Cover
Cover - shares | 9 Months Ended | |
Feb. 29, 2024 | Apr. 18, 2024 | |
Cover [Abstract] | ||
Entity Registrant Name | KARBON-X CORP. | |
Entity Central Index Key | 0001729637 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --05-31 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Feb. 29, 2024 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2024 | |
Entity Common Stock Shares Outstanding | 78,664,969 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-56288 | |
Entity Incorporation State Country Code | NV | |
Entity Tax Identification Number | 82-2882342 | |
Entity Address Address Line 1 | 910 7th Ave SW | |
Entity Address City Or Town | Calgary | |
Entity Address Country | CA | |
Entity Address Postal Zip Code | T2P 3N8 | |
City Area Code | 778 | |
Local Phone Number | 256-5730 | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) | Feb. 29, 2024 | May 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 212,140 | $ 206,820 |
Accounts receivable | 24,782 | 0 |
Sales tax receivable | 26,544 | 45,586 |
Prepaid expenses and other current assets | 94,475 | 59,767 |
Total current assets | 357,941 | 312,173 |
Property and equipment | 7,503 | 9,116 |
Internally Developed Software | 524,282 | 522,771 |
Inventory | 223,649 | 80,750 |
Right of use asset | 56,239 | 68,307 |
Investment in Silviculture | 0 | 1,514,483 |
Security deposit | 7,537 | 7,515 |
Total assets | 1,177,151 | 2,515,115 |
Current liabilities | ||
Accounts payable | 134,096 | 69,732 |
Current portion of lease-liability | 23,521 | 14,688 |
Short-term loan | 151,644 | 100,000 |
Credit Card | 8,819 | 0 |
Due from related Parties | 37,486 | 0 |
Payroll liabilities | 11,779 | 10,061 |
Total Current Liabilities | 367,343 | 194,481 |
Non-current portion of lease liability | 37,710 | 55,415 |
Total Liabilities | 405,055 | 249,896 |
Commitments and contingencies | 0 | 0 |
Shareholders' equity (deficit) | ||
Common stock $0.001 par value, 200,000,000 shares authorized, 78,664,969 and 72,579,000 shares issued and outstanding as of February 29, 2024 and May 31, 2023, respectively. | 78,664 | 72,579 |
Shares to be issued | 74,998 | 1,750,000 |
Additional Paid-in capital | 5,009,285 | 2,638,532 |
Accumulated deficit | (4,356,124) | (2,192,106) |
Accumulated other comprehensive gain (loss) | (34,727) | (3,786) |
Total shareholders' equity (deficit) | 772,096 | 2,265,219 |
Total liabilities and shareholders' equity (deficit) | $ 1,177,151 | $ 2,515,115 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - $ / shares | Feb. 29, 2024 | May 31, 2023 |
STOCKHOLDERS DEFICIT | ||
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 78,664,969 | 72,579,000 |
Common stock, shares outstanding | 78,664,969 | 72,579,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 29, 2024 | Feb. 28, 2023 | Feb. 29, 2024 | Feb. 28, 2023 | |
Operations | ||||
Total revenue | $ 247,222 | $ 7,823 | $ 287,062 | $ 7,823 |
Cost of revenue | 223,758 | 1,190 | 237,959 | 1,190 |
Gross profit | 23,464 | 6,633 | 49,103 | 6,633 |
Marketing expenses | 66,629 | 17,928 | 95,468 | 36,912 |
Salaries and wages | 149,533 | 0 | 464,274 | 0 |
Professional fees | 51,188 | 231,020 | 201,650 | 324,347 |
Other operating expenses | 127,513 | 142,950 | 262,302 | 305,377 |
Total operating expenses | 394,863 | 391,898 | 1,023,694 | 666,636 |
Loss from Operations | (371,399) | (385,265) | (974,591) | (660,003) |
Impairment of Investments | 0 | 0 | ||
Other income (expenses) | (99,872) | 13,476 | (1,188,775) | 13,969 |
Net loss before income taxes | (2,163,366) | (646,034) | ||
Federal income tax expense | 0 | 0 | 0 | 0 |
Net loss | (471,271) | (371,789) | (2,163,366) | (646,034) |
Other comprehensive loss | ||||
Foreign currency translation gain (loss) | (20,561) | 33,371 | (30,941) | 1,398 |
Total comprehensive loss | $ (491,832) | $ (338,418) | $ (2,194,308) | $ (644,636) |
Earnings Per Share | ||||
Weighted average shares outstanding (Basic and Diluted) | 77,617,191 | 69,323,708 | 77,017,953 | 69,077,537 |
Basic and fully diluted loss per share | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.01) |
Consolidated Statement of Chang
Consolidated Statement of Changes in Shareholders Equity (Unaudited) - USD ($) | Total | Common Stock | Stock to be issued | Additional Paid-In Capital | Accumulated Deficit | Accumulated other comprehensive gain (loss) |
Balance, shares at May. 31, 2022 | 68,320,000 | |||||
Balance, amount at May. 31, 2022 | $ 637,870 | $ 68,320 | $ 0 | $ 786,822 | $ (204,228) | $ (13,044) |
Shares to be issued for investment | 1,125,000 | $ 0 | 1,125,000 | 0 | 0 | 0 |
Issuance of shares for cash, shares | 1,720,000 | |||||
Issuance of shares for cash, amount | 1,720 | $ 1,720 | 0 | 0 | 0 | 0 |
Warrants issued | 678,280 | 0 | 0 | 678,280 | 0 | 0 |
Translation gain (loss) | 1,398 | 1,398 | ||||
Net loss | (646,034) | 0 | 0 | (646,034) | 0 | |
Write off of Investment in silviculture | 0 | |||||
Balance, amount at Feb. 28, 2023 | 1,798,234 | $ 70,040 | 1,125,000 | 1,465,102 | (850,262) | (11,646) |
Balance, shares at Feb. 28, 2023 | 70,040,000 | |||||
Balance, shares at Nov. 30, 2022 | 69,040,000 | |||||
