This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6
of the Securities Act of 1934, as amended, that involve substantial risks and
uncertainties. These forward-looking statements are not historical facts, but
rather are based on current expectations, estimates and projections about our
industry, our beliefs and our assumptions. Words such as "anticipate,"
"expects," "intends," "plans," "believes," "seeks" and "estimates" and
variations of these words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors, some of
which are beyond our control and difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this Form 10-Q.
Investors should carefully consider all of such risks before making an
investment decision with respect to the Company's stock. The following
discussion and analysis should be read in conjunction with our financial
statements and summary of selected financial data for Kange Corp. Such
discussion represents only the best present assessment from our Management.
Company Overview
Kange Corp., a Nevada corporation (the "Company," "Kange," "we," and "us"), is
an early-stage company that was incorporated in Nevada on August 16, 2013.
The Company has historically focused on developing and marketing software
product as mobile applications for end users of iPhone and iPad from Apple,
Inc., and mobile phones using the Android platform, and since 2017, has been
focusing on the intersection of technology and wholistic technology-based health
treatments, and with the intention to provide services to formulate a treatment
model to meet the needs of professional athletes that suffer from PTSD and the
early onset of dementia and Alzheimer's. The Company is currently evaluating
operations in the wholistic health industry.
On November 9, 2015, AMJ Global, LLC ("AMJ Global"), a company beneficially
owned by Dr. Arthur Malone, Jr., the Company's chief executive officer and
director, assigned the rights of AMJ Global pursuant to its agreements with
Blabeey, Inc. ("Blabeey"), a mobile App designer. The irrevocable assignment,
transferred and conveyed in its entirety to the Company in a common control
transaction, all of AMJ Global's rights and obligations that are stipulated and
set forth in every and all agreements between AMJ Global and Blabeey, including,
but not limited to, the agreement between AMJ Global and Blabeey dated October
26, 2015. Blabeey's web site is www.blabeey.com, which is not incorporated in
this filing. The Company issued 5,000,000 shares of common stock to AMJ Global
for the assignment. The Company valued those shares at $471,672, the historical
asset costs of Blabeey. Since the Company's transaction with AMJ Global was
between entities under common control, the amount of the historical cost of the
assets, $471,672, was recorded as an expense in 2015 as there was no fixed and
determinable future value, and the expense was recorded as a loss on the
acquisition of contractual rights. Subsequently, the Company began working with
Blabeey on developing technology for social media regarding Autism, PTSD and
other neurological issues, and the Company is still consulting with Blabeey
regarding software development opportunities in connection with the wholistic
health industry.
In May of 2017, the Company retained Bruce Weitzberg to serve on the Company's
Board of Advisors and advise the Company regarding the intersection of
technology and wholistic health care treatment and healthy living. Mr. Weitzberg
is the CEO of Patient Access Solutions Inc., a Nevada corporation with ticker
symbol "PASO" ("PASO"). PASO is a provider of healthcare and financial
processing solutions for the healthcare and dental industries, and it has also
opened a new center for the treatment of individuals with autism spectrum
disorder and other biomedical conditions.
Subsequently, the Company retained James Lantiegne, a professional magician and
former COO and CFO of a national software company, to serve on the Company's
Board of Advisors and provide the Company advice on the intersection of
technology and health. In October of 2017, the Company retained Benny Malone,
former NFL running back for the Miami Dolphins and Washington Redskins, and Eric
Metcalf, former NFL running back, wide receiver and three-time Pro-Bowl
selection, to serve on the Company's Board of Advisors and advise the Company
regarding sports health issues and treatments.
On November 1, 2017, the Company executed a stock purchase agreement (the "SPA")
with AMJ Global Entertainment, LLC, another related party company controlled by
our CEO and director, Dr. Arthur Malone, Jr., to purchase 1,157,142 shares of
Patient Access Solutions Inc., a Nevada corporation with ticker symbol "PASO"
("PASO"), in consideration of the issuance of 158,824 shares of our common
stock. PASO is a provider of healthcare and financial processing solutions for
the healthcare and dental industries, and it has also opened a new center for
the treatment of individuals with autism spectrum disorder and other biomedical
conditions. The Company is currently advising PASO on formulating a treatment
model to meet the needs of professional athletes that suffer from PTSD and the
early onset of dementia and Alzheimer's. The Company is currently evaluating
wholistic technology-based healthcare treatments, and is evaluating potential
additional operations in the wholistic health industry. On January 13, 2020, the
transaction was rescinded, and the Company will return 1,157,142 shares of
Patient Access Solutions Inc. back to AMJ Global Entertainment, LLC in exchange
for 157,142 shares of the Company.
