Our Management's Discussion and Analysis contains forward-looking statements
relating to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as "may",
"should", "intends", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential", or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors which may cause our or our
industry's actual results, levels of activity or performance to be materially
different from any future results, levels of activity or performance expressed
or implied by these forward-looking statements. Additional information and risks
relating to our forward-looking statements can be found in the introduction to
this Report and are incorporated by reference herein.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or performance. You should not place undue reliance on these
statements, which speak only as of the date that they were made. These
cautionary statements should be considered with any written or oral
forward-looking statements that we may issue in the future. Except as required
by applicable law, we do not intend to update any of the forward-looking
statements to conform these statements to actual results, later events or
circumstances or to reflect the occurrence of unanticipated events.
The management's discussion and analysis of our financial condition and results
of operations are based upon our audited financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP").
The following discussion and analysis of financial condition and results of
operations of the Company is based upon, and should be read in conjunction with,
the audited financial statements and related notes elsewhere in this Annual
Report on Form 10-K.
Plan of Operations
Going forward, we intend to seek, investigate and, if such investigation
warrants, engage in a business combination with a private entity whose business
presents an opportunity for our shareholders. No specific assets or businesses
have been definitively identified and there is no certainty that any such assets
or business will be identified, or any transactions will be consummated.
We do not expect to generate any revenues over the next 12 months, unless we are
able to enter into a business combination with an operating company. Our
principal business objective for the next 12 months will be to seek, investigate
and, if such investigation warrants, engage in a business combination with a
private entity whose business presents an opportunity for our shareholders.
During the next 12 months we anticipate incurring costs related to filing of
Exchange Act reports and will need funds of approximately $100,000 to cover
ongoing general and administrative expenses and professional fees incurred to
operate as a public company. We will need additional funds in order to
effectuate our business plan relating to consummating an acquisition or business
combination. There can be no assurance that additional capital will be available
to us at all or on acceptable terms or that actual cash requirements will not
exceed our estimates. We may have to issue debt or equity or enter into
strategic arrangements with a third party. We currently have no agreements,
arrangements or understandings to obtain funds through bank loans, lines of
credit or any other sources.
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Going Concern
Our auditors have issued a going concern opinion for the fiscal years ended
November 30, 2017 and November 30, 2018. As we had no cash on hand and a working
capital deficiency in the amount of $299,258 and an accumulated deficit of
$7,970,527 as of November 30, 2018, we do not have sufficient working capital to
enable us to carry out our stated plan of operation for the next twelve months
and there is substantial doubt that the Company can continue as an on-going
business for the next twelve months unless we obtain additional capital. We plan
to finance our operations through the sale of debt and/or equity and to fund our
working capital deficit in order to enable us to pay our accounts payable and
accrued liabilities. We currently do not have any arrangements in place for any
such financings and there is no assurance that we will be successful in
completing any debt or equity financing.
Results of Operations
For the years ended November 30, 2018 and November 30, 2017:
Revenue
We have not generated any revenue in the fiscal years ended November 30, 2018
and 2017.
Operating Expenses
We had total operating expenses of $22,518 for the year ended November 30, 2018
as compared to total operating expenses of $43,739 for the year ended November
30, 2017. Operating expenses were comprised of $20,518 in professional fees in
the year ended November 30, 2018 compared to $41,094 in the year ended November
30, 2017. The decrease was a result of SEC filings not being prepared for the
last two quarters of the fiscal year ended November 30, 2018. Such professional
fees were for SEC reporting and corporate governance compliance and are
currently expected to be limited to such fees until a business target is
identified and acquired.
Net Loss
Net loss was $20,518 for the year ended November 30, 2018 compared to a net loss
of $43,738 for the year ended November 30, 2017.
Statement of Cash Flows
Operating Activities
Net cash used by operating activities was $20,623 in fiscal 2018 and $43,443 in
fiscal 2017. The decrease was a result of SEC filings not being prepared for the
last two quarters of the fiscal year ended November 30, 2018.
Investing Activities
For the fiscal years ended in 2018 and 2017, we had no investing activities.
Financing Activities:
Cash flows from financing activities were $20,623 for the fiscal year ended
November 30, 2018 compared to $43,443 for the fiscal year ended November 30,
2017. The decrease was a result of SEC filings not being prepared for the last
two quarters of the fiscal year ended November 30, 2018. The financing was
provided by an increase in a shareholder loan.