Balance, amount at Nov. 30, 2022 | 1,636,652 | $ 69,040 | 1,125,000 | 966,102 | (478,743) | (45,017) |
Net loss | (371,789) | $ 0 | 0 | 0 | (371,789) | 0 |
Shares to be issued for investment, shares | 1,000,000 | |||||
Shares to be issued for investment, amount | 500,000 | $ 1,000 | 0 | 499,000 | 0 | 0 |
Translation gain (loss) | 33,371 | 0 | 0 | 0 | 0 | 33,371 |
Balance, amount at Feb. 28, 2023 | 1,798,234 | $ 70,040 | 1,125,000 | 1,465,102 | (850,262) | (11,646) |
Balance, shares at Feb. 28, 2023 | 70,040,000 | |||||
Balance, shares at May. 31, 2023 | 72,579,000 | |||||
Balance, amount at May. 31, 2023 | 2,265,219 | $ 72,579 | 1,750,000 | 2,638,532 | (2,192,106) | (3,786) |
Shares to be issued for investment | 375,000 | 0 | 375,000 | 0 | 0 | 0 |
Net loss | (2,163,366) | 0 | 0 | 0 | (2,163,366) | 0 |
Translation gain (loss) | (31,594) | $ (1) | 0 | 0 | (652) | (30,941) |
Shares to issued as stock Compensation, shares | 2,500,000 | |||||
Shares to issued as stock Compensation, amount | 74,998 | $ 2,500 | (550,002) | 622,500 | 0 | 0 |
Issuance of shares for cash And warrants, net, shares | 3,385,969 | |||||
Issuance of shares for cash And warrants, net, amount | 1,655,671 | $ 3,386 | 0 | 1,652,285 | 0 | 0 |
Conversion of loan to shares, shares | 200,000 | |||||
Conversion of loan to shares, amount | 100,000 | $ 200 | 0 | 99,800 | 0 | 0 |
Offering expenses | (3,832) | 0 | 0 | (3,832) | 0 | 0 |
Write off of Investment in silviculture | (1,500,000) | 0 | (1,500,000) | 0 | 0 | 0 |
Balance, amount at Feb. 29, 2024 | 772,096 | $ 78,664 | 74,998 | 5,009,285 | (4,356,124) | (34,727) |
Balance, shares at Feb. 29, 2024 | 78,664,969 | |||||
Balance, shares at Nov. 30, 2023 | 78,603,858 | |||||
Balance, amount at Nov. 30, 2023 | 1,189,582 | $ 78,603 | 55,000 | 4,954,346 | (3,884,201) | (14,166) |
Issuance of shares for cash, shares | 61,111 | |||||
Issuance of shares for cash, amount | 0 | $ 61 | (55,000) | 54,939 | 0 | 0 |
Translation gain (loss) | (21,213) | 0 | 0 | 0 | (652) | (20,561) |
Net loss | (471,271) | 0 | 0 | 0 | (471,271) | 0 |
Shares issued as stock compensation | 74,998 | 0 | 74,998 | 0 | 0 | 0 |
Balance, amount at Feb. 29, 2024 | $ 772,096 | $ 78,664 | $ 74,998 | $ 5,009,285 | $ (4,356,124) | $ (34,727) |
Balance, shares at Feb. 29, 2024 | 78,664,969 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flow (Unaudited) - USD ($) | 9 Months Ended | |
Feb. 29, 2024 | Feb. 28, 2023 | |
Cash flows from operating activities | ||
Net loss | $ (2,163,366) | $ (646,034) |
Adjustments to reconcile net loss to net cash: | ||
Depreciation expense | 1,099 | 824 |
Amortization of ROU | 12,265 | 0 |
Loss(Gain) on investment | 1,191,890 | (13,391) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (24,782) | 0 |
Sales tax receivable | 19,042 | (21,131) |
Accounts payable | 64,363 | 25,904 |
Payroll liabilities | 10,535 | 177 |
Deferred Revenue | 0 | 0 |
Due from Silviculture | 0 | (147,133) |
Due to related parties | 37,486 | 14,860 |
Inventory | (142,899) | (81,471) |
Lease Liability | (9,073) | 0 |
Prepaid expenses | (34,708) | 2,808 |
Security deposit | 0 | (8,296) |
Cash used in operating activities | (1,038,148) | (872,883) |
Cash flows from investing activities | ||
Acquisition of property and equipment | 0 | (3,046) |
Purchase of equity method investment | (727,409) | 0 |
Cash paid for capital work in progress | 0 | (280,169) |
Cash used in investing activities | (727,409) | (283,215) |
Cash flows from financing activities | ||
Proceeds from short term loan | 151,644 | 99,604 |
Proceeds from issuance of shares and warrants | 1,651,838 | 680,000 |
Cash flow from financing activities | 1,803,482 | 779,604 |
Effect of translation changes on cash | (32,605) | 1,367 |
Change in cash and cash equivalents | 5,320 | (375,127) |
Cash, beginning of period | 206,820 | 477,339 |
Cash, end of period | 212,140 | 102,212 |
Non cash investing and financing activities | ||
Shares to be issued for the Silviculture investment | 0 | 1,125,000 |
Write off of Investment in Silviculture | (1,500,000) | 0 |
Supplemental disclosures | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | $ 0 | $ 0 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Feb. 29, 2024 | |
Basis of Presentation and Significant Accounting Policies | |
Basis of Presentation and Significant Accounting Policies | Note 1 - Basis of Presentation and Significant Accounting Policies Karbon-X Corp. (“Karbon-X” or the Company”) was incorporated in the State of Nevada under the name Cocoluv,Inc on September 13, 2017 and established a fiscal year end of May 31. On February 21, 2022, pursuant to the terms of a Share Exchange Agreement, the Company acquired all of the issued and outstanding shares of common stock of Karbon-X Project Inc. ("Karbon-X"), and Karbon-X became the wholly owned subsidiary of the Company in a reverse acquisition (the "Reverse Acquisition"). Pursuant to the Reverse Acquisition, all of the issued and outstanding shares of Karbon-X common stock were converted, at an exchange ratio of 20,000-for-1, into an aggregate of 20,000,000 shares of the Company's common stock, resulting in Karbon-X becoming a wholly owned