| Summary of Significant Accounting Policies | Note
2 – Summary of Significant Accounting Policies Basis
of Presentation The
unaudited financial statements for the three and nine months ended February 28, 2018 and 2017 have been prepared by us pursuant
to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments necessary
to present fairly our financial position, results of operations, and cash flows as of February 28, 2018 and 2017, and for the
periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Certain information and note
disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles
have been or omitted. The unaudited financial statements should be read in conjunction with the audited financial statements as
of and for the year ended May 31, 2017 and footnotes thereto included in the Company’s Report on Form S-1/A filed with the
SEC on December 1, 2017. The results of operations for the nine months ended February 28, 2018 are not necessarily indicative
of the results to be expected for the full year. Going
Concern As
reflected in the accompanying financial statements, the Company has a net loss and net cash used in operations of $340,937 and
$439,525, respectively, for the nine months ended February 28, 2018. Additionally the Company has an accumulated deficit
of $4,486,565 at February 28, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going
concern for a period of 12 months from the issuance date of this report. The ability of the Company to continue as a going concern
is dependent on the Company’s ability to implement its business plan, raise capital, and generate sufficient revenue; however,
the Company’s cash position may not be sufficient to support its daily operations. Management intends to raise additional
funds by way of a private or public offering. While the Company believes in the viability of its strategy to further implement
its business plan and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to
that effect. The financial statements do not include any adjustments related to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be necessary should the Company is unable to continue
as a going concern. Use
of estimates The
preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management
to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related
disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from
these estimates. Significant estimates made by management include, but are not limited to, the allowance for doubtful accounts,
inventory valuations, the useful life of property and equipment, the valuation of deferred tax assets, the value of stock-based
compensation, and the fair value of non-cash common stock issuances. Cash
and cash equivalents The
Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less,
when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution
that is insured by the Federal Deposit Insurance Corporation. Accounts
receivable and allowance for doubtful accounts The
Company has a policy of providing on allowance for doubtful accounts based on its best estimate of the amount of probable credit
losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether
an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of
an account may be in doubt. Account balances deemed to be uncollectible are charged to bad debt expense and included
in the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Prepaid
expenses and other current assets Prepaid
expenses and other current assets of $3,000 and $18,089 at February 28, 2018 and May 31, 2017, respectively, consist primarily
of costs paid for future services which will occur within a year. Prepaid expenses at February 28, 2017 primarily included prepayments
in common stock for consulting services which are being amortized over the terms of their respective agreements while prepayments
at February 28, 2018 primarily included cash prepayment to vendors. Advances
to suppliers Advances
to a supplier represents the cash paid in advance for installment payments for the purchase of inventory. The advances to a supplier
are interest free and unsecured. As of February 28, 2018 and May 31, 2017, advances to the Company’s major supplier amounted
$129,089 and $16,135, respectively. Upon shipment of the purchase inventory, the Company reclassifies such advances to supplier
into inventory. Inventory The
Company values inventory, consisting of finished goods and raw materials, at the lower of cost and net realizable value. Cost
is determined using an average cost method. The Company reduces inventory for the diminution of value, resulting from product
obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its
net realizable value. The Company evaluates its current level of inventory considering historical sales and other factors and,
based on this evaluation, classifies inventory markdowns in the statement of operations as a component of cost of goods sold.
These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer
demand or competition differ from expectations. Property
and Equipment Property
and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method
over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements
and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are
removed, and any resulting gains or losses are included in the statement of operations. Revenue
recognition The
Company followed paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will
recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned
when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped,
(iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. Consideration
paid to promote and sell the Company’s products to customers is typically recorded as a reduction in revenues in accordance
with Accounting Standard Codification (“ASC”) ASC 605-50-45-2, Revenue Recognition—Customer Payments and Incentives. Cost
of Sales The
primary components of cost of sales include the cost of the product and shipping fees. Shipping
and Handling Costs The
Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification.
While amounts charged to customers for shipping products are included in revenues, the related costs of shipping products to customers
are classified in marketing and selling expenses as incurred. Shipping costs included in marketing and selling expense were $27,628
and $32,636 for the nine months ended February 28, 2018 and 2017, respectively. Marketing,
selling and advertising Marketing,
selling and advertising costs are expensed as incurred. Customer
Deposits Customer
deposits consisted of prepayments from customers to the Company. The Company will recognize the prepayments as revenue upon delivery
of products in compliance with its revenue recognition policy. Fair
value measurements and fair value of financial instruments The
Company adopted Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”
(“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 requires the use of fair value
measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The
adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand
certain disclosures. 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 market prices in active markets for identical assets or liabilities
Level
2: Observable
market-based inputs or unobservable inputs that are corroborated by market data
Level
3: Unobservable
inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. The
Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard
Board’s (“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The
estimated fair value of certain financial instruments, including prepaid expenses, deposits, accounts payable and accrued expenses
are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. Income
Taxes The
Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC
740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The
asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided
to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will
not be realized. The
Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed,
there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained.