Liquidity and Capital Resources
As of November 30, 2018, and November 30, 2019 we had no cash on hand. We do not
currently have sufficient resources to accomplish our business plan of acquiring
a target business and will require substantial additional funds for operations,
and to fund our business objectives. We will have to continue to raise capital
through on equity and debt financing or other external sources of capital. There
can be no assurance that financing, whether debt or equity, or other sources
will be available to us in the amount required at any particular time or for any
particular period or, if available, that it can be obtained on terms favorable
to us.
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Off Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting periods. The application of GAAP involves the exercise of varying
degrees of judgment. The resulting accounting estimates will not always
precisely equal the related actual results. Management considers an accounting
estimate to be critical if:
- assumptions are required to be made; and
- changes in estimates could have a material effect on our financial statements.
We have determined that none of the estimates meet those criteria of a
significant estimate.
Recent Accounting Pronouncements
In July 2015, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) 2015-11, "Simplifying the Measurement of Inventory,"
Topic 330, "Inventory" (ASU 2015-11). The amendments in ASU 2015-11, which apply
to inventory that is measured using any method other than the last-in, first-out
(LIFO) or retail inventory method, require that entities measure inventory at
the lower of cost and net realizable value. The amendments in ASU 2015-11 should
be applied on a prospective basis. ASU 2015-11 is effective for fiscal years
beginning after December 15, 2016 and interim periods within those years. The
Company adopted the amendments of ASU 2015-11 effective October 1, 2017. The
adoption of this standard did not have a material impact on the Company's
consolidated financial statements for the year ended November 30, 2018.
In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee
Share-Based Payment Accounting," Topic 718, "Compensation-Stock Compensation"
(ASU 2016-09). ASU 2016-09 includes provisions intended to simplify various
aspects related to how share-based payments are accounted for and presented in
the Company's financial statements, including income tax consequences,
forfeitures and classification on the statement of cash flows. Under previous
guidance, excess tax benefits and deficiencies from share-based compensation
arrangements were recorded in equity when the awards vested or were settled. ASU
2016-09 requires prospective recognition of excess tax benefits and deficiencies
in income tax expense, rather than paid-in-capital. The Company adopted the
amendments of ASU 2016-09 effective October 1, 2017.The adoption of this
standard did not have a material impact on the Company's consolidated statements
of income for the year ended November 30, 2018.
In addition, under ASU 2016-09, excess tax income tax benefits from share-based
compensation arrangements are classified as cash flow from operations, rather
than as cash flow from financing activities. For the year ended November 30,
2018, there were no excess income tax benefits.
The Company has elected to continue to estimate the number of share-based awards
expected to vest, as permitted by ASU 2016-09, rather than electing to account
for forfeitures as they occur.
ASU 2016-09 requires excess tax benefits and deficiencies to be prospectively
excluded from assumed future proceeds in the calculation of diluted shares,
resulting in an immaterial decrease in diluted weighted average shares
outstanding for the year ended November 30, 2018.
In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill
Impairment," Topic 350, "Intangibles - Goodwill and Other" (ASU 2017-04). The
amendments in ASU 2017-04 simplify the accounting for goodwill impairment for
all entities by requiring impairment charges to be based on the first step in
the current two-step impairment test. An impairment charge for the amount by
which the carrying amount exceeds the reporting unit's fair value should be
recognized; however, the loss recognized should not exceed the total amount of
goodwill allocated to that reporting unit. The amendments should be applied on a
prospective basis. Early adoption is permitted for annual and interim goodwill
impairment testing dates after January 1, 2017, and the ASU is effective for the
Company's first quarter of the fiscal year ending September 30, 2020. The
Company is currently evaluating the impact that the adoption of these provisions
will have on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, "Leases," Topic 842, "Leases"
(ASU 2016-02). ASU No. 2016-02 requires lessees to recognize a right-of-use
asset and corresponding lease liability for all leases with terms of more than
12 months. Recognition, measurement and presentation of expenses will depend on
classification as a finance or operating lease. ASU 2016-02 also requires
certain quantitative and qualitative disclosures. The provisions of ASU 2016-02
are effective for the Company's first quarter of the fiscal year ending
September 30, 2020, with early adoption permitted. The Company will apply the
transition provisions of ASU 2016-02 at its adoption date, rather than the
earliest comparative period presented in the financial statements, as permitted
by ASU 2018-11, "Leases," Topic 842, "Targeted Improvements," released in July
2018.
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The adoption of ASU 2016-02 may result in a material increase to the Company's
consolidated balance sheets for lease liabilities and right-of-use assets. The
Company is also performing a comprehensive review of its current processes to
determine and implement changes required to support the adoption of this
standard. The Company is currently evaluating the other effects the adoption of
ASU 2016-02 will have on its consolidated financial statements, once the Company
becomes an operating Company in Fiscal Year Ended November 30, 2020.