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We have had limited operations and have been issued a "going concern" opinion by
our auditor, based upon our reliance on related party loans and the sale of our
common stock as the sole sources of funds for our operations for the near
future.
Reports to Security Holders
The Company is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, and is a "voluntary filer." As a voluntary
filer, the Company intends to furnish its stockholders with annual reports
containing consolidated financial statements audited by its independent
registered public accounting firm and to make available quarterly reports
containing unaudited consolidated financial statements for each of the first
three quarters of each year, but is not obligated to do so. The Company files
Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports
on Form 8-K with the Securities and Exchange Commission. The Company may also
file additional documents with the Commission if those documents become
necessary in the course of its operations.
Available Information
All reports of the Company filed with the SEC are available free of charge
through the SEC's website at www.sec.gov. In addition, the public may read and
copy materials filed by the Company at the SEC's Public Reference Room located
at 100 F Street, N.E., Washington, D.C. 20549. The public may also obtain
additional information on the operation of the Public Reference Room by calling
the Commission at 1-800-SEC-0330.
Results of Operations
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and notes
thereto for the three and six months ended May 31, 2018 and 2017, and related
management discussion herein.
Our financial statements are stated in U.S. Dollars and are prepared in
accordance with generally accepted accounting principles of the United States
("GAAP").
Going Concern Qualification
Several conditions and events cast substantial doubt about the Company's ability
to continue as a going concern. The Company has incurred cumulative net losses
of $1,250,585 since its inception and requires capital for its contemplated
operational and marketing activities to take place. The Company's ability to
raise additional capital through debt or future issuances of capital stock is
unknown. The obtainment of additional financing, the successful development of
the Company's contemplated plan of operations, and its transition, ultimately,
to the attainment of profitable operations are necessary for the Company to
continue operations. The ability to successfully resolve these factors raises
substantial doubt about the Company's ability to continue as a going concern.
For the Three Months Ended May 31, 2018 and 2017:
Our operating results for the three months ended May 31, 2018 and 2017, and the
changes between those periods for the respective items, are summarized as
follows:
Three Months Ended
May 31, Change
2018 2017 Amount
Operating loss $ (24,676 ) $ (6,571 ) $ (18,105 )
Other expense (521,112 ) (2,247 ) (518,865 )
Net loss $ (545,788 ) $ (8,818 ) $ (536,970 )
During the three months ending May 31, 2018 the Company had an operating loss of
$24,676, recognized a loss on debt settlement of $452,378 due to shares issuance
for debt to related party, and recognized an unrealized loss on marketable
securities of $68,734 due to revaluation of marketable securities. For the same
period in the prior fiscal year, the Company recorded an operating loss of
$6,571, interest expense of $1,627, and amortization of debt discount of $620.
The increase in operating loss during the three months ended May 31, 2018, is
primarily due to consulting fees of $20,581.
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For the Six Months Ended May 31, 2018 and 2017:
Our operating results for the six months ended May 31, 2018 and 2017, and the
changes between those periods for the respective items, are summarized as
follows:
Six Months Ended
May 31, Change
2018 2017 Amount
Operating loss $ (54,076 ) $ (14,580 ) $ (39,496 )
Other expense (488,249 ) (5,424 ) (482,825 )
Net loss $ (542,325 ) $ (20,004 ) $ (522,321 )
Revenues
We did not earn any revenues during the six months ending May 31, 2018 or 2017.
Operating Loss
Our loss from operations increased to $54,076 during the six months ending May
31, 2018, from an operating loss of $14,580 in the comparative period ending May
31, 2017. The following table presents operating expenses for the six-month
periods ending May 31, 2018 and 2017:
Six Months Ended
May 31, Change
2018 2017 Amount Percentage
Consulting Fees $ 41,293 $ - $ 41,293 -
General and administrative expenses 12,783 14,580 (1,797 ) (12 %)
Total Operating Expenses $ 54,076 $ 14,580 $ 39,496 271 %
The Company recorded $41,293 in consulting fees during the six months ended May
31, 2018, as compared to $0 for the same period in the prior fiscal year, due to
signed advisory board agreements. We realized a decrease of $1,797 in general
and administrative expenses during the six months ended May 31, 2018, as
compared to the same period in the prior fiscal year.