subsidiary of the Company and all debt owed to the related party of Cocoluv, Inc. was forgiven. The accompanying financial statements' share information has been retroactively adjusted to reflect the exchange ratio in the Reverse Acquisition. As part of the Reverse Acquisition, on April 14, 2022 the Company changed its name to Karbon-X Corp. Under generally accepted accounting principles in the United States ("US GAAP") because the combined entity will be dependent on Karbon-X's senior management, the Reverse Acquisition was accounted for as a recapitalization effected by a share exchange, wherein Karbon-X is considered the acquirer for accounting and financial reporting purposes. On the date of the reorganization, the assets and liabilities of Karbon-X have been brought forward at their book value and consolidated with Cocoluv, Inc.’s assets, which comprised of cash and cash equivalents of $134 and liabilities which comprises due to related party of $99,902 (see Note 1 Basis of Presentation below). No goodwill has been recognized. Accordingly, the assets and liabilities and the historical operations that are reflected in the consolidated financial statements are those of Karbon-X and are recorded at the historical cost basis of Karbon-X. Going concern To date the Company has generated minimal revenues from its business operations and has incurred operating losses since inception of $4,356,124. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. Basis of Presentation The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements present the consolidated balance sheets, statements of operations, stockholders' equity and cash flows of the Company. These consolidated financial statements are presented in the United States dollar and have been prepared in accordance with accounting principles generally accepted in the United States. Use of Estimates and Assumptions Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. Sales Tax Receivable Sales tax receivable consists of the accumulated reclaimable GST paid by the Company on purchases made in Canada. Property and Equipment Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets which are all five years. Costs of major additions and improvements are capitalized while expenditures for maintenance and repairs, which do not extend the life of the asset, are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is credited or charged to income. Long-lived assets held and used by us are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Inventory Inventories are valued at the lower of cost or net realizable value. The Company's inventories are valued under the first in, first out (FIFO) method. Net realizable value is estimated based on current selling prices. Estimated provisions are established for slow-moving and obsolete inventory. As of June 1, 2023, the Company changed its inventory policy from weighted average to FIFO, this had no significant impact on the current or prior consolidated financial statements. Investments The Company accounts for investments with a 20% to 50% ownership and a significant, but not controlling influence as equity method investments. Investments with a greater than 50% ownership and a controlling influence are accounted for using the consolidation method. The Company assesses the potential impairment of equity method investments when indicators such as a history of operating losses, negative earnings and cash flow outlook, and the financial condition and prospects for the investee's business segment might indicate a loss in value. The Company previously accounted for its investment in Silviculture Systems using the equity method and its investment in its subsidiary Karbon-X Project, Inc using the consolidation method. During November 2023, the Company abandoned the silviculture investment deal and decided to write off the carrying value of the Equity Investment in Silviculture. Fair Value of Financial Instruments The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: • Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; • Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and • Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The carrying amount of the Company’s financial assets and liabilities approximate their fair values due to their short-term maturities. Revenue Recognition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under ASC 606, the Company recognizes revenue from the commercial sales of carbon credits and consulting services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. Rates for consulting services are typically per day, per hour, or a similar basis. Consulting revenue is recognized over the period in which the service is provided. Revenue for sales of carbon credits is recognized at a point in time when control of the credit transfers to the buyer. The Company acts as a principal in all revenue transactions. Foreign Currency Translation The functional currency of the Company is the Canadian Dollar (“CAD”). For financial statement purposes, the reporting currency is the United States Dollar (“USD”). For financial reporting purposes, the consolidated financial statements are translated into the Company’s reporting currency, USD. Asset, liability and equity accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive loss in stockholder’s equity (deficit). Warrants There is estimation uncertainty with respect to selecting inputs to the Black-Sholes model used to determine the fair value of the warrants (Note 7). These inputs include the stock price ranging from $0.50 - $0.25, exercise price ranging from $0.75 - $0.50, time to maturity of two years, annual risk-free interest rate ranging from 2.66% - 4.92%, and annualized volatility ranging from 637.12 % -25.93 %. The above estimates and assumptions are reviewed regularly. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant Estimates Significant estimates applied in the preparation of these financial statements include the estimated useful lives of property and equipment, share volatility and estimated life of options and warrants in determining their fair value as well as the expected potential for the realization of deferred tax assets in determining the amount of the valuation allowance thereto. Earnings per Common Share The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of February 29, 2024, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per share. Reclassifications Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position, or cash flows. |
Prepaid Expenses
Prepaid Expenses | 9 Months Ended |
Feb. 29, 2024 | |
Prepaid Expenses | |
Prepaid Expenses | Note 2 – Prepaid Expenses As of February 29, 2024 and May 31, 2023, prepaid expenses consisted of the following: Description February 29, 2024 May 31, 2023 Prepaid Common Credit Purchase $ 59,939 $ - Prepaid furniture - 59,767 Prepaid Advertising Expenses 32,559 - Other prepaids 1,977 - Total $ 94,475 $ 59,767 |
Inventory
Inventory | 9 Months Ended |
Feb. 29, 2024 | |
Inventory | |
Inventory | Note 3 – Inventory Inventory as of February 29, 2024 and May 31, 2023, consisted of the following: Description February 29, 2024 May 31, 2023 Carbon Credit Inventory $ 223,649 $ 80,750 Total $ 223,649 $ 80,750 Carbon credit inventory represents carbon credits currently held for sale. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Feb. 29, 2024 | |
Property and Equipment | |
Property and Equipment | Note 4 - Property and Equipment The amount of property and equipment as of February 29, 2024 and May 31, 2023, consisted of the following: Description February 29, 2024 May 31, 2023 Furniture and fixtures $ 6,626 $ 6,607 Computer and equipment 3,715 3,705 Total property cost $ 10,341 $ 10,312 Accumulated depreciation (2,838 ) (1,196 ) Property and equipment, net $ 7,503 $ 9,116 The Company made no purchases during the nine months ended February 29,2024 and purchased office chairs and desks the year ended May 31,2023 for $ 6,607. The company also purchased computers during the year ended May 31,2023 for $ 3,705. Depreciation expense, net of translation, for the three months and nine months ended February 29, 2024 was $ 550 and $ 1,650 respectively. Depreciation expense for the nine months ended February 29, 2023 was $824. |
Shareholders Equity
Shareholders Equity | 9 Months Ended |
Feb. 29, 2024 | |
Shareholders Equity | |
Shareholders' Equity | Note 5 – Shareholders’ Equity During the nine months ended February 29, 2024, Karbon-X Corp completed following private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. During July – September 2023, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 3,274,858 shares of common stock at $0.50 per share for gross proceeds of $ 1,637,429, net of expenses related to issuances of $83,993. On June6, 2023 the Company converted a loan for $100,000 into 200,000 shares at price of $0.50 per share. During November 2023, the Company sold 50,000 common stock at $2 per unit for total proceeds of $100,000. During January 2024, the Company revalued the common stock from $2 per unit to $0.90 per unit and issued an additional 61,111 shares. During the year ended May 31, 2023, the Company executed an agreement to issue shares of Karbon-X Corp for the purchase of up to 80% of Silviculture Systems to be issued in tranches based on completion of milestones. As of August 31, 2023, the Company had agreed to purchase 32% of Silviculture Systems for 6,000,000 shares of Karbon-X Corp shown as shares to be issued for a value of $1,500,000. During November 2023, amidst ongoing disputes which we are currently discussing, the Company has chosen to abandon the silviculture investment deal and write off the carrying value of the Equity Investment in Silviculture. Accordingly, the Company has written of carrying value of Investment of $ 2,564,203, accumulated value of shares to be issued $ 1,500,000 and recognized loss on write off $ 1,064,203 in its statement of operations for the three months ended November 30, 2023. During the six months ended November 30, 2022, Karbon-X Corp. completed a private placement pursuant to Rule 506(c) of the Securities Exchange Act of 1934, as amended. In that private placement the company sold 720,000 units at $0.25 per unit for total proceeds of $180,000. Each unit consisted of share of common stock and warrant to purchase a share of common stock for $0.75 per share for a period of two years. |
