Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Nov. 30, 2020 | Jan. 11, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Nov. 30, 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --05-31 | |
Entity File Number | 333-220846 | |
Entity Registrant Name | Reviv3 Procare Co | |
Entity Central Index Key | 0001718500 | |
Entity Tax Identification Number | 47-4125218 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 9480 Telstar Avenue. | |
Entity Address, Address Line Two | Unit 5, El Monte | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91731 | |
City Area Code | 888 | |
Local Phone Number | 638-8883 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 41,485,881 |
CONDENSED BALANCE SHEETS (Unaud
CONDENSED BALANCE SHEETS (Unaudited) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
CURRENT ASSETS: | ||
Cash | $ 579,498 | $ 409,031 |
Accounts receivable, net | 78,981 | 182,201 |
Inventory | 323,304 | 288,124 |
Prepaid expenses and other current assets | 13,548 | 13,708 |
Total Current Assets | 995,331 | 893,064 |
OTHER ASSETS: | ||
Property and equipment, net | 41,709 | 31,577 |
Deposits | 16,277 | 16,277 |
Right of use assets, net | 166,248 | 201,984 |
Total Other Assets | 224,234 | 249,838 |
TOTAL ASSETS | 1,219,565 | 1,142,902 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 325,877 | 128,851 |
Customer deposits | 17,364 | 128,354 |
Due to related party | 28,862 | 2,396 |
Equipment financing payable, current | 3,300 | 3,300 |
Loans payable, current | 10,294 | 5,002 |
Lease liability, current | 77,020 | 71,896 |
Total Current Liabilities | 462,717 | 339,799 |
LONG TERM LIABILITIES: | ||
Equipment financing payable | 7,150 | 8,800 |
Loans payable | 152,606 | 157,898 |
Lease liability, non-current | 92,655 | 131,802 |
Total Long Term Liabilities | 252,411 | 298,500 |
Total Liabilities | 715,128 | 638,299 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.0001 par value; 20,000,000 shares authorized; none issued and outstanding | ||
Common stock, $0.0001 par value: 100,000,000 shares authorized; 41,485,881 shares issued and outstanding as of November 30, 2020 and 41,285,881 shares issued and outstanding as of May 31, 2020 | 4,149 | 4,129 |
Additional paid-in capital | 5,327,363 | 5,311,383 |
Accumulated deficit | (4,827,075) | (4,810,909) |
Total Stockholders' Equity | 504,437 | 504,603 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,219,565 | $ 1,142,902 |
CONDENSED BALANCE SHEETS (Una_2
CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Nov. 30, 2020 | May 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 41,485,881 | 41,285,881 |
Common stock, shares outstanding | 41,485,881 | 41,285,881 |
STATEMENTS OF OPERATIONS (Unaud
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Nov. 30, 2020 | Nov. 30, 2019 | |
Income Statement [Abstract] | ||||
Sales | $ 644,061 | $ 328,552 | $ 912,515 | $ 454,234 |
Cost of sales | 247,828 | 169,714 | 384,087 | 214,867 |
Gross profit | 396,233 | 158,838 | 528,428 | 239,367 |
OPERATING EXPENSES: | ||||
Marketing and selling expenses | 228,828 | 45,726 | 299,804 | 102,763 |
Compensation and related taxes | 9,835 | 20,899 | 17,803 | 31,193 |
Professional and consulting expenses | 31,369 | 9,073 | 89,479 | 37,472 |
General and administrative | 71,643 | 113,025 | 134,824 | 198,356 |
Total Operating Expenses | 341,675 | 188,723 | 541,910 | 369,784 |
LOSS FROM OPERATIONS | 54,558 | (29,885) | (13,482) | (130,417) |
OTHER INCOME (EXPENSE): | ||||
Interest income | 12 | 30 | 19 | 70 |
Interest expense and other finance charges | (1,467) | (519) | (2,703) | (636) |
Other Income (Expense), Net | (1,455) | (489) | (2,684) | (566) |
LOSS BEFORE PROVISION FOR INCOME TAXES | 53,103 | (30,374) | (16,166) | (130,983) |
Provision for income taxes | ||||
NET LOSS | $ 53,103 | $ (30,374) | $ (16,166) | $ (130,983) |
NET LOSS PER COMMON SHARE - Basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic and diluted | 41,485,881 | 41,285,881 | 41,431,236 | 41,285,881 |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance at May. 31, 2019 | $ 4,129 | $ 5,311,383 | $ (4,638,142) | $ 677,370 | |
Beginning Balance, Shares at May. 31, 2019 | 41,285,881 | ||||
Net Loss for the Period | (130,983) | (130,983) | |||
Ending Balance at Nov. 30, 2019 | $ 4,129 | 5,311,383 | (4,769,125) | 546,387 | |
Ending Balance, Shares at Nov. 30, 2019 | 41,285,881 | ||||
Beginning Balance at Aug. 31, 2019 | $ 4,129 | 5,311,383 | (4,738,751) | 576,761 | |
Beginning Balance, Shares at Aug. 31, 2019 | 41,285,881 | ||||
Net Loss for the Period | (30,374) | (30,374) | |||
Ending Balance at Nov. 30, 2019 | $ 4,129 | 5,311,383 | (4,769,125) | 546,387 | |
Ending Balance, Shares at Nov. 30, 2019 | 41,285,881 | ||||
Beginning Balance at May. 31, 2020 | $ 4,129 | 5,311,383 | (4,810,909) | 504,603 | |
Beginning Balance, Shares at May. 31, 2020 | 41,285,881 | ||||
Shares issued for services | $ 20 | 15,980 | 16,000 | ||
Shares issued for services, Shares | 200,000 | ||||
Net Loss for the Period | (16,166) | (16,166) | |||
Ending Balance at Nov. 30, 2020 | $ 4,149 | 5,327,363 | (4,827,075) | 504,437 | |
Ending Balance, Shares at Nov. 30, 2020 | 41,485,881 | ||||
Beginning Balance at Aug. 31, 2020 | $ 4,149 | 5,327,363 | (4,880,178) | 451,334 | |
Beginning Balance, Shares at Aug. 31, 2020 | 41,485,881 | ||||
Net Loss for the Period | 53,103 | 53,103 | |||
Ending Balance at Nov. 30, 2020 | $ 4,149 | $ 5,327,363 | $ (4,827,075) | $ 504,437 | |
Ending Balance, Shares at Nov. 30, 2020 | 41,485,881 |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (16,166) | $ (130,983) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 5,276 | 5,539 |
Bad debt expense (recovery) | 574 | (2,342) |
Stock based compensation | 16,000 | |
Intangibles impairment | 474 | |
Non-cash lease expense | 1,713 | |
Change in operating assets and liabilities: | ||
Accounts Receivable | 102,647 | 29,106 |
Inventory | (35,179) | (37,391) |
Prepaid expenses and other current assets | 160 | 2,993 |
Accounts payable and accrued expenses | 197,024 | 134,637 |
Deposits | (1,428) | |
Customer deposits | (110,990) | 1,308 |
NET CASH USED IN OPERATING ACTIVITIES | 161,059 | 1,913 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (15,408) | (9,230) |
NET CASH USED IN INVESTING ACTIVITIES | (15,408) | (9,230) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of equipment financing | (1,650) | (1,906) |