In January 2018, the FASB issued ASU 2018-01, "Leases," Topic 842, "Land
Easement Practical Expedient for Transition to Topic 842" (ASU 2018-01). ASU
2018-01 permits an entity to elect a transition practical expedient to not
assess, under Accounting Standards Codification (ASC) 842, land easements that
exist or expired before the standard's effective date that were not previously
accounted for as leases under ASC 840. The Company plans to elect this practical
expedient in implementing ASU 2016-02.
In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with
Customers," Topic 606, "Revenue from Contracts with Customers" (ASU 2014-09).
ASU 2014-09 provides guidance for revenue recognition and will replace most
existing revenue recognition guidance in GAAP when it becomes effective. ASU
2014-09's core principle is that a company will recognize revenue when it
transfers promised goods or services to customers in an amount that reflects the
consideration to which the company expects to be entitled for the transfer of
those goods or services. ASU 2014-09 permits the use of either the retrospective
or cumulative effect transition method. Additionally, the amendments in this ASU
provide a practical expedient for entities to recognize the incremental costs of
obtaining a contract as an expense when incurred if the amortization period of
the asset that the entity otherwise would have recognized is one year or less,
The Company plans to elect this practical expedient upon adoption.
In July 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with
Customers - Deferral of the Effective Date." The FASB approved the deferral of
ASU 2014-09, by extending the new revenue recognition standard's mandatory
effective date by one year and permitting public companies to apply the new
revenue standard to annual reporting periods beginning after December 15, 2017.
The guidance in ASU 2014-09 will be effective for the Company in the first
quarter of the fiscal year ending November 30, 2019. The Company is currently
evaluating the other effects the adoption of ASU 2015-14 will have on its
consolidated financial statements, once the Company becomes an operating Company
in Fiscal Year Ended November 30, 2020.
Further to ASU 2014-09 and ASU 2015-14, the FASB issued ASU 2016-08, "Revenue
from Contracts with Customers," Topic 606, "Principal versus Agent
Considerations (Reporting Revenue Gross versus Net)" (ASU 2016-08) in March
2016, ASU 2016-12, "Revenue from Contracts with Customers," Topic 606,
"Narrow-Scope Improvements and Practical Expedients" (ASU 2016-12) in May 2016
and ASU 2016-20, "Revenue from Contracts with Customers," Topic 606, "Technical
Corrections and Improvements" (ASU 2016-20) in December 2016. The amendments in
ASU 2016-08 clarify the implementation guidance on principal versus agent
considerations, including indicators to assist an entity in determining whether
it controls a specified good or service before it is transferred to the
customers. ASU 2016-12 addresses narrow-scope improvements to the guidance on
collectability, non-cash consideration, and completed contracts at transition.
Additionally, the amendments in this ASU provide a practical expedient for
contract modifications at transition and an accounting policy election related
to the presentation of sales taxes and other similar taxes collected from
customers. The Company plans to make such election. The Company also plans to
elect the practical expedient in ASU 2016-20 that provides entities do not need
to disclose the transaction price allocated to performance obligations when the
related contracts have a duration of one year or less. This includes loyalty
rewards, which can be redeemed in the month subsequent to the quarter earned,
and marketing promotions that cross accounting periods. Both of these classes of
transactions are currently immaterial to the Company. The effective date and
transition requirements for ASU 2016-08, ASU 2016-12 and ASU 2016-20 are the
same as for ASU 2014-09.
The Company does not plan to early adopt the new revenue recognition guidance;
adoption will be on the modified retrospective basis beginning in fiscal year
2019. The Company has substantially concluded its assessment of the impact of
the adoption of this standard on its consolidated financial statements. Most of
the Company's revenue is expected to continue to be generated from point-of-sale
transactions, which ASU 2014-09 treats generally consistent with current
accounting standards. The Company does not expect this standard will have a
material impact on the accounting for point-of-sale transactions or related
areas including the right of return and customer incentives. Although the impact
on the consolidated financial statements is not expected to be material,
additional disclosures will be required.
In June 2018, the FASB issued ASU 2018-07, "Compensation-Stock Compensation,"
Topic 718, "Improvements to Nonemployee Share-Based Payment Accounting" (ASU
2018-07) as part of its Simplification Initiative to reduce complexity when
accounting for share-based payments to non-employees. ASU 2018-07 expands the
scope of Topic 718 to more closely align share-based payment transactions for
acquiring goods and services from non-employees with the accounting for
share-based payments to employees, with certain exceptions. The provisions of
ASU 2018-07 are effective for the Company's first quarter of the fiscal year
ending November 30, 2020, with early adoption permitted.
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