Convertible Debt
Convertible Debt | 9 Months Ended |
Feb. 29, 2024 | |
Convertible Debt | |
Convertible Debt | Note 6 – Convertible Debt On February 13, 2024, Karbon-X Corp. issued a convertible debt note to Tyler Skinner or their assigns. The note is for the principal amount of $150,000 and is convertible into common stock of the company at a conversion price of $0.90 per share. The note carries a one-time interest fee of $37,500, which will be converted into common stock at the same conversion price. Any unpaid principal on the note will accrue interest at a rate of eighteen percent (18%) per annum from the due date until paid. The note matures on the earlier of the company raising a minimum of $1,000,000 or one year from the issue date, subject to extension. |
Warrants
Warrants | 9 Months Ended |
Feb. 29, 2024 | |
Warrants | |
Warrants | Note 7 – Warrants During the nine months ended February 29, 2024, the Company issued 10,400 warrants in connection with one private placement. Each warrant entitles the holder to acquire one common share of the Corporation at an exercise price of $0.50 with a two year term. The 10,400 units of warrants and shares were issued as a commission fee valued at $2,236. A detail of warrant activity for the nine months ended February 29, 2024 is as follows: Description Number Weighted average exercise price Weighted average remaining contractual life (in years) Outstanding May 31, 2023 4,140,000 $ 0.75 0.33 Exercised - - - Granted 10,400 0.50 1.67 Expired - - - Cancelled - - - Outstanding February 29, 2024 4,150,400 $ 0.75 0.34 |
Investments
Investments | 9 Months Ended |
Feb. 29, 2024 | |
Investments | |
Investments | Note 8 – Investments On May 31, 2023, the Company executed an amended share exchange agreement to buy up to 80% of Silviculture Systems in exchange for cash and shares of Karbon-X Corp valued at $7,250,000. $3,250,000 paid for in shares and the remaining $3,500,000 paid for in cash over the next three years. The issuance of shares was originally intended to occur in tranches upon the completion of milestones. As of November 30, 2023, the Company had paid $999,783 in cash, had rights to a 32% ownership in Silviculture Systems and had a significant, but not controlling interest in Silviculture Systems. The shares related to the 32% ownership are shown have not been issued but are reflected in these financial statements as shares to be issued and were valued at the most recent stock purchase price, at the time of signing, of $0.25 per share. This investment was originally accounted for as an equity method investment and its respective gain/loss for the period has been recorded in the statement of operations. During November 2023, the Company has abandoned the silviculture investment deal and decided to write off the carrying value of the Equity Investment in Silviculture. Accordingly, amidst ongoing disputes which we are currently discussing, the Company has written off the carrying value of Investment of $2,564,203, accumulated value of shares to be issued $ 1,500,000 and recognized loss on write off $1,064,203 in its statement of operations for the three months ended November 30, 2023. |
Capital Work in Progress (Inter
Capital Work in Progress (Internally Developed Software) | 9 Months Ended |
Feb. 29, 2024 | |
Capital Work in Progress (Internally Developed Software) | |
Capital Work in Progress (Internally Developed Software) | Note 9 – Capital Work in Progress (Internally Developed Software) In accordance with ASC 350-40, the Company has capitalized internally developed software for its development of a mobile application. The software is currently in its application development stage and all related costs are being capitalized as incurred. Once the software is ready for implementation, the Company will begin amortizing the software over its estimated useful life. As of February 29, 2024 and May 31, 2023, the Company has capitalized internally developed software of $524,282 and $522,771, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Feb. 29, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10 – Commitments and Contingencies Operating Lease The Company leases office space from a third party under an operating lease agreement over 40 months which expires in July 2026.The lease also includes the payment of executory costs. Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, if applicable. When lease terms include an option to extend the lease, we have not assumed the options will be exercised. Lease expense for operating leases generally consist of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include agreed-upon changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognized total lease expense of approximately $17,665 for the nine months ended February 29, 2024, primarily related to operating lease costs paid to lessors from operating cash flows. We entered into our operating lease in April 2023 with a term of three years. Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at February 29, 2024 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES Year Ended May 31, Total 2024 $ 4,785 2025 $ 28,712 2026 $ 28,712 2027 $ 7,179 Thereafter $ - Total lease payment $ 69,388 Less: Imputed Interest $ (8,157 ) Operating lease liabilities $ 61,231 Operating lease liabilities- Current $ 23,521 Operating lease liabilities- Non-current $ 37,710 In January 2024, a former employee filed a lawsuit against the Company asserting wrongful termination. As of the date of this report, the lawsuit is ongoing. In review of the status with our external counsel, the Company believes there will be a positive outcome and no provision is recorded. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Feb. 29, 2024 | |