Advances from a related party | 26,466 | 7,577 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 24,816 | 5,671 |
NET (DECREASE) INCREASE IN CASH | 170,467 | (1,647) |
CASH - Beginning of period | 409,031 | 346,179 |
CASH - End of period | 579,498 | 344,532 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Interest | 250 | 519 |
Income taxes |
Organization
Organization | 6 Months Ended |
Nov. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1 – Organization Reviv3 Procare Company (the “Company”) was incorporated in the State of Delaware on May 21, 2015 as a reorganization of Reviv3 Procare, LLC which was organized on July 31, 2013. The Company is engaged in the manufacturing, marketing, sale and distribution of professional quality hair and skin care products throughout the United States, Canada, Europe and Asia. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Nov. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies | Note 2 – Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The unaudited financial statements for the six months ended November 30, 2020 and 2019 have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of November 30, 2020 and 2019, 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 omitted. The unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended May 31, 2020. The results of operations for the six months ended November 30, 2020 are not necessarily indicative of the results to be expected for the full year. Risk and Uncertainty Concerning COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States and the World. We are currently monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread. All of our Chinese facilities were temporarily closed for a period of time. Most of these facilities have been reopened since July 2020. Depending on the progression of the outbreak, our ability to obtain necessary supplies and ship finished products to customers may be partly or completely disrupted globally. Also, our ability to maintain appropriate labor levels could be disrupted. If the coronavirus continues to progress, it could have a material negative impact on our results of operations and cash flow, in addition to the impact on its employees. We have concluded that while it is reasonably possible that the virus could have a negative impact on the results of operations, the specific impact is not readily determinable as of the date of these financial statements. The accompanying unaudited financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management is focused on growing the Company’s existing products offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the unaudited accompanying financial statements. Going Concern As reflected in the accompanying financial statements, the Company has a net loss of $16,166 for the six months ended November 30, 2020. Additionally, the Company has an accumulated deficit of $4,827,075 at November 30, 2020. 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 continue its business plan, raise capital, and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. 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 be 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 intangible assets, 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 $13,548 and $13,708 at November 30, 2020 and May 31, 2020, respectively, consist primarily of costs paid for future services which will occur within a year and cash prepayment to vendors. 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 Effective June 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, which is effective for public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures and there was no cumulative effect of the adoption of ASC 606. The Company sells a variety of hair and skin care products. The Company recognizes revenue for the agreed upon sales price when a purchase order is received from the customer and subsequently the product is shipped to the customer, which satisfies the performance obligation. Consideration paid to the customer to promote and sell the Company’s products is typically recorded as a reduction in revenues. See Note 12 for revenue disaggregation disclosures. Cost of Sales The primary components of cost of sales include the cost of the product and freight-in. Shipping and Handling Costs The Company accounts for shipping and handling fees in accordance with ASC 606. 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 $53,816 and $20,606 for the six months ended November 30, 2020 and 2019, respectively. Shipping costs included in marketing and selling expense were $41,195 and $10,314 for the three months ended November 30, 2020 and 2019, 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 recorded impairment losses of $474 as an operating expense in the accompanying financial statements, for the six months ended November 30, 2019. 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. In June 2018, the FASB issued Accounting Standards Update (“ASU”) - ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company adopted ASU No. 2018-07 on June 1, 2019 and there was no cumulative effect of adoption. Lease Accounting In February 2016, the FASB issued ASU No. 2016-02, Leases 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 November 30, 2020 and 2019, the Company had no potentially dilutive securities outstanding. Recently Issued Accounting Pronouncements In November 2019, the FASB issued ASU No. 2019-08, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements – Share-based Consideration Payable to a Customer (“ASU 2019-08”). ASU 2019-08 requires that an entity apply the guidance in ASC 718 to measure and classify share-based payment awards granted to a customer. Under ASC 718, among other things, share-based awards to non-employees must generally be measured at the grant-date fair value of the equity instrument. For entities that have adopted the provisions of ASU 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-based Payment Accounting, this amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. As discussed above, the Company has adopted the provisions of ASU 2018-07 on June 1, 2019 and adopted ASU 2019-08 on June 1, 2020 and it did not have a material impact on the Company’s financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12, among other things, (a) eliminates the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income (or a gain) from other items, (b) eliminates the exception to the general methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss for the year, (c) requires than an entity recognize a franchise tax (or a similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, and (d) requires than an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation for the interim period that includes the enactment date. For public companies, these amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted but must involve the adoption of all amendments contained in ASU 2019-12 concurrently. The Company has not adopted ASU 2019-12 and is evaluating the potential impact of adoption 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 |
