | 2 Months Ended |
Aug. 01, 2018USD ($) | |
MaxChater Ltd [Member] | |
Total consideration transferred | $ 49,582 |
11. Capital Stock (Details Narr
11. Capital Stock (Details Narrative) - USD ($) | 2 Months Ended | 5 Months Ended | 9 Months Ended | 10 Months Ended | 11 Months Ended | 12 Months Ended | ||
Aug. 08, 2019 | Jul. 31, 2018 | Oct. 17, 2019 | Feb. 18, 2019 | Apr. 05, 2019 | May 02, 2019 | May 31, 2020 | May 31, 2019 | |
Proceeds from issuance of common stock | $ 0 | $ 15,000 | $ 60,000 | |||||
Issuance of common stock issued for services provided, value | $ 5,500 | |||||||
Service Provider [Member] | ||||||||
Issuance of common stock issued for services provided, shares | 10,000 | |||||||
Issuance of common stock issued for services provided, value | $ 5,500 | |||||||
Common Stock [Member] | ||||||||
Stock issued new, shares | 40,000 | 20,000 | 50,000 | 50,000 | ||||
Proceeds from issuance of common stock | $ 15,000 | $ 10,000 | $ 25,000 | $ 25,000 |
12. Commitments and Contingen_2
12. Commitments and Contingencies (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rental Expense | $ 3,891 | $ 20,633 | $ 5,719 |
13. Concentration (Details Narr
13. Concentration (Details Narrative) - USD ($) | 2 Months Ended | 12 Months Ended | |
Jul. 31, 2018 | May 31, 2020 | May 31, 2019 | |
Cost of goods sold | $ 22,559 | $ 145,612 | $ 104,777 |
Revenues | 26,067 | 175,877 | 133,699 |
Cost of Goods Sold [Member] | One Supplier [Member] | |||
Cost of goods sold | $ 19,766 | $ 112,666 | $ 62,249 |
Concentration Risk Percentage | 87.00% | 78.00% | 59.00% |
Sales Revenue Net [Member] | Online Web Sales [Member] | |||
Revenues | $ 26,952 | ||
Concentration Risk Percentage | 15.00% | ||
Sales Revenue Net [Member] | Two Non-Related Parties [Member] | |||
Revenues | $ 13,455 | $ 39,759 | $ 33,564 |
Concentration Risk Percentage | 56.00% | 23.00% | 26.00% |
Accounts receivable - non-related parties | $ 0 | $ 9,581 |