Subsequent Events | |
Subsequent Events | Note 11 – Subsequent Events On March 27, 2024 th On April 11, 2024, the Board of Directors of Karbon-X Corp. decided it's in the company's best interest to extend the expiration date on warrants issued as part of its private placements in 2022. The expiration date for all such warrants is extended to May 31, 2024. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Feb. 29, 2024 | |
Basis of Presentation and Significant Accounting Policies | |
Going Concern | To date the Company has generated minimal revenues from its business operations and has incurred operating losses since inception of $4,356,124. The Company will require additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. |
Basis of Presentation | The consolidated financial statements include the accounts of the Company and its subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements present the consolidated balance sheets, statements of operations, stockholders' equity and cash flows of the Company. These consolidated financial statements are presented in the United States dollar and have been prepared in accordance with accounting principles generally accepted in the United States. |
Use of Estimates and Assumptions | Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates. |
Cash and Cash Equivalents | For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. |
Sales Tax Receivable | Sales tax receivable consists of the accumulated reclaimable GST paid by the Company on purchases made in Canada. |
Property and Equipment | Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets which are all five years. Costs of major additions and improvements are capitalized while expenditures for maintenance and repairs, which do not extend the life of the asset, are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is credited or charged to income. Long-lived assets held and used by us are reviewed based on market factors and operational considerations for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. |
Inventory | Inventories are valued at the lower of cost or net realizable value. The Company's inventories are valued under the first in, first out (FIFO) method. Net realizable value is estimated based on current selling prices. Estimated provisions are established for slow-moving and obsolete inventory. As of June 1, 2023, the Company changed its inventory policy from weighted average to FIFO, this had no significant impact on the current or prior consolidated financial statements. |
Investments | The Company accounts for investments with a 20% to 50% ownership and a significant, but not controlling influence as equity method investments. Investments with a greater than 50% ownership and a controlling influence are accounted for using the consolidation method. The Company assesses the potential impairment of equity method investments when indicators such as a history of operating losses, negative earnings and cash flow outlook, and the financial condition and prospects for the investee's business segment might indicate a loss in value. The Company previously accounted for its investment in Silviculture Systems using the equity method and its investment in its subsidiary Karbon-X Project, Inc using the consolidation method. During November 2023, the Company abandoned the silviculture investment deal and decided to write off the carrying value of the Equity Investment in Silviculture. |
Fair Value of Financial Instruments | The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows: • Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; • Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and • Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The carrying amount of the Company’s financial assets and liabilities approximate their fair values due to their short-term maturities. |
Revenue Recognition | In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under ASC 606, the Company recognizes revenue from the commercial sales of carbon credits and consulting services by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. Rates for consulting services are typically per day, per hour, or a similar basis. Consulting revenue is recognized over the period in which the service is provided. Revenue for sales of carbon credits is recognized at a point in time when control of the credit transfers to the buyer. The Company acts as a principal in all revenue transactions. |