Accounts Receivable
Accounts Receivable | 6 Months Ended |
Nov. 30, 2020 | |
Receivables [Abstract] | |
Accounts Receivable | Note 3 – Accounts Receivable Accounts receivable, consisted of the following: November 30, 2020 May 31, 2020 Accounts Receivable $ 81,373 $ 184,019 Less: Allowance for doubtful accounts (2,392 ) (1,818 ) Total $ 78,981 $ 182,201 The Company recorded bad debt expense of $574 and a bad debt recovery of $2,342 during the six months ended November 30, 2020 and 2019, respectively. The Company recorded bad debt expense of $0 during the three months ended November 30, 2020 and 2019, respectively. |
Inventory
Inventory | 6 Months Ended |
Nov. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 4 – Inventory Inventory consisted of the following: November 30, 2020 May 31, 2020 Finished Goods $ 28,148 $ 29,839 Raw Materials 295,156 258,285 Total $ 325,877 $ 288,124 At November 30 and May 31, 2020, inventory held at third party locations amounted to $556 and $556, respectively. At November 30 and May 31, 2020, inventory in- transit amounted to $3,450 and $0, respectively. During the six months ended November 30, 2019, the Company sold some of the slow-moving inventory which had been written off and recovered $769. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Nov. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 5 – Property and Equipment Property and equipment, stated at cost, consisted of the following: Estimated Life November 30, 2020 May 31, 2020 Furniture and Fixtures 5 years $ 5,759 $ 5,759 Computer Equipment 3 years 17,392 17,392 Plant Equipment 5-10 years 45,128 29,720 Less: Accumulated Depreciation (26,570 ) (21,294 ) $ 41,709 $ 31,577 Depreciation expense amounted to $5,276 and $5,539 for the six months ended November 30, 2020 and 2019, respectively. Depreciation expense amounted to $2,712 and $2,770 for the three months ended November 30, 2020 and 2019, respectively. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 6 Months Ended |
Nov. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Note 6 – Accounts Payable and Accrued Expenses Accounts payable and accrued expenses comprised of the following: November 30, 2020 May 31, 2020 Trade Payables $ 275,797 $ 98,608 Accrued expenses 19,903 — Credit Cards 7,311 10,378 Shares to be issued 18,313 18,313 Other 4,553 1,552 Total $ 354,529 $ 128,851 |
Equipment Financing Payable
Equipment Financing Payable | 6 Months Ended |
Nov. 30, 2020 | |
Notes to Financial Statements | |
Equipment Financing Payable | Note 7 - Equipment Financing Payable During the year ended May 31, 2019, the Company purchased a forklift under an installment purchase plan. The loan amount is $16,500 payable in 60 monthly installment payments of $317 comprising of principal payment of $275 and interest payment of $42. As of November 30, 2020, and May 31, 2020, the balance outstanding on the loan was $10,450 and $12,100. At November 30, 2020, $3,300 of the loan is payable within one year and the balance $7,150, is payable after one year from November 30, 2020. The Company recorded an interest expense of $250 and $29, respectively on the loan in the accompanying unaudited financial statements for the six months ended November 30, 2020 and 2019, respectively. The Company recorded an interest expense of $125 and $15, respectively on the loan in the accompanying unaudited financial statements for the three months ended November 30, 2020 and 2019, respectively. The amounts of loan payments due in the next five years ended November 30, are as follows: 2021 $ 3,300 2022 3,300 2023 3,300 2024 550 Total $ 10,450 |
Loans Payable
Loans Payable | 6 Months Ended |
Nov. 30, 2020 | |
Debt Disclosure [Abstract] | |
Loans Payable | Note 8 - Loans Payable On May 8, 2020, a commercial bank granted to the Company a loan (the “Loan”) in the amount of $12,900, which is administered under the authority and regulations of the U.S. Small Business Administration pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Loan, which is evidenced by a note dated May 8, 2020, bears interest at an annual rate of 1.0% and matures on May 8, 2022. The Note may be prepaid without penalty, at the option of the Company, at any time prior to maturity. Proceeds from loans granted under the CARES Act are intended to be used for payroll, costs to continue employee group health care benefits, rent, utilities, and certain other qualified costs (collectively, “qualifying expenses”). The Company intends to use the loan proceeds for qualifying expenses. The Company’s borrowings under the Loan may be eligible for loan forgiveness if used for qualifying expenses incurred during the “covered period,” as defined in the CARES Act, except that the amount of loan forgiveness is limited to the amount of qualifying expenses incurred during the 8-week period commencing on the loan effective date. In addition, the amount of any loan forgiveness may be reduced if there is a decrease in the average number of full-time equivalent employees of the Company during the covered period, compared to the comparable period in the prior calendar year. The Company’s indebtedness, after any such loan forgiveness, is payable in 18 equal monthly installments commencing on November 8, 2020, with all amounts due and payable by the maturity. During the year ended May 31, 2020, a commercial bank granted to the Company a loan (the “Loan”) in the amount of $150,000, which is administered under the authority and regulations of the U.S. Small Business Administration pursuant to the Economic Injury Disaster Loan Program (the “EIDL”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The Loan, which is evidenced by a note dated May 18, 2020, bears interest at an annual rate of 3.75% and is payable instalments of $731 per month, beginning May 18, 2021 until May 13, 2050. The Company has to maintain a hazard insurance policy including fire, lightning, and extended coverage on all items used to secure this loan to at least 80% of the insurable value. Proceeds from loans granted under the CARES Act are intended to be used for payroll, costs to continue employee group health care benefits, rent, utilities, and certain other qualified costs (collectively, “qualifying expenses”). The Company intends to use the loan proceeds for qualifying expenses. The Company’s borrowings under the loan may be eligible for up to $10,000 of loan forgiveness. The Company recorded an accrued interest of $2,835 and $200, as of November 30, 2020 and May 31, 2020, respectively. Loans Payable November 30, 2020 May 31, 2020 Paycheck Protection Program (PPP) $ 12,900 $ 12,900 Economic Injury Disaster Loan Program (EIDL) 150,000 150,000 162,900 162,900 Less: Current portion (10,294 ) (5,002 ) Loans Payable, Non-current portion $ 152,606 $ 157,898 The amounts of principal loan payments due in the next five years ended November 30, are as follows: 2021 $ 10,294 2022 7,412 2023 3,185 2024 3,307 2025 3,433 Thereafter 135,269 Total $ 162,900 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Nov. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 9 – Stockholders’ Equity Shares Authorized The authorized capital of the Company consists of 100,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.0001 per share. Preferred Stock The preferred stock may be issued from time to time in one or more series. The Board of Directors of the Company is expressly authorized to provide for the issuance of all or any of the shares of the preferred stock in one or more series, and to fix the number of shares and to determine or alter, for each such series, such voting powers, full or limited, or no voting powers and such designations, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed until the resolution adopted by the Board of Directors providing the issuance of such shares. The Board of Directors is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issue of shares of that series. In case the number of shares of any such series shall be so decreased, the decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. Common Stock As of November 30, 2020, 41,485,881 shares of common stock were issued and outstanding. During the six months ended November 30, 2020, the Company issued 200,000 shares to a consultant for past services. The shares were valued at the fair market value of the $16,000, which expense was recognized immediately. No stock was issued during the three months ended November 30, 2019. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Nov. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Leases As discussed in Note 2 above, the Company adopted ASU No. 2016-02, Leases The Company treats a contract as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange for consideration, or the Company directs the use of the asset and obtains substantially all the economic benefits of the asset. These leases are recorded as right-of-use (“ROU”) assets and lease obligation liabilities for leases with terms greater than 12 months. ROU assets represent the Company’s right to use an underlying asset for the entirety of the lease term. Lease liabilities represent the Company’s obligation to make payments over the life of the lease. A ROU asset and a lease liability are recognized at commencement of the lease based on the present value of the lease payments over the life of the lease. Initial direct costs are included as part of the ROU asset upon commencement of the lease. Since the interest rate implicit in a lease is generally not readily determinable for the operating leases, the Company uses an incremental borrowing rate to determine the present value of the lease payments. The incremental borrowing rate represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar lease term to obtain an asset of similar value. The Company reviews the impairment of ROU assets consistent with the approach applied for the Company’s other long-lived assets. The Company reviews the recoverability of long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. Lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are expensed as incurred. Variable payments change due to facts or circumstances occurring after the commencement date, other than the passage of time, and do not result in a remeasurement of lease liabilities. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. Pursuant to the new standard, the Company recorded an initial lease liability of $235,748 and an initial right of use asset in the same amount. During the three months and six months ended November 30, 2020, the Company recorded a lease expense in the amount of $23,559 and $47,117, respectively. As of November 30, 2020, the lease liability balance was $169,675 and the right of use asset balance was $166,248. A lease term of three years and a discount rate of 12% was used. Supplemental balance sheet information related to leases was as follows: November 30, 2020 Assets Right of use assets $ 235,748 Accumulated reduction (69,500 ) Operating lease assets, net $ 166,248 Liabilities Lease liability $ 235,748 Accumulated reduction (66,074 ) Total lease liability, net 169,675 Current portion (77,020 ) Non-current portion $ 92,655 Maturities of operating lease liabilities were as follows as of November 30, 2020: Operating Lease Year 1 $ 94,235 Year 2 97,661 Total 191,896 Less: Imputed interest (22,221 ) Present value of lease liabilities 169,675 Less: current portion (77,020 ) Non- current portion $ 92,655 Rent expense, prior to the signing of the new lease agreement, amounted to $0 and $23,880 for the three months ended November 30, 2020 and 2019, respectively. Rent expense, prior to the signing of the new lease agreement, amounted to $0 and $47,547 for the six months ended November 30, 2020 and 2019, respectively. Contigencies On November 23, 2020, the Company was served a copy of a complaint filed by Jacksonfill, LLC in the Fourth Circuit Court for Duval County, Florida. The complaint alleges breach of Agreement for non-payments for certain products against the Company. The allegations arise from alleged discrepancies discovered by the Company in the manufacturing of certain product. The Company has retained counsel and intends to vigorously defend the allegations. The product was delivered to the Company. However, the Company believes that the product was defective. The amount of the claim of $204,182 has been recorded as accounts payable, in the accompanying unaudited financial statements as of November 30, 2020. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Nov. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11 – Related Party Transactions The Company’s Chief Executive Officer, from time to time, provided advances to the Company for working capital purposes. At November 30, 2020 and May 31, 2020, the Company had a payable to the officer of $28,862 and $2,396, respectively. These advances are due on demand and non-interest bearing. |