Other Income (Expense)
The following table presents other income and expenses for the six months ended
May 31, 2018 and 2017:
Six Months Ended
May 31,
2018 2017
Loss on settlement of debt $ 452,378 $ -
Unrealized Loss on marketable securities 35,871 -
Interest expense - 3,254
Amortization of debt discount - 2,170
Total expense $ 488,249 $ 5,424
During the six months ending May 31, 2018 the Company recognized loss on debt
settlement of $452,378 due to shares issued for debt to related party. During
the six months ending May 31, 2018 the Company recognized an unrealized loss on
marketable securities of $35,871 due to revaluation of marketable securities.
For the same period in the prior fiscal year, the Company recorded interest
expense of $3,254, and amortization of debt discount of $2,170.
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Net Loss
The Company incurred a $542,325 net loss during the six months ended May 31,
2018, compared to net loss of $20,004 in the same period in the prior fiscal
year. This is due to loss on settlement of debt, and the net effect of the
consulting fees and unrealized loss on marketable securities recognized during
the 2018 period.
Liquidity and Capital Resources
Based upon our current financial condition, we do not have sufficient cash to
operate our business at the current level for the next twelve months. We intend
to fund operations through debt and/or equity financing arrangements, which may
be insufficient to fund expenditures or other cash requirements. We plan to seek
additional financing in a private equity offering to secure funding for
operations. There can be no assurance that we will be successful in raising
additional funding. If we are not able to secure additional funding, the
implementation of our business plan will be impaired. There can be no assurance
that such additional financing will be available to us on acceptable terms or at
all.
Working Capital
The following table presents our working capital position as of May 31, 2018 and
November 30, 2017:
As of As of
May 31, November 30, Change
2018 2017 Amount Percentage
Cash $ - $ 77 $ (77 ) -
Marketable securities 45,129 81,000 (35,871 ) (44%)
Prepaid expenses 25,019 66,312 (41,293 ) (62%)
Current Assets 70,148 147,389 (77,241 ) (52%)
Current Liabilities 13,706 33,151 (19,445 ) (59%)
Working Capital $ 56,442 $ 114,238 $ (57,796 ) (51%)
The change in working capital during the six months ended May 31, 2018, was
primarily due to a decrease in current assets of $77,241 and a decrease in
current liabilities of $19,445. Current assets decreased primarily due to
revaluation of investment in marketable securities and amortization of prepaid
consulting expense. Current liabilities decreased due to the net effect of an
increase in accounts payable and accrued liabilities of $5,456, debt settlement
to related party of $32,151 and increase in accrued expenses due to related
party of $6,000. Cash reduced as of May 31, 2018, by $77 to $0.
Cash Flow
We fund our operations with cash received from advances from officers and
related parties and issuances of equity.
The following tables presents our cash flow for the six months ended May 31,
2018 and 2017:
Six Months Ended
May 31,
2018 2017
Cash (used in) operating activities $ (1,327 ) $ (8,747 )
Cash provided by financing activities 1,250 8,669
Net change in cash for the period $ (77 ) $ (78 )
Cash Flows from Operating Activities
We did not generate positive cash flows from operating activities for the six
months ended May 31, 2018 or 2017.
For the six months ended May 31, 2018, net cash flows used in operating
activities consisted of a net loss of $542,325, reduced by unrealized loss on
marketable securities of $35,871, loss on settlement of debt of $452,378 and by
a net increase in change of operating assets and liabilities of $52,749.
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For the six months ended May 31, 2017, net cash flows used in operating
activities consisted of a net loss of $20,004, reduced by amortization of debt
discount of $2,170 and net change in operating assets and liabilities of $9,087.
Cash Flows from Investing Activities
For the six months ended May 31, 2018 and 2017, no cashflows were provided by or
used in investing activities.
Cash Flows from Financing Activities
For the six months ended May 31, 2018 and 2017, we received $1,250 and $8,669,
respectively, in advances from related parties, which used to fund operations
and business activities.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to investors.
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