In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the
period during which, based on all available evidence, management believes it is more likely than not that the position will be
sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset
or aggregated with other positions. Tax
positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more
than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated
with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax
benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing
authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination.
As such, the Company has not recorded a liability for uncertain tax benefits. The
Company has adopted ASC 740-10-25, “Definition of Settlement”, which provides guidance on how an entity should determine
whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides
that a tax position can be effectively settled upon the completion and examination by a taxing authority without being legally
extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even
if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and
the statute of limitations remains open. The federal and state income tax returns of the Company are subject to examination
by the IRS and state taxing authorities, generally for three years after they are filed. Impairment
of long-lived assets The
Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount
of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected
undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference
between the asset’s estimated fair value and its book value. The Company did not record any impairment losses during the
nine months ended February 28, 2018 and 2017. Stock-based
compensation Stock-based
compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, “Compensation —
Stock Compensation” (“ASC 718”), which requires recognition in the financial statements of the cost of employee
and director services received in exchange for an award of equity instruments over the period the employee or director is required
to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the
cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant
to ASC Topic 505-50, “Equity Based Payments to Non-employees”, for share-based payments to consultants and other third-parties,
compensation expense is determined at the measurement date. The expense is recognized over the vesting period of the award. Until
the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation
expense based on the fair value of the award at the reporting date. Net
loss per share of common stock Basic
net loss per share is computed by dividing the net loss by the weighted average number of common shares during the period. Diluted
net loss per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding
during the period. At February 28, 2018 and 2017, the Company has none and 430,000, respectively, potentially dilutive securities
outstanding related to common stock warrants. Those potentially dilutive common stock equivalents were excluded from the dilutive
loss per share calculation as they would be antidilutive due to the net loss. Recently
Issued Accounting Pronouncements In
August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers. The ASU defers the effective date of previously
issued ASU 2014-09 (the new revenue recognition standard) by one year for both public and private companies. The ASU requires
public entities to apply the new revenue recognition guidance for annual reporting periods beginning after December 15, 2017,
and interim reporting periods within annual reporting periods beginning after December 15, 2017. Both public and nonpublic entities
will be permitted to apply the new revenue recognition standard as of the original effective date for public entities (annual
periods beginning after December 15, 2016). The Company will adopt this standard for their fiscal year beginning June 1, 2018.
The Company does not expect this ASU to have a material impact on its financial statements. In
February 2016, FASB issued ASU 2016-02, “Leases” (Topic 842). The new standard requires lessees to apply a dual approach,
classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed
purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest
method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a
lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of
12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective
for fiscal years beginning after December 15, 2018, and interim periods within those annual periods and is applied retrospectively.
Early adoption is permitted. The Company does not believe the guidance will have a material impact on its financial statements. In
January 2017, the FASB issued ASU No. 2017-4, “Intangibles – Goodwill and Other” (Topic 350): Simplifying
the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. When an indication of impairment
was identified after performing the first step of the goodwill impairment test, Step 2 required that an entity determine the fair
value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) using the same
procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination.
Under the amendments in ASU No. 2017-4, an entity would perform its annual, or interim, goodwill impairment test by comparing the
fair value of a reporting unit with its carrying value. An entity would recognize an impairment charge for the amount by
which the carrying value exceeds the reporting unit’s fair value. In addition, an entity must consider income tax effects
from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss,
if applicable. A public business entity that is a SEC filer should adopt the amendments in ASU No. 2017-4 for its annual,
or any interim, good will impairment tests in fiscal years beginning after December 15, 2019. The Company does not believe
the guidance will have a material impact on its financial statements. In
May 2017, the FASB released ASU 2017-09, “Compensation - Stock Compensation”. The update provides guidance
about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting
in ASC Topic 718. An entity shall account for the effects of a modification described in ASC paragraphs 718-20-35-3 through 35-9,
unless all the following are met: (1) The fair value of the modified award is the same as the fair value of the original award
immediately before the original award is modified; (2) The vesting conditions of the modified award are the same as the vesting
conditions of the original award immediately before the original award is modified; and (3) The classification of the modified
award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before
the original award is modified. The provisions of this update become effective for annual periods and interim periods within those
annual periods beginning after December 15, 2017. The Company does not believe the guidance will have a material impact on its
financial statements. In
July 2017, the FASB issued ASU 2017-11 “Earnings Per Share” (Topic 260). The amendments in the update
change the classification of certain equity-linked financial instruments (or embedded features) with down round features. The
amendments also clarify existing disclosure requirements for equity-classified instruments. For freestanding equity-classified
financial instruments, the amendments require entities that present earnings per share (“EPS”) in accordance with
Topic 260, Earnings Per Share, to recognize the effect of the down round feature when it is triggered. That effect is treated
as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded
conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion
features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260).
For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2018. The Company does not believe the guidance will have a material impact on
its financial statements. Other
accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected
to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are
not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