Concentrations and Revenue Disa
Concentrations and Revenue Disaggregation | 6 Months Ended |
Nov. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentrations and Revenue Disaggregation | Note 12 – Concentrations and Revenue Disaggregation Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade accounts receivable and cash deposits, investments and cash equivalents instruments. The Company maintains its cash in bank deposits accounts. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At November 30, 2020 the Company held cash of approximately $317,895, in excess of federally insured limits. The Company has not experienced any losses in such accounts through November 30, 2020. Concentration of Revenue, Product Line, Accounts Receivable and Supplier During the three months ended November 30, 2020 sales to two customers, which each represented over 10% of our total sales, aggregated to approximately 50% of the Company’s net sales at 11% and 39%. During the six months ended November 30, 2020 sales to two customers, which each represented over 10% of our total sales, aggregated to approximately 51% of the Company’s net sales at 39%, and 12%. During the three months ended November 30, 2019 sales to one customer, which represented over 10% of our total sales at 48%. During the six months ended November 30, 2019 sales to three customers, which each represented over 10% of our total sales, aggregated to approximately 55% of the Company’s net sales at 35%, 10% and 11%. During the three months ended November 30, 2020, sales to customers outside the United States represented approximately 14% which consisted of sales of 8% from Canada and 6% from the EU during the six months ended November 30, 2020, sales to customers outside the United States represented approximately 18% which consisted of 14% from Canada and 4% from the EU. During the three months ended November 30, 2019, sales to customers outside the United States represented approximately 21% which consisted of 13% from Canada and 8% from the EU and during the six months ended November 30, 2019, sales to customers outside the United States represented approximately 30% which consisted of 18% from Canada, 10% the EU and 2% from UK. During the six months ended November 30, 2020, sales by product lines which each represented over 10% of sales consisted of approximately 32% from sale of introductory kit (shampoo, conditioner and treatment spray) and 37% from sale of fragrance shampoo and conditioner. During the three months ended November 30, 2020, sales by product lines which each represented over 10% of sales consisted of approximately 36% from sale of introductory kit (shampoo, conditioner and treatment spray) and 37% from sale of fragrance shampoo and conditioner. During the six months ended November 30, 2019, sales by product lines which each represented over 10% of sales consisted of approximately 16% from sales of prep cleanser and shampoo, 10% from sale of moisturizer and conditioner, 19% from sale of introductory kit (shampoo, conditioner and treatment spray) and 35% from sale of fragrance shampoo and conditioner. During the three months ended November 30, 2019, sales by product lines which each represented over 10% of sales consisted of approximately 14% from sale of introductory kit (shampoo, conditioner and treatment spray) and 48% from sale of fragrance shampoo and conditioner. During the six months ended November 30, 2020 and 2019, sales by product line comprised of the following: For the six months ended Hair Care Products November 30, 2020 November 30, 2019 Shampoos and Conditioners 86 % 88 % Ancillary Products 14 % 12 % Total 100 % 100 % As of November 30, 2020, accounts receivable from two customers represented approximately 65% at 24% and 41% and at May 31, 2020, accounts receivable from one customer represented approximately 69%, respectively. The Company purchased inventories and products from one vendor totaling approximately $257,810 (74% of the purchases) and two vendors totaling approximately $196,692 (88% of the purchases at 76% and 12%) during the six months ended November 30, 2020 and 2019, respectively. The Company purchased inventories and products from two vendors totaling approximately $32,582 (67% of the purchases at 39% and 28%) and two vendors totaling approximately $125,451 (88% of the purchases at 70% and 18%) during the three months ended November 30, 2020 and 2019, respectively. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Nov. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 – Subsequent Events As of November 30, 2020, the Company had recorded $18,313 as accrued expenses for shares to be issued to a consultant. Subsequent to November 30, 2020, the Company entered into a settlement agreement with the consultant and paid him $2,000 as full and final settlement. The gain of $16,313 was recorded as a gain on settlement of debt, on the books, subsequent to November 30, 2020. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Nov. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited financial statements for the six months ended November 30, 2020 and 2019 have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the management, all adjustments necessary to present fairly our financial position, results of operations, and cash flows as of November 30, 2020 and 2019, 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 omitted. The unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended May 31, 2020. The results of operations for the six months ended November 30, 2020 are not necessarily indicative of the results to be expected for the full year. |