Foreign Currency Translation | The functional currency of the Company is the Canadian Dollar (“CAD”). For financial statement purposes, the reporting currency is the United States Dollar (“USD”). For financial reporting purposes, the consolidated financial statements are translated into the Company’s reporting currency, USD. Asset, liability and equity accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive loss in stockholder’s equity (deficit). |
Warrants | There is estimation uncertainty with respect to selecting inputs to the Black-Sholes model used to determine the fair value of the warrants (Note 7). These inputs include the stock price ranging from $0.50 - $0.25, exercise price ranging from $0.75 - $0.50, time to maturity of two years, annual risk-free interest rate ranging from 2.66% - 4.92%, and annualized volatility ranging from 637.12 % -25.93 %. The above estimates and assumptions are reviewed regularly. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. |
Significant Estimates | Significant estimates applied in the preparation of these financial statements include the estimated useful lives of property and equipment, share volatility and estimated life of options and warrants in determining their fair value as well as the expected potential for the realization of deferred tax assets in determining the amount of the valuation allowance thereto. |
Earnings per Common Share | The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of February 29, 2024, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per share. |
Reclassifications | Certain amounts in the consolidated financial statements for the prior year have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings, financial position, or cash flows. |
Prepaid Expenses (Table)
Prepaid Expenses (Table) | 9 Months Ended |
Feb. 29, 2024 | |
Prepaid Expenses | |
Schedule of Prepaid Expenses | Description February 29, 2024 May 31, 2023 Prepaid Common Credit Purchase $ 59,939 $ - Prepaid furniture - 59,767 Prepaid Advertising Expenses 32,559 - Other prepaids 1,977 - Total $ 94,475 $ 59,767 |
Inventory (Table)
Inventory (Table) | 9 Months Ended |
Feb. 29, 2024 | |
Inventory | |
Schedule of Inventory | Description February 29, 2024 May 31, 2023 Carbon Credit Inventory $ 223,649 $ 80,750 Total $ 223,649 $ 80,750 |
Property and Equipment (Table)
Property and Equipment (Table) | 9 Months Ended |
Feb. 29, 2024 | |
Property and Equipment | |
Schedule of Property and Equipment | Description February 29, 2024 May 31, 2023 Furniture and fixtures $ 6,626 $ 6,607 Computer and equipment 3,715 3,705 Total property cost $ 10,341 $ 10,312 Accumulated depreciation (2,838 ) (1,196 ) Property and equipment, net $ 7,503 $ 9,116 |
Warrants (Table)
Warrants (Table) | 9 Months Ended |
Feb. 29, 2024 | |
Warrants | |
Schedule of Warrants | Description Number Weighted average exercise price Weighted average remaining contractual life (in years) Outstanding May 31, 2023 4,140,000 $ 0.75 0.33 Exercised - - - Granted 10,400 0.50 1.67 Expired - - - Cancelled - - - Outstanding February 29, 2024 4,150,400 $ 0.75 0.34 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Feb. 29, 2024 | |
Commitments and Contingencies | |
Schedule of lease payments | SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES Year Ended May 31, Total 2024 $ 4,785 2025 $ 28,712 2026 $ 28,712 2027 $ 7,179 Thereafter $ - Total lease payment $ 69,388 Less: Imputed Interest $ (8,157 ) Operating lease liabilities $ 61,231 Operating lease liabilities- Current $ 23,521 Operating lease liabilities- Non-current $ 37,710 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | ||
Feb. 29, 2024 | Feb. 28, 2024 | Jan. 31, 2024 | |
Issued and outstanding shares of common stock converted, exchange ratio | 20,000-for-1 | ||
Common stock, shares authorized | 20,000,000 | ||
Cash and cash equivalents | $ 134 | ||
Related party due | 99,902 | ||
Operating losses | $ 4,356,124 | ||
Exercise price | $ 0.50 | ||
Minimum [Member] | |||
Ownership percentage | 20% | ||
Stock price | $ 0.90 | ||
Minimum [Member] | Warrant [Member] | |||
Stock price | $ 0.25 | ||
Exercise price | $ 0.50 | ||
Risk-free interest rate | 2.66% | ||
Volatility rate | 25.93% | ||
Maximum [Member] | |||
Ownership percentage | 50% | ||
Stock price | $ 2 | ||
Maximum [Member] | Warrant [Member] | |||
Stock price | $ 0.50 | ||
Exercise price | $ 0.75 | ||
Risk-free interest rate | 4.92% | ||
Volatility rate | 637.12% |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) | Feb. 29, 2024 | May 31, 2023 |
Prepaid Expenses | ||
Prepaid Common Credit Purchase | $ 59,939 | $ 0 |
Prepaid furniture | 0 | 59,767 |
Prepaid Advertising Expenses | 32,559 | 0 |
Other prepaids | 1,977 | 0 |
Total | $ 94,475 | $ 59,767 |
Inventory (Details)
Inventory (Details) - USD ($) | Feb. 29, 2024 | May 31, 2023 |
Inventory | ||
Carbon Credit Inventory | $ 223,649 | $ 80,750 |
Total Inventory | $ 223,649 | $ 80,750 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Feb. 29, 2024 | May 31, 2023 |
Property and Equipment | ||