Risk and Uncertainty Concerning COVID-19 Pandemic | Risk and Uncertainty Concerning COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States and the World. We are currently monitoring the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread. All of our Chinese facilities were temporarily closed for a period of time. Most of these facilities have been reopened since July 2020. Depending on the progression of the outbreak, our ability to obtain necessary supplies and ship finished products to customers may be partly or completely disrupted globally. Also, our ability to maintain appropriate labor levels could be disrupted. If the coronavirus continues to progress, it could have a material negative impact on our results of operations and cash flow, in addition to the impact on its employees. We have concluded that while it is reasonably possible that the virus could have a negative impact on the results of operations, the specific impact is not readily determinable as of the date of these financial statements. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management is focused on growing the Company’s existing products offering, as well as its customer base, to increase its revenues. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for its planned operations or future acquisitions. Future business demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot assure that it will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, management believes that the Company has sufficient capital and liquidity to fund its operations for at least one year from the date of issuance of the unaudited accompanying financial statements. |
Going Concern | Going Concern As reflected in the accompanying financial statements, the Company has a net loss of $16,166 for the six months ended November 30, 2020. Additionally, the Company has an accumulated deficit of $4,827,075 at November 30, 2020. 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 continue its business plan, raise capital, and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. 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 be unable to continue as a going concern. |
Use of Estimates | 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 intangible assets, 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 | 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 | 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 Prepaid expenses and other current assets of $13,548 and $13,708 at November 30, 2020 and May 31, 2020, respectively, consist primarily of costs paid for future services which will occur within a year and cash prepayment to vendors. |
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 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 | Revenue recognition Effective June 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, which is effective for public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures and there was no cumulative effect of the adoption of ASC 606. The Company sells a variety of hair and skin care products. The Company recognizes revenue for the agreed upon sales price when a purchase order is received from the customer and subsequently the product is shipped to the customer, which satisfies the performance obligation. Consideration paid to the customer to promote and sell the Company’s products is typically recorded as a reduction in revenues. See Note 12 for revenue disaggregation disclosures. |
Cost of Sales | Cost of Sales The primary components of cost of sales include the cost of the product and freight-in. |
Shipping and Handling Costs | Shipping and Handling Costs The Company accounts for shipping and handling fees in accordance with ASC 606. 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 $53,816 and $20,606 for the six months ended November 30, 2020 and 2019, respectively. Shipping costs included in marketing and selling expense were $41,195 and $10,314 for the three months ended November 30, 2020 and 2019, respectively. |
Marketing, Selling and Advertising | Marketing, selling and advertising Marketing, selling and advertising costs are expensed as incurred. |
Customer Deposits | 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 | 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 | 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 | 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 recorded impairment losses of $474 as an operating expense in the accompanying financial statements, for the six months ended November 30, 2019. |
Stock-based Compensation | 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. In June 2018, the FASB issued Accounting Standards Update (“ASU”) - ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies several aspects of the accounting for nonemployee share-based payment transactions by expanding the scope of the stock-based compensation guidance in ASC 718 to include share-based payment transactions for acquiring goods and services from non-employees. ASU No. 2018-07 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted, but entities may not adopt prior to adopting the new revenue recognition guidance in ASC 606. The Company adopted ASU No. 2018-07 on June 1, 2019 and there was no cumulative effect of adoption. |
Lease Accounting | Lease Accounting In February 2016, the FASB issued ASU No. 2016-02, Leases |