Furniture and fixtures | $ 6,626 | $ 6,607 |
Computer and equipment | 3,715 | 3,705 |
Total property cost | 10,341 | 10,312 |
Accumulated depreciation | (2,838) | (1,196) |
Property and equipment, net | $ 7,503 | $ 9,116 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Feb. 29, 2024 | Feb. 29, 2024 | Feb. 28, 2023 | |
Property and Equipment | |||
Office chairs and desks purchase | $ 6,607 | ||
Computer purchase | 3,705 | ||
Depreciation expense | $ 550 | $ 1,650 | $ 824 |
Shareholders Equity (Details Na
Shareholders Equity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 06, 2023 | Jan. 31, 2024 | Nov. 30, 2023 | May 31, 2023 | Sep. 30, 2023 | Feb. 29, 2024 | |
Additional common stock share Issued | 61,111 | |||||
Private Placement [Member] | ||||||
Price per share | $ 0.25 | |||||
Share sold during period | 720,000 | |||||
Proceeds from share sold | $ 180,000 | |||||
Share of common stock in warrant Desription | Each unit consisted of share of common stock and warrant to purchase a share of common stock for $0.75 per share for a period of two years | |||||
Private Placement One [Member] | ||||||
Price per share | $ 0.50 | $ 2 | ||||
Share sold during period | 50,000 | 3,274,858 | ||||
Proceeds from share sold | $ 100,000 | $ 1,637,429 | ||||
Net of expenses related to issuances | $ 83,993 | |||||
Minimum [Member] | ||||||
Price per share | $ 0.90 | |||||
Converted loan | $ 100,000 | |||||
Maximum [Member] | ||||||
Price per share | $ 2 | |||||
Converted loan | $ 200,000 | |||||
Silviculture System [Member] | ||||||
Recognized loss on write off investments | $ 1,064,203 | |||||
Accumulated value of shares to be issued | 1,500,000 | |||||
Written of carrying value of Investment | $ 2,564,203 | |||||
Description related to agreement of issue share | the Company executed an agreement to issue shares of Karbon-X Corp for the purchase of up to 80% of Silviculture Systems to be issued in tranches based on completion of milestones. As of August 31, 2023, the Company had agreed to purchase 32% of Silviculture Systems for 6,000,000 shares of Karbon-X Corp shown as shares to be issued for a value of $1,500,000. |
Convertible Debt (Details Narra
Convertible Debt (Details Narratives) | Feb. 13, 2024 USD ($) $ / shares |
Convertible Debt | |
Principal amount | $ 150,000 |
Conversion price | $ / shares | $ 0.90 |
Interest fee | $ 37,500 |
Interest rate | 18% |
Convertible debt note | $ 1,000,000 |
Warrants (Details)
Warrants (Details) | 9 Months Ended |
Feb. 29, 2024 $ / shares shares | |
Warrants | |
Outstanding, beginning balance | shares | 4,140,000 |
Granted | shares | 10,400 |
Outstanding, ending balance | shares | 4,150,400 |
Weighted average exercise price, beginning balance | $ 0.75 |
Weighted average exercise price, Exercised | 0 |
Weighted average exercise price, Granted | 0.50 |
Weighted average exercise price, expired | 0 |
Weighted average exercise price, Cancelled | 0 |
Weighted average exercise price, ending balance | $ 0.75 |
Weighted average remaining contractual life (in years), beginning balance | 3 months 29 days |
Weighted average remaining contractual life (in years), granted | 1 year 8 months 1 day |
Weighted average remaining contractual life (in years), ending balance | 4 months 2 days |
Warrants (Details Narratives)
Warrants (Details Narratives) | 9 Months Ended |
Feb. 29, 2024 USD ($) $ / shares shares | |
Warrants | |
Warrants | shares | 10,400 |
Warrant exercise price | $ / shares | $ 0.50 |
Warrant value | $ | $ 2,236 |
Investments (Details Narratives
Investments (Details Narratives) - USD ($) | 1 Months Ended | 3 Months Ended |
May 31, 2023 | Nov. 30, 2023 | |
Share executed exchange of share | 80% | |
Share executed exchange of share amount value | $ 7,250,000 | |
Silviculture System [Member] | ||
Stock purchase price per share | $ 0.25 | |
Cash | $ 999,783 | |
Owenship | 32% | |
Joint Venture [Member] | ||
share exchange agreement | $3,250,000 paid for in shares and the remaining $3,500,000 paid for in cash over the next three years. | |
Loss on write off | $ 1,064,203 | |
Investment written off | 2,564,203 | |
Shares issued value | $ 1,500,000 |
Capital Work in Progress (Int_2
Capital Work in Progress (Internally Developed Software) (Details Narrative) - USD ($) | Feb. 29, 2024 | May 31, 2023 |
Capital Work in Progress (Internally Developed Software) | ||
Software development cost | $ 524,282 | $ 522,771 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | Feb. 29, 2024 | May 31, 2023 |
Commitments and Contingencies | ||
2024 | $ 4,785 | |
2025 | 28,712 | |
2026 | 28,712 | |
2027 | 7,179 | |
Thereafter | 0 | |
Total lease payment | 69,388 | |
Less: Imputed interest | (8,157) | |
Operating lease liabilities | 61,231 | |
Operating lease liability - current | 23,521 | $ 14,688 |
Operating lease liability - non-current | $ 37,710 | $ 55,415 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) | 9 Months Ended |
Feb. 29, 2024 USD ($) | |
Commitments and Contingencies | |
Total lease expense | $ 17,665 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Mar. 27, 2024 shares |
Subsequent Event [Member] | |
Share issued to directors | 41,666 |