Net Loss Per Share of Common Stock | 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 November 30, 2020 and 2019, the Company had no potentially dilutive securities outstanding. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In November 2019, the FASB issued ASU No. 2019-08, Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements – Share-based Consideration Payable to a Customer (“ASU 2019-08”). ASU 2019-08 requires that an entity apply the guidance in ASC 718 to measure and classify share-based payment awards granted to a customer. Under ASC 718, among other things, share-based awards to non-employees must generally be measured at the grant-date fair value of the equity instrument. For entities that have adopted the provisions of ASU 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-based Payment Accounting, this amendment is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. As discussed above, the Company has adopted the provisions of ASU 2018-07 on June 1, 2019 and adopted ASU 2019-08 on June 1, 2020 and it did not have a material impact on the Company’s financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12, among other things, (a) eliminates the exception to the incremental approach for intra-period tax allocation when there is a loss from continuing operations and income (or a gain) from other items, (b) eliminates the exception to the general methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss for the year, (c) requires than an entity recognize a franchise tax (or a similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, and (d) requires than an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation for the interim period that includes the enactment date. For public companies, these amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted but must involve the adoption of all amendments contained in ASU 2019-12 concurrently. The Company has not adopted ASU 2019-12 and is evaluating the potential impact of adoption 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 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Accounts receivable, consisted of the following: November 30, 2020 May 31, 2020 Accounts Receivable $ 81,373 $ 184,019 Less: Allowance for doubtful accounts (2,392 ) (1,818 ) Total $ 78,981 $ 182,201 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consisted of the following: November 30, 2020 May 31, 2020 Finished Goods $ 28,148 $ 29,839 Raw Materials 295,156 258,285 Total $ 325,877 $ 288,124 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment, stated at cost, consisted of the following: Estimated Life November 30, 2020 May 31, 2020 Furniture and Fixtures 5 years $ 5,759 $ 5,759 Computer Equipment 3 years 17,392 17,392 Plant Equipment 5-10 years 45,128 29,720 Less: Accumulated Depreciation (26,570 ) (21,294 ) $ 41,709 $ 31,577 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses comprised of the following: November 30, 2020 May 31, 2020 Trade Payables $ 275,797 $ 98,608 Accrued expenses 19,903 — Credit Cards 7,311 10,378 Shares to be issued 18,313 18,313 Other 4,553 1,552 Total $ 354,529 $ 128,851 |
Equipment Financing Payable (Ta
Equipment Financing Payable (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Notes to Financial Statements | |
Schedule of Loan Payment Due | The amounts of loan payments due in the next five years ended November 30, are as follows: Total 2021 $ 3,300 2022 3,300 2023 3,300 2024 550 $ 10,450 |
Loans Payable (Tables)
Loans Payable (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Disclosure Loans Payable Tables Abstract | |
Schedule of Loan Payable | Loans Payable November 30, 2020 May 31, 2020 Paycheck Protection Program (PPP) $ 12,900 $ 12,900 Economic Injury Disaster Loan Program (EIDL) 150,000 150,000 162,900 162,900 Less: Current portion (10,294 ) (5,002 ) Loans Payable, Non-current portion $ 152,606 $ 157,898 |
Schedule of loan payments due in the next five years | The amounts of principal loan payments due in the next five years ended November 30, are as follows: Total 2021 $ 10,294 2022 7,412 2023 3,185 2024 3,307 2025 3,433 Thereafter 135,269 $ 162,900 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Supplemental balance sheet information | Supplemental balance sheet information related to leases was as follows: November 30, 2020 Assets Right of use assets $ 235,748 Accumulated reduction (69,500 ) Operating lease assets, net $ 166,248 Liabilities Lease liability $ 235,748 Accumulated reduction (66,034 ) Total lease liability, net 169,654 Current portion (77,020 ) Non-current portion $ 92,655 |
Schedule of future minimum rental payments required under operating lease | Maturities of operating lease liabilities were as follows as of November 30, 2020: Operating Lease Year 1 $ 94,235 Year 2 97,661 Total 191,896 Less: Imputed interest (22,221 ) Present value of lease liabilities 169,675 Less: current portion (77,020 ) Non- current portion $ 92,655 |
Concentrations and Revenue Aggr
Concentrations and Revenue Aggregation (Tables) | 6 Months Ended |
Nov. 30, 2020 | |
Concentrations And Revenue Aggregation | |
Schedule of Sales by Product Line | During the six months ended November 30, 2020 and 2019, sales by product line comprised of the following: For the six months ended Hair Care Products November 30, 2020 November 30, 2019 Shampoos and Conditioners 86 % 88 % Ancillary Products 14 % 12 % Total 100 % 100 % |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Nov. 30, 2020 | Nov. 30, 2019 | Nov. 30, 2020 | Nov. 30, 2019 | May 31, 2020 | |
Accounting Policies [Abstract] | |||||
Net Loss | $ (53,103) | $ 30,374 | $ 16,166 | $ 130,983 | |
Accumulated Deficit | 4,827,075 | 4,827,075 | $ 4,810,909 | ||
Prepaid expenses and other current assets | 13,548 | 13,548 | $ 13,708 | ||
Shipping costs | $ 41,195 | $ 10,314 | $ 53,816 | $ 20,606 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Receivables [Abstract] | ||
Accounts receivable | $ 81,373 | $ 184,019 |
Less: Allowance for bad accounts | (2,392) | (1,818) |
Accounts receivable, net | $ 78,981 | $ 182,201 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) | 6 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
Receivables [Abstract] | ||
Bad debt expense | $ 574 | $ (2,342) |
Inventory (Details)
Inventory (Details) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 28,148 | $ 29,839 |
Raw materials | 295,156 | 258,285 |
Inventory, net | $ 323,304 | $ 288,124 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Inventory Disclosure [Abstract] | ||
Inventory held at third party locations | $ 556 | $ 556 |
Inventory in-transit | $ 3,450 | $ 0 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 6 Months Ended | |
Nov. 30, 2020 | May 31, 2020 | |
Less: Accumulated depreciation | $ (26,570) | $ (21,294) |
Property and equipment net | $ 41,709 | 31,577 |
Computer Equipment [Member] | ||
Estimated life | 3 years | |
Property and equipment gross | $ 17,392 | 17,392 |
Machinery and Equipment [Member] | ||
Property and equipment gross | $ 45,128 | 29,720 |
Furniture and Fixtures [Member] | ||
Estimated life | 5 years | |
Property and equipment gross | $ 5,759 | $ 5,759 |
Minimum [Member] | Machinery and Equipment [Member] | ||
Estimated life | 5 years | |
Maximum [Member] | Machinery and Equipment [Member] | ||
Estimated life | 10 years |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 6 Months Ended | |
Nov. 30, 2020 | Nov. 30, 2019 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 5,276 | $ 5,539 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Payables and Accruals [Abstract] | ||
Trade Payables | $ 275,797 | $ 98,608 |
Accrued expenses | 19,903 | |
Credit Cards | 7,311 | 10,378 |
Accrued Compensation for Services | 18,313 | 18,313 |
Other | 4,553 | 1,552 |
Accounts Payable and Accrued Expenses, net | $ 325,877 | $ 128,851 |
Equipment Financing Payable (De
Equipment Financing Payable (Details) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Notes to Financial Statements | ||
2021 | $ 3,300 | $ 3,300 |
2022 | 3,300 | |
2023 | 3,300 | |
2024 | 550 | |
2025 | ||
Total | $ 10,450 |
Loans Payable (Details)
Loans Payable (Details) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Loan Payable | $ 162,900 | $ 162,900 |
Less: Current portion | (10,294) | (5,002) |
Loans Payable, Non-current portion | 152,606 | 157,898 |
Paycheck Protection Program [Member] | ||
Loan Payable | 12,900 | 12,900 |
Economic Injury Disaster Loan Program [Member] | ||
Loan Payable | $ 150,000 | $ 150,000 |
Loans Payable (Details 2)
Loans Payable (Details 2) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Loans Payable [Abstract] | ||
2021 | $ 10,294 | |
2022 | 7,412 | |
2023 | 3,185 | |
2024 | 3,307 | |
2025 | 3,433 | |
Thereafter | 135,269 | |
Total | $ 162,900 | $ 162,900 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - $ / shares | Nov. 30, 2020 | May 31, 2020 |
Stockholders' Equity (Textual) | ||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Par Value Per Share | $ 0.0001 | $ 0.0001 |
Common Stock, Shares, Issued | 41,485,881 | 41,285,881 |
Common Stock, Shares, Outstanding | 41,485,881 | 41,285,881 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock, Par Value Per Share | $ 0.0001 | $ 0.0001 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Schedule of Future minimum rental payments for operating lease | ||
1 Year | $ 94,235 | |
2 Years | 97,661 | |
Total | 191,896 | |
Less: Imputed interest | (22,221) | |
Present value of lease liabilities | 169,675 | |
Less: current portion | (77,020) | $ (71,896) |
Non- current portion | $ 92,655 | $ 131,802 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) - USD ($) | 6 Months Ended | |
Nov. 30, 2020 | May 31, 2020 | |
Commitments and Contingencies (Textual) | ||
Lease agreement, description | The Company has a lease agreement in connection with its office and warehouse facility in California under an operating lease which expired in October 2019. On December 1, 2019, the Company signed an extension of the lease for 3 years. The rent will be $7,567 per month for the first year and increase by a certain amount each year. | |
Lease agreement period | 3 years | |
Monthly base rent | $ 7,567 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Nov. 30, 2020 | May 31, 2020 |
Related Party Transactions (Textual) | ||
Amount payable to officers | $ 28,862 | $ 2,396 |
Concentrations and Revenue Ag_2
Concentrations and Revenue Aggregation (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Nov. 30, 2020USD ($)CustomerVendor | Nov. 30, 2019USD ($)CustomerVendor | Nov. 30, 2020USD ($)CustomerVendor | Nov. 30, 2019USD ($)CustomerVendor | May 31, 2020Customer | |
Concentrations (Textual) | |||||
Amount of FDIC | $ 250,000 | $ 250,000 | |||
Held in cash | $ 317,895 | $ 317,895 | |||
Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Number of customers | Customer | 2 | 1 | 2 | 3 | |
Concentration risk percentage | 50.00% | 48.00% | 51.00% | 55.00% | |
Vendors [Member] | |||||
Concentrations (Textual) | |||||
Number of vendors | Vendor | 1 | 2 | 1 | 2 | |
Purchased inventories and products | $ 32,582 | $ 125,451 | $ 257,810 | $ 196,692 | |
Percentage of purchases | 67.00% | 88.00% | 74.00% | 88.00% | |
Accounts Receivable [Member] | |||||
Concentrations (Textual) | |||||
Number of customers | Customer | 2 | 1 | |||
Concentration risk percentage | 65.00% | 69.00% | |||
EU [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 6.00% | 8.00% | 4.00% | 10.00% | |
CANADA [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 8.00% | 13.00% | 14.00% | 18.00% | |
Outside UNITED STATES [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 14.00% | 21.00% | 18.00% | 30.00% | |
UK [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 2.00% | ||||
Ancillary Products [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 14.00% | 12.00% | |||
Product [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 100.00% | 100.00% | |||
Shampoos and Conditioners [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 86.00% | 88.00% | |||
Customer Two [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 39.00% | 12.00% | 10.00% | ||
Customer Two [Member] | Accounts Receivable [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 41.00% | ||||
Vendors Two [Member] | Vendors [Member] | |||||
Concentrations (Textual) | |||||
Percentage of purchases | 28.00% | 18.00% | 12.00% | ||
Vendors One [Member] | Vendors [Member] | |||||
Concentrations (Textual) | |||||
Percentage of purchases | 39.00% | 70.00% | 76.00% | ||
Customer One [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 11.00% | 48.00% | 39.00% | 35.00% | |
Customer One [Member] | Accounts Receivable [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 24.00% | 69.00% | |||
Customer Three [Member] | Sales Revenue, Net [Member] | |||||
Concentrations (Textual) | |||||
Concentration risk percentage | 11.00% |
Concentrations and Revenue Ag_3
Concentrations and Revenue Aggregation (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Nov. 30, 2020 | Nov. 30, 2019 | Nov. 30, 2020 | Nov. 30, 2019 | May 31, 2020 | |
Sales Revenue, Net [Member] | |||||
Sales, Percent | 50.00% | 48.00% | 51.00% | 55.00% | |
Accounts Receivable [Member] | |||||
Sales, Percent | 65.00% | 69.00% | |||
Product [Member] | Sales Revenue, Net [Member] | |||||
Sales, Percent | 100.00% | 100.00% | |||
Ancillary Products [Member] | Sales Revenue, Net [Member] | |||||
Sales, Percent | 14.00% | 12.00% | |||
Shampoos and Conditioners [Member] | Sales Revenue, Net [Member] | |||||
Sales, Percent | 86.00% | 88.00% |